AMALGAMATED INDUSTRIAL STEEL BERHAD (Company No. 9118-M)

(Incorporated in Malaysia under the Companies Act, 1965)

CIRCULAR TO SHAREHOLDERS

IN RELATION TO THE

PROPOSED DIVERSIFICATION IN OPERATIONS CARRIED ON BY AMALGAMATED INDUSTRIAL STEEL BERHAD TO INCLUDE PROPERTY DEVELOPMENT BUSINESS

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

An Extraordinary General Meeting (“EGM”) of AISB will be held at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan on Monday, 16 February 2015 at 11.00 a.m. or at any adjournment thereof. The notice of EGM, together with the Form of Proxy are enclosed in this Circular.

You are required to complete the enclosed Form of Proxy and deposit the same at the Registered Office of the Company at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time and date indicated below if you are unable to attend the EGM. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so.

Last date and time for lodging the Form of Proxy : Saturday, 14 February 2015 at 11.00 a.m.

Date and time of EGM : Monday, 16 February 2015 at 11.00 a.m. or at any adjournment thereof

This Circular is dated 30 January 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

Bursa Malaysia Securities Berhad (“Bursa Securities”) takes no responsibility for the contents of this Circular, makes no representation as to its

accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.

DEFINITIONS

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Except where the context otherwise requires, the following terms and abbreviations shall apply throughout the Circular:

“Act” : Companies Act, 1965, as amended from time to time and any re-enactment thereof

“AISB” or “the Company” : Amalgamated Industrial Steel Berhad (9118-M)

“AISB Group” or “the Group” : AISB and its subsidiaries, collectively

“AISB Share(s)” : Ordinary shares of RM0.10 each in AISB

“Board” : Board of Directors of AISB

“Bursa Securities” or “the

Exchange”

: Bursa Malaysia Securities Berhad (635998-W)

“EGM” : Extraordinary General Meeting

“EPS” : Earnings per share

“FYE” : Financial year ended/ending, as the case may be

“Jalan Pelaya Property” : A leasehold land and buildings located at Lot 6, Jalan Pelaya 15/1, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan

“Jalan Utas Property” : A leasehold land with buildings located at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan

“Listing Requirements” : Main Market Listing Requirements of Bursa Securities and all amendments thereto

“LPD” : 15 January 2015, being the latest practicable date prior to the printing of the Circular

“NA” : Net assets

“Proposed Diversification” : Proposed diversification in operations carried on by the Company to include property development business

“RM” and “sen” : Ringgit Malaysia and Sen respectively

“RPGT” : Real Property Gain Tax

All references to “our Company” and/or AISB in this Circular are to AISB. References to “AISB Group” and/or

“our Group” are to AISB and our subsidiaries and references to “we”, “us”, “our” and “ourselves” are to AISB where the context requires, shall include our subsidiaries. All references to “you” in this Circular are to our shareholders. Words denoting the singular shall, where applicable, include the plural and vice versa and words denoting the masculine gender shall, where applicable, include the feminine gender and vice versa. Reference to persons shall include corporations. Any reference to any enactment in this Circular is a reference to that enactment as for the time being amended or re-enacted. Any discrepancy in the tables between the amounts listed and the totals in the Circular are due to rounding. Any reference to a time of day in this Circular shall be reference to Malaysian time, unless otherwise stated.

TABLE OF CONTENTS

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LETTER TO THE SHAREHOLDERS OF AISB IN RELATION TO THE PROPOSED DIVERSIFICATION

PAGE

1.0 INTRODUCTION 1

2.0 DETAILS OF THE PROPOSED DIVERSIFICATION 2 - 8

3.0 RATIONALE OF THE PROPOSED DIVERSIFICATION 8

4.0 INDUSTRY OVERVIEW AND PROSPECTS 9 - 11

5.0 RISK FACTORS 11 - 13

6.0 EFFECTS OF THE PROPOSED DIVERSIFICATION 13 - 14

7.0 APPROVALS REQUIRED 14 - 15

8.0 INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM 15

9.0 DIRECTORS’ RECOMMENDATION 15

10.0 OTHER INTENDED CORPORATE EXERCISES/SCHEMES ANNOUNCED BUT PENDING COMPLETION 15

11.0 EXPECTED DATE OF COMPLETION OF THE PROPOSED DIVERSIFICATION 15

12.0 EGM 15

13.0 FURTHER INFORMATION 16

APPENDIX I – FURTHER INFORMATION 16

NOTICE OF EGM ENCLOSED

FORM OF PROXY ENCLOSED

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AMALGAMATED INDUSTRIAL STEEL BERHAD (Company No. 9118-M)

(Incorporated in Malaysia under the Companies Act, 1965)

Registered Office: Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan 30 January 2015

Board of Directors: Dato’ Ghazali Bin Mat Ariff (Chairman, Independent Non-Executive Director) Sulaiman Bin Salleh (Senior Independent Non-Executive Director) Tuan Haji Fauzi Bin Mustapha (Independent Non-Executive Director) Lim Yew Boon (Non-Independent Executive Director) Lim Chin Sean (Non-Independent Non-Executive Director) Dr. Goh Swee Por (Alternate Director to Lim Chin Sean, Non-Independent Non-Executive Director) To: The Shareholders of AISB Dear Sir/Madam, PROPOSED DIVERSIFICATION IN OPERATIONS CARRIED ON BY AISB TO INCLUDE PROPERTY DEVELOPMENT BUSINESS 1.0 INTRODUCTION

On 16 January 2015, the Company announced to Bursa Securities that AISB is proposing to seek the approval of its shareholders for the proposed diversification in operations carried on by AISB to include property development business (“Proposed Diversification”). As the current business operation progresses, the Group wishes to diversify its operations to include property development business for development of a piece of land measuring 500,622.9 square feet (46,509 square metres) held under H.S.(D) 172552, Lot P.T. Kawasan Perusahaan Shah Alam, District of Petaling, State of Selangor Darul Ehsan held under the name of Amalgamated Industrial Steel Bhd. The Board envisages that it is timely for the Company to undertake the property development business to improve the revenue and profit of the Group and hence, improve the NA per share of the Group. As the contribution from the property development segment may potentially exceed 25% of the net profits of AISB Group in the future, the Board proposes to seek the prior approval from the shareholders at the forthcoming EGM for the Proposed Diversification pursuant to Paragraph 10.13 of the Listing Requirements. The purpose of this Circular is to provide you with details of the Proposed Diversification together with the recommendation from our Board and to seek your approval for the Ordinary Resolution pertaining thereto to be tabled at the forthcoming EGM to be convened and held at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan on Monday, 16 February 2015 at 11.00 a.m. The Notice of EGM and Form of Proxy are set out in this Circular. SHAREHOLDERS OF AISB ARE ADVISED TO READ AND CONSIDER THE CONTENTS AND APPENDICES OF THIS CIRCULAR CAREFULLY BEFORE VOTING ON THE ORDINARY RESOLUTION TO GIVE EFFECT TO THE PROPOSED DIVERSIFICATION AT THE FORTHCOMING EGM.

