CONTENTS. Audit Committee Report. Notice Of Annual General Meeting. Statement on Risk Management & Internal Control.

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2 CONTENTS 2 Notice Of Annual General Meeting 23 Audit Committee Report Group Structure Group Financial Highligths Corporate Information Profi le of Board of Directors Chairman s Statement Corporate Governance Statement Statement on Risk Management & Internal Control Financial Statements Analysis of Shareholdings List of Group Properties Proxy Form

3 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Forty-Sixth Annual General Meeting ( 46 th AGM ) of the shareholders of the Company will be held at Bukit Kiara Equestrian and Country Resort, Dewan Berjaya, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur, Malaysia on Monday, 30 May 2016 at 2.30 p.m. for the purpose of considering and, if thought fi t, passing the following resolutions: - AGENDA 1. To receive the Directors Report and the Audited Financial Statements of the Group and the Company for the fi nancial year ended 31 December 2015 and the Auditors Report thereon. Please refer Explanatory Note A 2. To approve the payment of a fi rst and fi nal single-tier dividend of 7% per ordinary share of 0.10 each in respect of the fi nancial year ended 31 December To approve the payment of Directors fees of 101,000 in respect of the fi nancial year ended 31 December 2015, an increase of 58,000 from the fi nancial year ended 31 December To re-elect the following Directors retiring in accordance with Article 83 of the Company s Articles of Association: - (a) Dato Wong Hok Yim; and (b) Mr Woo Hin Weng. 5. To re-elect En Minhat Bin Mion who is retiring in accordance with Article 90 of the Company s Articles of Association. 6. To re-appoint Tan Sri Dato Tan Hua Choon as Director of the Company pursuant to Section 129(6) of the Companies Act, 1965 to hold offi ce until the conclusion of the next Annual General Meeting of the Company. 7. To re-appoint Messrs PCCO PLT (AF: 1056) as Auditors of the Company and to authorise the Directors to fi x their remuneration. Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 (a) Ordinary Resolution 3 (b) Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 8. To transact any other business of the Company for which due notice shall have been received in accordance with the Companies Act, NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of the shareholders at the 46 th AGM, a fi rst and fi nal single-tier dividend of 7% per ordinary share of 0.10 each in respect of the fi nancial year ended 31 December 2015 will be paid on 16 June 2016 to depositors registered in the Record of Depositors of the Company as at 2 June A depositor shall qualify for entitlement only in respect of: a. Securities transferred into the Depositor s Securities Account before 4.00 p.m. on 2 June 2016 in respect of ordinary transfers; and b. Securities bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. 2 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

4 Notice of Annual General Meeting By Order of the Board Lim Lai Sam (MAICSA No ) Tan Shien Yin (MAICSA No ) Secretaries Kuala Lumpur 29 April 2016 Notes on Proxy Form 1. A member entitled to attend and vote is entitled to appoint one or more proxies (but not more than two) to attend and vote instead of him. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) proxies, the member shall specify the proportion of his shareholding to be represented by each proxy, failing which the appointment shall be invalid. 2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation s common seal or under the hand of an offi cer or attorney duly authorised. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. 3. Where a member of the Company is an authorised nominee as defi ned under the Central Depositories Act, it shall be entitled to appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple benefi cial 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. Where an authorised nominee or an exempt authorised nominee appoints more than one proxy, the proportion of shareholdings to be represented by each proxy must be specifi ed in the instrument appointing the proxies. 4. The Proxy Form shall be deposited with the Company s Share Registrars, Bina Management (M) Sdn Bhd, at Lot 10, The Highway Centre, Jalan 51/205, Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof. 5. Depositors whose names appear in the Record of Depositors on a date not less than three (3) market days before the Annual General Meeting shall be regarded as Member of the Company entitled to attend and vote at the Annual General Meeting or appoint a proxy to attend and vote on his behalf. Explanatory Note A This Agenda item is meant for discussion only as under the provisions of Section 169(1) of the Companies Act, 1965, the audited fi nancial statements do not require formal approval of members and hence, the matter will not be put forward for voting. Distribution of Refreshment Voucher A shareholder or proxy/corporate representative who represents the shareholder will be given a refreshment voucher upon registration. No door gift will be distributed. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 3

5 Group Structure As at 31 December 2015 MARCO HOLDINGS BERHAD (8985-P) MARCO CORPORATION (M) SDN BHD (13431-H) MARCO HERITAGE (M) SDN BHD ( V) MARCO WORLDWIDE SDN BHD ( P) Note: Companies which have not commenced active operations are excluded. 4 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

6 Group Financial Highlights For the fi nancial years ended 31 December Revenue 167, , , , ,153 Profi t Before Tax 26,296 24,533 19,737 19,276 19,063 Profi t After Tax and non-controlling Interest Attributable to Shareholders 19,862 18,056 15,041 14,872 14,221 Dividends-Net 7,380 2,109 20,033 10,276 14,345 Shareholders Fund 163, , , ,349 94,855 Earnings per Share Based on Profi t After Tax and non-controlling Interest 1.88 sen 1.77 sen 1.86 sen 2.04 sen 1.92 sen Net Assets Per Share sen sen sen sen sen Dividend Rate 7% 2% 24% 14% 15% REVENUE 000 PROFIT BEFORE TAX 000 SHAREHOLDERS FUND , , , , , ,296 24,533 19,737 19,276 19, , , , ,349 94, ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 5

7 Corporate Information BOARD OF DIRECTORS Tan Sri Dato Tan Hua Choon Siau Hock Cheng Dato Wong Hok Yim Woo Hin Weng Haji Azizzuddin Bin Haji Hussein Siew Cheau Sheang Ong Sim Jeng Aminuddin Yusof Lana Minhat Bin Mion (Chairman, Non-Independent Non-Executive Director) (Deputy Chairman) (Executive Director) (Non-Independent Non-Executive Director) (Independent Non-Executive Director) (Executive Director - Finance) (Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) AUDIT COMMITTEE NOMINATION COMMITTEE REMUNERATION COMMITTEE SENIOR INDEPENDENT NON- EXECUTIVE DIRECTOR Haji Azizzuddin Bin Haji Hussein (Chairman) Woo Hin Weng (MIA member) Minhat Bin Mion Tan Sri Dato Tan Hua Choon Haji Azizzuddin Bin Haji Hussein Minhat Bin Mion Tan Sri Dato Tan Hua Choon Woo Hin Weng Minhat Bin Mion Fax: (03) COMPANY SECRETARIES REGISTERED OFFICE Lim Lai Sam Tan Shien Yin 8-3, Jalan Segambut Kuala Lumpur Tel: (03) Fax: (03) PRINCIPAL BANKERS REGISTRARS AUDITORS STOCK EXCHANGE LISTING HSBC Bank Malaysia Berhad Malayan Banking Berhad Bina Management (M) Sdn Bhd Lot 10, The Highway Centre Jalan 51/ Petaling Jaya Selangor Darul Ehsan Tel: (03) Fax: (03) Messrs PCCO PLT (AF : 1056) (Chartered Accountants) Bursa Malaysia Securities Berhad Main Market Stock Name : MARCO Stock Code : ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

