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Annual Report 2008

Rising to th Cal n e


2/31

2 Notice o Thirteenth Annual General Meeting

6 Corporate In ormation

7 Pro le o Directors10 Chairmans Statement

13 Corporate Structure

14 Five Years Group Financial Highlights

16 Corporate Governance Statement

22 Statement o Directors Responsibility

23 Audit Committee Report

27 Statement on Internal Control

28 Statement o Corporate Social Responsibility

30 Environmental Management System

31 Other In ormation

32 Corporate Calendar

37 Financial Statements

109 Recurrent Related Party Transactions

110 List o Properties Owned

115 Statistical Report

ENCLOSED Form o Proxy

Contents


3/312 ANN JOO RESOURCES BERHAD(371152-U) | A N N U A l R E p O R t 2 0 0 8

Notice of Thirteenth Annual General Meeting

AS ORDINARY BUSINESS:-

1. To receive the Audited Financial Statements or the nancial year ended 31 December 2008 andthe Reports o the Directors and Auditors thereon.

2. To approve the payment o Directors ees amounting to RM510,000 or the nancial year ended 31December 2008.

3. To re-elect the ollowing Directors, who shall retire pursuant to Article 101 o the CompanysArticles o Association:-

a) Dato Lim Kiam Lamb) Datuk Kamarudin bin Md Ali

4. To re-appoint Messrs KPMG as Auditors o the Company or the nancial year ending 31 December2009 and to authorise the Directors to x the Auditors remuneration.

AS SpECIAl BUSINESS:-

5. To consider and, i thought t, pass the ollowing resolutions, with or without modi cations:-

5.1 RE-AppOINtMENt OF DIRECtOR

THAT pursuant to Section 129(6) o the Companies Act, 1965, Dato Ong Kim Hoay be re-appointed as a Director o the Company to hold o ce until the conclusion o the next AnnualGeneral Meeting.

5.2 AUtHORItY tO AllOt SHARES

THAT subject always to the Companies Act, 1965, the Articles o Association o the Companyand the approvals o the relevant governmental and/or regulatory authorities, the Directorsbe and are hereby empowered, pursuant to Section 132D o the Companies Act, 1965, toissue shares in the Company rom time to time and upon such terms and conditions and orsuch purposes as the Directors may deem t provided that the aggregate number o sharesissued pursuant to this Resolution in any one nancial year does not exceed 10% o the totalissued share capital o the Company or the time being and THAT the Directors be and are alsoempowered to obtain the approval or the listing o and quotation or the additional sharesso issued on Bursa Malaysia Securities Berhad and THAT such authority shall continue in orceuntil the conclusion o the next Annual General Meeting o the Company.

5.3 pROpOSED RENEWAl OF AUtHORISAtION tO ENABlE tHE COMpANY tO pURCHASE Up tO10% OF tHE ISSUED AND pAID-Up ORDINARY SHARE CApItAl OF tHE COMpANY pURSUANttO SECtION 67A OF tHE COMpANIES ACt, 1965

THAT subject always to the Companies Act, 1965, the Listing Requirements o Bursa MalaysiaSecurities Berhad (Bursa Securities) and all other applicable laws, guidelines, rules andregulations, the Company be and is hereby authorised to purchase such amount o ordinaryshares o RM1.00 each in the Company as may be determined by the Directors o the Company

rom time to time through Bursa Securities upon such terms and conditions as the Directorsmay deem t and expedient in the interest o the Company provided that:

(i) the aggregate number o shares purchased does not exceed 10 per cent o the totalissued and paid-up share capital o the Company as quoted on Bursa Securities as atthe point o purchase;

(Resolution 1)

(Resolution 2)

(Resolution 3)(Resolution 4)

(Resolution 5)

(Resolution 6)

(Resolution 7)

NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting o the Company will be held at Bahamas 1 & 2, Level12, Sunway Resort Hotel & Spa, Persiaran Lagoon, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan on Tuesday,26 May 2009 at 10.00 a.m. to transact the ollowing business:-


4/313ANN JOO RESOURCES BERHAD(371152-U) | A N N U A l R E p O R t 2 0 0 8


(Resolution 8)

(Resolution 9)(Resolution 10)(Resolution 11)(Resolution 12)

(ii) an amount not exceeding the Companys retained pro ts and/or the share premiumaccount be allocated or the purchase o its own shares (as at 31 December 2008, theamount o the retained pro ts and/or the share premium account o the Companystood at RM375,434,000 and RM22,340,000 respectively); and

(iii) the Directors o the Company may decide either to retain the shares purchasedas treasury shares or cancel the shares or retain part o the shares so purchased astreasury shares and cancel the remainder or to resell the shares or distribute theshares as dividends.

AND THAT the authority con erred by this resolution will commence immediately and will, subjectto renewal thereat, expire at the conclusion o the next Annual General Meeting o the Company

ollowing the passing o this Ordinary Resolution (unless earlier revoked or varied by an OrdinaryResolution o the shareholders o the Company in a general meeting) but shall not prejudice thecompletion o purchase(s) by the Company be ore that a oresaid expiry date and in any event, inaccordance with the provisions o the guidelines issued by Bursa Securities or any other relevantauthorities;

AND THAT authority be and is hereby given to the Directors o the Company to take all such steps asare necessary or expedient (including without limitation, the opening and maintaining o centraldepository account(s) under the Securities Industry (Central Depositories) Act, 1991, and theentering into o all other agreements, arrangements and guarantee with any party or parties) toimplement, nalise and give ull e ect to the a oresaid purchase with ull powers to assent to anyconditions, modi cations, revaluations, variations and/or amendments (i any) as may be imposedby the relevant authorities and with the ullest power to do all such acts and things therea ter inaccordance with the Companies Act, 1965, the requirements and/or guidelines o Bursa Securitiesand all other relevant governmental and/or regulatory authorities.

5.4 pROpOSED RENEWAl OF EXIStING SHAREHOlDERS MANDAtE FOR RECURRENt RElAtEDpARtY tRANSACtIONS OF A REVENUE OR tRADING NAtURE

THAT approval be and is hereby given or the renewal o shareholders mandate or the Companyand/or its subsidiary companies to enter into recurrent transactions o a revenue or trading naturewith the ollowing Related Parties as speci ed in Section 2.4 o Part B o the Circular to Shareholdersdated 4 May 2009:-

(i) LIM Group(ii) MISI Group(iii) CHH Group(iv) SHH Group

PROVIDED ALWAYS that such transactions are:-

(i) necessary or the day-to-day operations;

(ii) carried out on an arms length basis in the ordinary course o business and on normalcommercial terms which are not more avourable to the Related Parties than those generallyavailable to the public; and

(iii) are not to the detriment o the minority shareholders

(the Shareholders Mandate)

AND THAT the Shareholders mandate, unless revoked or varied by the Company in a general

meeting, shall take e ect rom the date o the passing o this Ordinary Resolution and will continuein orce until:-



(a) the conclusion o the next Annual General Meeting (AGM) o the Company at which timeit will lapse unless authority is renewed by a resolution passed at the next Annual GeneralMeeting;

(b) the expiration o the period within which the next AGM is to be held pursuant to Section

143(1) o the Companies Act, 1965 (but shall not extend to such extension as may be allowedpursuant to Section 143(2) o the Companies Act, 1965); or

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

whichever is earlier.

AND FURTHER THAT the Directors o the Company be authorised to complete and to do all suchacts and things (including executing all such documents as may be required) as they may considerexpedient or necessary to give e ect to the Shareholders Mandate.

5.5 pROpOSED NEW SHAREHOlDERS MANDAtE FOR ADDItIONAl RECURRENt RElAtED pARtY

tRANSACtIONS OF A REVENUE OR tRADING NAtURE

THAT approval be and is hereby given or a new shareholders mandate or the Company and/orits subsidiary companies to enter into additional recurrent related party transactions o a revenueor trading nature with LIM Group and SANH Group as set out in Section 2.5 o Part B o the Circularto the Shareholders dated 4 May 2009:-

PROVIDED ALWAYS that such transactions are:-

(i) necessary or the day-to-day operations;

(ii) carried out on an arms length basis in the ordinary course o business and on normalcommercial terms which are not more avourable to the Related Parties than those generallyavailable to the public; and

(iii) are not to the detriment o the minority shareholders

(the New Shareholders Mandate)

AND THAT the New Shareholders mandate, unless revoked or varied by the Company in a generalmeeting, shall take e ect rom the date o the passing o this Ordinary Resolution and will continuein orce until:-

(a) the conclusion o the next Annual General Meeting (AGM) o the Company at which timeit will lapse unless authority is renewed by a resolution passed at the next Annual GeneralMeeting;

(b) the expiration o the period within which the next AGM is to be held pursuant to Section143(1) o the Companies Act, 1965 (but shall not extend to such extension as may be allowedpursuant to Section 143(2) o the Companies Act, 1965); or

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

whichever is earlier.