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2.0 DETAILS OF THE PROPOSED DIVERSIFICATION 2.1 Paragraph 10.13 of the Listing Requirements

Pursuant to Paragraph 10.13 of the Listing Requirements, the Company must obtain its shareholders’ approval in a general meeting for any transaction or business arrangement which might reasonably be expected to result in either:-

(a) the diversion of 25% or more of the net assets of the Company to an operation which

differs widely from those operations previously carried on by the listed issuer; or

(b) the contribution from such an operation of 25% or more of the net profits of the listed issuer.

In assessing the extent of diversification or the amount of contribution to the net profits, consideration should be taken of any associated transactions or loans effected or intended and of contingent liabilities or commitments. For the purpose of the above, Bursa Securities may aggregate separate transactions and treat such transactions as if they were one (1) transaction if the terms of such transactions were agreed upon within a period of 12 months and the total percentage ratio of assets allocated for the diversification is 25% or more.

AISB is engaged in the manufacture and sale of steel-related products, mainly black welded steel and galvanized industrial pipes, square and rectangular hollow tubes and hollow sections and trading of construction related materials. These products are mainly sold to stockists (hardware shops) for the use of roof structure, fence and hand rail, water piping, cable and wire trucking, scaffolding, firefighting system and air-condition ducting. The Company’s

subsidiary, AIS Manufacturing Sdn. Bhd. (formerly known as Amalgamated Industrial Stainless Steel (1987) Sdn. Bhd) is involved in the manufacturing of steel pipes and trading of construction related materials. 87% of the total sales are from local market and 13% of the total sales are to Singapore market. The major customers of AISB Group are as follows:- Kim Guan Huat H/W Co Pte. Ltd. Ann Joo Metal Sdn. Bhd. Lian Hoe H/W Pte. Ltd. Kozai (Sabah) Sdn. Bhd. H.H. Enterprise Thiam Aik H/W & Machinery Co Pte. Ltd. Tai Hoe Hardware Sdn. Bhd. Yick Hoe Ferrous Steel Sdn. Bhd. Chua Tong Hin Hardware Sdn. Bhd. Shan Yet Hardware Sdn. Bhd. While AISB is taking active measures to venture into new growth area to diversify its income stream pursuant to the Proposed Diversification, the steel division will remain an important feature of its profile.

The details of the financial position of the Group for the financial years 2011, 2012, 2013 and the nine (9) months financial period ended 30 September 2014 are as follows:-

Audited 2011 RM

Audited

2012 RM

Audited

2013 RM

Unaudited 30 September

2014 RM

Revenue (1) 144,849,666 153,594,921 92,738,064 60,614,192 Gross profit 854,194 2,106,031 1,498,816 3,362,812 Profit/(loss) before tax (9,605,489) (9,660,031) (1,321,828) (3,328,944) Profit/(loss) for the year (9,401,712) (8,054,017) (458,123) (2,784,519) Earnings/(loss) per share (sen) (2) (8.26) (7.08) (0.40) (2.45) Net assets per share (sen) 95.33 88.25 95.03 92.58

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Notes: (1) Revenue represents the invoiced value of goods sold net of returns and discounts. (2) The basic loss per share has been calculated based on the following weighted average number

of ordinary shares in issue during the financial year/period after deducting treasury shares calculated as follows:-

GROUP Unaudited

as at 30 September2014

2013 2012 2011

Number of ordinary shares at 1 January 120,521,875 120,521,875 120,521,875 120,521,875

Effect of treasury shares (6,797,300) (6,797,300) (6,796,763) (6,718,625) Weighted average number of ordinary shares at 31 December 113,724,575 113,724,575 113,725,112 113,803,250

AISB Group has not been profitable over the past three (3) financial years and the period ended 30 September 2014 due to high raw material prices, such as hot rolled coils, as well as increasing labour and electricity costs. The revenue of AISB Group has been fluctuating over the financial years under review and was mainly affected by, amongst others, intense competition in the market and worldwide depressed steel markets. Moving forward, AISB Group is expected to continue to operate in a challenging environment particularly due to rising production cost, such as high raw material prices, coupled with weak steel prices due to over-production by steel mills from China. Notwithstanding the aforementioned, in the 2nd quarter of 2013, AISB Group had made efforts to streamline its operations and consolidate its internal resources into one centralised manufacturing location from its manufacturing locations at Jalan Utas and Jalan Pelaya, both in Shah Alam, into one manufacturing location at Jalan Utas, Shah Alam. The consolidation of the manufacturing facility was to reduce escalating input cost, prevent duplicating functional expenses, save interplant transport cost and to ensure better control and coordination of operations, and it was completed in October 2013. As a consequence, the Group’s financial

performance improved with reduced loss after tax registered in FYE 31 December 2013 of RM0.46 million as compared to loss after tax of RM8.05 million registered in FYE 31 December 2012. As such, we envisaged that the Group financial performance will gradually improve moving forward to be contributed from the expected benefits to be derived from the consolidation of the manufacturing facility as well as efforts by the Company to further reduce production costs. With the strategic move of having consolidated all our operating plants at Jalan Utas Property, the Jalan Pelaya Property is now vacant. The Group is desirous of undertaking the Proposed Diversification to develop the Jalan Pelaya Property for better earnings in the foreseeable future. The Proposed Diversification is also part of AISB Group’s plan to reduce the Group’s sole

dependency on its existing core business. The Group believes that, the diversification of the Group’s operations to include property development business, which have stable and strong growth prospects, will be beneficial to the Group’s future earnings.

2.2 Information on Jalan Pelaya Property

AISB had on 3 August 1984 entered into a Sale & Purchase Agreement (“SPA”) with Champions Motors (1975) Sendirian Berhad for the acquisition of Jalan Pelaya Property together with the plant and equipment free from all liens, charges and encumbrances for a total purchase price of RM15,000,000. The purchase consideration had been fully settled and the land title was issued on 5 April 2002.