8 Profi le of Board of Directors Tan Sri Dato Tan Hua Choon aged 75, Malaysian Chairman, Non-Independent Non-Executive Director Tan Sri Dato Tan was appointed as Chairman and Director of the Company on 20 December On 20 March 2002, he was appointed to the Nomination Committee and Remuneration Committee of the Company. Tan Sri Dato Tan is a self-made businessman with vast experience in businesses and industries. He has been involved in a wide range of businesses which include manufacturing, marketing, banking, shipping, property development and trading. He has also built-up investments in numerous public listed companies and is currently the Chairman of the Boards of Jasa Kita Berhad, JKG Land Berhad (formerly known as Keladi Maju Berhad), FCW Holdings Berhad and Goh Ban Huat Berhad. He was also Chairman of the Board of GPA Holdings Berhad from 2000 to May Siau Hock Cheng aged 58, Malaysian Deputy Chairman Mr Siau was appointed as Executive Director of the Group on 20 December He was redesignated as Deputy Chairman on 1 August Mr Siau holds a Diploma in Marketing, Chartered Institute of Marketing, United Kingdom obtained in November 1984 and a degree in Business Administration from the National University of Singapore. He was a Product Executive with Lam Soon (M) Berhad in 1982 and left in 1985 to join Carlsberg Brewery (M) Berhad as the Product Manager. From 1991 to 1994, he was attached with the East Asiatic Co (M) Berhad where he was the General Manager for the non-food consumer product division. He has extensive experience in the fi eld of marketing and is responsible for the overall operations of the Group. He is also a Director of Marco Corporation (M) Sdn Bhd since 1996 and Director of several private limited companies. Dato Wong Hok Yim aged 50, Permanent Resident Executive Director Dato Wong was appointed to the Board of the Company on 20 December 2001 and subsequently became an Executive Director of the Company on 1 February Dato Wong graduated from DeMonfort University, Leicester, United Kingdom in 1992 with a Bachelor of Science combined studies degree majoring in Accounting and minoring in Law. Subsequently, he obtained Master in Business Administration in Finance from University of Hull, United Kingdom in He also sits on the Boards of GPA Holdings Berhad, Computer Forms (Malaysia) Berhad and several private limited companies. Woo Hin Weng aged 58, Malaysian Non-Independent Non-Executive Director Mr Woo was appointed to the Board and Audit Committee of the Company on 20 December He was later appointed to the Board s Remuneration Committee on 1 June He is a member of the Malaysian Institute of Accountants and a Fellow member of the Chartered Association of Certifi ed Accountants. He joined Jasa Kita Engineering Sdn Bhd, a wholly-owned subsidiary company of Jasa Kita Berhad, as the Financial Controller in Prior to joining Jasa Kita Berhad, he has held senior positions in accounting and fi nance. He is also a Director of Jasa Kita Berhad. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 7

9 Profi le of Board of Directors Haji Azizzuddin Bin Haji Hussein aged 58, Malaysian Independent Non-Executive Director Haji Azizzuddin was appointed to the Board and Chairman of the Audit Committee as well as member of Nomination Committee on 9 September He obtained a Higher National Diploma in Business Studies, majoring in Finance and Accounting from Stockport College of Technology (Manchester), United Kingdom in 1979 and did his practical training in London where he was attached to a Chartered Accountants fi rm from 1980 to Upon his return to Malaysia, he ventured into private business. From 1992 to 1997, he was a management consultant and at end 1997, he joined Myriad MISM (M) Sdn. Bhd., a software development and management information system consultancy company, as its Finance & Administration Director and left in He was a director of A&M Realty Berhad, a property development company from 1994 to He was a State Assemblyman for the constituency of Mengkebang, Kelantan representing Barisan Nasional from 2004 to Between 2000 to 2014, Haji Azizzuddin was a Board member of GPA Holdings Berhad, Jasa Kita Berhad, Keladi Maju Berhad (now known as JKG Land Berhad) and Malaysia Aica Berhad (now known as Sunsuria Berhad). Currently, he also sits on the Board of FCW Holdings Berhad. Siew Cheau Sheang aged 46, Malaysian Executive Director-Finance Ms Siew was appointed to the Board of the Company on 27 January She is an associate member of Chartered Institute of Management Accountants (CIMA) since 1997 and also a member of Chartered Global Management Accountants (CGMA) respectively. She obtained Master in Business Administration from University of Bath, United Kingdom in She joined Marco Corporation (M) Sdn Bhd, a wholly-owned subsidiary company of Marco Holdings Berhad as the Finance and Administration Manager in 2002 and was subsequently promoted to Financial Controller in Prior to joining Marco Corporation (M) Sdn Bhd, she had many years of experience in the accounting and fi nance fi elds from various industries. Ong Sim Jeng aged 40, Malaysian Executive Director Mr Ong was appointed to the Board of the Company on 1 August He holds a Bachelor Degree in Corporate Administration & Management from Curtin University of Technology, Western Australia. Mr Ong was a Marketing Executive of PDI, subsidiary brand of Padini Holding Bhd from October 1999 to June He left PDI and joined AV Business System Sdn Bhd, the distributor and dealers of projectors, as Sales Manager until June From July 2004 to February 2006, he was attached with IJO Communication Sdn Bhd, an advertising agency, as Business Development Manager. Prior to his appointment to the Company, Mr Ong was the General Manager of Questeam Sdn Bhd, the sole distributor of THEFACESHOP Korean brand products in Malaysia. 8 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

10 Profi le of Board of Directors Aminuddin Yusof Lana aged 67, Malaysian Independent Non-Executive Director En Aminuddin was appointed to the Board of the Company on 1 November He holds a Bachelor of Commerce and Administration Degree from Victoria University of Wellington, New Zealand. He is a Chartered Accountant of the New Zealand Society of Accountants and an Associate member of the Institute of Chartered Secretaries and Administrators of London and Wales. He had previously served as Director and later Group Managing Director of Renong Berhad from 1990 to 1994 and as Director and Group Managing Director of Faber Group Berhad from 1990 to He was the Managing Director of Metacorp Berhad from 1995 to He was also the Managing Director of UEM Builders Berhad from 2000 to Currently, he sits on the Board of PDZ Holdings Bhd and Goh Ban Huat Berhad. Minhat Bin Mion aged 69, Malaysian Independent Non-Executive Director En Minhat was appointed to the Board and Audit Committee of the Company on 2 November He was also appointed to the Board s Nomination Committee and nominated as the Senior Independent Non-Executive Director of the Company on the same date. En Minhat holds a Bachelor of Arts (Honours) degree from Universiti Malaya in 1972 and a post-graduate Diploma in Management Science from Institut Tadbiran Awam Negara (INTAN) in En Minhat had served in the Malaysian civil service from 1972 to 1991 in the administrative and diplomatic services. During his tenure as a civil servant, he served at the Kuala Lipis Land Offi ce, Ministry of Defence, INTAN, Public Service Department, Ministry of Works, and Ministry of Health. His last position was as Under Secretary in the Prime Minister s Department. Since 1992, he had conducted his own business concentrating on the travel, tourism and construction industries. He also sits on the Board of Jasa Kita Berhad. FURTHER INFOATION ON THE BOARD OF DIRECTORS Family Relationship None of the Directors have any family relationship with other Directors and major shareholders of the Company except for Tan Sri Dato Tan Hua Choon who is the father-in law of Dato Wong Hok Yim, a Director of the Company. Conflict of Interest None of the Directors have any confl ict of interest with the Company. Conviction of Offences None of the Directors have been convicted of any offence within the past 10 years, other than traffi c offences, if any. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 9

