CORPORATE INFORMATION 2 DIRECTORS PROFILE 3 CHAIRMAN S STATEMENT 11 CORPORATE GOVERNANCE STATEMENT 12 AUDIT COMMITTEE REPORT 19

Transcription

1

2 CONTENTS CORPORATE INFORMATION 2 DIRECTORS PROFILE 3 CHAIRMAN S STATEMENT 11 CORPORATE GOVERNANCE STATEMENT 12 AUDIT COMMITTEE REPORT 19 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL 25 ADDITIONAL COMPLIANCE STATEMENT 26 FINANCIAL STATEMENTS Directors Report 28 Statement by Directors and Statutory Declaration 32 Independent Auditors Report 33 Statements of Profit & Loss and Other Comprehensive Income 35 Statements of Financial Position 36 Consolidated Statement of Changes in Equity 37 Statement of Changes in Equity 38 Statements of Cash Flows 39 Notes to Financial Statements 41 1 LIST OF PROPERTIES 80 ANALYSIS OF SHAREHOLDINGS 81 NOTICE OF EIGHTEENTH ANNUAL GENERAL MEETING 83 PROXY FORM Enclosed ANNUAL REPORT 2014

3 CORPORATE INFORMATION BOARD OF DIRECTORS Dato Izham Bin Yusoff Independent Non-Executive Chairman Dato Tan Seng Hu Managing Director Abdul Latif Bin Abdul Rahim Non-Independent Non-Executive Director Mohd Fikry Bin Rahman Independent Non-Executive Director Chen Hian Loong Executive Director Yee Chee Yee Yen Non-Independent Non-Executive Director Ho Fook Meng Independent Non-Executive Director Tony Tan Han (Chen Han) Independent Non-Executive Director 2 AUDIT COMMITTEE Mohd Fikry Bin Rahman - Chairman Independent Non-Executive Director Ho Fook Meng Independent Non-Executive Director Yee Chee Yee Yen Non-Independent Non-Executive Director NOMINATION COMMITTEE Dato Izham Bin Yusoff - Chairman Independent Non-Executive Director Abdul Latif Bin Abdul Rahim Non-Independent Non-Executive Director Ho Fook Meng Independent Non-Executive Director REMUNERATION COMMITTEE Dato Izham Bin Yusoff - Chairman Independent Non-Executive Director Abdul Latif Bin Abdul Rahim Non-Independent Non-Executive Director Ho Fook Meng Independent Non-Executive Director REGISTERED ADDRESS No : 149A, 149B, 151B Persiaran Raja Muda Musa Port Klang, Selangor Darul Ehsan. Tel : Fax : COMPANY SECRETARIES Wan Haslinda Wan Yusoff MAICSA Sangar Nallappan MACS AUDITORS STYL Associates AF 1929 Chartered Accountants Unit No : 902, 9th Floor Block A, Damansara Intan No : 1, Jalan SS 20/ Petaling Jaya Tel : / / Fax : SHARE REGISTRAR Tricor Investor Services Sdn Bhd Level 17, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra Kuala Lumpur. Tel : Fax : is.enquiry@my.tricorglobal.com PRINCIPAL BANKERS Public Bank Berhad CIMB Bank Berhad STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad BUSINESS ADDRESS STOCK NAME - RAYA 3rd Floor, No: 66, Jalan Kampung Attap, Kuala Lumpur Tel : Fax : Website : STOCK CODE ANNUAL REPORT

4 DIRECTORS PROFILE DATO IZHAM BIN YUSOFF Independent Non-Executive Chairman Malaysian, aged 48, was appointed to the Board on 1 October 2013 as an Independent Non-Executive Director of the Company. He was re-designated as Independent Non-Executive Chairman on 14 May Qualifications & Working Experience and Occupation He graduated with Bachelor of Accounting and Master of Business Administration (Accounting and International Business), both from University of Miami, United States of America. He is also an Associate Member of Institute of Internal Auditors Malaysia. Dato Izham has more than 20 years experiences in large and multinational companies with various senior management positions, specialising in corporate planning and finance. He was the Managing Director and Chief Executive Officer of Percetakan Nasional Malaysia Berhad (PNMB) from February 2010 until 31 January He was Executive Director / Chief Operating Officer of Ninebio Sdn Bhd. He was also the Managing Director / Chief Operating Officer of KUB Malaysia Berhad and Amanah Rakyat Berhad. He sat on numerous listed companies and was the former Director of Bursa Malaysia Securities Berhad. Board Committees He was appointed as Chairman of the Nomination and Remuneration Committee on 30 June Family Relationship with any Director and / or Major Shareholder of the Company He has no family relationship with other Directors or major shareholders of the Company. 3 Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Directorship of Public Companies (if any) Currently he is the Managing Director of Bina Darulaman Berhad and a Director of Malaysian Alliance of Corporate Directors (MACD). Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. Shareholdings in the Company He does not hold any shares in the Company. No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 During the financial year, he attended five out of seven meetings of the Board. ANNUAL REPORT 2014