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Brief description of Jalan Pelaya Property is set out below:

Address : Lot 6, Jalan Pelaya 15/1 Seksyen 15 40000 Shah Alam Selangor Darul Ehsan

Location : H.S.(D) 172552

Lot P.T. Kawasan Perusahaan Shah Alam Town of Shah Alam District of Petaling State of Selangor Darul Ehsan

Tenure : Leasehold interest for a term of 99 years expiring on 11 November 2074

Provisional land area : 46,515.03 sq. metres (500,700 sq. feet)** Category of land use : Industrial use Restriction in-interest : Not stated Encumbrances : Nil

** In accordance with Selangor Darul Ehsan Certified Plan bearing no. PA 10-057863, the subject property has been assigned a new Lot No. identified as Lot No. 22 on 23 July 1991 with a surveyed land area of 46,509 square metres (500,622.9 square feet). Jalan Pelaya Property is located along Jalan Pelaya 15/1, Seksyen 15 within the Shah Alam Industrial Estate, Shah Alam City, Selangor Darul Ehsan. Shah Alam City, the capital of Selangor, a self-contained township comprising a golf course, terrace, semi-detached, detached houses, townhouses, bungalow lots, shophouses, commercial lots, medium cost apartments, condominiums and low cost houses, the Shah Alam Racing Circuit, Shah Alam Stadium, Masjid Sultan Salahuddin Abdul Aziz Shah, Universiti Teknologi Mara Campus (“UiTM”), The Selbourne Square, Worldwide Business Square,

Wisma MBSA, Bangunan Sultan Salahuddin Abdul Aziz Shah, Holiday Inn Shah Alam, Plaza Perangsang, the Kelab Sultan Abdul Aziz Golf Course and SACC Mall. This township is sited on the right and left hand side of the Federal Highway travelling from Kuala Lumpur City Centre towards Klang. It is located about 30 kilometres west of Kuala Lumpur City Centre. Klang Town is located about 20 kilometres west. Access to Jalan Pelaya Property from Kuala Lumpur City Centre is via the Federal Highway, Persiaran Selangor and finally turning left onto Jalan Pelaya 15/1 where the Jalan Pelaya Property is located. The area has excellent accessibility due to its close proximity to the Federal Highway, the Shah Alam Expressway and Kemuning – Shah Alam Highway which is a key to this industrial area. Properties within Shah Alam Industrial Estate are developed with various types of properties including shophouses, residential and industrial properties forming housing and industrial schemes, such as Bukit Jelutong, Taman TTDI Jaya, Padang Jawa Industrial Area, Bukit Raja Industrial Estate, Taman Perindustrian Subang Utama, Batu Tiga Industrial Park, Sime UEP Industrial Park, the industrial areas of Sections 16, 21, 22, 23, 26 and 27, the residential areas of Sections 2, 3, 4, 5, 6, 8. 9, 10, 11, 12, 18, 19, 20, 24 and 25 (Taman Sri Muda) and Dataran Otomobil. Properties in the immediate vicinity comprise numerous standard and individually designed detached and semi-detached factories which include premises of local and multinational companies. Based on the Report and Valuation of Jalan Pelaya Property conducted by Raine & Horne International Zaki + Partners Sdn. Bhd. (“the Valuer”) on 31 December 2013, the market

value of Jalan Pelaya Property together with the buildings erected thereon, with vacant possession and free from all encumbrances is RM58,600,000 and this amount was recorded as the net book value in the latest audited financial statements as at 31 December 2013.

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In arriving at the market value of Jalan Pelaya Property, the Valuer had adopted comparison method valuation. This method of valuation seeks to determine the value of the property being valued by comparing and adopting as a yardstick recent sale evidences involving other similar properties in the vicinity. Adjustments are being made to differences in location, size and shapes, accessibility, infrastructure available, improvements made to the site and other value considerations. In addition to the foregoing approach, the Valuer had also adopted cost approach in the valuation exercise. On 24 December 2014, Raine & Horne International Zaki + Partners Sdn. Bhd. furnished with their opinion letter stating that the market value of Jalan Pelaya Property as at 24 December 2014 is RM61,000,000.

2.3 Details of the Proposed Development Project

The brief description of the Proposed Development Project is set out below:

Number of units to be developed (a) : 34 units

Estimated total gross development value (b) : RM161 million

Estimated total gross development cost (c) : RM84 million

Land cost : RM61 million

Estimated loan interest : RM1.2 million

Estimated profit before tax (d) : RM14.8 million

Notes:- (a) The number of units to be developed is derived upon consultations with architect and

building consultants. (b) The estimated total gross development value of RM161 million is estimated based on

RM557 per square foot on the built-up area of 289,058 square feet and various required designs and has been conservatively estimated based on market surveys and visits to development projects around Shah Alam as stated in Section 2.2 above and in consultation with property agents.

(c) The estimated total gross development cost of RM84 million is estimated based on RM290

per square foot on the built-up area of 289,058 square feet and cost estimates on various industrial building designs derived in consultation with various consultants such as architect, civil & structural engineer, mechanical & electrical engineer, quantity surveyor, land surveyor and town planner.

(d) The estimated profit before tax of RM14.8 million is derived based on Management

estimates on the total gross development value, total gross development cost, the land cost and the estimated loan interest.

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

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2.4 Types of Proposed Development Project

The types of Proposed Development Project consist the following:-

Type of Development Number of units

Built-up area (in square

feet)

Status of completion of the Proposed

Development Project as at the LPD

Targeted commencement

date

Targeted completion

date

(a) Three (3) storey Semi-Detached factory 79’ x 160’

12 141,588 Yet to commence June 2015 June 2017

(b) Three (3) storey Semi-Detached factory 77’ x 160’

10 113,620 Yet to commence June 2015 June 2017

(c) Three (3) storey Semi-Detached factory 75’ x 160’ 2 21,850 Yet to commence

June 2015 June 2017

(d) Single storey Terrace low-cost factory 20’ x 60’ 10 12,000 Yet to commence June 2015 June 2017

Total:

34

289,058

NA

NA

NA

Estimated dates for submission of application to Majlis Bandaraya Shah Alam (“MBSA”)

: To submit planning permission for layout plan to MBSA by March 2015

To submit survey plan, earthworks plan, road and drainage plan and building plan by May 2015

As at the LPD, the Company has not obtained any approvals as stated above for the commencement of the Proposed Development Project. The tentative timeframe to complete the project evaluation will be by first quarter of 2015. Save for Jalan Pelaya Property, AISB Group currently does not have any other landbank for future property development activities.

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

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2.5 Financial Commitment

The breakdown of the financial commitment required and its source of funds for the abovementioned Proposed Development Project are as follows:-

RM million Total estimation costs 146.2 Less: Land cost (61.0) Less: Loan interest (a) (1.2 ) Financial Commitment consists of: 84.0 - Preliminaries and piling and building works 45.6 - Infrastructure costs 8.4 - Premium / Extension of leasehold land for another 39 years (b) 17.1 - Pre-development cost, professional fees, administration cost, sales

and marketing, contribution and contingencies 12.9

RM million

Source of funds Bank borrowings for construction 20.0 Internal generated fund (c) 64.0 84.0

Notes: (a) Loan interest estimated at RM1.2 million is based on projected cash flow taking into consideration expected progress

claims receivable, progressive construction cost payable and any expected net cash flow funding from project financing of estimated RM20 million over a short period of financing to cover the cash flow shortfall (from construction claim paid to progress claim received).