11 Chairman s Statement Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report of Marco Holdings Berhad ( Group or the Company ) for the fi nancial year ended 31 December THE YEAR IN REVIEW The year in review was challenging with an even more unfavourable operating environment compared to last year. Global growth has slowed even more. US s economy was growing albeit slow, Europe continent had been stagnant and China s economy had come to a hard landing with its economic growth slowing to a low single digit. Crude oil price had plunged on the back of sluggish economic activities and excessive supply from producing countries. The prospects of interest rate hikes by the Federal Reserve had caused the demand for the US Dollar to pick up signifi cantly. Emerging markets currencies were routed as a result, and geopolitics have become tenser. All these spell an early sign of a major economic crisis, with continuous readjustment of operating conditions required in many economies. In our home market of Malaysia, fi scal consolidation and changes to government policies such as the implementation of consumption-based Goods and Services Tax ( GST ), rationalization of fuel and sugar subsidy system, coupled with the downward pressure on commodity prices and volatile currency markets that witnessed the signifi cant depreciation of the Malaysian Ringgit to a level of 4.40 against the US Dollar, all have contributed to the hike of infl ation and weighed on private consumption. Companies are faced with margin compression as a result of intense market competition and elevated cost of doing business. Our Group s performance was affected by these adverse economic conditions and operations had been challenging across the Group. As volatility and uncertainty of the currency and commodity prices continued through the second half of 2015, coupled with the effect of GST, the market reacted cautiously and consumer demand slowed down drastically. During this period, we remained focused and aggressively carried out the planned sales and promotional activities to raise the awareness of our brands, at the same time containing expenses effectively. PERFOANCE Against this challenging macro environment, the Group performed well to register a revenue of 167 million, representing a growth of 10% as compared with Group s pre-tax profi t improved in tandem with the increase in revenue by 8% to 26.6 million; Group s net profi ts also increased by 5% to 18.9 million and this has resulted in improved earnings per share of 1.80 Sen. DIVIDENDS In line with the Group s commitment to enhance the shareholder value, the Board of Directors is pleased to recommend the payment of a fi rst and fi nal dividend of 7 percent per ordinary share of 0.10 each for the fi nancial year ended 31 December 2015 ( FY2015 ) which is subject to shareholders approval at the coming Annual General Meeting. REVIEW OF GROUP OPERATIONS Timepiece Division During the year, the Group s growth continued to be propelled by Timepiece sales. The sustained growth momentum of this division led to an increase in the revenue. Revenue for this division grew at a healthy pace of 12% as a result of higher consumer spending prior to the implementation of GST in the fi rst quarter of 2015, coupled with aggressive sales and promotional activities in view of the sluggish economy. This division accounted for 71% of the Group s total revenue, up by 4% from To support the growth of its timepiece division, our Group leveraged on the strength of the dealer base by organizing Casio Global Time Sync Conference during the year that promoted the major ranges of Casio watches to strengthen the dealers relationship and loyalty. Our Group also proactively ensures that we create and maintain product awareness by having digital and outdoor advertisement at prominent locations such as the airports and malls. Besides, it was a great honor again for us to be part of the main sponsor for Miss Astro Chinese International Pageant 2015 which was exclusively organized by Astro to showcase our products to increase brand awareness. On top of that, we also collaborated with local movie distributors and host preview screenings in conjunction with the release of movies to strengthen our products presence. 10 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

12 Chairman s Statement Calculator Division Calculator division continued to reinforce its brand image and market position by recording a 49% increase in its revenue in This division contributed around 15% of the Group s total revenue. During the year, intense marketing activities continued to take place and we penetrated into one of the major chain store and pushed the division s sales further. We also executed the year-long campaign in the label printer and label tape segment which had resulted in successful sales uplift. Besides, we also actively participated in school related programs and used digital channels to create new market and users. Digital Camera Division With the ever expanding digitalised world and maturing industry, this sector continued to be challenging in Contributing to around 10% of the Group s total revenue, the revenue of this division has dropped by 18% in Although Casio digital camera enjoys high levels of brand recognition among customers, it has nevertheless been affected by weak consumer sentiment. In view of this, our Group continued with the Casio Uni Tour to 5 main universities to offer different experiences to our customers by giving the touch and feel on Casio Exilim camera for students to try on. Besides, we also conducted survey, engaged Facebook and organized Mr. and Ms. Casio contest to create awareness and interaction among the young generation. With our continuous branding and community building efforts, we are pleased with the recognition of Casio Exilim as the best compact camera brand and the Readers Choice award in Tech Award organized by HWM Malaysia in Musical Keyboard Division This division continues to register growth and its revenue has increased by 6% in During the year in review, the division executed several initiatives to spur further growth and maximize returns for the Group. Amongst the many initiatives carried out, was the promotion of Casio digital musical instrument in major event such as Popular Book fair 2015, launching the Casio Celviano Grand Hybrid piano and collaboration with Rockschool on their piano syllabus using Casio Privia piano. Operation Efficiency The world is becoming more digital oriented and the ability to access the internet anytime and anywhere has created an insatiable consumer appetite for online information. It has also opened up the way consumers communicate and performing a myriad of tasks. To operate in this digital economy, we have hastened our efforts to use this enabler to improve our operational effi ciencies as well as sharpen our focus on our large targeted consumer base. Further to the barcoding system and online and mobile delivery status checking facility, we have revamped our website in 2015 to make it more appealing and functional to the increasingly discerning digital technology users who are driving the changes in consumption patterns. On top of that, our newly implemented online payment and online statement facilities for dealers have also ensured that we are on track to embrace technology to meet changing consumers demand. By the next milestone in the course of our journey, digital technology will be a key theme that will redefi ne the way we do business. THE YEAR AHEAD The Group has withstood a challenging FY2015 and we expect a worsening and possibly a demanding operating environment in the year ahead where uncertainties in the business environment continue, as GDP is forecasted to grow at a slower rate in We will remain committed to the long-term growth of the Group by taking pro-active approach to the management of our brands to grow our business. As the retail industry evolves, we will be focusing our resources on more digital based promotional activities to tap into the changing consumer communities. Towards this end, we will continue to improve our web base infrastructure for greater operational effi ciency and productivity. On top of our current business, we will continue to explore and identify new opportunities to expand on our brand and product portfolio. Although the market sentiment looks bleak in the short to medium term, we believe the expansion of brands and product portfolio will benefi t the Group in the long term. With that said, our Group will continue to monitor the markets closely and make prudent, welltimed decisions. APPRECIATION During the year, one of our Directors Dato Ismail Bin Hamzah has resigned from the Board. The Company has benefi tted immensely from his knowledge and experience and on behalf of the Board, I would like to express our gratitude to him for his past contribution. At the same time, I would like to welcome Encik Minhat Bin Mion as new member of the Board. I would like to thank the Board, Management team and staffs for their commitment and passion. I would also like to thank our shareholders, business partners, dealers and customers for their unwavering support as we take the Group into its next phase of growth. Tan Sri Dato Tan Hua Choon Chairman ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 11