5 DIRECTORS PROFILE (Cont d) DATO TAN SENG HU Managing Director Malaysian, aged 38, was appointed as an Executive Director of the Company on 19 June 2014 and he was re-designated as the Managing Director on 30 June Qualifications & Working Experience and Occupation He graduated with a Bachelor of Arts, Business Administration, Human Resource and Personnel from the Washington State University in 2001 and obtained a Master of Science, Economics from the University of Idaho in He has been involved in the construction industry for eight years and is currently managing his own project management company since Board Committees He is not a member of any Board Committee of the Company. Family Relationship with any Director and / or Major Shareholder of the Company Dr Tan Cheng Kiat, being his father, is a substantial shareholder of the Company and Mr Yee Chee Seng, Non-Independent Non-Executive Director of the Company is his uncle. 4 Directorship of Public Companies (if any) He is an Alternate Director to Dr Tan Cheng Kiat, a Founding Director of Bina Puri Holdings Bhd. Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 During the financial year, he attended four out of four meetings of the Board. Shareholdings in the Company His shareholding is disclosed on page 81 of the Annual Report ANNUAL REPORT

6 DIRECTORS PROFILE (Cont d) CHEN HIAN LOONG Executive Director Malaysian, aged 43, is an Executive Director of the Company. He was appointed to the Board on 30 June Qualifications & Working Experience and Occupation He holds a Diploma In Business and has been involved in tele-communication, technical and sales for more than twenty (20) years and is currently managing his own IT Company. Board Committees He is not a member of any Board Committee of the Company. Family Relationship with any Director and / or Major Shareholder of the Company He has no family relationship with other Directors or major shareholders of the Company. Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Directorship of Public Companies (if any) He does not hold any directorships in other public companies. 5 Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. Shareholdings in the Company As at the date of this Annual Report, he does not hold any shares in the Company No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 During the financial year, he attended three out of three meetings of the Board. ANNUAL REPORT 2014

7 DIRECTORS PROFILE (Cont d) ABDUL LATIF BIN ABDUL RAHIM Non-Independent Non-Executive Director Malaysian, aged 57, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 1 October Qualifications & Working Experience and Occupation He holds a Diploma in Business Administration. Encik Abdul Latif began his career in year 1982 with Malaysian Tobacco as a Senior Executive. In year 1992, he joined Regal Marketing Sdn. Bhd., as Business Executive and worked until He is currently the General Manager of Azeera Management Consultant (M) Sdn Bhd which he has joined since year Board Committees He was appointed as Members of the Nomination and Remuneration Committee on 30 June Family Relationship with any Director and / or Major Shareholder of the Company He has no family relationship with other Directors or major shareholders of the Company. 6 Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Directorship of Public Companies (if any) He does not hold any directorships in other public companies. Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. Shareholdings in the Company He does not hold any shares in the Company. No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 During the financial year, he attended seven out of seven meetings of the Board ANNUAL REPORT

8 DIRECTORS PROFILE (Cont d) CAPTAIN TONY TAN HAN (CHEN HAN) Independent Non-Executive Director Singaporean, aged 39, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 24 March Qualifications & Working Experience and Occupation He obtained his Diploma in Nautical Studies from Singapore Polytechnics in In 2009, he obtained a Specialist Diploma in workplace Safety and Health from Ngee Ann Polytechnics. Captain Tony Tan has a Certificate of Competency ( COC ) Class 1 Master Mariner (foreign-going) issued by the Maritime and Port Authority of Singapore and is also a Registered Safety Officer issued by the Ministry of Manpower in Captain Tony Tan started his career as a Marine Superintendent/Senior Marketing Executive with EZRA Marine Services Pte Ltd in He joined Hako Offshore Pte Ltd in 2010 as a Senior Safety Manager/ Designated Person Ashore. He established Skips Marine Services in Singapore in 2011 and is the Managing Director. Captain Tony Tan is well versed in the maritime industry and has over 18 years of professional marine experience in both sea-going and shore-based operations which include container, tanker, oil and gas, offshore fleet and ship management, ship operations and marine safety operations. He is also involved in audit, incident investigation as well as implementation of International Safety Management ( ISM ) appointments. Board Committees 7 He is not a member of any Board Committee of the Company. Family Relationship with any Director and / or Major Shareholder of the Company He has no family relationship with other Directors or major shareholders of the Company. Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Directorship of Public Companies (if any) He does not hold any directorships in other public companies. Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. Shareholdings in the Company He does not hold any shares in the Company. No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 Not Applicable as he was appointed on 24 March Since March 2015, he had attended one out of one meeting of the Board held from March 2015 to April ANNUAL REPORT 2014