(b) The premium is payable on the extension of the leasehold land tenure for another 39 years. (c) As the land cost of RM61 million has been fully settled, the expected progressive claim will generate cash flow from the

land cost recovered contributing substantially to the internal generated fund of RM64 million.

2.6 Key Management Team

Mr. Lim Yew Boon, the Non-Independent Executive Director, was appointed to the Board of AISB on 9 December 2003. Prior to his appointment to the Board of AISB, he has served as the Group Chief Operating Officer in LGB Group of Companies. He started his career in the field of construction with consultant engineers. With over 20 years of varied corporate and management experience, he has wide in-depth exposure in various key industries covering construction, manufacturing, property development and public utilities. Mr Lim Yew Boon, will be the key personnel to spearhead the property development business of the Group and will be actively involved in management of the day to day operation to achieve the Group’s business growth.

LGB Group of Companies are mainly involved in construction, property development, infrastructure developments, highway concessions, water and waste treatment services, information technology and steel manufacturing. During his tenure in LGB Group of Companies, Mr. Lim Yew Boon has involved in the following projects and was/is a member of the Executive Committee in these projects:- a) Menara LGB, Taman Tun Dr. Ismail, Kuala Lumpur (Status : Completed)

Menara LGB is a new generation technologically sustainable luxury Grade ‘A’ office building, located in Taman Tun Dr. Ismail, one of Kuala Lumpur’s most popular residential districts. The well-appointed, refined, technologically and environmentally enabled 31-storey corporate flagship development has obtained Malaysia’s Multimedia Super Corridor (MSC) Cybercentre

status and Singapore’s Building and Construction Authority (BCA) Green Mark (Gold) Accreditation. This integrated lifestyle development comprising retail, office and residential amenities, is also designed to comply with Malaysia’s Green Building Index (GBI)

Certification.

b) The Greens, Taman Tun Dr. Ismail, Kuala Lumpur (Status : On-going)

A twin-towered 27 storeys freehold sustainable luxury condominium with 165 elegantly designed and luxuriously-finished apartments, The Greens is a contemporary-styled vertical

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community in Taman Tun Dr. Ismail. With clear unobstructed views of the city skyline and over 900 acres of lush greenery made up of Kuala Lumpur Golf and Country Club, Bukit Kiara Park & Forest Reserve, Bukit Kiara Equestrian Club, Kelab Golf Perkhidmatan Awam and Royal Selangor Club, and is complemented with three (3) floors of carefully planned modern alfresco dining F&B establishments at the feet of the development, The Greens offers an integrated, well-balanced lifestyle for today’s multi-generational families.

As property development business is a new venture to the Group, the Group may not have the required manpower resources to run the operations efficiently. By the third quarter of 2015, we expect to recruit management executives to cover functions such as project management, contract management, finance and administration management and sales and marketing management. In the meantime, the Group will also be seeking advice and assistance from the various experts and consultants namely, the architect, engineers, surveyors, subcontractors and other consultants. Mr. Lim Chin Sean, the Non-Independent Non-Executive Director, was an alternate director to Dato’

Ghazali Bin Mat Ariff since 23 November 2005 and was re-designated as a principal Director of AISB on 26 September 2007. He joined the LGB Group of Companies since September 2003 and is currently involved in property development, construction projects, manufacturing and IT advisory services. Mr. Lim Chin Sean, will not involve in the daily operations of the Group but through his vast experience in the property development, will provide relevant checks and balances and advice in the development and evaluation of strategies and monitor operational performance. The Proposed Development Project will be awarded to qualified main contractors based on open tendering basis. AISB will be the project owner, monitoring and coordinating the overall project progress and development of main contractors, in-charge of administrative work (including submission of project plans to the relevant authorities for approval), sales and marketing. Whereas, main contractors are planning, developing and coordinating of work processes with building construction and overseeing the construction project to ensure that all necessary measures are taken to complete construction in a timely and correct manner. Save for the common directorships (Mr. Lim Yew Boon and Mr. Lim Chin Sean) and major shareholder (Mr. Lim Chin Sean), there are no other business relationships between AISB and/or its directors with LGB Group of Companies. There is no management agreement entered into with any of the key management personnel who is involved in AISB Group’s property development business. There is no plan to enter into management agreement with any of the key management personnel.

3.0 RATIONALE FOR THE PROPOSED DIVERSIFICATION

AISB Group intends to venture into property development business to diversify its earnings base and to enhance the Group's overall long term growth prospects. The Board anticipates that the contribution of the property development business will be another source of revenue stream and may contribute to stable earning growth for the Group in the future. The Proposed Diversification would provide another source of revenue and income to AISB Group and reduce its sole dependency on the existing core business of manufacture and sale of mild steel pipes and trading of construction related materials. The expansion of the Group’s business into the property development is part of AISB Group’s long term strategy of diversifying into other industries with strong growth prospects. However, the manufacturing and selling of mild steel pipes and trading of construction related materials will continue to be the core business of AISB Group. The Board has also taken into consideration the following factors in its decision for the Group to venture into the property development business instead of other business:-

(a) the property development is expected to contribute positively to the Group’s future earnings and

improve the financial position of the Group in the long term; and

(b) the property development business has good growth prospects, given the encouraging outlook and prospects of the property market.

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4.0 INDUSTRY OVERVIEW AND PROSPECTS 4.1 Overview and the Prospect of the Malaysian Economy

The Malaysian economy expanded further by 5.6% during the third quarter of 2014 (Q2 2014: 6.5%) supported by domestic activities amid a moderation in the external sector. On the supply side, the services sector remained as the key driver of growth, sustaining its pace at 6.1% (Q2 2014: 6.2%) spurred by the wholesale and retail, communication and business services subsectors. Meanwhile, the manufacturing sector expanded at a slower pace of 5.3% (Q2 2014: 7.3%) due to a more challenging external environment. The subsectors supporting manufacturing growth were electronics and electrical (E&E), transport and equipment as well as food, beverage and tobacco. The construction sector grew steadily by 9.6% (Q2 2014: 9.9%) supported by strong activity in the residential and non-residential subsectors. The agriculture sector grew 4% (Q2 2014: 7.1%) amid slower production of oil palm, which was mitigated by higher output of forestry and other agriculture subsectors. Meanwhile, the mining sector increased 1.4% (Q2 2014: 2.1%) supported by higher production of crude oil despite lower output of natural gas.