13 Corporate Governance Statement Marco Holdings Berhad and its subsidiaries (the Group ) recognise the importance of adopting good corporate governance practices as a form of self-regulation to secure the Group s on-going growth and business prosperity, to increase investors confi dence and customers trust in the Group. In that respect, the Board has diligently taken practical steps for the Group to carry out its business operations within the required standard of corporate governance set out in the Malaysian Code on Corporate Governance 2012 ( the Code ) and will continue to endeavor to comply with the key principles and recommendations of the Code where the Board deems appropriate, in its effort to maintain good corporate culture for the best interest of the shareholders of the Company. The Board is pleased to present below on the manner in which the Group has applied the principles set out in the Code ( Principles ), having regard to the recommendations prescribed under each Principle, throughout the fi nancial year ended 31 December A. BOARD OF DIRECTORS i) The Board Marco Holdings Berhad is led and managed by an experienced and effective Board of Directors. The Board has within it professionals drawn from varied background in the fi elds of management, marketing, administration, fi nance, accounting and horology. Together, they form a team with broad range of skills, experience and knowledge to direct and manage the Group s business activities. The Board views that the current composition of the Board and its size constitute an effective Board in terms of background, qualifi cation, mix of skills and expertise suffi cient and optimum for the Board to discharge its duties and responsibilities effi ciently to bring a broader view to the Company s business activities. The Board is mindful of the importance of devoting suffi cient time to carry out their responsibilities, regularly updating their knowledge and enhance their skills. Each Director is expected to commit suffi cient time as and when required to discharge their responsibilities. Each Director of the Company does not hold more than fi ve (5) directorships in public listed companies, in line with the Main Market Listing Requirements ( MMLR ). During the fi nancial year ended 31 December 2015, the Board met twice where it deliberated and considered matters relating to the Group s fi nancial performance, operational issues, business development and strategies, property management, recurrent related party transactions, audit fi ndings and the relevant recommendations from the Internal Audit Consultants. All the deliberations and conclusions of the Board meetings were properly recorded by the Company Secretaries present at the meeting. The details of attendance of each Board Member at the Board Meetings held during the fi nancial year ended 31 December 2015 are set out below :- Director Status % of Attendance Tan Sri Dato Tan Hua Choon Chairman 100 Non-Independent Non-Executive Director Mr Siau Hock Cheng Deputy Chairman 100 Dato Wong Hok Yim Executive Director 100 Ms Siew Cheau Sheang Executive Director - Finance 100 Mr Ong Sim Jeng Executive Director ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

14 Corporate Governance Statement A. BOARD OF DIRECTORS (CONT D) i) The Board (cont d) Director Status % of Attendance Mr Woo Hin Weng Non-Independent 100 Non-Executive Director Haji Azizzuddin Bin Haji Hussein Independent Non-Executive Director 100 En Aminuddin Yusof Lana Independent Non-Executive Director 100 Dato Ismail Bin Hamzah Independent Non-Executive Director 100 (resigned w.e.f ) En Minhat Bin Mion Independent Non-Executive Director * (appointed w.e.f ) * There was no Board meeting held between the date of En Minhat s appointment to the Board and 31 December ii) Board Committees The Board has delegated specifi c responsibility to its three committees namely Audit, Nomination and Remuneration Committees, all of which have terms of reference to govern their respective responsibilities. The Board Committees will deliberate and examine issues within their defi ned terms of reference and report to the Board with their recommendation. Audit Committee The Audit Committee was established on 12 April The details of the Audit Committee Report are set out in pages 23 to 27 of this Annual Report. Nomination Committee The Nomination Committee, which was established on 20 March 2002 and comprising three Non-Executive Directors, two of whom are independent, is charged with the responsibility of proposing suitable new nominees for appointment as Directors and to fi ll the seats on Board Committees wherever necessary. It will also carry out the process of assessing the effectiveness of the Board as a whole, the Board Committees and the contribution of each individual Director. The present members of the Nomination Committee are:- 1) Tan Sri Dato Tan Hua Choon - Non-Independent Non-Executive Director 2) Haji Azizzuddin Bin Haji Hussein - Independent Non-Executive Director 3) En Minhat Bin Mion - Independent Non-Executive Director Generally, the Board, via the Nomination Committee, will review annually its required mix of skills, experience and other qualities, including core competencies of the Non-Executive Directors. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 13

15 Corporate Governance Statement A. BOARD OF DIRECTORS (CONT D) ii) Board Committees (cont d) Nomination Committee (cont d) The Nomination Committee ( NC ) met twice during the fi nancial year where all the NC members present at the meetings carried out assessment on the proposed appointment of a new Independent Non-Executive Director based on among others, the requisite criteria of qualifi cation, skills, experience, ability to contribute in group discussion and availability of time to be spent on the Group s affairs. The NC also performed the annual evaluation process on the effectiveness of the Board of Directors as a whole and its Committees as well as the contribution of each individual Director respectively based on specifi c sets of requisite creteria set out in the Performance Evaluation Survey Form for the assessment of the respective parties to ensure that they possess the appropriate balance of expertise and ability to lead the Group towards higher level of achievement. All the assessment and evaluation carried out were properly documented. Remuneration Committee The Remuneration Committee was established on 20 March 2002 and comprises wholly of Non-Executive Directors. Its main responsibility is to recommend to the Board the remuneration of the Executive Directors in all its forms, drawing from outside advice where necessary. The members of the Remuneration Committee are: - 1) Tan Sri Dato Tan Hua Choon Non-Independent Non-Executive Director 2) Mr Woo Hin Weng Non-Independent Non-Executive Director The Remuneration Committee met once during the fi nancial year where it reviewed the remuneration packages and benefi ts accorded to the Executive Directors as well as the Non-Executive Directors remuneration. The relevant Executive Directors do not participate in discussion to be held on their own remuneration packages. iii) Board Balance As at December 2015, the Board has 9 members, comprising 4 Executive Directors and 5 Non-Executive Directors, 3 of whom are Independent Non-Executive Directors. With this Board composition, the Company has fully complied with the MMLR, with regard to the constitution of the Board of Directors and the required ratio of independent directors, as well as the requirement for a Director who is a member of the Malaysian Institute of Accountants to sit on the Audit Committee. The profi le of each Board member is set out in pages 7 to 9 of this Annual Report. There is clear segregation of roles between the Chairman of the Board and Executive Directors to ensure that there is a balance of power and authority. Under the present structure of the Board, the Chairman is responsible to guide the Executive Directors in the oversight of management. The Executive Directors have the primary responsibility of communicating matters to the Board and to ensure major proposals by the Management are thoroughly deliberated and examined to take into account the overall interest of the shareholders and the communities in which the Group conducts its business; while the Management is accountable for the execution of the expressed policies and attainment of the Group s expressed corporate objectives and in running the Group s day-to-day business operations. The Code recommends that the board of directors of a public listed company should comprise of majority of independent directors where the chairman of the board is not an independent director. 14 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