9 DIRECTORS PROFILE (Cont d) HO FOOK MENG Independent Non-Executive Director Malaysian, aged 57, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 24 March Qualifications & Working Experience and Occupation He graduated from the University of Malaya, Kuala Lumpur with a Bachelor of Economics (Honours) degree in 1981 and holds a Masters of Business Administration from Ken State University, Ohio, USA. Mr Ho started his career in the banking and financial services industry in He started as a Bank Officer at Bank of Commerce (M) Berhad in In 1993, he joined United Overseas Bank as a Team Leader in the Commercial Banking Department. Subsequently, Mr Ho joined AmBank (M) Berhad as a General Manager in the Business Banking Division from 2002 to Mr Ho has over 30 years experience in the banking and financial services industry of which he specialized in emerging mid-cap corporations. As a senior banker, he is very often tapped for his expertise and wide ranging experience by his banking clients and investors in their growth and expansion strategies. He has established a very wide business network that was built over the years as banker and advisor to a wide range of his banking customers. 8 Board Committees He was appointed as Members of the Audit Committee, Nomination and Remuneration Committee on 24 March Family Relationship with any Director and / or Major Shareholder of the Company He has no family relationship with other Directors or major shareholders of the Company. Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Directorship of Public Companies (if any) He does not hold any directorships in other public companies. Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 Not Applicable as he was appointed on 24 March Since March 2015, he had attended one out of one meeting of the Board held from March 2015 to April Shareholdings in the Company His shareholding is disclosed on page 81 of the Annual Report ANNUAL REPORT

10 DIRECTORS PROFILE (Cont d) YEE CHEE YEE YEN Non-Independent Non-Executive Director Malaysian, aged 75, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 27 January Qualifications & Working Experience and Occupation He is a qualified Accountant since 1965 and he is also a Fellow Member of the Chartered Institute of Management Accountants of United Kingdom ( U.K). He has worked as an Internal Auditor for 2 years and later acquired extensive experience in accounting and finance working for 28 years in FELDA (Federal Land Development Authority) in which he held the senior positions as Financial Controller and Finance Director. He retired from FELDA in 1995 as the Deputy Director-General. Between year , he was a Board Director and Chairman of Audit Committee of Prestar Resource Bhd, a listed company in Bursa Malaysia. Board Committees He was appointed as Member of the Audit Committee on 27 January Family Relationship with any Director and / or Major Shareholder of the Company Mr Yee Chee Seng is the Uncle to Dato Tan Seng Hu, the Managing Director of the Company. 9 Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Directorship of Public Companies (if any) He does not hold any directorships in other public companies. Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. Shareholdings in the Company He does not hold any shares in the Company. No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 Not Applicable as he was appointed on 27 January Since January 2015, he had attended two out of two meetings of the Board held from January 2015 to April ANNUAL REPORT 2014

11 DIRECTORS PROFILE (Cont d) MOHD FIKRY BIN RAHMAN Independent Non-Executive Director Malaysian, aged 29, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 18 June Qualifications & Working Experience and Occupation He graduated with Bachelor of Engineering Technology in Supply Chain Management. He started his career at Seicom System Sdn Bhd as a Project Manager responsible in managing a project development from initiation stage to its closure. In September 2013 till todate, he is serving as Senior Procurement Executive at Halliburton Services (M) Sdn Bhd responsible in monitoring, processing and controlling all procurement activities. Board Committees He was appointed as a member of Audit Committee on 18 June 2014 and was re-designated as Chairman of the Audit Committee on 23 June Family Relationship with any Director and / or Major Shareholder of the Company 10 He has no family relationship with other Directors or major shareholders of the Company. Conflict of Interest with the Company He has no conflict of interest with the Company or its subsidiary companies. Directorship of Public Companies (if any) He does not hold any directorships in other public companies. Conviction of Offences Within the last 10 years, he has not been convicted for any offences other than traffic offences, if any. Shareholdings in the Company He does not hold any shares in the Company. No. of Board Meetings Attended from 1 January 2014 to 31 December 2014 During the financial year, he attended three out of four meetings of the Board ANNUAL REPORT

12 CHAIRMAN S STATEMENT Dear Shareholders, On behalf of the Board of Directors of Raya International Berhad ( Raya or the Company ), it gives me great pleasure to present the Annual Report and Audited Financial Statements of Raya and its subsidiaries ( the Group ) for the financial year ended ( FYE ) 31 December FINANCIAL REVIEW The Group s revenue for FYE 2014 was RM million representing a 21.1 % growth compared to the previous year due to higher revenue in general trading. The profitability of the Group slipped into the red due to higher operating expenses incurred and deposits written off as well as a reduction in the waiver from director and / or shareholder. PROSPECTS The Group is optimistic in its general trading activities but expects to face challenges in its filtration activities for the coming financial year. The Group is currently deliberating on the viability of the existing business of the Group and review its strategies and business operations and are considering options available to improve its long term and sustainable future growth. APPRECIATION 11 On behalf of the Board of Directors of Raya, I wish to convey my heartfelt appreciation to the management team for their dedication and hard work. I also wish to sincerely thank my colleagues on the Board for their wise counsel and insights in helping to guide the Group through the challenges and to new avenues of opportunity. Last but not least, our utmost gratitude to all our valued shareholders, customers, business associates, financiers, relevant authorities and other stakeholders for the confidence, support and trust in us. Together, we will continue to share a better future and look forward to your continuous support for the year Thank you. DATO IZHAM BIN YUSOFF Independent Non-Executive Chairman ANNUAL REPORT 2014