AND FURTHER THAT the Directors o the Company be authorised to complete and to do all suchacts and things (including executing all such documents as may be required) as they may considerexpedient or necessary to give e ect to the New Shareholders Mandate. (Resolution 13)




6. To transact any other business o which due notice shall have been given in accordance with theCompanies Act, 1965 and the Companys Articles o Association.

By Order o the Board

leong Oi Wah (MAICSA 7023802)Soo Shiow Fang (MAICSA 7044946)Company Secretaries

4 May 2009

NOtES:-

1) A Member o the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote instead o him. A Member shall not be entitled to appoint more than two proxies to attend and vote at the same meeting. Where a memberappoints two proxies, the appointment shall be invalid unless he speci es the proportions o his holdings to be represented by eachproxy. Where a member o the Company is an authorised nominee as de ned under the Securities Industry (Central Depositories)Act, 1991, it may appoint at least one proxy in respect o each securities account it holds with ordinary shares o the Companystanding to the credit o the said securities account.

2) A proxy may but need not be a Member o the Company and a Member may appoint any person to be his proxy without limitationand the provisions o Section 149(1)(b) o the Companies Act, 1965, shall not apply to the Company.

3) The instrument appointing a proxy shall be in writing under the hand o the appointor or o his attorney duly authorised in writingor, i the appointor is a corporation, either under the corporations seal or under the hand o an o cer or attorney duly authorised.

4) The instrument appointing a proxy, with the power o attorney or other authority (i any) under which it is signed or a notariallycerti ed or o ce copy o such power or authority, shall be deposited at the Share Registrar o the Company at Level 26, MenaraMulti-Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than orty-eight (48) hours be ore the timeappointed or holding the meeting or at any adjournment thereo .

5) Explanatory Notes on Special Business:-a) Ordinary Resolution 6

The proposed resolution 6 in relation to the re-appointment o Dato Ong Kim Hoay, i passed, will enable Dato Ong Kim Hoayto continue in o ce until the conclusion o the next Annual General Meeting.

b) Ordinary Resolution 7The proposed resolution in relation to authority to allot shares pursuant to Section 132D o the Companies Act, 1965, i passed,will empower the Directors to issue shares up to an aggregate amount not exceeding 10% o the total issued share capital o theCompany or the time being, or such purposes as the Directors consider would be in the interest o the Company. This authorityunless revoked or varied at a general meeting will expire at the next Annual General Meeting o the Company.

c) Ordinary Resolutions 8 to 13Please re er to the Circular to Shareholders dated 4 May 2009 or urther in ormation.




Corporate In ormation

BOARD OF DIRECtORS

Da o lim Kiam lamGroup Executive Chairman

Da o lim Hong thyeGroup Managing Director

lim Sin SeongExecutive Director

lim Kien liExecutive Director

Y.A.M. tunku Naquiyuddin Ibni tuanku JaafarIndependent Non-Executive Director

Da o Ong Kim HoayIndependent Non-Executive Director

tan Sri Da uk A. Razak Bin Ram iIndependent Non-Executive Director

Da uk Kamarudin Bin Md A iIndependent Non-Executive Director

AUDIt COMMIttEEY.A.M. Tunku Naquiyuddin Ibni Tuanku Jaa ar (Chairman)Independent Non-Executive Director

Dato Ong Kim Hoay (Member)Independent Non-Executive Director

Tan Sri Datuk A. Razak Bin Ramli (Member)Independent Non-Executive Director

Datuk Kamarudin Bin Md Ali (Member)Independent Non-Executive Director

NOMINAtION COMMIttEE Tan Sri Datuk A. Razak Bin Ramli (Chairman)Independent Non-Executive Director



REMUNERAtION COMMIttEE

Dato Ong Kim Hoay (Chairman)Independent Non-Executive Director

Tan Sri Datuk A. Razak Bin Ramli (Member)Independent Non-Executive Director


COMpANY SECREtARY

Leong Oi Wah (MAICSA 7023802)Soo Shiow Fang (MAICSA 7044946)

HEAD OFFICE & REGIStERED OFFICEWisma Ann Joo, Lot 19391Batu 8 , Jalan Klang Lama46000 Petaling JayaSelangor Darul Ehsan Telephone No. : 03-7877 0028Fax No. : 03-7876 5381Website : www.annjoo.com.my

pRINCIpAl BANKERS

Malayan Banking BerhadCIMB Bank BerhadAlliance Bank Malaysia BerhadRHB Bank Berhad

AUDItORS

KPMGLevel 10, KPMG Tower8, First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul Ehsan

SHARE REGIStRAR

Symphony Share Registrars Sdn BhdLevel 26 Menara Multi-PurposeCapital SquareNo. 8 Jalan Munshi Abdullah50100 Kuala Lumpur Telephone No. : 03-2721 2222Fax No. : 03-2721 2530/31

StOCK EXCHANGE lIStINGMain Board o the Bursa Malaysia Securities Berhad



DAtO lIM KIAM lAM

56 years o age, MalaysianGroup Executive Chairmam

Dato Lim Kiam Lam was appointed as a Director of theCompany on 11 September 1996 and re-designated asGroup Executive Chairman on 30 June 2008. Dato Limhas over 30 years of hands-on experience in the steelbusiness. During his tenure as a key member of thesenior management, the Groups business has grown andexpanded rapidly.

Dato Lim is the Chairman of the Commerce Committeeof the Kuala Lumpur & Selangor Chinese Chamber of Commerce & Industry. He is also the Executive Chairman of Ann Joo Steel Berhad and also sits on the board of severalprivate companies, society and associations.

Dato Lim is the son of the major shareholder, Mr Lim SengChee and the brother to Mr Lim Kien Lip, an ExecutiveDirector of the Company. He has no conflict of interestwith the Company and no convictions for offences withinthe past 10 years.

DAtO lIM HONG tHYE

34 years of age, Ma aysianGroup Managing Director

Dato Lim Hong Thye joined the Company in August 2000and was seconded to Malayawata Steel Berhad (MYS)(now known as Ann Joo Steel Berhad), a subsidiary of theCompany, on 10 August 2000. Prior to that, he was withthe Assurance & Advisory Service unit of Price Waterhouseand PriceWaterhouseCoopers. Dato Lim was appointed asthe Executive Director of the Company on 1 January 2003.He was also appointed to the Board of MYS as ExecutiveDirector on 15 January 2004 and assumed the positionof President with effect from 18 February 2004. Dato Limassumed the position of Group Managing Director on30 June 2008.

Dato Lim holds a Bachelor of Commerce (Accountingand Finance) from The University of Melbourne. He is aChartered Accountant (CA) of The Malaysian Institute of Accountants (MIA) and a Certified Practising Accountant(CPA) of Australian Society of CPAs.

Dato Lim is also the Managing Director of Ann Joo SteelBerhad and sits on the Board of several private limitedcompanies.

Dato Lim is the son of the major shareholder, Mr Lim SengQwee. He has no conflict of interest with the Companyand no convictions for offences within the past 10 years.

Prole o Directors



Y.A.M. tUNKU NAQUIYUDDIN IBNI

tUANKU JAAFAR62 years o age, MalaysianIndependent Non-Executive Director

Y.A.M Tunku Naquiyuddin Ibni TuankuJaafar was appointed to the Board on 8January 2008. He is the Chairman of theAudit Committee of the Company.

Tunku Naquiyuddin is a keenenvironmentalist and was a CommitteeMember of the World Wide Fundfor Nature (Malaysia) and a CouncilMember of the Business Council forSustainable Development in Geneva.An active businessman, TunkuNaquiyuddins interest spanned a broadspectrum uniting the Malaysian publiccompanies through the Federation of Public Listed Companies Bhd which hefounded; bridging bilateral boundariesthrough the Malaysia-France Economicand Trade Association which he headedfor eight years; and even striving forAsia-Pacic co-operation through theCanada-ASEAN Centre of which he wasa Council Member. He was nominatedby the Minister of Finance to sit onthe Committee of Kuala Lumpur Stock Exchange in 1989 for ve years. He wasa former diplomat. He was also Regentof the State of Negeri Sembilan from1994 until April 1999.

Tunku Naquiyuddin is presently theChairman of Sino Hua-An InternationalBerhad as well as Kian Joo Can FactoryBerhad. He is also a director of OrixLeasing Malaysia Berhad, SyarikatPendidikan Staffi eld Berhad andOlympia Industries Berhad as well asGlobal Gold Holdings Limited andNoble Mineral Resources Limited, whichboth listed in Australia.