The private sector remained the key driver of growth with private spending increasing 6.7% during the third quarter of 2014 (Q2 2014: 8.1%). Private consumption sustained its resilience growing by 6.7% (Q2 2014: 6.5%) while investment expanded at a moderate pace of 6.8% (Q2 2014: 12.1%). Public sector expenditure declined marginally by 1.2% during the quarter (Q2 2014: -1.6%), weighed down by slower investment activity. Subsequently, domestic demand increased 4.8% (Q2 2014: 5.8%). Private consumption was supported by favourable labour market conditions. The major consumption indicators showed a positive performance, in particular, sales tax collection (27.1%) and sales of food (12.1%). Meanwhile, public consumption rebounded by 5.3% (Q2 2014: -0.5%) due to higher spending on supplies and services. On the investment side, gross fixed capital formation grew 1.1% (Q2 2014: 7.2%) mainly driven by the private sector. Private investment accounted for 67.1% of total investment (Q2 2014: 71.1%), mostly in the construction and manufacturing sectors. This was reflected in the performance of major investment indicators, including loans disbursed to the business sector which grew strongly by 19.7%, as well as higher imports of intermediate goods at 11.1% and imports of iron and steel at 7.8%.

The construction sector remained resilient with a strong growth of 9.6% in the third quarter of 2014 (Q2 2014: 9.9%). Growth was spearheaded by residential projects, which increased 18.6% (Q2 2014: 15.5%), mainly in the Klang Valley, Pulau Pinang and Johor. Non-residential building activity rose 7.9% (Q2 2014: 11.7%), supported by the construction of storage facilities and commercial buildings. The civil engineering subsector increased 4.2% (Q2 2014: 3.9%) supported by the ongoing implementation of infrastructure projects. During the quarter the value of construction works expanded 10.7% to RM25.3 billion with 9,835 construction projects registered. The highest share was contributed by the non-residential building subsector (34.5%), followed by the civil engineering (31%), residential building (30%) and special trade (4.5%) subsectors. Of the total projects, public sector works contributed 30% to the total value of construction work. The local bourse was affected by a challenging external environment in the third quarter of 2014. The FBM KLCI rose in the beginning of July to reach a record high of 1,892.65 points on 8 July 2014 supported by the IMF’s forecast of better global growth. However, the market shed its gains during the period on concerns over global growth prospects, US interest rate hikes and intensified geopolitical risks. The FBM KLCI declined marginally by 1.9% or 36.4 points to 1,846.31 points during the quarter (end-June 2014: 1.8%; 33.5 points; 1,882.71 points). Market capitalisation, however, grew RM3.7 billion or 0.2% to RM1,774.09 billion as at end-September 2014 (end-June 2014: RM51.3 billion; 3%; RM1,770.42 billion). Similarly, trading activity was also higher at 169.2 billion units valued at RM140.3 billion during the third quarter of 2014 (Q2 2014: 118.2 billion units; RM138.1 billion). On the domestic front, the economy is expected to remain on a steady growth trajectory in the 4th quarter of 2014. Private sector spending will remain the key driver of growth, with private investment continuing to expand steadily. Federal Government development expenditure is expected to pick up amid a rebound in NFPEs’ investment projects in utilities, oil and gas as well as infrastructure. On the supply side, all key sectors are envisaged to register positive growth. The services and manufacturing sectors will continue to lead growth, benefiting from resilient domestic private sector spending despite a moderating external sector.

(Source: Malaysian Economy 3rd Quarter 2014, Ministry of Finance Malaysia)

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The Malaysian economy is projected to grow from 5% to 6% in year 2015. In 2015, inflation is expected to increase to 4% to 5%, largely due to the implementation of Goods and Services Tax (“GST”) and spillover effect of fuel subsidy reduction in October 2014. Domestic demand is envisaged to expand, albeit at a moderate pace, underpinned by higher investment and sustained consumption spending. Private consumption is expected to moderate below its long-term average, but will continue to support growth. Household spending is expected to moderate amid higher inflation following the implementation of GST. Nevertheless, the impact of higher inflation on consumption is expected to be temporary and will eventually taper off after a few months of GST implementation.

The construction sector is projected to increase 10.7% in 2015 (2014: 12.7%) supported by commencement of some oil and gas related projects such as RAPID as well as ongoing transportation-related infrastructure projects. Meanwhile, the residential subsector is expected to remain strong in view of the increased demand for housing, particularly from the middle-income group. Demand for affordable housing will remain favourable amid several Government initiatives such as 1 Malaysia Housing Programme (PR1MA), Rumah Idaman Rakyat and Rumah Mesra Rakyat. The non-residential subsector is also expected to remain stable supported by encouraging demand for industrial and commercial buildings. Major commercial building projects such as the 118-storey Menara Warisan and Bukit Bintang City Centre are expected to contribute to the growth of the sector. (Source: Economic Report 2014/2015, Ministry of Finance, Malaysia)

4.2 Outlook of Property Development Industry in Selangor

Selangor continued to be the country’s largest contributor in industrial transactions with 2,681 units,

followed by Johor (1,214) and Perak (1,082). Two states recorded double digit growth; Perak (10.5%) and Kedah (67.7%). Thirteen states saw double digit reduction; Kelantan (-91.5%), W.P. Putrajaya (-50.0%), Pahang (-39.6), Perlis (-36.4%), W.P. Kuala Lumpur (-29.9%), Sabah (-26.8%), Terengganu (-26.7%), Melaka (-24.5%), Pulau Pinang (-24.2%), Sarawak (-19.3%), Negeri Sembilan (-16.0%), Selangor (-13.0%) and W.P. Labuan (-12.0%). Johor decreased moderately by 6.8%.

Terraced factory/ warehouse and vacant plots dominated the market activity with 2,778 and 2,661 transactions respectively, contributing 64.6% of the market share. Selangor led in both terraced factory and vacant plots, capturing 49.7% and 21.8% respectively. In terms of price, 71.3% (6,006 transactions) of the total industrial transactions were for property priced above RM250,000.