13 CORPORATE GOVERNANCE STATEMENT The Board of Directors ( the Board ) of Raya International Berhad ( Raya ) recognizes the importance of upholding the highest standards of corporate governance in conducting the Group s business activities and discharging the Board s fiduciary responsibilities to protect and enhance the shareholder s value. The Board reaffirms its supports to the Code and believes that good corporate governance is fundamental in achieving the Group s objectives. In order to ensure that the best interests of shareholders and other stakeholders are effectively served, the Board continues to play an active role in improving governance practices and monitors the development in corporate governance including the Code. This statement describes the Company s compliance with the principles of the Code. A. DIRECTORS i. The Board The Board is primarily responsible for the strategic directions of the Company. In addition, the Board also oversees the conduct of the Company s business, whereby it devises and puts in place adequate systems of control, focuses primarily on the mitigation of any foreseeable or potential risk besetting the Company. The Group is led and controlled by an effective Board. All Board members carry an independent judgement to bear on issues of strategy, performance, resources and standards of conduct. The Board understands the Board s philosophy, principles, ethics, mission and vision and reflects this understanding on key issues throughout the year. 12 ii. Board Balance The current Board has eight (8) directors comprising two (2) Executive Directors, two (2) are Non- Independent Non-Executive Directors and four (4) Independent Non-Executive Directors. More than one-third (1/3) of the current Board is represented by Independent Non-Executive Directors who are independent of management and free from any business or other relationship which could interfere with the exercise of independent judgment on the Board s deliberation and decision making, each of whom brings with him vast and varied experiences, exposure and expertise. The profile of each member of the current Board is set out in Directors profile of this Annual Report. The Executive Director oversees the day to day management and running of the Group and the implementation of the Board s decision and policies. The presence of four (4) Independent Non-Executive Directors is essential in providing unbiased views and impartiality to the Board s deliberation and decision-making process. In addition, the non-executive directors ensure that matters and issues brought to the Board are fully discussed and examined, taking into account the interest of all stakeholders in the Group in order to ensure the effectiveness of the Independent Directors. In line with the Code, the tenure of an Independent Director shall not exceed nine (9) years consecutively. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to his redesignation as a Non-Independent Non-Executive Director should an Independent Director be retained after 9 years, his retention must be approved by the shareholders ANNUAL REPORT

14 CORPORATE GOVERNANCE STATEMENT (Cont d) The Board has not appointed a Senior Independent Director as there is no combination or overlapping of roles between the current Chairman who is an Independent Non-Executive Director and the Managing Director of the Company as these two (2) positions are held by separate individuals. The roles of the Independent Non-Executive Chairman and the Managing Director are separated with clear division of responsibilities and the decision making process of the Board is based on collective decisions without any individual exercising any considerable concentration of power or influence. To ensure that no one person dominates the Board, the Board s composition is comprised of six (6) Non-Executive Directors out of a Board size of eight (8) Directors of which, four (4) are Independent Non-Executive Directors which ensures that a strong element of Independence is present. The Board takes note that the Code recommends that the Chairman of the Nomination Committee should be the Senior Independent Director identified by the Board, which will from time to time review the recommendation and make the necessary appointment as and when it deems fit. The Company also adopts non-discriminatory policy in employing talents to fulfill its human resource needs at all levels including Board especially in ensuring gender diversity. Presently, the Board is of the opinion that the current size and composition of the Board is appropriate to commensurate the group s business skill requirement and effective decision making. iii. Board Meetings To ensure that the Raya Group is managed properly, the current Board is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary. Besides that, the Board also approves matters through the circulation of Director Circular Resolution in accordance with the Articles of Association of the Company. 13 During the financial year ended 31 December 2014, the Board met seven (7) times. The details of the Director s attendances at the Board Meetings during their tenure in office are set out below:- No Name of Directors No of Meetings attended % during the time the Directors hold office 1. Jeneral Tan Sri Abdul Aziz Bin Zainal (Rtd) 5/7 72 Independent Non-Executive Director (Resigned on 27 November 2014) 2. Dato Izham Bin Yusoff 5/7 72 Independent Non-Executive Director 3. Dato Malek Radzuan Bin Saharin 1/3 30 Non-Independent Non-Executive Director (Resigned on 18 June 2014) 4. Deepak Jaikishan A/L Jaikishan Rewachand 3/3 100 Managing Director (Resigned on 30 May 2014) 5. Arulampalam A/L S Mariampillai 0/3 0 Independent Non-Executive Director (Resigned on 30 May 2014) ANNUAL REPORT 2014