Tunku Naquiyuddin has no familyrelationship with any Director and/ or major shareholder of the Company.He has no conict of interest withthe Company and no convictions foroffences within the past 10 years.

lIM SIN SEONG

52 years o age, MalaysianExecutive Director

Lim Sin Seong was appointed asDirector of the Company on 11September 1996. He has over 30 yearsof involvement in the steel tradingbusiness. His embracing of modernmanagement approaches wasinstrumental in the transformationof Ann Joo Group with adoption of modern logistic facilities and state-of-the-art computerised managementsystem. He is the Managing Directorof Ann Joo Metal Sdn Bhd, the tradingarm of the Group and he also sits onthe board of several private limitedcompanies.

Mr Lim is the brother of the majorshareholders, Mr Lim Seng Chee andMr Lim Seng Qwee. He has no conflictof interest with the Company and noconvictions for offences within thepast 10 years.

lIM KIEN lIp

47 years o age, MalaysianExecutive Director

Lim Kien Lip joined Ann Joo Group of Companies in 1987 and rose to therank of General Manager/ExecutiveDirector of Anshin Steel Industries SdnBhd (ASI) in 1997. He was appointedas the Managing Director of ASI in 2000and subsequently as the Director of theCompany on 17 June 2003.

Mr Lim holds a Bachelor of Sciencein Business Administration (majorin Management) from the CentralWashington University St., UnitedStates of America in 1983 and obtainedhis Master of Science in BusinessAdministration (major in Management)from City University Washington St.,United States of America in 1984.

Mr Lim currently sits on the board of Ann Joo Steel Berhad and MalaysianIron & Steel Industry Federation as wellas several private limited companies.

Mr Lim is the son of the majorshareholder, Mr Lim Seng Chee andthe brother to the Group ExecutiveChairman, Dato Lim Kiam Lam. He hasno conict of interest with the Companyand no convictions for offences withinthe past 10 years.

Prole o Directors



DAtO ONG KIM HOAY

75 years o age MalaysianIndependent Non-Executive Director

Dato Ong Kim Hoay was appointedas Director of the Company on 11September 1996. He is the Chairmanof the Remuneration Committee anda member of the Audit Committeeand Nomination Committee. He wasdesignated as the Senior IndependentNon-Executive Director of the Companyto whom concerns of shareholders maybe directed.

Dato Ong is an Associate Member of the Institute of Chartered Accountants(Australia), Institute of CharteredSecretaries and Administrators(Australia) and also a member of theMalaysian Institute of Accountants.He started his career in 1969 as anAuditor with Turquands Young & Co.(now known as Ernst & Young), a publicaccounting rm. He subsequently joined Malayan Banking Berhad(Maybank) in 1970 and held varioussenior positions in Maybank beforeretiring as General Manager, SingaporeOperations in 1992. He also served onthe Board of Maybank for several years.His current directorships in publiccompanies include Atlan HoldingsBerhad and Multivest ResourcesBerhad.

He has no family relationship with anyDirector and/or major shareholder of theCompany. He has no conict of interestwith the Company and no convictionsfor offences within the past 10 years.

DAtUK KAMARUDIN BIN MD AlI

58 years o age MalaysianIndependent Non-Executive Director

Datuk Kamarudin bin Md Ali wasappointed as Director of the Companyon 1 March 2007. He also serves asa member of its Audit Committee,Nomination Committee andRemuneration Committee.

Datuk Kamarudin holds a Masters inScience (Engineering) from Universityof Birmingham, United Kingdomand a Bachelor of Science (Honours)(Mechanical Engineering) from theUniversity of Strathclyde GlasgowScotland. He is an Associate member of the Royal College of Defense Studies UK (RCDS). Datuk Kamarudin retired fromthe Police Force on 4 May 2006. Beforehis retirement, his last position was asthe Director of Management with therank of Police Commissioner. He hasover 30 years experiences specializing inMechanical engineering with extensiveknowledge and skills in Logistic andFinance Management, ManpowerDevelopment, Strategic Planning,

Training and Development, Recruitmentand Selection, Career Developmentand Crime Prevention gained throughwide range of command posts andmanagerial capacities held during histenure of offi ce in the Royal MalaysiaPolice. He is noted for his contribution inMalaysia Crime Prevention Foundation,which he is a council member.

Datuk Kamarudin is also a director of ECM Libra Financial Group Berhad, ECMLibra Investment Bank Berhad, AvenueInvest Berhad and Masterskill EducationGroup Berhad.

Datuk Kamarudin has no familyrelationship with any Director and/ or major shareholder of the Company.He has no conict of interest withthe Company and no convictions foroffences within the past 10 years.

tAN SRI DAtUK A. RAZAK BIN RAMlI

60 years of age Ma aysianIndependent Non-Executive Director

Tan Sri Datuk A. Razak Bin Ramli wasappointed as Director of the Companyon 25 November 2004. He is theChairman of the Nomination Committeeand a member of the Audit Committeeand Remuneration Committee.

Tan Sri Datuk A. Razak holds a Bachelorof Arts (Hons) degree majoring inpublic administration since 1971from University of Tasmania, Australiaand obtained his diploma in GestionPublique from Institut InternationaldAdministration Publique, Paris, Francein 1980. He was Deputy Secretary-General (Industry) and DeputySecretary-General (Trade) of Ministry of International Trade and Industry (MITI)prior to his retirement from civil serviceas Secretary General of MITI. Throughouthis years in civil service, he servedseveral Ministries and GovernmentAgencies including the Public ServicesDepartment and Economic PlanningUnit, Prime Ministers Department.

Tan Sri Datuk A. Razak currently holdsdirectorships in Favelle Favco Berhad,Lafarge Malayan Cement Bhd, Shangri-La Hotels (Malaysia) Bhd and TransmileGroup Bhd, all public listed companies.He also holds directorships in HongLeong Islamic Bank Berhad, HongLeong Tokio Marine Takaful Berhad,Hong Leong Investment Bank Berhadand Ophir Holdings Berhad.

Tan Sri Datuk A. Razak has no familyrelationship with any Director and/ or major shareholder of the Company.

He has no conict of interest withthe Company and no convictions foroffences within the past 10 years.

Prole o Directors



Chairmans Statement

Dear Shareholders,

On beha f of he Board, I am eased o resenAnn Joo Resources Bhds annua re or for henancia year ended 31 December 2008.

tHE YEAR UNDER REVIEW The year 2008 witnessed economic meltdown in severalmajor advanced countries that has dragged the globaleconomy into a recession; the world economy seems tobe particularly vulnerable to sharp contractions in activityin the ace o nancial stress. The contractions in globaldemand and trade combined with the reduction in globalcommodity prices have a ected the export earnings o many economies, including Malaysia.

In the ace o this severe economic downturn, steel prices,production and demand have plummeted. Steel pricesexperienced an unprecedented volatility with a massivesurge in the beginning o year 2008 but su ered a sharpprice correction in the second hal o the year.

In line with international market movements, Malaysia steelindustry also experienced a very volatile year starting withremarkable pro ts recorded in the rst hal o year 2008but su ered heavy losses in the second hal year. Domesticdemand shrunk by more than 50% in the last quarter o 2008 as compared with the steel consumption in the rsthal o 2008. To survive in the sharply deteriorating businessenvironment with heavy destocking activities worldwide,steel mills including Ann Joo were le t with no choice butto cut production output or schedule plant stoppages or

maintenance works which resulted in production outputslashed to below hal o the industry capacity.

pERFORMANCE & OpERAtIONSAnn Joo Group remained strong and resilient deliveringyet again steady pro t in the midst o such extremevolatility o steel prices and unprecedented severe marketconditions. During the year under review, the Groupregistered marginal growth in revenue o RM 2.22 billion,representing an increase o 14% as compared to RM 1.94billion in the preceding year.

The Group continued to pursue strong organic businessgrowth to sustain its delivery o steady earnings with apro t attributable to equity holders o RM 139.40 milliona ter the inventory write down o RM 470.33 million. The allin steel prices and depressed demand rom the spreadinge ects o the global economic meltdown later part o theyear has however partially o set the Groups pro tabilityderived rom the robust international steel market in the

rst hal o the year.

Iron & S ee Manufac uring

Ann Joo Steel Bhd (AJSB) consistently delivered acommendable contribution to the Groups earnings. Duringthe year under review, AJSB recorded higher revenue o RM 1.60 billion against a revenue o RM 1.44 billion in the

preceding year. AJSB Groups pro t attributable to equityholders was RM 118.54 million a ter the inventory writedown o RM 413.78 million, representing a decrease o 23%as compared to the previous years results.



Chairmans Statement

The pro tability o the steel mill business was mainlyattributable to rising international steel prices and robustinternational market in rst hal o 2008. However, thispro tability has been partially eroded by a less avourableresult in the second hal o 2008 due to sluggish demandresulting rom the global nancial crisis and urther delaysin the implementation o some mega projects in Malaysia.

The steel mill division continued to achieve an excellente ciency record with approximately 680,000 metric tonsproduction output despite the plant running at a slowerpace in the last quarter o the year. Beginning in the year2009, AJSB has embarked on an upgrading o the existingsteel making plant which will enable the steel mill toimprove its operational e ciency and productivity.