(Source: Press Release, Malaysian Property Market 2013 by National Property Information Centre (NAPIC), Valuation & Property Services Department, Ministry of Finance Malaysia on 22 April 2014)

The state’s property market performance witnessed slight moderation as market activity and construction sector softened. Nevertheless, several indicators aligned the market onto a hopeful track as indicated by the performance of primary market, the improvement in overhang and unsold situation as well as the sturdy growth in prices and rentals across the board. There were 38,974 transactions worth RM23.23 billion recorded in the first half of 2014, down by 3.2% in volume against first half of 2013. Nevertheless, the magnitude of market activity decline improved from contraction 17.2% recorded in first half of 2013. Value of transactions charted a positive 6.0% growth, a turnaround from -4.0% the year before. The state remained the main driver of the national property market, contributing 20.2% and 28.3% to the volume and value of transactions respectively. The residential sub-sector dominated the market activity, capturing 75.6% of the market activity. Commercial sub-sector ranked second with 10.6% of the market share, followed by agricultural (6.5%), development land (3.9%) and industrial sub-sector (3.4%). The residential sub-sector dominated the market activity, capturing 75.6% of the market activity. Commercial sub-sector ranked second with 10.6% of the market share, followed by agricultural (6.5%), development land (3.9%) and industrial sub-sector (3.4%). Market movements across the board were mixed. Three sub-sectors made a comeback, namely commercial, development land and industrial sub-sectors, showing positive growth of 23.4%, 17.2% and 0.7% respectively, after experiencing contractions in H1 2013. Contrarily, residential sub-sector declined by 6.5% though lower than -16.2% recorded in H1 2013. Agricultural sub-sector continued to chart a downturn of 9.5% (H1 2013: -6.6%). In terms of value, residential, commercial and industrial sub-sectors saw positive growth compared to H1 2013. However, agricultural and development land recorded otherwise.

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On industrial sub-sector, there were 18 overhang units worth RM3.26 million, down by 61.7% against first half of 2013. The unsold not constructed category recorded 12 units, stagnated since second half of 2013. Meanwhile, the unsold under construction category increased to 40 units, up by 29.0%. The construction activities showed signs of slowing down. Residential and shops sub-sector recorded declines in completions and starts but new building plan approvals recorded otherwise. Industrial sub-sector saw a mixed construction tempo with fewer completions and new building plan approvals but more starts.

(Source: Property Market Report First Half 2014 for Selangor, by National Property Information Centre (NAPIC))

4.3 Prospect of the Proposed Diversification

In light of the outlook of the property and construction industry in Malaysia as set out in Section 4.0 above, the prospects of the property development business of the Group remain encouraging due to the following:- (a) The Malaysian economy is expected to strengthen further and projected to grow at a rate of

5% to 6% in year 2015 based on the Economic Report 2014/2015;

(b) Non-residential building activity rose 7.9% (Q2 2014: 11.7%), supported by the construction of storage facilities and commercial buildings in the third quarter of 2014; and

(c) Selangor continued to be the country’s largest contributor in industrial transactions with 2,681

units. Terraced factory/ warehouse and vacant plots dominated the market activity with 2,778 and 2,661 transactions respectively, contributing 64.6% of the market share. Selangor led in both terraced factories and vacant plots, capturing 49.7% and 21.8%, respectively.

Going forward, AISB Group intends to seek further opportunities in the property development sector. The Board is confident that, with the competency and experience of Mr. Lim Yew Boon in the property development business, coupled with the assistance from experienced management team to be appointed as well as the various experts and consultants namely, the architect, engineers, surveyors, subcontractors and other consultants, AISB Group has the required expertise to operate the property development business. (Source: Our management)

5.0 RISK FACTORS

Below are the main risk factors relating to the Proposed Diversification, which may not be exhaustive:-

5.1 Diversification in operations risks

AISB Group is principally engaged in the manufacturing and selling of mild steel pipes and trading of construction related materials. As the Proposed Diversification would result in the diversification of AISB Group into new businesses, AISB Group is exposed to the risks of diversification in operations. The risks include, inter-alia, inefficiency of operations and dealing with competition.

Nevertheless, Mr. Lim Yew Boon being the Non-Independent Executive Director has been involved in the property development business for more than 10 years. He has through his career gained vast experience in planning and managing construction and development projects. With the wide experience of Mr. Lim Yew Boon together with the expertise of the management team, the Board is confident that it has the required expertise to operate the property development business.

5.2 Business Risks

As the Proposed Diversification forms part of AISB’s business expansion plan into the property

development industry, the Proposed Diversification is subject to certain risks inherent in property development. These include inter-alia, timely commencement or completion of projects, satisfactory performance of contractors, availability of labour, changes in general

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economic, business conditions, demand and changes in the legal and environmental framework within which the industry operates. The Company has never been involved in property development. Hence, the Company may be subject to challenges and initial risks arising from property development in which the Company does not have any track record to ensure the success of this venture. The management seeks to limit these risks through, inter-alia, keeping abreast with the latest development in the property development market, careful planning, continuous review and close supervision on projects and effective management to ensure cost containment and innovative marketing and pricing strategies to ensure the marketability of the buildings. However, no assurance can be given that any changes in these factors will not have any material adverse effect on the business operations performance and financial performance of AISB.

5.3 Borrowing risks

The Company intends to finance the Proposed Development Project vide a combination of internally generated funds and external bank borrowings. As such, the Company may be exposed to fluctuations of interest rate movements. Any significant increases in interest rate expenses may also adversely affect the financial performance of the Group. Apart from the working capital, the Board and the management of AISB Group will seek to mitigate the aforesaid risks by taking into consideration the gearing level, interest cost as well as internal cash requirements of the Group in determining the optimal funding structure for the Proposed Diversification.

5.4 Dependence on key personnel

As in any other business, AISB Group’s continued success depends largely on the abilities, skills, experience, competency of Mr. Lim Yew Boon and the management team. The departure or loss of the director and/or relevant key management personnel without suitable and timely replacement, or the inability of AISB Group to attract and retain other qualified personnel, could adversely affect AISB Group’s operations and hence, its revenue and profitability. We may not be able to replace such persons within reasonable period of time with individuals that possess equivalent expertise and experience, and hence may disrupt our business and impair our financial condition and results of operation. In addition, our continued success will also depend on our ability to attract and retain talented and qualified personnel at all levels to perform various functions, such as project management, contract management, finance and administration management and sales and marketing management. Recognising the importance of the key management, AISB Group will continuously adopt appropriate approaches to retain the key personnel as well as attract and retain qualified experienced personnel who are essential towards addressing AISB Group’s succession plan to

complement the management team. This will in turn help to ensure continuity and competency of the management team.

5.5 Risk of dependence on third party contractors

AISB Group’s property development business is dependent on the support of third party contractors to ensure the continuous supply of services and construction materials.

Although AISB Group is not dependent on any single third party contractor, any substantial limitation or sub-standard performance of the third party contractors and their inability to supply sufficient labour, whether skilled or unskilled, and sufficient quality services and building materials will inevitably disrupt the progress and/or quality of AISB Group’s operation and may

cause an adverse effects. Thus, the Group will focus on its selection of third party contractors engaged for its projects as well as implementing control procedures such as careful planning, closely monitoring of project progress and endeavouring prompt actions to ensure the overall positive progress of the projects.