15 CORPORATE GOVERNANCE STATEMENT (Cont d) No Name of Directors No of Meetings attended % during the time the Directors hold office 6. Ezrul Ehsan Bin Ismail 4/4 100 Executive Director (Resigned on 30 June 2014) 7. Mohd Shukri Bin Abdullah 0/3 0 Independent Non-Executive Director (Resigned on 18 June 2014) 8. Abdul Latif Bin Abdul Rahim 7/7 100 Non- Independent Non-Executive Director 9. Rajesh A/L Jaikishan 3/3 100 Non-Independent Non-Executive Director (Resigned on 30 May 2014) 10. Mejar Ismail Bin Ahmad (Rtd) 6/7 86 Non-Independent Non-Executive Director (Resigned on 27 November 2014) Mr. Naresh Kumar Lender Lal A/L 3/3 100 K. Lal Independent Non-Executive Director (Resigned on 30 May 2014) 12. Dato Tan Seng Hu 4/4 100 Managing Director (Appointed on 19 June 2014) 13. Md Yaakob Bin Md Shariff 4/4 100 Independent Director (Appointed on 25 June 2014 and subsequently resigned on 23 March 2015) 14. Mohd Fikry Bin Rahman 3/4 75 Independent Director (Appointed on 18 June 2014) 15. Chen Hian Loong 3/3 100 Executive Director (Appointed on 30 June 2014) 16. Yee Chee Yee Yen N/A Non-Independent Non-Executive Director (Appointed on 27 January 2015) 17. Ho Fook Meng N/A Independent Non-Executive Director (Appointed on 24 March 2015) 18. Capt Tony Tan Han (Chen Han) N/A Independent Non-Executive Director (Appointed on 24 March 2015) 2014 ANNUAL REPORT

16 CORPORATE GOVERNANCE STATEMENT (Cont d) iv. Supply of Information and Access to Advice The Board is provided with comprehensive board papers on a timely manner prior to board meetings. This is to ensure and enable the members of the Board to discharge their duties and responsibilities competently in a well-informed manner. All members of the Board have unhindered access to the advice and services of the Company Secretary, and where necessary, may seek independent professional advisers for advice for the purpose of discharging their statutory and fiduciary duties. All directors have the right and duty to make further enquiries where they consider necessary. In most instances, members of Senior Management are invited to be in attendance at Board meetings to provide insight and to furnish clarification on issues that may be raised by the Board. Every Director also has unrestricted access to all information with regard to the activities of the Raya Group. v. Directors Training All Directors had attended the Mandatory Accreditation Programme for Directors of Public Listed Companies ( MAP ) except the newly appointed Directors i.e Ho Fook Meng and Tony Tan Han (Chen Han). They will attend the MAP in due course pursuant to the Listing Requirements pending registration with Bursatra Sdn Bhd. vi. Re-election of Directors In accordance with the Company s Articles of Association, one-third (1/3) of the directors shall retire from office and be eligible for re-election at each Annual General Meeting and all directors shall retire from office at least once in every three (3) years but shall be eligible for re-election. Directors appointed during the year will be subject to retirement and re-election by shareholders in the Annual General Meeting. 15 Directors over seventy (70) years of age are required to retire and submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, B. BOARD COMMITTEES The Board has set up the following Committees to assist the Board in discharging their duties and decision making:- (a) Audit Committee The existing Audit Committee comprises three (3) members as follows:- Chairman : Mohd Fikry Bin Rahman Independent Non-Executive Director Member : Yee Chee Yee Yen Non- Independent Non-Executive Director : Ho Fook Meng Independent Non-Executive Director The Audit Committee Report is set out on page 19 to 24 of this Annual Report. ANNUAL REPORT 2014

