On behalf of the Board of Directors, I hereby present the Annual Report and Audited Financial Statements of Lion Corporation Berhad ("LCB") for the financial year ended 30 June 2009.

Financial Performance

The sub-prime mortgage crisis which precipitated the worst worldwide recession since the Great Depression of the 1930s caused one of the most severe and prolonged contractions in demand for the steel industry. Commencing from September 2008, steel demand fell sharply by 60% to 80% as overall global demand softened. Megasteel Sdn Bhd ("Megasteel"), the country’s sole producer of hot rolled coils ("HRC") and the Group’s main contributor was forced to implement massive production cuts during the financial year under review in response to weakening demand and rising inventory levels. HRC prices which reached a record US$1,100 per metric ton in June 2008, plunged to around US$400 per metric ton in the first half of 2009. Due to the adverse operating conditions, the Group registered a significantly lower revenue of RM3.1 billion and a net loss of RM1.2 billion. Our associate, Lion Industries Corporation Berhad which is primarily involved in the manufacturing of long steel products and billets, also encountered weak demand and margin erosion.

Corporate Developments

The Proposed LCB Scheme was implemented on 27 February 2009. The Proposed Amsteel Corporation Berhad ("ACB") Offer was completed on 21 April 2009. Upon completion of the Proposed ACB Offer, the Company issued 36,734,534 LCB B Warrants in consideration for the 367,345,482 ACB Shares acquired. ACB therefore became a 67.7% owned subsidiary of LCB on 21 April 2009. The Company had subsequently on 26 June 2009 completed the disposal of 20% equity interest in ACB, comprising 266,234,962 ACB Shares, for a cash consideration of RM50,000; reducing the Company’s holding in ACB to 47.7% and resulting in ACB ceasing to be a subsidiary of the Company.

Corporate Social Responsibility

We recognise the importance of Corporate Social Responsibility ("CSR") as an integral part of business and incorporating a CSR framework into our business plan to enhance stakeholder confidence, accountability and transparency. CSR is an important component of good business practice aimed at improving society and the environment.

Society

In carrying out its business activities, the Group is mindful of its responsibilities as a corporate citizen, in contributing to society while enhancing the bottom-line and shareholders’ value. The Group is focused on assisting the community through education and medical care via the two Foundations established by the Lion Group of Companies of which the Group is a member. The Lion-Parkson Foundation disburses funds for education and charitable needs; and every year, awards scholarships and interest-free education loans to undergraduates in the local universities. The Lion Group Medical Assistance Fund provides financial assistance to needy Malaysians who require medical treatment including surgery, purchase of equipment and medication. The Fund also sponsors community health programmes such as medical camps and the purchase of dialysis machines for Dialysis Centres providing subsidised treatment to the less fortunate. The Group also supports the community by contributing to fundraising and donation drives and responding to the plight of disaster victims locally and elsewhere.

Environment

In keeping abreast with technology and industry developments, the Group seeks to uphold environmental concerns through strict compliance of its operations with the environmental laws and regulations governing the industries in which it operates. In the face of increasing demand for energy and other natural resources, the Group is also identifying alternative sources of energy such as natural gas, and opting for new technologies that are environmentally friendly, for our business operations. The Group subscribes to the safety, health and environment regulations with a systematic approach reinforced by constant training and monitoring to ensure the safety and well-being of our employees.

Prospects

The global economic and financial turmoil has adversely affected the Malaysian economy. However, the steel market is expected to stabilize in the second half of the calendar year boosted by the two stimulus packages announced by the Government together with the new iron and steel policy effective August 2009. Moving forward, we are confident that with all the measures taken to enhance the competitiveness of the steel industry by the Government, the Group will be able to achieve a set of satisfactory results in the next financial year.

Acknowledgement

On behalf of the Board, I would like to record our appreciation to all our shareholders, valued customers, financiers, business associates and Government authorities for their strong support, and to our employees for their dedication and commitment to the Group.

TAN SRI WILLIAM H.J. CHENG Chairman