AJSB continues to gain international recognitions onits product quality. An example is obtaining productquality credentials rom the United Kingdom Certi cationAuthority or Rein orcing Steels (CARES). The company,being the rst CARES certi ed producer in South EastAsia, that is able to expand its exports in new destinationsand notably the only one success ully gained acceptancein the Middle East market, with Ann Joos steel bars nowpresent in the United Arab Emirates.

In the meantime, Ann Joo Integrated Steel Sdn Bhd(AJIS) is making progress in its expansion plans, its BlastFurnace Project is under way. However, the commissioningo this blast urnace project will be delayed to year 2010due to various technical issues encountered during theconstruction stage.

S ockis & trading

The international market or fat and engineering steelsalso weakened with the sharp deterioration o global

nancial conditions and liquidity crunch. This environmenthad negative repercussions on investment spending whichconsequently dampened steel consumption. Weakeningdemand or industrial production and consumer productshave urther slackened the demand and prices o fat

products.

The stockist and trading division registered higherrevenue o RM 789.55 million in 2008 as compared toRM 493.36 million in 2007 as a result o expansion o our trading business or the commercial grade steelproducts. This business segment maintained consistentpro it results o RM 49.95 mill ion a ter the write down ininventory o RM 31.03 million in 2008 as compared toRM 50.67 million in 2007.

Service Cen re

The service centres division recorded a combined revenueo RM 197.69 million against RM 181.42 million in 2007. The segments pro t was RM 21.26 million, representingan increase o 60% against the segment pro t o RM 13.23

million in 2007. The divisions business per ormance wasmainly attributable to the higher steel prices and demandin the rst hal o 2008 coupled with lower input costbrought orward rom year 2007.

CORpORAtE DEVElOpMENt

In line with the Groups mission to be the leadingand most e cient steel group in the region, Ann Joocontinued to carry out various business rationalization andcorporatization strategies during the year o 2008.

In January 2008, AJR completed a renounceable rights issueo 261,353,639 warrants with the listing and quotation onBursa Securities at an issue price o RM0.15 per warrant.

Gross proceeds o RM 39,203,045.85 were realized rom thesaid exercise.

AJSB acquired a piece o leasehold land located at SeberangPrai Tengah, Pulau Pinang measuring approximately 5.24acres together with a our and a hal storey detachedo ce cum actory building. The property was acquiredvia the purchase o the entire shareholding in Nanometric Technology Sdn Bhd (now known as AJSB Land Sdn Bhd),comprising o 2,000,002 ordinary shares o RM 1.00 each ora cash consideration o RM11,540,110. The o ce buildingis currently occupied by the enlarged team o both AJSBand AJIS.

As part o the Groups divestment strategy o its non-corebusinesses, AJSB disposed o Empresa (M) Sdn Bhd, asubsidiary involved in the oil palm plantation business or acash consideration o RM 30,374,391. The Group recognizeda gain on the disposal o approximately RM2.25 million.

In September 2008, AJSB, in response to a proposal romAJR on 28 August 2008, undertook a selective capitalrepayment (SCR) exercise pursuant to Section 64 o theCompanies Act, 1965 which resulted in the cancellation o 3,643,663 AJSB shares held by shareholders other than AJR. The scheme involved a capital repayment o RM 14,064,539on the basis o RM 3.86 or every cancelled AJSBs share.

Upon completion o the SCR, AJSB became a wholly-ownedsubsidiary o AJR.

OUtlOOK & pROSpECtS

The global economy is entering into a recession phaseresulting rom the US nancial chaos spreading worldwide.Despite concerted interest rate cuts and massive liquidityinjections, the credit crisis continues to deepen withoutsigns o abating. The reduction in steel demand is nowexpected to go beyond cyclical downturn given the levelo distress in the global nancial market and deterioratingeconomic conditions.

It is anticipated that once liquidity conditions normalise,the steel market will improve with the commencemento the economic stimulus packages launched by various



Chairmans Statement

governments that place heavy ocus on the revitalisationo economic activities and in rastructure developments.Demand or long products is expected to rebound morequickly as the construction industry will bene t rom the

scal stimulus measures initiated by various governmentsto pump-prime the economy. However, the fat productmarket appears to be still vulnerable as automobile,consumer products, household appliances, shipbuildingindustry have started to eel the pinch rom the all inglobal demand.

Domestic demand is expected to remain sluggish inanticipation o urther delays in the roll-out o megaprojects under the Ninth Malaysia Plan. Nevertheless, theexecution o the RM7 billion economic stimulus packageand the RM60 billion Mini Budget are expected to pump

prime the construction sector and will indirectly increasethe steel demand towards the second hal o 2009.

Amidst the challenges and uncertainties, the Group willcontinuously be on the lookout or opportunities to growexport sales particularly to the regional markets whichhave shown signs o recovery in steel consumption. TheGroup will continue to remain ocus on improvemento production e ciency, e ective execution o strategicprocurement policy and inventory management to positionourselves as the leading steel group o quality products yetat the lowest production cost in the region.

DIVIDEND

During the nancial year under review, AJR paid a naldividend o 8 sen per share less income tax o 26% inrespect o the nancial year ended 31 December 2007amounting to RM 30,405,350 on 16 June 2008.

Subsequently, on 7 August 2008, AJR declared aninterim dividend o 12 sen per share less income tax o 26% in respect o the nancial year ended 31 December2008 amounting to RM 44,646,800 which was paid on 2September 2008. With current outlook uncertainties andour commitments in respect o the on-going Blast Furnace

project, the Group does not recommend any nal dividendin respect o the nancial year ended 31 December 2008.

AppRECIAtION

On behal o the Board and Management o AJR, I wish toextend our gratitude to our valuable customers, businesspartners, shareholders, nanciers and relevant authorities

or their invaluable support and unwavering con dence inus.

I would like to take this opportunity to record our heart eltgratitude to our ormer Executive Chairman and Co-

ounder o Ann Joo Group, Mr. Lim Seng Qwee, who retiredrom the Board in July 2008. His wealth o experience has

been an invaluable asset throughout his tenure o serviceto the Board. My sincere thanks and appreciation to theBoard or entrusting me with the position o the GroupExecutive Chairman. It is a privilege to work with such agroup o Board members who contribute tirelessly or thebetterment o Ann Joo. I also welcome the appointment o Dato Lim Hong Thye as the Group Managing Director. I amcon dent that his pro essionalism and dynamism will leadthe Group to greater heights.

Last but not least, we wish to express our deep appreciationto the management and sta or their continuedcommitment, dedication and loyalty in contributing to thecontinuing success o the Group.

DAtO lIM KIAM lAMGroup Executive ChairmanMay 2009



Corporate Structureas at May 2009

Subsidiary Company

Associated Company

IRON & StEElMIll

Ann Joo Steel Berhad

Malayawata MarketingSdn Bhd

AJSB PropertiesSdn Bhd

Sachiew Palm Oil MillSdn Bhd

AJSB Land Sdn Bhd( ormerly known as Nanometric

Technology Sdn Bhd)

Ann Joo Integrated SteelSdn Bhd

Anshin CastingIndustries Sdn Bhd

StOCKISt &tRADING

Ann Joo MetalSdn Bhd

AJE Best-On Sdn Bhd

Ann Joo InternationalPte Ltd

Saga Makmur IndustriSdn Bhd

Ann Joo TradingSdn Bhd

SERVICE CENtRE

Anshin Steel ServiceCentre Sdn Bhd

Anshin PrecisionIndustries Sdn Bhd

S.A. Networks TechnicalIndustries Sdn Bhd

Anshin Steel ProcessorSdn Bhd

OtHER

Ann Joo ManagementServices Sdn Bhd

( ormerly known as Ann JooDistripark Sdn Bhd)100% 100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

59.12%

36%

62%

100%

Ann Joo (Sarawak)Sdn Bhd

Lian Tiong SteelFabrication & Civil

Engineering Sdn Bhd

Anshin Steel IndustriesSdn Bhd

100%

100%

100%

100%

100%



5 YearsGroup Financial Highlights

2004

RM000

2005

RM000

2006

RM000

2007

RM000

2008

RM000Con inuing O era ionsRevenue 528,566 565,539 1,435,027 1,947,857 2,222,054

Pro t Be ore Taxation 96,747 33,107 132,038 212,385 105,086

Pro t A ter Taxation 68,609 20,317 126,769 197,856 148,780

Pro t Attribute to EquityHolders o the Company 62,887 17,691 102,551 171,017 139,398

Shareholders Funds 480,390 483,241 635,710 827,579 885,617

Net Assets 480,390 483,241 635,710 827,579 885,617

Net Assets per Share (sen) 191 177 188 159 176

Earnings Per Share (sen)