17 CORPORATE GOVERNANCE STATEMENT (Cont d) (b) Nomination Committee The Nomination Committee comprises the following members:- Chairman : Dato Izham Bin Yusoff Independent Non-Executive Director Members : Abdul Latif Bin Abdul Rahim Non- Independent Non-Executive Director : Ho Fook Meng Independent Non-Executive Director The terms of reference of the Nomination Committee are as follows:- To regularly review the Board structure, size and composition. To recommend candidates for the approval of the Board to fill vacancies in the Board. To annually review the required mix of skills and experience and other qualities and competencies which non-executive directors should bring to the Board. To annually assess the effectiveness of the Board as a whole, the committee of the Board and contributions of each individual director of the Board. Identifying and recommending directors who are to be put forward for retirement by rotation. Consider gender diversity generally when making appointments to the Board. 16 (c) Remuneration Committee The Company has an established framework of principles to evaluate performance and reward for executive directors. Remuneration packages for the executive directors are formulated to be competitive and realistic, emphasis being placed on performance, with aims to attract, motivate and retain executive directors of high caliber to the Group. For non-executive directors, the level of remuneration commensurate with the level of responsibilities undertaken by them for the Company. The Remuneration Committee comprises the following members:- Chairman : Dato Izham Bin Yusoff Independent Non-Executive Director Members : Abdul Latif Bin Abdul Rahim Non- Independent Non-Executive Director : Ho Fook Meng Independent Non-Executive Director The term of reference of the Remuneration Committee are as follows:- To review and determine, at least once annually, adjustments to the remuneration package including benefits-in-kind of each executive director, taking into account the performance of the individual, the inflation price index and where necessary, information from independent sources on remuneration packages for the equivalent jobs in the industry. To review and determine the quantum of performance related bonuses, benefits-in-kind and Employee Share Options, if available, to be given to the executive directors. To consider and execute the renewal of the service contract of executive directors as and when due, as well as the service contracts and remuneration packages for newly appointed executive directors prior to their appointments ANNUAL REPORT

18 CORPORATE GOVERNANCE STATEMENT (Cont d) C. DIRECTORS REMUNERATION The Directors are satisfied that the current level of remuneration is in line with the responsibilities expected. The aggregate Directors remuneration paid or payable to all Directors of the Company categorised into appropriate components for the financial year ended 31 December 2014 are as follows:- Remuneration (RM 000) Non-Executive Executive Total Directors ( RM 000) Directors (RM 000) (RM 000) Salaries Fees Bonuses Payroll based expenses - EPF Meeting Allowance Benefits-in-kind Total Number of Director Range of Remuneration Non-Executive Executive Total Directors Directors Below RM 50, RM 50,000 RM 100, RM 100,000 RM 150, RM 150,000 RM 200, D. RELATIONSHIP WITH SHAREHOLDERS The Company maintains various methods of dissemination of information important to shareholders, stakeholders and the public at large through timely announcement of events, quarterly announcement of financial results and product information on the Company s website. The Annual General Meeting also provides an opportunity for the shareholders to seek and clarify any issues relevant to the Company. Shareholders are encouraged to meet and communicate with the Board at Annual General Meetings and to vote on all resolutions. E. ACCOUNTABILITY AND AUDIT i. Financial Reporting The Board aims to provide a balanced and understandable assessment of the Group s financial position and prospects through the annual report as well as quarterly financial results to its shareholders. It is the Board s responsibility to ensure that the financial statements are prepared in accordance with the Companies Act, 1965 and the applicable approved accounting standards set by Malaysian Accounting Standard Board so as to present a balanced and fair assessment of the Group s financial position and prospects. The Directors are also responsible for keeping proper accounting records, safeguarding the assets of the Company and taking reasonable steps to prevent and enable detection of fraud and other irregularities. ANNUAL REPORT 2014

19 CORPORATE GOVERNANCE STATEMENT (Cont d) ii. Statement of Directors Responsibility in respect of the Financial Statements The Malaysian Company Law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the results and cash flow of the Company for that period. In preparing those financial statements, the Directors are required to:- a) Select suitable accounting policies and then apply them consistently; b) State whether applicable accounting standards have been followed; c) Make judgments and estimates that are reasonable and prudent; and d) Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy, at any time, the financial position of the Company. The Directors are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and irregularities. iii. Internal Control 18 The Board acknowledges its overall responsibility for maintaining a sound system of internal control, which encompasses risk management, financial, organisational, operational and compliance controls necessary for the Group to achieve its objectives within an acceptable risk profile to safeguard shareholders investment and the Group s assets. However, the Board recognizes that such system is structured to manage rather than eliminate the possibility of encountering risk of failure to achieve corporate objectives. The Statement of Risk Management and Internal Controls is set out on page 25 of the Annual Report providing an overview of the state of internal controls within the Group. iv. Relationships with Auditors The Board has established a formal and transparent relationship with the auditor, Messrs. STYL & Associates appointed by the Company and its subsidiaries within its fold. The Audit Committee, has been accorded the authority to communicate directly with the external auditors. The auditors in turn are able to highlight matters which require the attention of the Board effectively to the Audit Committee in terms of compliance with the accounting standards and other related regulatory requirements. v. Corporate Social Responsibilities The Company did not undertake any corporate social responsibility activities or practices during the financial year under review ANNUAL REPORT

