MQ TECHNOLOGY BERHAD ( H)

Transcription

1 MQ TECHNOLOGY BERHAD ( H) ANNUAL REPORT

2 Contents 02 Corporate Information 04 Corporate Structure 05 Chairman's Statement 06 Profile Of Directors 08 Financial Highlights 09 Statement Of Corporate Governance 14 Statement On Risk Management And Internal Control 16 Audit Committee Report 19 Statement Of Directors Responsibilities 20 Corporate Social Responsibility 21 Disclosure Requirements 23 Financial Statements 69 List Of Properties 70 Statistics Of Shareholdings 72 Notice Of Annual General Meeting Proxy Form Annual Report 01

3 Corporate Information BOARD OF DIRECTORS Dr. Ch ng Huck Khoon Chairman, Independent Non-Executive Director Teh Eng Huat Executive Director Khoo Hun Sniah Executive Director Na Chiang Seng Independent Non-Executive Director Soo Tee Wei Independent Non-Executive Director Lim Soon Seng Non-Independent Non-Executive Director Wong Yu Sun Executive Director COMPANY SECRETARIES Datuk Tan Leh Kiah (MAICSA ) Ooi Yoong Yoong (MAICSA ) AUDIT COMMITTEE Soo Tee Wei Chairman Independent Non-Executive Director Dr. Ch ng Huck Khoon Member Independent Non-Executive Director Na Chiang Seng Member Independent Non-Executive Director Lim Soon Seng Member Non-Independent Non-Executive Director REMUNERATION COMMITTEE Lim Soon Seng Chairman Non-Independent Non-Executive Director Na Chiang Seng Member Independent Non-Executive Director Teh Eng Huat Member Executive Director NOMINATION COMMITTEE Na Chiang Seng Chairman Independent Non-Executive Director Dr. Ch ng Huck Khoon Member Independent Non-Executive Director Soo Tee Wei Member Independent Non-Executive Director Lim Soon Seng Member Non-Independent Non-Executive Director 02 Annual Report

4 Corporate Information (Cont d) AUDITORS Messrs SJ Grant Thornton Chartered Accountants 51-8-A, Menara BHL Jalan Sultan Ahmad Shah Penang Tel : Fax : REGISTERED OFFICE 39, Salween Road Penang Tel : Fax : HEAD OFFICE Plot 86-B, Lintang Bayan Lepas 9 Bayan Lepas Industrial Park Bayan Lepas, Penang, Malaysia Tel : Fax : Website : SOLICITOR Zaid Ibrahim & Co. PRINCIPAL BANKERS Ambank (M) Berhad Hong Leong Bank Berhad Public Bank Berhad SHARE REGISTRAR Tricor Investor Services Sdn. Bhd. ( V) Level 17, The Gardens North Tower, Mid Valley City Lingkaran Syed Putra Kuala Lumpur, Malaysia Tel : Fax : STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad Stock Name : MQTECH Stock Code : 0070 Annual Report 03

5 Corporate Structure 100% 100% 100% MICROLEAD Rapid Tooling and Prototyping Division MPTS Precision Processes Division SA Theme park MQ Technology Berhad ("MQ") was incorporated in Malaysia under the Companies Act, 1965 on 2 December 2003 as a private limited company under the name of MQ Technology Sdn Bhd. Subsequently, on 13 February 2004, it was converted to a public limited company and since then assumed its present name. The details of the subsidiaries of MQ as at the date of this Annual Report are summarised below:- Company Date / Place of Incorporation Issued and Paid-up Share Capital Effective Equity Interest % Principal Activities Microlead Precision Technology Sdn Bhd ( MICROLEAD ) MPT Solution Co., Ltd ( MPTS ) Star Acres Sdn Bhd ( SA ) / Malaysia / Thailand / Malaysia 537, (i) Manufacture of moulds, tools, dies, jigs and fixtures mainly for use in the manufacture of hard disk drives (ii) Design, development and manufacture of advanced suspension tooling, progressive tooling, semiconductor cavity/encapsulation moulds for application in hard disk drives and semiconductor industries (iii) Design, development and manufacture of advanced automation modules/ assemblies for digital data storage, medical instrument systems/devices and optoelectronics applications and related components 961, Manufacture of car spare parts, plastic moulds, metal moulds and blowing moulds for plastic products, tooling, jig and fixtures for electronic and semiconductor 400, The company is currently dormant and the proposed principal activity is managing theme park 04 Annual Report