16 Corporate Governance Statement A. BOARD OF DIRECTORS (CONT D) iii) Board Balance (cont d) The Board of Directors of the Company, whose Chairman is a Non-Independent Non- Executive Director notwithstanding, is of the opinion that the element of independence which currently exists is adequate to provide assurance that there is balance of power and authority on the Board. The Board has not set a boardroom or gender diversity target as it is of the view that the selection of suitable candidates as new Board members should be based on the candidates competency, knowledge, skills, experience, character, time commitment and other qualities in meeting the needs of the Group. However, the Group acknowledges the importance of boardroom diversity and has always been in support of non-discrimination on the basis of gender, age, race and religion. iv) Code of Conduct The Board is aware of the need to establish a corporate culture that would foster the common goal of achieving business profi tability, whilst cultivating ethical business conducts. The Board would develop and formalise a clear set of values that emphasise a culture encompassing sound business practices and good ethical conduct through a code of conduct and would ensure the implementation of appropriate internal systems by Management to support, promote and ensure its compliance of the code of conduct. v) Board Charter The Board has formalized and adopted a Board Charter, which provides guidance to the Board in relation to the Board s role, duties, responsibilities and authorities which are in line with the principles of good corporate governance. The Board Charter acts as a source of reference for the Board members, and the same is accessible by the public on the Company s website. vi) Supply of Information The Board of Directors has access to all information pertaining to the Group as well as to the advice of the Company Secretaries and independent professional advisers, if necessary, in appropriate circumstances at the Company s expense to enable the Board to discharge its duties with adequate knowledge on the matters being deliberated. It is also kept informed of the requirements and updates issued by the regulatory authorities from time to time. Prior to each scheduled Board Meeting, all the Directors were provided with the agenda for the meeting together with the detailed reports to enable them to have suffi cient time to peruse the papers and if necessary, obtain further information or clarifi cation from the Management to assess all aspects of the Group s performance and make informed decision. Senior management members were invited to attend these meetings to explain and clarify matters tabled. There is a formal schedule of matters specifi cally reserved for the Board s decision including, among other things, the major operational and fi nancial issues which include business strategies, investment policies, acquisitions and disposals of material assets and approval of fi nancial statements. Apart from the Board Meetings, the Board exercises control on matters that require its approval through Directors Circular Resolutions. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 15

17 Corporate Governance Statement A. BOARD OF DIRECTORS (CONT D) vii) Appointments to the Board Appointment of new Directors will be decided by the full Board after taking into consideration the recommendations of the Nomination Committee which had established a formal and transparent procedure for the appointment of new Directors to the Board. viii) Directors Training All the existing Directors have completed the Mandatory Accreditation Programme conducted by Research Institute of Investment Analyst of Malaysia whose role is now taken over by Bursatra Sdn Bhd. The Directors have also attended various accredited seminars under the Continuous Education Programme ( CEP ) prescribed by the MMLR. With the repeal of mandatory CEP under the MMLR, the Directors are encouraged to evaluate and determine their training needs from time to time so as to keep abreast with the latest statutory and regulatory requirements and the development in the industry for the enhancement of their skills and knowledge so as to enable them to discharge their duties effectively. Besides, the Directors also received updates on new regulations and statutory requirements from time to time. During the 2015 fi nancial year, the Directors have attended some talks/seminars/training courses which covered the following topics : Implementing Investor Relations Strategies; Board Chairman Series : Tone from the Chair and Establishing Boundaries; Tax & GST updates for the Property Development and Construction Industries; CG Breakfast Series With Directors Board Reward & Recognition; Development of key Performance Indicators (KPIs) to enhance Organisation Performance; Target Setting : Improvement and Development; Private Entity Reporting Standards to Malaysian Private Entities Reporting Standard 2016 Transition; Lead the Change : Getting Women on Boards; and Budget 2016 Highlights & Latest Tax Developments Newly appointed directors will be provided with a brief induction of the Group for an insight of the Group s business operations, past performances and corporate exercises undertaken. In addition, the Directors were also briefed by the Company Secretary from time to time on updates and changes of statutory requirements such as amendments to MMLR. ix) Re-election of Directors In accordance with the Company s Memorandum and Articles of Association, one third of the Directors, or if their number is not a multiple of three, the number nearest to one-third, are subject to retirement and re-election at each Annual General Meeting. Newly appointed Directors shall hold offi ce until the next Annual General Meeting and shall be eligible for reelection, but shall not be taken into account in determining the number of Directors who are to retire by rotation at such meeting. The Articles also provide that all the Directors are subject to retirement by rotation at least once every three (3) years. In addition, Directors whose age are seventy years and above are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

18 Corporate Governance Statement A. BOARD OF DIRECTORS (CONT D) x) Reinforce Independence The existence of the Independent Directors on the Board itself does not ensure absolute unbiased judgment as it can be compromised by familiarity with the other Board members. In this connection, the Nomination Committee has undertaken an annual assessment of the independence of the Independent Directors via disclosed interests and the criteria for assessing their independence are set out in the Performance Evaluation Survey Form used by the Nomination Committee in its annual assessment exercise. The Board does not have term limit for its Independent Directors and is of the view that the independence of the Independent Director should not be determined by their tenure of service. The Board is confi dent that the Independent Directors themselves, having provided all the relevant confi rmation on their independence, will be able to determine if they can continue to being independent and provide objective judgement on Board deliberations and decision making. xi) Company Secretaries The Company Secretaries are suitably qualifi ed and are members of professional body. The Company Secretaries play a supporting role to the Board to ensure the Company s compliance with the MMLR and other rules and regulations whichever applicable to the Company. The Secretaries also ensure that adequate records of proceedings of Board meetings and circular resolutions passed are taken and maintained in the statutory books of the Company. B. DIRECTORS REMUNERATION i) Level and make-up The Board ensures that the levels of remuneration offered for Directors are suffi cient to attract and retain people needed to run the Group successfully, while taking into consideration at the same time the state of the economy in general and the performance of the industry and the Group in particular. In the case of Executive Directors, the component parts of remuneration are structured to link rewards to corporate and individual performance. In the case of Non-Executive Directors, the level of remuneration refl ects the level of participation and responsibilities undertaken by the persons concerned. ii) Procedure The Remuneration Committee is responsible for recommending to the Board the policy framework of executive remuneration and the fi xing of the remuneration of individual Director. The determination of remuneration and benefi ts of Non-Executive Directors together with Non-Executive Chairman are also reviewed by the Remuneration Committee to ensure that the levels of remuneration offered for the Directors are suffi cient to attract and retain people needed to manage the Group successfully. The Directors concerned do not participate in making decisions on their own remuneration packages. Fees payable to the Directors are subject to the approval of the shareholders of the Company. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 17

19 Corporate Governance Statement B. DIRECTORS REMUNERATION (CONT D) iii) Disclosure The details of Directors Remuneration paid/payable to all the Directors of the Company during the fi nancial year ended 31 December 2015 are as follows:- a) Aggregate remuneration of Directors are categorised into the following components: Executive Non-Executive Directors Directors Total Category of Remuneration () () () (a) Fees - 101, ,000 (b) Salaries and other 1,388,868-1,388,868 emoluments (c) Bonuses 480, ,480 (d) Estimated value of benefi ts-in-kind Total 1,869, ,000 1,970,348 b) The number of Directors whose remuneration fall within the respective band is as follows : No. of Executive No. of Non-Executive Band () Directors Directors Total 1 50, , , , , , , , , , , , , , , , , Total C. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS i) Dialogue between Companies and Investors The Board recognises the importance of establishing a direct and effective line of communication with shareholders and investors through timely dissemination of information on the Group s performance and major corporate developments via appropriate channel of communication which includes distribution of annual reports, relevant circulars to shareholders, press releases (where appropriate), quarterly performance results and corporate announcements to Bursa Securities. 18 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