20 AUDIT COMMITTEE REPORT The Audit Committee was established with the primary objective to provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate governance and practices for the Group, to improve the business efficiency and enhance the independent role of external and internal auditors. 1. Composition of Audit Committee The existing Audit Committee comprises three (3) members as follows:- Chairman : Mohd Fikry Bin Rahman Independent Non-Executive Director Member : Yee Chee Yee Yen Non- Independent Non-Executive Director : Ho Fook Meng Independent Non-Executive Director 2. Terms Of Reference Composition The Audit Committee shall be appointed by the Board from amongst their members, who fulfils the following requirements:- 19 a) The Audit Committee must be composed of no fewer than three (3) members. In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above, the Company must fill the vacancy within three (3) months. b) All the Audit Committee members must be non-executive directors, with a majority of them being independent directors. c) All the Audit Committee members must be financially literate, with at least one member :- must be a member of the Malaysian Institute of Accountants; or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience and:- he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or he must be a member of one of the Associations of Accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or fulfils such other requirements as prescribed or approved by the Exchange. d) No alternate director shall be appointed as a member of the Audit Committee. e) The member of the Audit Committee shall elect a Chairman from among themselves who shall be an Independent Director. 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. ANNUAL REPORT 2014

21 AUDIT COMMITTEE REPORT (Cont d) All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. The Board must review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee has carried out its duties in accordance with its terms of reference. Secretary of the Audit Committee The Company Secretary of the Company shall be the Secretary of the Audit Committee. Duties and Responsibilities of the Audit Committee The following are the main duties and responsibilities of the Audit Committee collectively:- (a) Review the following and report the same to the Board of the Company:- 20 (i) oversee the Company s internal control; (ii) with the external auditors, the audit plan; (iii) with the external auditors, his evaluation of the system of internal controls; (iv) with the external auditors, his audit report; (v) the assistance given by the employees of the Company to the external auditors and the internal auditors; (vi) the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work (vii) the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; (viii) the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on :- changes in or implementation of major accounting policy changes; significant and unusual events; and compliance with accounting standards and other legal requirements; (ix) any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of (x) management integrity; any letter of resignation from the external auditors and any questions of resignation or dismissal; and (xi) whether there is reason (supported by grounds) to believe that the Company s external auditor is not suitable for re-appointment; (b) Oversee the Company s internal control structure to ensure operational effectiveness and efficiency, reduce risk of inaccurate financial reporting, protect the Company s assets from misappropriation and encourage legal and regulatory compliance; (c) Assist the Board in identifying the principal risks in the achievement of the Company s objectives and ensuring the implementation of appropriate systems to manage these risks; (d) Recommend to the Board on the appointment and re-appointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of the audit; (e) Discuss with the external auditors before the audit commences the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved; 2014 ANNUAL REPORT

22 AUDIT COMMITTEE REPORT (Cont d) (f) Discuss problems and reservations arising from the audits and any matter the auditors may wish to discuss in the absence of the management where necessary; (g) Review the external auditor s management letter and management s response therein; (h) In relation to the internal audit function:- a. review the adequacy of the scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work; b. review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function; c. review any appraisal or assessment of the performance of members of the internal audit function; d. approve any appointment of termination of senior staff members of the internal audit function; and e. take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning; (i) Consider the major findings of internal investigations and management s response; (j) To review the effectiveness of the internal controls and risk management processes of the Company; and (k) Consider other matters as defined by the Board. Rights of the Audit Committee 21 In carrying out its duties and responsibilities, the Audit Committee will:- have the authority to investigate any matter within its terms of reference; have the resources which are required to perform its duties; have full and unrestricted access to any information pertaining to the Company; have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; be able to obtain independent professional or other advice and to invite outsiders with relevant experience and expertise to attend the Audit Committee meeting (if required) and to brief the Audit Committee; and be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary. Conduct of Meetings a) The Audit Committee will meet at least four (4) times in each financial year although additional meetings may be called at any time, at the discretion of the Chairman of the Audit Committee. b) The quorum shall consist of a majority of independent committee members and shall not be less than two (2). c) Recommendations to the Audit Committee are submitted to the Board for approval. d) The Company Secretary shall be in attendance at each Audit Committee meeting and record the proceedings of the meeting thereat. ANNUAL REPORT 2014

23 AUDIT COMMITTEE REPORT (Cont d) e) Minutes of each meeting shall be kept as part of the statutory record of the Company upon confirmation by the Audit Committee and a copy shall be distributed to each member of the Board. f) The Managing Director and other officers may be invited to attend where their presence are considered appropriate as determined by the Audit Committee Chairman. g) The internal auditors and/or external auditors have the right to appear and be heard at any meeting of the Audit Committee. h) Upon the request of the internal auditors and/or external auditors, the Audit Committee Chairman shall also convene a meeting of the Audit Committee to consider any matter the auditor(s) believes should be brought to the attention of the Board or the shareholders. i) The Audit Committee must be able to convene meetings with external auditors without the presence of the executive board members and management at least twice a year and whenever deemed necessary. j) Where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach or Bursa Malaysia Securities Berhad requirements, the Audit Committee must promptly report such matter to Bursa Malaysia Securities Berhad. 22 k) The attendance at any particular Audit Committee meeting by other directors and employees of the Company shall be at the Audit Committee s invitation and discretion and must be specific to the relevant meeting. SUMMARY OF ACTIVITIES The Audit Committee is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary. Details of the attendance during the financial year ended 31 December 2014 are as follows:- No Name of Directors No of Meetings attended during % the time the Directors hold office 1. Encik Mohd Shukri Bin Abdullah 3/3 100 Independent Non-Executive Director (Resigned on 18 June 2014) 2. Dato Malek Radzuan Bin Saharin 1/3 30 Non-Independent Non-Executive Director (Resigned on 18 June 2014) 3. Mr. Arulampalam A/L S Mariampillai 0/3 0 Independent Non-Executive Director (Resigned on 30 May 2014) 2014 ANNUAL REPORT