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5.6 Competition risks

AISB Group’s property development business faces competition from other companies operating in the same business. The competitiveness of AISB Group is dependent on the ability of its management to price its products competitively, to provide quality and timely delivery of developments and to sell its properties. In addition, AISB Group may face some challenges as AISB Group is a new entrant in the property development industry and it lacks track record.

Nevertheless, AISB Group will continue to take measures to remain competitive in the property development industry by providing quality products and competitive pricing and actively seeking new opportunities in the property development sector.

5.7 Completion risks

The timely completion of the projects undertaken by the Company is dependent on many external factors including, inter alia, the timely receipt of requisite licenses, permits or regulatory approvals, availability of construction/building materials, equipment and labor, availability of financing and satisfactory performance of any sub-contractors appointed. Adverse developments in respect of these factors can lead to interruptions or delays in completing a project, which can consequently result in cost overruns that affect the Company’s

profitability and cash flows. However, the Company will strive to complete the projects within the specified time through close project planning and coordination. Nonetheless, there is no assurance that any change to the abovementioned factors will not result in delay in the completion of projects.

5.8 Political, economic and regulatory risks

Political and economic conditions as well as regulatory developments in Malaysia could have a material effect on the financial performance of the Company. Adverse political, economic and / or regulatory conditions or development including but not limited to risk of war, change in political leadership and environment, unfavorable changes in government policies, nationalisation and changes in interest rate or legislation. While the Company continues to take measures to mitigate these risks including close monitoring of the Government’s Master Plan in respect of long-term economic and development policies to stay ahead as well as capitalize on regulatory changes in the industry in which the Company operates, there can be no assurance that any changes to the political, economic and regulatory factors will not have a material and adverse effect on its business and prospect.

6.0 EFFECTS OF THE PROPOSED DIVERSIFICATION

6.1 Issued and paid-up share capital

The Proposed Diversification will not have any effect on the issued and paid-up share capital of AISB as it does not involve any issuance of new AISB shares.

6.2 NA and gearing

The Proposed Diversification is not expected to have any material effect on the consolidated net assets and gearing of AISB Group for the financial year ended 31 December 2014. However, the Proposed Diversification is expected to contribute positively to the net assets of AISB in future years and consequently improving its NA per share and gearing position.

The Proposed Diversification is not expected to have an immediate impact on AISB Group’s

gearing position. However, the future gearing position of AISB Group will depend on, amongst others, the manner of funding for the Proposed Development Project, as below:

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Audited as at 31.12.2013

RM’000

Unaudited as at

30.09.2014 RM’000

After financed by bank for the

Proposed Development

Project RM’000

Share capital Treasury shares Reserves, non-distributable

60,261 (3,725) 18,130

60,261 (3,725) 18,130

60,261 (3,725)

18,130 Retained earnings^ 33,404 30,619 44,219 Shareholders’ funds 108,070 105,285 118,885 Net asset per share (RM) 95.03 92.58 104.5 Total loans and borrowings (RM’000)# 43,837 37,525 37,525 Gearing (times) 0.41 0.36 0.32

Notes: Retained earnings RM’000 RM’000 Retained earnings before development project 30,619 Profit before tax from Jalan Pelaya Property Less: RPGT tax (tax loss relief available for corporate tax) ^

14,800 (1,200)

Profit after tax from Jalan Pelaya Property after completion in 2017 13,600 44,219 # Total loans and borrowings before completion of project

RM’000 Total loans and borrowings before development project 37,525 Add: Bank borrowings for Jalan Pelaya Property (for construction) 20,000 Total loans and borrowings with development project before completion of project

57,525

Total loans and borrowings after completion of project

RM’000 Total loans and borrowings before development project 57,525 Less: Settlement of the bridging loan from profit and realisation of land cost (20,000) Total loans and borrowings with development project after completion of project

37,525

^Paragraph 17A of Schedule 2 of the RPGT Act states that when a fixed asset comprising of real property

“is taken into trading stock of the company”, the real property is deemed to be disposed for RPGT

purposes. The 5% RPGT of approximately RM1.2 million is the expected tax on the land value as at 31 December 2014 over the purchase cost. Tax loss from the steel operation is available as tax relief on the expected profit from the property development business.

6.3 Shareholdings of the substantial shareholders

The Proposed Diversification will not have any effect on the substantial shareholders’

shareholdings as it does not involve any issuance of new AISB Shares.

6.4 Earnings and EPS

The Proposed Diversification is not expected to have any material impact on the consolidated earnings and earnings per share of AISB for the financial year ending 31 December 2015. However, the Proposed Diversification is expected to contribute positively to future earnings.

7.0 APPROVALS REQUIRED

The Proposed Diversification is subject to the approval of the shareholders of AISB at the forthcoming EGM.

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The Proposed Diversification is not conditional upon any other corporate exercise or transaction undertaken by AISB.

8.0 INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM

None of the directors and/or major shareholders of AISB and/or persons connected with them have any interest, direct or indirect, in the Proposed Diversification.

9.0 DIRECTORS’ RECOMMENDATION The Board, having considered all aspects of the Proposed Diversification, including but not limited to the rationale, justifications and financial effects, is of the opinion that the Proposed Diversification is in the best interest of the Company and the shareholders of AISB and accordingly, recommends that you vote in favour of the ordinary resolution to give effect to the Proposed Diversification which to be tabled at the forthcoming EGM.

10.0 OTHER INTENDED CORPORATE EXERCISES/SCHEMES ANNOUNCED BUT PENDING

COMPLETION There are no other corporate exercises that have been announced by the Company but have yet to be completed by the Company as at the LPD, save for the Proposed Private Placement of up to 11,372,457 new ordinary shares of RM0.10 each in AISB to independent third party investor(s) to be identified on the Main Market of Bursa Securities which was announced after the LPD, i.e. on 21 January 2015. The Proposed Diversification is not conditional or inter-conditional upon any other corporate exercise or scheme.

11.0 EXPECTED DATE OF COMPLETION OF THE PROPOSED DIVERSIFICATION

Barring any unforeseen circumstances and subject to all the required approvals being obtained, the Proposed Diversification is expected to be implemented by year 2015 and completed by year 2017. The Proposed Diversification will proceed with immediate effect upon AISB obtaining the shareholders’ approval at the forthcoming EGM.

12.0 EGM

The EGM, notice of which is enclosed with this Circular, will be held at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan on Monday, 16 February 2015 at 11.00 a.m. or at any adjournment thereof for the purpose of considering and, if thought fit, passing the ordinary resolution to give effect to the Proposed Diversification. If you are unable to attend and vote in person at the EGM, you should complete, sign and return the enclosed Form of Proxy, in accordance with the instructions printed thereon, as soon as possible and in any event so as to be deposited at the Registered Office of the Company at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before the time fixed for the EGM or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person should you subsequently wish to do so.