- Basic

- Diluted

23.73

20.90

6.56

6.00

22.80

22.80

33.72

33.72

27.3518.23

Net Dividend (RM) 22,896 26,547 24,444 34,407 75,052

Dividend per share (sen) 12.0 13.5 10.0 14.0 20.0

2004 2005 2006 2007 2008 2004 2005 2006 2007 2008

Revenue(RMmillion)

pro Before taxa ion(RMmillion)

1 , 9

4 7

. 8 6

2 , 2

2 2

. 0 5

1 , 4

3 5

. 0 3

5 6 5

. 5 4

5 2 8

. 5 7

9 6

. 7 5

3 3

. 1 1

1 3 2

. 0 4

2

1 2

. 3 9

1 0 5

. 0 9



2004 2005 2006 2007 2008

2004 2005 2006 2007 2008

2004 2005 2006 2007 2008

2004 2005 2006 2007 2008

2004 2005 2006 2007 2008

2004 2005 2006 2007 2008

5 YearsGroup Financial Highlights

Ne Asse s per Share(sen)

Shareho ders Funds(RMmillion)

pro Af er taxa ion(RMmillion)

pro Af er tax & MI(RMmillion)

Basic Earnings per Share(sen) Di u ed Earnings per Share(sen)

6 8

. 6 1

4 8 0

. 3 9

2 3

. 7 3

2 0

. 3 2

4 8 3

. 2 4

6

. 5 6

1 2 6

. 7 7

6 3

5 . 7

1

2 2

. 8 0

1 9 7

. 8 6

8 2 7

. 5 8

3 3

. 7 2

6 2

. 8 9

1 9 1

2 0

. 9 0

1 7

. 6 9

1 7

7

6 . 0 0

1 0 2

. 5 5

1 8 8

2 2

. 8 0

1 7 1

. 0 2

1 5 9

3 3

. 7 2

1 3 9

. 4 0

1 7 6

1 8

. 2 3

1 4 8

. 7 8

8 8 5

. 6 2

2 7

. 3 5



Corporate Governance Statement

PRINCIPLES STATEMENT

The Board o Directors is committed to ensuring that highest standard o corporate governance are practised throughoutthe Group as a undamental part o discharging its responsibilities and to protect and enhance shareholders value and theGroup per ormance. To achieve this objective, the Board is supportive and adhered to the principles and best practices o corporate governance as prescribed in the Malaysian Code o Corporate Governance (Revised 2007) (the Code).

A. BOARD OF DIRECTORS

Board Responsibilities

The Group acknowledges the important role played by the Board o Directors in the stewardship o its direction andoperations, and ultimately the enhancement o long-term shareholder value.

To ul l this role, the Board explicitly assumes the ollowing speci c responsibilities:-

(a) Reviewing and adopting a strategic plan or the Group, including the annual business plan and the overall Groupstrategy and direction;

(b) Overseeing the conduct o the Company and the Groups business to evaluate whether the business is properlymanaged;

(c) Identi ying and managing the principal risks a ecting the business or the Group;

(d) Overseeing the implementation o succession planning or business continuity;

(e) Developing and maintaining e ective communication with stakeholders including shareholders, investors and general

public; and

( ) Reviewing the adequacy and the integrity o the Groups internal control systems.

Board Meetings

The Board meetings are scheduled in advance prior to the commencement o a new nancial year and the meetingsschedule is circulated to the Directors to enable the Directors to plan ahead.

Board meetings are conducted in accordance to a ormal agenda and schedule matters arising or approval or notationduring the Board meetings. The agenda or each Board meeting and the relevant papers, with ull and air disclosuresrelating to agenda items are disseminated to all the Directors in advance to enable them to prepare or the meetings. The Board meeting papers tabled to the Directors include progress reports on business operations, nancial results,in ormation on business propositions, industry outlook, operational and regulatory compliance matters and corporateproposals. Agenda items or which resolution or approval is sought are identi ed and clearly stipulated in the Board paperto ensure that matters are discussed in a structured manner. For corporate proposals, which are deemed material and price-sensitive, would be circulated to the Directors at the Board meeting itsel .

At Board meetings, the Management presents and provides explanation on the reports tabled. Senior Management maybe invited to attend the Board meetings to advise or give detailed explanation and clari cation on relevant agenda itemsto enable the Board to make in ormed decision. Any Director who has a direct or indirect interest in the subject matter tobe deliberated shall abstain rom deliberation and voting on the same.

Minutes o every Board meetings are circulated to each Director or their perusal be ore con rming at the ollowing Boardmeeting. The proceedings o all meetings including pertinent issues, substance o inquiries and responses, suggestions

and proposals are recorded and minuted by the Company Secretary. The Directors may seek clari cation or raise commentsbe ore the minutes are con rmed and signed by the Chairman as a correct record o the proceedings o the Board.




The Board meets at least our times a year at quarterly intervals with additional meetings convened when urgent andimportant decisions need to be taken between the scheduled meetings. During the year ended 31 December 2008, theBoard met on ve (5) occasions to deliberate and consider matters including the Groups nancial results, major investments,strategic decisions, business plan and direction o the Group. The Company Secretary attends the Board meetings heldthroughout the year.

The details o the Directors meeting attendances during the nancial period are as ollows:-

Total Meetings Attended Percentage (%) o AttendanceDato Lim Kiam Lam 5/5 100Dato Lim Hong Thye 4/5 80Mr Lim Sin Seong 5/5 100Mr Lim Kien Lip 4/5 80Y.A.M. Tunku Naquiyuddin Ibni Tuanku Jaa ar 5/5 100Dato Ong Kim Hoay 5/5 100

Tan Sri Datuk A. Razak bin Ramli 5/5 100Datuk Kamarudin bin Md. Ali 5/5 100

Supply o in ormation

All Directors have direct access to the advice and services o the Company Secretary as well as access to all in ormationwithin the Company whether as a ull board or in their individual capacity, in urtherance o their duties. The Board isregularly updated and advised by the Company Secretary on new statues, directive issues by the authorities, and theimplications to the Company and the Directors pertaining to their duties and responsibilities. The Board believes that theCompany Secretary is capable o carrying out her duties in ensuring the e ective unctioning o the Board.

In urtherance o their duties, the Board will obtain independent pro essional advice where necessary and under appropriate

circumstances at the Groups expense.

Board Committees

The Board, which is the ultimate authority in decision-making or all signi cant matters, delegates certain responsibilities toBoard Committees namely Audit Committee, Nomination Committee and Remuneration Committee to enhance e ciency. The Board Committees consider particular issues and recommend proposed actions to the Board. The unctions and termso re erence o Board Committees are clearly de ned by the Board and are in line with the best practises prescribed by theCode.

The Chairman o the various Committees will report to the Board the outcome o the Committee meetings and such reportsare incorporated in the minutes o the Board meeting.

The Board has also established a Management Committee, namely Strategic Business Unit (SBU) Management Committeeto assist in the running o the business o the Company. This SBU Management Committee is made up o our (4) strategicbusiness units and is responsible in ensuring that the Company and its subsidiary companies maintain its established policyo e ective management and business operations or activities o the Group. It also oversees the senior managementse orts in managing the business operations or activities to ensure that the respective division or unction is running in ane ective and e cient manner.

Board Balance

As at the date o this statement, the Board consists o eight (8) members, comprising o our (4) Executive Directors andour (4) Independent Non-Executive Directors. The Company ensures that the Independent Non-Executive Directors

make up at least one-third o the Board o the Company. A brie pro le o each Director is presented in pages 7 to 9 o

this Annual Report.




The concept o independence adopted by the Board is in tandem with the de nition o an Independent Director o theListing Requirements o Bursa Malaysia Securities Berhad. The key elements or ul lling the criteria are the appointment o an Independent Director, who is not a member o management (a Non-Executive Director) and is ree o any relationshipwhich could inter ere with the exercise o independent judgement or the ability to act in the best interests o theCompany.

The Directors, with their di erent background and specialisation, collectively bring with them a wide range o experienceand expertise in areas such as nance, corporate a airs, marketing and operations. The Executive Directors in particular areresponsible or implementing the policies and decisions o the Board, overseeing the operations as well as co-ordinatingthe development and implementation o business and corporate strategies. The Independent Non-Executive Directorsbring objective and independent judgement to the decision making o the Board and provide a check and balance to thedecisions o the Executive Directors. Together with the Executive Directors who have intimate knowledge o the business,the Board is constituted o individuals who are committed to business integrity and pro essionalism in all its activities.

There is a clear division o responsibility at the head o the Company to ensure a balance o authority and power. The Board

is led by the Group Executive Chairman, Dato Lim Kiam Lam, who ensures e ectiveness o Board policies whilst Dato LimHong Thye, the Group Managing Director, leads the executive management and is also responsible or the day-to-dayoperations and implementation o Board policies and decisions. In line with the recommendation o the Code, the Boardhas identi ed Dato Ong Kim Hoay as the senior Independent Non-Executive Director to whom concerns o shareholdersregarding the Company may be directed.