20 Corporate Governance Statement C. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS (CONT D) i) Dialogue between Companies and Investors (cont d) The Shareholders and the public can also obtain up-to-date information on the Group s various new products releases and business promotional activities by accessing its website at ii) Annual General Meeting The Annual General Meeting ( AGM ) is the principal forum for dialogue and interaction with shareholders. Notices of AGM and Extraordinary General Meetings ( EGM ) are distributed to shareholders within a reasonable and suffi cient time frame and are published in a nationally circulated daily newspaper. Shareholders are encouraged to attend and participate in the AGM where the Board presents the performance and progress of the business of the Group during the particular fi nancial year as contained in the Annual Report. They are given the opportunity to seek clarifi cations on the Group s performance, business activities and prospects as well as to communicate their expectations and concerns of the Group wherein, the Directors, Finance Director, and the External Auditors are available to respond to the queries and to provide explanation on the issues raised thereat. A press conference is usually held immediately after the AGM or EGM whereat the Board members inform the media of the resolutions passed, and answer questions posed on the Group s operations and plans. En Minhat Bin Mion has been appointed by the Board as the Senior Independent Non- Executive Director of the Company to whom concerns or enquiry regarding the Company and the Group may be conveyed, if any. D. ACCOUNTABILITY AND AUDIT i) Financial Reporting The Board takes the responsibility to ensure that the quarterly results and fi nancial statements of the Group present a balanced, fair and understandable assessment of the Group s position and prospects. The Board is assisted by the Audit Committee to oversee the Group s fi nancial reporting process for quarterly results and annual fi nancial statements to ensure correctness and adequacy prior to the release of them to Bursa Securities via the Bursa LINK. A statement by Directors of their responsibilities pursuant to Section 169 of the Companies Act, 1965 is set out in pages 21 to 22 of this Annual Report. ii) Internal Control The Board always places signifi cant emphasis on maintaining a sound system of internal control which encompasses fi nancial, operational and compliance controls and risk management for the Group to achieve its corporate objectives within an acceptable risk level so as to safeguard the Group s assets and shareholders investment. Such controls, by its nature, can only provide reasonable but not absolute assurance against material misstatement, loss or fraud. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 19

21 Corporate Governance Statement D. ACCOUNTABILITY AND AUDIT (CONT D) ii) Internal Control (cont d) Ongoing reviews are continuously performed by the Internal Audit Consultants throughout the year to identify, evaluate and manage signifi cant risk for assurance of adequate and effective internal controls within the Group. The Group s overview of the state of internal controls is presented in the Statement on Risk Management & Internal Control by the Board of Directors set out in pages 28 to 30 of this Annual Report. iii) Relationship with Auditors The Board through the Audit Committee, maintains a formal and transparent relationship with the External Auditors in seeking professional advice and ensuring compliance with the applicable accounting standards. Signifi cant audit issues which merit the special attention of the Board and the Audit Committee would be brought up and discussed at Audit Committee meetings. The role of the Audit Committee in relation to the External Auditors is described in pages 23 to 27 of this Annual Report. The Audit Committee would review and monitor the suitability and independence of the External Auditors. The External Auditors had confi rmed that they were, and had been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements. The External Auditors can be engaged to perform non-audit services that are not perceived to be in confl ict with their role as External Auditors. The Audit Committee is satisfi ed with the competence and independence of the External Auditors. The External Auditors are invited to attend general meetings of shareholders of the Company and are available to answer the shareholders enquiries on the conduct of the statutory audit and the preparation and contents of their audit report. E. OTHER COMPLIANCE INFOATION Options, Warrants or Convertible Securities Exercised The Company did not issue any options, warrants or convertible securities during the 2015 fi nancial year. Non-Audit Fees The amount of non-audit fees incurred for services rendered to the Group by the Company s Auditors or a fi rm or corporation affi liated to the Auditors fi rm for the 2015 fi nancial year was 21,785. Material Contracts During the fi nancial year, there were no material contracts entered into by the Group involving Directors and major shareholders interests. 20 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

22 Corporate Governance Statement F. CORPORATE SOCIAL RESPONSIBILITY The Group undertakes its corporate social responsibility ( CSR ) conscientiously by doing business in a responsible manner, for our shareholders, employees and business partners at large. The CSR contributions of the Group, amongst others, include :- Workplace The Group believes its human resources are an important asset and hence, constantly invest in its employees through, amongst others, the following: - As part of our human capital developments, the Group arranged relevant training programmes, courses and workshops focusing on job related training and management development to enhance employees job performance, upgrading of employees skill, knowledge and career development. Ensuring the safety, health and welfare of employees are not compromised at the workplace, Group s insurance policies, which cover medical and personal accident, are provided for all employees. Fulfi lling the obligation of making contributions to EPF, SOCSO and etc. In order to promote interaction among employees to strengthen the bonds of friendship and instill a sense of belonging, the Group organized various social and sports activities such as monthly birthday parties, annual dinners, Christmas party and other outings for our staffs and families on a yearly basis through its Sports Club. The Group presents long service awards to employees in appreciation of their loyalty and commitment to the Group. The Group also presents best salesman award to sales personnel in appreciation of their dedication and efforts in achieving good results for the Group. Recruitment of staff workforce is based on candidates competency, knowledge, skills, experience and attitude. The Group is committed to provide an environment where all staff, regardless of age, gender, ethnicity, race and religion, have equal opportunity to work together in achieving organisational goals. Marketplace The Group recognizes the importance of customers to its business and seeks to strengthen existing customer relationships through twice yearly Customer Satisfaction Survey; and constantly strive to meet and satisfy customers needs with new products and services. G. DIRECTORS RESPONSIBILITY STATEMENT IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS The Board is fully aware of its responsibility to ascertain that the presentations of the fi nancial statements of the Group and the Company are in line with the applicable approved accounting standards of Malaysia and the provisions of the Companies Act, 1965 ( the Act ) so as to give a true and fair view of the Group and the Company s state of affairs, results and cash fl ow for the fi nancial year ended 31 December As such, the Board ensured that in preparing the fi nancial statements of the Group and the Company for the fi nancial year ended 31 December 2015, the Group has adopted and consistently applied the relevant and appropriate accounting policies, made reasonable judgments and estimates that are prudent and on the going concern basis. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 21

23 Corporate Governance Statement G. DIRECTORS RESPONSIBILITY STATEMENT IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS (CONT D) Apart from that, the Board takes the general responsibilities of : ensuring that the Group keeps adequate accounting records which disclose with reasonable accuracy, the fi nancial position of the Group and which will enable them to ensure that the fi nancial statements comply with the Companies Act, 1965; and taking reasonable steps open to them to safeguard the assets of the Group to prevent and detect fraud and other irregularities. 22 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