24 AUDIT COMMITTEE REPORT (Cont d) No Name of Directors No of Meetings attended during % the time the Directors hold office 4. Mr. Naresh Kumar Kukereja 3/3 Lender Lal A/L K. Lal Independent Non-Executive Director (Resigned on 30 May 2014) 5. Mohd Fikry Bin Rahman 2/2 100 Independent Non-Executive Director (Appointed on 18 June 2014) 6. Md Yaakob Bin Md Shariff 2/2 100 Independent Director (Appointed on 25 June 2014 and subsequently resigned on 23 March 2015) 7. Yee Chee Yee Yen N/A Non- Independent Non-Executive Director (Appointed on 27 January 2015) 8. Ho Fook Meng N/A Independent Non-Executive Director (Appointed on 24 March 2015) 23 During the year under review, the following were the activities of the Audit Committee:- (a) Reviewed the quarterly financial results and ensured that the financial reporting and disclosure requirements of relevant authorities had been complied with, focusing particularly on:- (1) changes in or implementation of major accounting policies and practices; (2) the going concern assumption; (3) significant and unusual event; and (4) compliance with accounting standards and other legal policies and requirements. (b) Reviewed the related party transactions and conflict of interest situation, if any, within the Company or Group including any transactions, procedures or course of conduct that raised questions of management integrity in the ordinary course of business. (c) Reviewed the audit strategy and plan of the external auditors. (d) Meetings with external auditors. ANNUAL REPORT 2014

25 AUDIT COMMITTEE REPORT (Cont d) INTERNAL AUDIT FUNCTION The Internal Audit function is outsourced to Messrs. Chung Wan Ling & Co. During the financial year under review, the Internal Auditors had assessed the effectiveness of the internal control environment of the Accounts and Finance function of the Company and the Group. All the findings raised by the Internal Auditors have been appropriately addressed by management. The Audit Committee Chairman has direct access to the Internal Auditors. They meet regularly to discuss internal control and audit related issues without the presence of the management and the External Auditors. In discharging its duties and responsibilities, the Internal Auditors receives instruction from and reports directly to the Audit Committee. The fee in respect of the Internal Audit function for the financial year ended 31 December 2014 is approximately RM 6, ANNUAL REPORT

26 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL INTRODUCTION The Board is committed to maintaining a sound system of internal control of the Company and is pleased to provide the following statement, which outlines the nature and scope of internal control of the Company during the year. THE BOARD S RESPONSIBILITIES The Board of Directors recognizes the importance of sound internal controls and risk management in safeguarding the assets of the Group. However, such systems are designed to manage rather than eliminate the business risk totally. It should be noted that any system could provide only reasonable and not absolute assurance against material misstatement or fraud. The Group has in place an on-going process to identify, evaluate, monitor and manage any significant risks through the internal controls set out in order to attain a reasonable assurance that business objectives have been met. These controls are regularly reviewed by the Board and subject to continuous improvement. THE RISK MANAGEMENT PROCESS Apart from financial controls, the Group s system of internal controls also cover operational and compliance controls and most importantly, risk management. As part of the risk management process, the Board assisted by the Audit Committee, is continuously identifying, assessing and managing significant business risks faced by the Group throughout the financial year. The process will be regularly reviewed by the Board through the Audit Committee and is in accordance with the guidance as contained in the Internal Control Guidelines. 25 THE INTERNAL CONTROL PROCESS The other key features of the Group s internal control system include the following: An organization structure with defined lines of responsibility and appropriate reporting structure including proper approval and authorization limit for approving capital expenditure and expenses within the Group; The Audit Committee had appointed an outsourced independent professional internal audit service provider to discharge the internal audit function which performs regular and systematic review of the internal controls to assess and provide sufficient assurance on the effectiveness of the systems of internal control and to highlight significant risks impacting the Group with recommendation for improvement; and The Audit Committee will regularly review reports by the independent professional internal audit service provider and conducts annual assessment on the adequacy of the function s scope of work and resources. The Group continues to take measures to enhance and strengthen the internal control environment. The Board is of the view that there is no significant breakdown or weaknesses in the system of internal control of the Group that may have material impact against the operations of the Group for the financial year ended 31 December ANNUAL REPORT 2014