The Board is o the opinion that its current composition airly refects the interest o shareholders o the Company.

Appointments to the Board

Nomination Committee

The Nomination Committee o the Company comprises exclusively o Independent Non-Executive Directors as ollows:-

Tan Sri Datuk A. Razak Bin Ramli (Chairman) Dato Ong Kim Hoay (Member) Datuk Kamarudin bin Md Ali (Member)

The Nomination Committee is responsible to recommend to the Board candidates or appointment as new Directors aswell as Board Committees and to review the Board structure, size and composition. The Committee is also responsible toassess the e ectiveness o the Board as a whole, the Board Committees and the contribution o each Director, including theNon-Executive Directors and Group Managing Director on annual basis.

Annually, the Nomination Committee will review the Boards mix o skills and experience and other qualities including corecompetencies which Non-Executive Directors should bring to the Board. The Company Secretary will table the evaluation

orms to assess the e ectiveness o the Board as a whole and the various Board Committees. On the evaluation o individualDirectors per ormance, the Nomination Committee agrees that a sel -evaluation be done and the evaluation orm willalso be circulated to the Directors or completion. The Nomination Committee then evaluates the Board Committeesbased on the evaluation carried out. The Nomination Committee agrees that the Board Committees have carried out their

unctions as expected and on overall the Directors have attended to their responsibilities e ectively. The proceedings o the assessment and evaluation o the members o the Board, including inquiries and suggestions are properly recordedand minuted by the Company Secretary.

As part o the process o nominating new candidates to ll the Board seats, the Nomination Committee will review theskills, knowledge, expertise, experience, pro essionalism and integrity o the proposed new nominees or appointmentto the Board and in the case o nominees or the position o independent non-executive directors, to evaluate thenominees ability to discharge such responsibilities/ unctions as expected rom independent non-executive directors and

thereupon recommend to the Board or approval. The newly appointed Directors will be brie ed by the Executive Directorsor Senior Management on the business operations, policy and procedures o the Group. The newly appointed Directorsare also encouraged to visit the business operations or plants o the Group to amiliarise themselves and to have a betterunderstanding o the Groups business and operations.




The Nomination Committee met once during the nancial year ended 31 December 2008. At the meeting held, theNomination Committee recommended to the Board the re-designation o Dato Lim Kiam Lam rom the position o GroupManaging Director to Group Executive Chairman o the Company upon the retirement o Mr Lim Seng Qwee, and toappoint Dato Lim Hong Thye to the position o the Group Managing Director to take over rom Dato Lim Kiam Lam. TheBoard approved the recommendation o Nomination Committee on the a oresaid re-designation.

The Nomination Committee had also reviewed the amended terms and re erence o the Nomination Committee priorrecommending to the Board or approval in accordance with the best practices in the Code. The Board approved therecommended amendments and the new terms o re erence was adopted by the Nomination Committee thereupon.

Re-election o Directors

The Articles o Association provides that at least one-third o the Board, is subject to retirement by rotation at each AnnualGeneral Meeting and that all Directors shall retire rom o ce at least once in every three years. The Directors to retire in

each year are the Directors who have been longest in o ce since their appointment or re-appointment. A retiring Directoris eligible or re-election.

Also, a Director, who is over 70 years o age is required to submit himsel or re-appointment annually in accordance withSection 129(6) o the Companies Act, 1965.

On yearly basis, the Nomination Committee is responsible or making recommendation to the Board or the re-election o the retiring Directors.

Directors Training

The Board always believes that continuous training or Directors is essential to keep abreast with industrial sector issues,the current and uture developments in the industry and global market, regulatory updates and management strategies toenhance the Boards skills and knowledge to enable them to discharge their duties e ectively. The Directors are encouragedto attend various training programmes and seminars to constantly updating themselves on the changing environmentwithin the business the Group operate, particularly in areas o regulatory compliance.

All Directors have attended and completed the Mandatory Accreditation Programme and complied with the requirementso the Continuing Education Programme (CEP) as prescribed under the Listing Requirements, which was repealed by BursaMalaysia Securities Berhad with e ect rom 1 January 2005. From time to time, the Board will assess the training needs o theindividual Directors to ensure that the Board is equipped with necessary knowledge to enable them to discharge duties asDirectors. The Board is also regularly updated by the Company Secretary on the latest update/amendments on the ListingRequirements and other regulatory requirements relating to the discharge o the Directors duties and responsibilities.

On 23 October 2008, the Company organised a hal -day in-house Directors Corporate Training on the course title Dutiesand Responsibilities o Directors arising rom Amendment to the Companies Act, 1965 to update the Directors on thelatest amendments to the Companies Act, 1965 and the implications to their duties and responsibilities.

In addition to the a oresaid in-house training, the ollowing Directors have also attended the ollowing training(s):

Name o Director Title o the Training/Seminar Attended

Dato Lim Hong Thye 12th Asian Regional Con erenceCon erence: Middle East Steel 2008 - Capitalise on the Regions Steel Boom5th China International Steel Congress

Lim Sin Seong Training and development programs on Business Management (on continuous basis)Lim Kien Lip Emerging Markets Forum Tan Sri A. Razak bin Ramli Training: Compliance and En orcement o Bursa Securities Listing Requirement

Updates and Case Study

Training: Con rmation For Directorship: Independent VS ExecutiveTraining: General Outlook On So t Commodities and the Distortion o Funds on theFundamentals o Supply and DemandTraining: Importance o IT SecurityTraining: Latest Development on Tax Audits and Tax Investigations

Datuk Kamarudin bin Md Ali Training: Orientation and Brie ng on Bank Negara Malaysia Guideline




B. DIRECTORS REMUNERATION

Remuneration Committee

The Remuneration Committee comprises entirely Independent Non-Executive Directors as ollows:

Dato Ong Kim Hoay (Chairman) Tan Sri Datuk A. Razak Bin Ramli (Member) Datuk Kamarudin bin Md Ali (Member) The Remuneration Committee met twice during the nancial year ended 31 December 2008.

The Remuneration Committee is responsible or recommending the ramework o the Executive Directors remunerationpackage as well as reviewing their scope o services. The policy adopted by the Remuneration Committee is to recommendsuch remuneration packages in order to attract, retain and motivate Directors in managing the business o the Group. Theultimate approval or the remuneration o the Executive Directors lies with the Board. The Remuneration Committee reviewsannually the per ormance o the Executive Directors and makes recommendations to the Board on speci c adjustmentsin remuneration and/or other emoluments that commensurate their contributions or per ormance or the year, which iscompetitive and is in tandem with the per ormance o the Company.

The Board as a whole determines the ee o the Non-Executive Directors with the individual Directors concerned abstainingrom decisions in respect o their individual remuneration. The Non-Executive Directors remuneration consists o annualees that refect their expected roles and responsibilities. The Non-Executive members o the Board and Board Committees

are also paid a meeting allowance or each meeting they attended.

Details o the remuneration o the Directors o the Company, during the nancial year, are as ollows:-

Bonus & StatutorySalary Fees Allowances contribution Beneft-in-kind TotalRM000 RM000 RM000 RM000 RM000 RM000

Executive Directors 2,852 299 2,598 774 134 6,657Non-Executive Directors - 240 100 - - 340

The number o Directors whose total remuneration alls within the respective bands is as ollows:

Number o DirectorsRange o Remuneration Executive Non-Executive

RM50,001 to RM100,000 - 4RM550,001 to RM600,000 1 -RM900,001 to RM950,000 1 -RM1,250,001 to RM1,300,000 1 -RM1,700,001 to RM1,750,000 1 -RM2,195,001 to RM2,200,000 1 -

C. COMMUNICATIONS WITH SHAREHOLDERS

The Company acknowledges the importance o communicating with its shareholders and the in ormation is communicatedto them through the Annual Report, Annual General Meetings (AGM), Extraordinary General Meetings and publicannouncements.

The policy o the Company is to maintain an active dialogue with its shareholders with the intention o giving shareholders anoverview o the Groups per ormance and operations. As the AGM is the main orum used by the Company to communicate

with its shareholders, the Chairman normally encourages the shareholders to ask questions both about the resolutionsbeing proposed and the Groups operations in general. The Board members, including the senior management, are presentat the AGM to respond to questions raised by shareholders.




In addition, the Company makes various announcements through Bursa Malaysia Securities Berhad, in particular, itsquarterly results within two months rom the close o the nancial quarter. Summaries o the quarterly and the ull yearsresults and copies o the ull announcement are supplied to the shareholders and members o the public upon request.Analyst brie ngs are held ollowing the announcements o the quarterly results to ensure air dissemination to the publicgenerally. Members o the public can also obtain the ull nancial results and the Companys announcements rom BursaMalaysia Securities Berhads website.

While the Company endeavours to provide as much in ormation as possible to its shareholders and stakeholders, theCompany is also wary o the legal and regulatory ramework governing the release o material and price-sensitivein ormation.