24 Audit Committee Report The Marco Holdings Berhad s ( Marco ) Audit Committee was established by the Company s Board of Directors on 12 April COMPOSITION OF AUDIT COMMITTEE Chairman Haji Azizzuddin Bin Haji Hussein Independent Non-Executive Director Members Mr Woo Hin Weng (MIA Member) En Minhat Bin Mion Non-Independent Non-Executive Director Independent Non-Executive Director TES OF REFERENCE 1. Membership The Marco Audit Committee shall be appointed by the Board from amongst their number and shall consist of not less than 3 members. All the Audit Committee members must be non-executive directors, with a majority of them being independent directors. Alternate director(s) cannot be appointed as member(s) of the Committee. In the event of any vacancy in the Committee which results in non-compliance of paragraph 15.10(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Main Market LR ), the vacancy shall be fi lled within 3 months. At least one member of the Committee must be qualifi ed under paragraph (1)(c) of the Main Market LR. The Chairman of the Committee shall be an independent director appointed by the Committee. 2. Frequency of Meetings Meetings shall be held not less than four times in each fi nancial year. In addition, the Chairman of the Committee may call a meeting of the Committee upon the request of the External Auditors, to consider any matter the External Auditors believe should be brought to the attention of the Board and Shareholders. Majority members present in person who are Independent Non-Executive Directors shall be a quorum. 3. Secretaries The Company Secretaries shall be the Secretaries of the Committee. 4. Authority The Marco Audit Committee shall, at the Company s expense, have the following authority and rights:- 1. full and unrestricted access to any information and documents from the External Auditors and Senior Management of the Company and the Group which are relevant to the activities of the Company; 2. be provided with the necessary resources which are required to perform its duties; 3. the right to investigate into any matter within its Terms of Reference and as such, have direct communication channel with the External Auditors and persons carrying out the internal audit function of the Company; ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 23

25 Audit Committee Report TES OF REFERENCE (CONT D) 4. Authority (cont d) 4. the liberty to obtain independent professional advice and to secure the attendance of such external parties with relevant experience and expertise at its meeting if it considers this necessary; 5. be able to convene meetings with the External Auditors, the Internal Auditors or both, excluding the attendance of other directors and employees of the Group, whenever deemed necessary; and 6. may extend invitation to other non-member Directors and Offi cers of the Company to attend a specifi c meeting, whenever deemed necessary. 5. Duties The Marco Audit Committee shall report to the Board of Directors either formally in writing, or verbally, as it considers appropriate on the matters within its Terms of Reference. The duties of the Marco Audit Committee shall be :- 1. To discuss with the External Auditors before the audit commences, the nature and scope of the audit, audit plan and ensure co-ordination where more than one (1) audit fi rm is involved; 2. To review the audit report with the External Auditors; 3. To review the assistance given by the Company s Offi cers to the External Auditors and to meet with the External Auditors without executive board members presence at least twice a year; 4. To review the quarterly results and year-end fi nancial statements of the Company and the Group, prior to the approval by the Board, focusing particularly on: a. changes in or implementation of major accounting policies and practices; b. signifi cant and unusual events; c. signifi cant adjustments arising from the audit; d. the going concern assumption; and e. compliance with accounting standards, regulatory and other legal requirements. 5. To discuss problems and reservations arising from the interim and fi nal audits, and any matter the External Auditors may wish to discuss (in the absence of management, where necessary); 6. To review any related party transaction and confl ict of interest situation that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises questions of management integrity; 7. To review the adequacy of the scope, functions, competency and resources of the internal audit function and to ensure that it has the necessary authority to carry out its work; 8. To take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his/her reasons for resigning, if the staff member concerned so desires; 9. To review any internal audit programme, processes, the results of the internal audit programme, processes or investigations undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; 24 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

26 Audit Committee Report TES OF REFERENCE (CONT D) 5. Duties (cont d) 10. To review any evaluation made on the systems of internal controls with the Internal and External Auditors; 11. To recommend to the Board of Directors the appointment of the External Auditors and the level of their fees; 12. To consider any resignation or removal of the External Auditors, and to furnish such written explanation or representation from the External Auditors to Bursa Malaysia Securities Berhad; 13. To review and monitor the suitability and independence of External Auditors, to obtain written assurance from the External Auditors confi rming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements. 14. To review whether there is reason (supported by grounds) to believe that the External Auditors are not suitable for re-appointment; 15. The Chairman of the Audit Committee should engage on a continuous basis with Senior Management, the Head of Internal Audit and the External Auditors in order to be kept informed of matters affecting the Company; and 16. To undertake such other functions as may be agreed by the Marco Audit Committee and the Board. 6. Performance Review The term of offi ce and performance of the Marco Audit Committee and each of its members shall be reviewed by the Board of Directors of the Company at least once every three (3) years to determine whether the Audit Committee and members have carried out their duties in accordance with the Audit Committee s Terms of Reference. MEETINGS The Marco Audit Committee held four meetings with due notice of issues to be discussed circulated to the Committee Members during the fi nancial year ended 31 December, The attendance records of the Audit Committee members at the meetings are as follows : Date of Meeting % of Member 16/2/ /5/ /8/ /11/2015 Attendance Haji Azizzuddin Bin Haji Hussein 100 Mr Woo Hin Weng 100 En Minhat Bin Mion (appointed w.e.f. 2. November 2015) Dato Ismail Bin Hamzah (resigned w.e.f. 25 September 2015) N/A N/A N/A 100 N/A 100 N/A : Not applicable as the person concerned was not a member of the Audit Committee on the particular dates shown. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 25

27 Audit Committee Report MEETINGS (CONT D) The Executive Directors and Internal Audit Consultants were usually invited to attend the Marco Audit Committee meetings to brief on the activities involving their areas of responsibilities. The Audit Committee was also briefed by the External Auditors on their annual audit fi ndings and new standards introduced by the Malaysian Accounting Standards Board ( MASB ), where applicable. The proceedings and conclusions of each Audit Committee meeting were documented and distributed to each member of the Audit Committee and also to the other non-audit Committee Board members. ACTIVITIES OF THE COMMITTEE During the fi nancial year ended 31 December 2015, the activities carried out by the Audit Committee included, among others, the following:- a. Reviewed the unaudited quarterly reports on the consolidated results and fi nancial statements prior to tabling the same for the Board of Directors adoption. b. Reviewed the assistance given by the Management to the External Auditors. c. Reviewed the adequacy of the existing policies, procedures and systems of internal control of the Group. d. Reviewed the Group Budget for the fi nancial year ending 31 December e. Reviewed various variances arising from the comparisons of the Group s year-to-date actual results against the budget and from comparison of year-to-date results for year 2015 over f. Reviewed the Internal Audit Consultants audit fi ndings on the following aspects of the Group s business processes : Sales & Marketing; and After Sales Service Warranty Claim g. Reviewed the External Audit Report in relation to signifi cant audit and accounting matters for the fi nancial year ended 31 December 2014 prepared by the External Auditors. h. Discussed with the External Auditors on audit issues for the fi nancial year ended 31 December 2014, without the presence of the Executive Directors and Senior Management. i. Reviewed the Audit Plan in relation to the External Auditors audit program and some updates on new accounting standards/interpretations/amendments applicable to the Group s fi nancial statements for the 2015 fi nancial year. INTERNAL AUDIT FUNCTION The Group has outsourced its internal audit function to external consultants. The principal objective of the internal audit function is to assist the Board of Directors of Marco in maintaining a sound system of internal controls within the Group in order to safeguard the shareholders investment and the Group s assets. The internal audit function reports directly to the Marco Audit Committee. 26 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