13.0 FURTHER INFORMATION Shareholders are advised to refer to the attached appendix for further information.

Yours faithfully, For and on behalf of the Board AMALGAMATED INDUSTRIAL STEEL BERHAD DATO' GHAZALI BIN MAT ARIFF Chairman, Independent Non-Executive Director

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APPENDIX I FURTHER INFORMATION 1. RESPONSIBILITY STATEMENT

The Directors have seen and approved this Circular and they collectively and individually accept full responsibility for the accuracy of the information given in this Circular. They confirm that after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement in this Circular misleading.

2. MATERIAL COMMITMENTS AND CONTINGENT LIABILITIES 2.1 Material commitments

As at the LPD, there are no material commitments incurred or known to be incurred by the Group that has not been provided for which upon becoming enforceable, may have a material effect on the financial position or results of the Group.

2.2 Contingent liabilities

As at the LPD, our Board is not aware of any contingent liabilities incurred or known to be incurred by the Group which may substantially affect the ability of the Group to meet its obligations as and when they fall due.

3. MATERIAL LITIGATION

As at the LPD, neither the Company nor the subsidiaries are engaged in any material litigation either as plaintiff or defendant, claim or arbitration, and our Board is not aware of any proceedings, pending or threatened, against our Company and/or our subsidiaries, of any fact likely to give rise to any proceedings which may materially and adversely affect the business or financial position of our Group.

4. MATERIAL CONTRACTS As at the LPD, the Group has not entered into any material contracts (not being contracts entered into in the ordinary course of business) within the two (2) years preceding the LPD.

5. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal office hours (except for public holidays) from the date of this Circular up to and including the date of the forthcoming EGM, at the Registered Office of the Company at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan:-

(i) The Memorandum and Articles of Association of AISB;

(ii) The audited consolidated financial statements of AISB Group for the past two (2) financial

years ended 31 December 2012 and 31 December 2013 and the unaudited quarterly results of AISB Group for the financial period ended 30 September 2014;

(iii) The SPA dated 3 August 1984; and

(iv) Valuation report dated 31 December 2013 and an opinion letter dated 24 December 2014 prepared by Raine & Horne International Zaki + Partners Sdn. Bhd..

AMALGAMATED INDUSTRIAL STEEL BERHAD (Company No. 9118-M)

(Incorporated in Malaysia under the Companies Act, 1965)

NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Amalgamated Industrial Steel Berhad (“AISB” or the “Company”) will be held at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan on Monday, 16 February 2015 at 11.00 a.m. or at any adjournment thereof for the purpose of considering and, if thought fit, passing the following resolution:- ORDINARY RESOLUTION - PROPOSED DIVERSIFICATION IN OPERATIONS CARRIED ON BY AMALGAMATED INDUSTRIAL STEEL BERHAD TO INCLUDE PROPERTY DEVELOPMENT BUSINESS (“PROPOSED DIVERSIFICATION”) “THAT approval be and is hereby given to the Company to diversify the business of the Group to include property development business. AND THAT the Directors of the Company be and are hereby authorised to give effect to the Proposed Diversification with full power to assent to any conditions, modifications, variations and/or amendments in any manner whatsoever as may be required by the relevant authorities and to take all such steps and to do all such acts, deeds and things and execute all such documents as they may deem necessary or expedient in the best interest of the Company.” BY ORDER OF THE BOARD Chin Ngeok Mui (MAICSA 7003178) Company Secretary Selangor Darul Ehsan 30 January 2015 Notes:- 1. In regard of deposited securities, only members whose names appears in the Record of Depositors as at 10 February 2015 (“General

Meeting Record of Depositors”) shall be eligible to attend and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his behalf. The

proxy may but need not be a member of the Company. A member may appoint any person to be his proxy without limitation and there shall be no restrictions as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

3. In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of an officer or attorney of the corporation duly authorised in that behalf.

4. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

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

6. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

7. The instrument appointing a proxy must be deposited at the Company’s registered office at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan not less than 48 hours before the time appointed for holding the meeting or at any adjournment thereof.

AMALGAMATED INDUSTRIAL STEEL BERHAD

(Company No. 9118-M) (Incorporated in Malaysia under the Companies Act, 1965)

FORM OF PROXY

CDS Account No. : Number of Shares held :

*I/We .....................………………………………………….Company/NRIC/Passport No.….……….………......................... of ………………………………………………………………………………………………………………………………… being a member of Amalgamated Industrial Steel Berhad hereby appoint:-

Name of proxy Address NRIC/ Passport No.

Proportion of Shareholdings (%)

or failing whom,

Name of proxy Address NRIC/ Passport No.

Proportion of Shareholdings (%)

or failing whom, the Chairman of the Meeting as my/our proxy/proxies to attend and vote for me/us and on my/our behalf at the Extraordinary General Meeting of the Company to be held at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan on Monday, 16 February 2015 at 11.00 a.m. or at any adjournment thereof, in the manner as indicated below:-

Ordinary Resolution For Against Proposed diversification in operations carried on by Amalgamated Industrial Steel Berhad to include property development business

(Please indicate with an “X” in the appropriate space how you wish your vote to be cast. Unless otherwise instructed, the proxy may vote or abstain from voting on any resolution as he/she may think fit.) If no name is inserted in the space provided for the name of proxy, the Chairman of the Meeting will act as my/our proxy. In case of a vote by show of hands, the first named proxy shall vote on my/our behalf.

..................................................................... Signature of Shareholder(s)/Common Seal

Dated this……..……. day of ……………….……, 2015 Notes:- 1. In regard of deposited securities, only members whose names appears in the Record of Depositors as at 10 February 2015 (“General

Meeting Record of Depositors”) shall be eligible to attend and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his behalf. The

proxy may but need not be a member of the Company. A member may appoint any person to be his proxy without limitation and there shall be no restrictions as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

3. In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of an officer or attorney of the corporation duly authorised in that behalf.

4. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

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

6. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

7. The instrument appointing a proxy must be deposited at the Company’s registered office at Lot 11A, Jalan Utas 15/7, Seksyen 15, 40000 Shah Alam, Selangor Darul Ehsan not less than 48 hours before the time appointed for holding the meeting or at any adjournment thereof.

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AFFIX STAMP

The Company Secretary AMALGAMATED INDUSTRIAL STEEL BERHAD (Company No. 9118-M) Lot 11A, Jalan Utas 15/7 Seksyen 15 40000 Shah Alam Selangor Darul Ehsan

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