D. ACCOUNTABILITY AND AUDIT

Financial reporting

The Board aims to provide and present a balanced and meaning ul assessment o the Groups nancial per ormance andprospects at the end o the nancial year, primarily through the annual nancial statements and announcements o thequarterly results to shareholders. The Board is assisted by the Audit Committee to oversee the Groups nancial reportingprocesses and the quality o its nancial reporting.

State o Internal Controls

The Board acknowledges its ultimate responsibility to maintain sound systems o internal controls to sa eguard shareholdersinvestment and the Groups assets.

The Groups Statement on Internal Control is set out on page 27 o this Annual Report.

Relationship with the Auditors

The Group has established and maintained a ormal and transparent relationship with the Groups auditors through theAudit Committee. During the year, the Audit Committee met up on several occasions with the Groups auditors includingtwo occasions with the external auditors without the presence o the Executive Directors and management.

COMPLIANCE STATEMENT

The Board considers that the Group has complied with the best practices o the Code to the extent as set out in the CorporateGovernance Statement. The Board is committed to continuously achieving a higher standard o Corporate Governancethroughout the Group.

This statement was approved by the Board o Directors on 24 April 2009.



Statement of DirectorsResponsibility or Preparing The Financial Statements

The Directors are required by the Companies Act, 1965 to prepare nancial statements or each nancial year which havebeen made out in accordance with the applicable approved accounting standards and give a true and air view o the stateo a airs o the Group and Company at the end o the nancial year and o the results and cash fows o the Group andCompany or the nancial year.

In preparing the nancial statements, the Directors have:

adopted suitable accounting policies and applied them consistently;made judgements and estimates that are reasonable and prudent;ensured that all applicable accounting standards have been ollowed; andprepared nancial statements on a going concern basis as the Directors have reasonable expectation, havingmade enquiries, that the Group and Company have adequate resources to continue in operational existence or the

oreseeable uture.

The Directors have the responsibility or ensuring that the Company keeps accounting records which disclose with

reasonable accuracy the nancial position o the Group and Company and which enable them to ensure that the nancialstatements comply with the Companies Act, 1965 and applicable approved accounting standards. The Directors have theoverall responsibility or taking such steps as are reasonably open to them to sa eguard the assets o the Group to preventand detect raud and other irregularities.



Audit Committee Report

MEMBERSHIP

The present members o the Committee are as ollows:-

Y.A.M. Tunku Naquiyuddin Ibni Tuanku Jaa ar (Chairman)Independent Non-Executive Director


Tan Sri Datuk A. Razak bin Ramli (Member)Independent Non-Executive Director

Datuk Kamarudin bin Md Ali (Member)Independent Non-Executive Director

The Audit Committee o the Company comprising o our (4) members, all o whom are Independent and Non-ExecutiveDirectors. All the Audit Committee members are able to read, analyse and understand the underlying rules and principles o

nancial statements and have e ectively discharged their duties pursuant to the terms o re erence o the Audit Committee.Dato Ong Kim Hoay is a quali ed Chartered Accountant and also a member o the Malaysian Institute o Accountants.

The authority and duties o the Audit Committee are clearly governed by the written Terms o Re erence.

TERMS OF REFERENCE

Constitution and Membership

1. The Audit Committee shall be appointed by the Board o Directors rom amongst their members and shall consist o not less than three members and at least one member o the Committee:-

i. must be a member o the Malaysian Institute o Accountants; or

ii. i he is not a member o the Malaysian Institute o Accountants, he must have at least three years working experienceand:-

(a) he must have passed the examinations speci ed in Part I o the 1st Schedule o the Accountants Act, 1967; or

(b) he must be a member o one o the associations o accountants speci ed in Part II o the 1st Schedule o theAccountants Act, 1967; or

iii. ul lls such other requirements as prescribed or approved by the Exchange.

2. All members o the Committee must be Non-Executive Directors, with a majority o them being IndependentDirectors.

3. No alternate director is to be appointed as a member o the Committee.

4. The members o the Committee shall elect a Chairman rom amongst their members who shall be an IndependentDirector.

5. The term o o ce and per ormance o the Committee and each o its members shall be reviewed by the Board at leastonce every three years.




Authority

6. The Committee is authorised by the Board to investigate any matter within its terms o re erence. It is authorised to seek any in ormation it requires rom the external auditors, person(s) carrying out the internal audit unction or activity andany employees and all employees are directed to co-operate with any request made by the Committee.

7. The Committee shall have the resources which are required to per orm its duties.

8. The Committee is authorised to obtain independent pro essional or other advice i it considers necessary.

9. The Committee should be able to convene meetings with the external auditors, the internal auditors or both, excludingthe attendance o other directors and employees o the Company, whenever deemed necessary.

Functions and Duties

10. The unctions and duties o the Committee shall be:-

(i) To review the ollowing and report the same to the Board o Directors:-

(a) with the external auditors, the audit plan;

(b) with the external auditors, their evaluation o the system o internal control;

(c) with the external auditors, their audit report;

(d) the assistance given by the employees o the Company to the external auditors;

(e) the quarterly results and year end nancial statements prior to the approval o the Board o Directors,ocusing particularly on:-

changes in or implementation of accounting policies and practices; signi cant and unusual events; compliance with accounting standards and other legal requirements; signi cant adjustments arising from the audit; the on-going concern assumption; and major judgmental areas.

( ) any related party transaction and confict o interest situation that may arise within the Company orGroup including any transaction, procedure or course o conduct that raises questions o managementintegrity; and

(g) the external auditors management letter and managements response;

(ii) To consider the major ndings o internal investigations and managements response;

(iii) To discuss problems and reservations arising rom the audit and any matter the auditors may wish to discuss (inthe absence o management where necessary);

(iv) To consider the appointment or re-appointment o external auditors, the audit ee and any question o dismissalor resignation where explanations are provided.

(v) To recommend the nomination o a person or persons as external auditors;

(vi) To per orm any other unctions or duties as may be agreed to by the Committee and the Board;

(vii) To do the ollowing in relation to the internal audit unction:-




(a) review the adequacy o the scope, unctions, competency and resources o the internal audit unction,including the authority o the internal audit;

(b) review the internal audit programme, processes and the results o the internal audit programme,processes or investigations undertaken, and where necessary, ensure appropriate actions are taken onthe recommendations o the internal audit unction;

(c) review any appraisal or assessment o the per ormance o members o the internal audit unction;

(d) approve any appointment or termination o senior sta members o the internal audit unction; and

(e) take cognisance o resignations o internal audit sta members and provide the resigning sta memberan opportunity to submit his reasons or resigning.

Quorum and Attendance at Meetings

11. A quorum shall be two members and the majority o members present must be Independent Directors.

12. The Head o Finance, the Head o Internal Audit and representative(s) o the external auditors shall normally attendmeetings. Other Board members and employees may attend meetings upon invitation o the Committee. However, atleast twice in a nancial year, the Committee shall meet with the external auditors, without executive board memberspresent.

13. The external auditors may request a meeting.

14. The Secretary to the Committee shall be the Company Secretary.

Frequency o Meetings and Minutes

15. Meetings shall be held not less than our times in a nancial year.

16. Minutes o each meeting shall be distributed to each member o the Board.

(The Terms o Re erence o the Audit Committee o the Company was amended on 18 February 2008 in line with therevision made to the Malaysian Code on Corporate Governance.)

Meetings

During the nancial year ended 31 December 2008, the Audit Committee held a total o ve meetings. The details o attendance o the Committee members are as ollows:-

No. o Committee MeetingsName o Committee Member Held AttendedY.A.M. Tunku Naquiyuddin Ibni Tuanku Jaa ar 4 4Dato Ong Kim Hoay 5 5 Tan Sri Datuk A. Razak bin Ramli 5 5Datuk Kamarudin bin Md Ali 5 5

The Management and Head o Group Internal Audit were present at all the meetings. Representatives o the externalauditors attended meetings where matters relating to the audit o the statutory accounts were discussed. As a best practiceo corporate governance, the Committee had met with the external auditors twice, on 18 February 2008 and 27 November2008, during the nancial year ended 31 December 2008, without the presence o the Management including the executiveboard members.

The Company Secretary present at all the Audit Committee meetings and the deliberations, suggestions and the issuesdiscussed at the meetings were correctly recorded and minuted.



Summary o Activities o Audit Committee

The Audit Committee carried out its duties in accordance with its terms o re erence during the year.

The main activities undertaken by the Committee were as ollows:

Review of the quarterly and annual nancial statements of the Company and the Group prior to submission to theBoard o Directors or consideration and approval.

Review of the internal audit reports and considerations of the ndings and managements responses thereto.

Review and discuss with the external auditors on the nature and scope of the statutory audit and consider theirproposed audit ee.

Review and discuss with the external auditors on the issues arising from the statutory audit.

Review of recurrent related party transactions and possible con ict of interest situations within the Group.