28 Audit Committee Report INTERNAL AUDIT FUNCTION (CONT D) The internal audit function assists the Management to identify, evaluate and update signifi cant risks and develop risks based audit plans for approval by the Audit Committee. The scope of the internal audit function covers the audits of all units and operations of the Group. The total cost incurred for the internal audit function of the Group in respect of the 2015 fi nancial year amounted to 56,000. A summary of the activities performed by the internal audit consultants during the fi nancial year 2015 is set out in pages 28 to 30 of this Annual Report. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 27

29 Statement on Risk Management & Internal Control In compliance with Paragraph 15.26(b) of Bursa Securities Main Market Listing Requirements and the Statement on Risk Management & Internal Control - Guidelines for Directors of Public Listed Issuers, the Board is pleased to present the Statement on Risk Management and Internal Control which outlines the nature and scope of risk management and internal control of the Group during the fi nancial year ended 31 December Board s Responsibility The Board recognises its overall responsibility for the adequacy and effectiveness of the risk management framework and system of internal controls within the Group. However, the Board is equally aware that such systems and processes are designed to manage the Group s risks within an acceptable risk appetite, rather than eliminate the risk of failure to achieve the policies, goals and objectives of the Group. In this regard, the risk management framework and internal control system can only provide reasonable assurance, and not absolute assurance against material misstatement of fi nancial information and records or against fi nancial losses or fraud. The Board, through its Audit Committee, reviews the adequacy and effectiveness of the risk management and internal control system in relation to the internal audits conducted. The internal audit observations, together with Management s response and propose action plans are presented to the Audit Committee on a quarterly basis. In addition, the review of the internal audit reports is part of the agenda of the Board meeting. 2. Risk Management Framework The Group adopts an enterprise wide risk management approach and all the active businesses of the companies within the Group are considered and categorized in accordance with their main functional activities. This process has been in place for the fi nancial year under review and up to the date of approval of the annual report and fi nancial statements. The main features of the risk management process are as follows: a) Establish the context of risk in relation to the Group s risk appetite The amount of risk, on a broader level, acceptable to the Group in pursuing the various business objectives is determined by the Senior Management. b) Risk identifi cation The risks are identifi ed through a series of interviews and discussions with the key personnel and management of the Group. The risk identifi cation process includes consideration of both internal and external environment factors. External environmental factors include economic and political changes, changes in the behavior of competitors, new regulations or legislation and technological developments. Internal factors include changes in key personnel, introduction of new or revision of existing policies and procedures. c) Assess the potential impact and likelihood of the risks identifi ed and hence their risk levels The impact of the risk is rated on a scale of A to E (A to indicate the lowest impact and E to indicate the highest impact). Whereas the likelihood of a risk is rated on a scale of 1 to 5 (1 to indicate lowest probability and 5 to indicate the highest probability). The risk level shall be rated low, medium and high and be determined according to the Risk Analysis Matrix. d) Ongoing monitor and review risk mitigating measures, risk levels and emerging risks All the identifi ed risk and mitigating measures are documented into a Business Risk Profi le. The Business Risk Profi le of the Group is updated on an ongoing basis and approved by the Board. 28 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

30 2. Risk Management Framework (cont d) d) Ongoing monitor and review risk mitigating measures, risk levels and emerging risks (cont d) The Business Risk Profi le serves as a tool for the heads of department/business unit for managing key risks applicable to their areas of business. All key risks and issues are regularly reviewed and resolved by the Management team at regular meeting. Through these mechanisms, key risks identifi ed in the Business Risk Profi le are assessed in a timely manner and control procedures are re-evaluated accordingly in order to ensure that the key risks are mitigated to an acceptable level. The Internal Audit Function reviews the effectiveness and adequacy of control procedures adopted by the Company on a regular basis in mitigating the key risks identifi ed in the Business Risk Profi le. Any weaknesses noted during the audit review are reported to the Audit Committee. Through these mechanisms, the Audit Committee can be assured that the key risks of the Company are regularly reviewed and appropriately managed to an acceptable level. 3. System of Internal Controls Statement on Risk Management & Internal Control The key elements of the Group s system of internal controls that the Board has established in reviewing the adequacy and effectiveness of the risk management and internal control system are as follows: The Group has an appropriate organizational structure for planning, executing, controlling and monitoring business operations in order to achieve the Group s business objectives. Lines of responsibility and delegations of authority are clearly defi ned. To ensure the uniformity and consistency of practices and controls within the Group, Standard Operating Procedures have been formalized and documented for the key business processes. The trading operations are accredited with ISO9001:2000 international quality system standard and such quality management system provides the Group with improved control of key processes and a foundation for improving quality and customer satisfaction. The policies and procedures are regularly updated to refl ect changes in the operations and business processes. The Management establishes Key Performance Indicators (KPIs) to monitor certain key processes of the Group. Business units prepare an annual business plan and budget and present it to the Board for approval. Any variances of actual performance against budget are monitored and reported on a monthly basis to Management and quarterly to the Board. Appropriate actions are devised to address any areas of concern arising from the regular review. Financial results are prepared and presented to Management and to the Board and Audit Committee in a timely manner for effective monitoring and decision making. The Executive Directors act as the channel of communication between the Board and the Management. The Executive Directors are empowered to manage the businesses of the Group and implement the Board s directives and policies. Capital expenditures and investment options are referred to the Board for review and approval. Regular internal audit visit are carried out to provide independent assurance on the effectiveness of the Company s system of internal controls and advising the Management on areas for further improvements. The Audit Committee meets at least four times a year. The Committee meets with the Internal Auditors and External Auditors regularly to review their reports. The Audit Committee reviews the actions taken to rectify the fi ndings in a timely manner, and to evaluate the effectiveness and adequacy of the Group s internal control systems. ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P) 29

31 3. System of Internal Controls (cont d) Through the establishment of sound internal control, which includes monitoring reporting systems, the Board reports that the existing system of internal controls is satisfactory. No material losses have occurred during the fi nancial year under review as a result of weakness in internal control. The Board, together with the Management continue to take measures to strengthen the control environment. 4. Assurance from Management Statement on Risk Management & Internal Control In accordance with the Statement on Risk Management & Internal Control Guidelines for Directors of listed issuers, the Board has received assurance from the Executive Directors that to the best of their knowledge the risk management and internal control system of the Group are operating effectively and adequately, in all material respects, based on the risk management and internal control described above. 5. Review of the Statement by External Auditors As required by Paragraph of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the External Auditors have reviewed this Statement on Risk Management & Internal Control. The External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal control system and risk management of the Group. 30 ANNUAL REPORT 2015 MARCO HOLDINGS BERHAD (8985-P)

32 FINANCIAL STATEMENTS 32 Directors Report 41 Consolidated Statement of Cash Flows Statement by Directors Statutory Declaration Independent Auditors Report Consolidated Statement of Profi t or Losses and Other Comprehensive Income Statement of Profi t or Losses and Other Comprehensive Income Statement of Financial Position Statement of Changes In Equity Statement of Cash Flows 39 Consolidated Statement of Financial Position 47 Notes to the Financial Statements 40 Consolidated Statement of Changes In Equity