Review of the adequacy and the relevance of the scope, functions, resources, internal audit plan and results arisingrom the internal audits.

Review and deliberation on the Statement on Internal Control for inclusion into the Annual Report.

Internal Audit Function

The Groups Internal Audit unction is an independent appraisal unction established within the Group to provideindependent and objective assurance that the current system o internal controls in place throughout the Group is su cientto sa eguard the Groups interest. It also assists to improve the e ectiveness o risk management, control and governanceprocess.

In order to maintain its independence, the Head o Group Internal Audit reports directly to the Audit Committee. Audits areconducted with impartiality, pro ciency and due pro essional care.

The Group Internal Audit is responsible to bring a systematic and disciplined approach to evaluate, report and improve onthe e ectiveness o risk management, control and governance process. However, the existence o the Group Internal AuditDepartment does not relieve the Management o their responsibility or the proper execution and control o activities,including responsibility or the on-going monitoring, conduct review and improvement o internal controls and risk management in their respective areas.

Summary o Activities o Internal Audit

The main activities undertaken by the Groups Internal Audit unction are primarily driven by the approved risk-basedinternal audit plan, and involve the ollowing:

Review and ascertain adequacy of controls in place to safeguard the Groups assets;

Review of operations and plans to ascertain whether results are consistent with established objectives and goals andwhether the operations are carried out as planned;

Coordinate, facilitate and monitor the risk management exercise for various business units in the Group;

Identify areas for improvement in operations and business processes of the Group and making recommendations toimprove/enhance the existing internal control systems; and

Conduct special reviews as requested by the Board and/or the Audit Committee.

During the year, a total o twenty (20) routine audits and nine (9) ollow-up audits were carried out. Audit recommendations,management action plans to recti y the weaknesses and ollow-up to actions taken arising rom the audits were promptlyreported to the Audit Committee. The total cost incurred or the Group Internal Audit unction during the year wasapproximately RM302,000.




Statement on Internal Control

INTRODUCTION

The Malaysian Code on Corporate Governance (Revised 2007) stipulates that the Board o a listed issuer should maintaina sound system o internal controls to sa eguard the shareholders investment and Groups assets. Pursuant to paragraph15.27(b) o the Listing Requirements o Bursa Malaysia Securities Berhad, the Board is required to provide a statement o internal control, which outlines the nature and scope o the Groups internal control system during the year under review.

Board Responsibility

The Board acknowledges its responsibility or the Groups system o internal control and or reviewing its adequacy andintegrity through the process o constant review and monitoring. Because o the limitations that are inherent in any systemo internal control, this system is designed to manage rather than to eliminate the risk o ailure to achieve corporateobjectives. Accordingly, this system can only provide reasonable and not absolute assurance against material misstatementor loss.

Risk and Control Processes

The Board con rms that there is an on-going process or identi ying, evaluating and directing signi cant risks aced by theGroup, which is subject to periodic review by the Board.

The enterprise risk management ramework is aimed to put in place adequate and e ective risk management processes tomanage risks in order to achieve business objectives and providing reasonable assurance to the Board, also the stakeholderson the Groups state o internal control and its ability to increase shareholders value and con dence.

The Group adopts a risk based audit, which audit plan is based on the result rom the risk assesment exercise. The audit planis directed to ocus on areas o high and signi cant risks critical to the Groups per ormance. The audit plan is tabled to theAudit Committee or review and approval.

Further, the Board reviews and approves the annual budget or the Group. The Board also reviews actual per ormanceagainst budget on a quarterly basis, where explanations are provided or any variances noted.

The Board is committed towards operating a sound system o internal control and e ective risk management practicesthroughout the Group. The Board is o the view that the risks aced by the Group are within the acceptable level o thebusiness environment that it operates in and the system o internal control in place are adequate to sa eguard interest o the Group.

The Board is also cognizant o the act that the system o internal control and risk management practices must continuouslyevolve to support the type o the business and size o operations o the Group. Thus, the Board will, when necessary, putin place appropriate action plans to recti y any potential weaknesses or urther enhance the existing system o internalcontrols.

The Board remains committed to ensure that appropriate remedial measures are taken to address any control weaknessesthat may become evident and that every e ort is put into place to urther strengthen the internal control system to protectthe interests o its shareholders.

Review o the Statement by External Auditors

As required by paragraph 15.24 o the Listing Requirements o Bursa Malaysia Securities Berhad, the external auditorshave reviewed this Statement on Internal Control or the inclusion in the annual report or the nancial year under review. Their review was per ormed in accordance with Recommended Practice Guide 5: Guidance or Auditors on the Review o Directors Statement on Internal Control issued by the Malaysian Institute o Accountants. From the review conducted, theexternal auditors have reported that nothing has come to their attention that causes them to believe that this Statement

is inconsistent with their understanding o the process the Board has adopted in the review o the adequacy and integrityo internal controls o the Group.



Statement of Corporate Social Responsibility

The Ann Joo Group has always been concerned with the Groups social responsibility to society. We have a Corporate SocialResponsibility (CSR) Practice where we strongly pursue our belie o caring or and sharing with people, business associatesand the community. We also recognize the importance o CSR as an integral part o business and have incorporated it intoour Groups plan to enhance stakeholders con dence.

The strength o the Group and what it is today, is attributable to many reasons. This includes our corporate commitment,not just to pro tability but recognizing in tandem that CSR is an important component o good business practice whichbene ts the Group, as well as society and the environment.

A glimpse o our policies / activities in these areas are as ollows:-

COMMUNITY SERVICES

In carrying out its business activities, Ann Joo is mind ul o its responsibilities as a corporate citizen. The Group continuouslyprovides access to higher education to nancially deserving students through our TARC-Ann Joo Group Student Loan

Fund. Worthy students (based on merit), who come rom such backgrounds, are awarded with a yearly loan und to assistthem in their tertiary education.

The Group also supports community and government agencies such as the police, bomba and some governmental sportsclubs by contributing to und raising and donation drives.

ENVIRONMENTAL RESPONSIBILITY

While going through an expansion programme with the building o a blast urnace at our Prai plant, the Group undertakesvarious environmental management measures to ensure our plant operates and continues to operate in a responsible andenvironmental riendly manner. We ensure that we not only comply with the laws and regulations governing the industriesin which we operate but take additional measures to protect the environment.

Our operational processes are continuously being upgraded to cater or a changing environment. We work closely with theregulatory authorities on the protection o our environment and ensure that our operations are conducted not just in anenvironmentally sa e way but in a way that can help to preserve and improve our precious natural resource.

We are committed to improve the sa ety, health and environment (SHE) conditions o our operations. The Group adoptsa systematic approach to SHE management designed to ensure not just compliance with the law but also or continualimprovement and prevention o pollution. In summary, we strive not only to protect our employees, our stakeholdersand the community rom any sa ety and health risk or adverse environmental impact related to our operations but tocontinuously do better or the bene t o all.



Statement of Corporate Social Responsibility

EMPLOYEE WELFARE

The Group is committed to protect the well-being o its work orce through the e ective and stringent implementation o good Occupational Sa ety and Health (OSH) practices in all business operations. OSH guidelines are e ectively developed,implemented and continuously improved in accordance with current industry practices.

We also have an established Sa ety and Health Committee set up within the Group to constantly train, monitor and ensurethe sa ety and well being o our employees. Regular meetings are held by Committee to brainstorm and implementproposals or the bene t o the employees.

As employees are our greatest assets, the Group aims to attract, retain and motivate them and encourages their contributionand development. Appropriate career paths and internal recognition programmes are carried out and employees areprovided with numerous learning and development opportunities to ul ll their potential. A variety o team synergyprogramme and motivational courses were conducted to enhance their capability and knowledge. These developmentopportunities are structured to align with our organizational objectives and to help employees in urthering their careeraspirations.

INVESTOR RELATIONS

Our Group is committed to providing investors with accurate, use ul and timely in ormation about the Group, the steelindustry outlook and business per ormance. The Group actively communicates with our stakeholders and the investorcommunity at large.

The Group believes that regular clear and transparent communications with investors encourage a better appreciationo the Groups business and activities, reduces share price volatility and assists the investors in making well in ormeddecisions.

Regular dialogue sessions with research analysts and investors are held to brie them on our Groups nancial results andper ormance. In addition to the sessions, there are media releases and announcements to keep the public updated and toput our Group at the ore ront o the investment community.

Last year, approximately 11 research houses covered Ann Joo Resources Berhad. In addition to one-on-one meetings, roadshows, corporate luncheons and investor con erences, we received visits and calls rom various analysts and und managersinterested in the Groups strategies and development. In total, the management o Ann Joo Resources Berhad met withmore than a hundred und managers and investors at road shows and corporate meetings in 2008, including in countriessuch as Singapore and Hong Kong.

Our corporate services responsibility is a continuous journey. Ann Joo will indeed strive to grow a business that embraces thewell-being o the communit

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