6 CHAIAN s STATEMENT On behalf of the Board of Directors, I am delighted to present the annual report and the audited financial statements of the MQ Technology Berhad and its subsidiaries ( the Group ) for the financial year ended December 31,. FINANCIAL PERFOANCE The Group went through a tremendous challenge in FY, with the Group affected by drop in orders from old customers. During the year, the Group had undertaken cost cutting measures to improve cost and expenses and this had helped the Group reduced its losses. The Group had also been aggressively pursuing new and existing customers for higher sales allocation but the efforts had limited impact of FY as the customers only started giving us more sales towards the end of the year. As a result, the Group has recorded a lower revenue in FY, which is million (FY:20.55 million), Despite the lower revenue, there was a decline in both Loss Before Tax and Loss After Tax, which amounted to million and million respectively in the year under review. INDUSTRY OUTLOOK & PROSPECTS The Group has undertaken cost cutting measures and aggressively pursuing new and existing customers for higher sales allocation. These efforts are ongoing and will have much bigger positive impact in 2015 and future years. In recent years, there had been a number of new multinationals in the northern part of peninsular Malaysia especially those setting up facilities manufacturing equipment and components for the medical industry. The Group has achieved traction in sales to this market sector and is expected to be a major revenue contributor. The group is accessing all its potential business opportunities by diversifying its focuses into different industry so that its business is not over dependent on the Hard Disk Drive (HDD) industry which is unpredictable and very challenging. DIVIDENDS There was no dividend declared or paid for the financial year ended 31 December. APPRECIATION On behalf of the board, I wish to take the opportunity to express my sincere and heartfelt gratitude and appreciation to my fellow directors, Management and staff for your dedication and commitment. To all our valued suppliers, distributors and customers for your continuous support and trust on us and to our bankers, business associates, advisers and regulatory authorities for your cooperation, trust and confident given towards us. Last but not least to a big thank you to all valued shareholders for your believe in MQ Technology Berhad. Dr. Ch ng Huck Khoon Chairman, Independent Non-Executive Director Annual Report 05

7 Profile Of Directors DR. CH NG HUCK KHOON Malaysian, aged 46, appointed as Chairman, Independent Non- Executive Director on November 26,. Dr. Ch ng Huck Khoon pursued his PhD studies in Finance at the Universiti Sains Malaysia (USM). He also holds a Master of Business Administration (Finance) from University of Stirling, United Kingdom. He is a Certified Financial Planner and also an Associate Member of the Institute of Chartered Secretaries and Administrators (ICSA). Dr. Ch ng was an Assistant Professor at the Universiti Tunku Abdul Rahman (UTAR) and Wawasan Open University (WOU). He was also a Capital Markets Services Representative License holder for 15 years with A A Anthony Securities Sdn. Bhd. Currently, he is an Independent Non-Executive Director of CNI Holdings Berhad, YGL Convergence Berhad and AT Systematization Berhad. He is a member of the Audit Committee and Nomination Committee of the Company. He does not have any family relationship with any director and/ or major shareholder of the Company. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years. NA CHIANG SENG Malaysian, aged 39, appointed as Independent Non-Executive Director on March 19,. He graduated with a Bachelor of Engineering (Civil Engineering) from The University of Sydney, Australia in 1999 and continued his studies to attain his Master of Business Administration from University of Heriot-Watt, United Kingdom in year Upon graduation in 1999, he worked as a Project Engineer in Sunlight Engineering Sdn. Bhd. and promoted to Project Manager in year In 2003, he joined Broadland Development Sdn.Bhd and advances himself as a Senior Manager. He then took up the challenge to become a Project Director in Naing Sdn Bhd. In relation to directorship in public company, he is an Independent Non-Executive Director in Ire-tex Corporation Berhad. He is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company. He does not have any family relationship with any director and/ or major shareholder of the Company. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years. TEH ENG HUAT Malaysian, aged 46, appointed as Executive Director on March 19,. He is the founder and managing director of Zoomic Technology (M) Sdn Bhd and Zoomic Automation (M) Sdn Bhd. His qualification and past experience is on electronics and Mechanical engineering and he also holds a Masters of Business Administration from the Southern Pacific University. He has over 20 years experience as an entrepreneur starting up new businesses and managing them. He first ventured into business in 1992 when he setup Zoomic Technology Sdn Bhd to provide electronics design, electro-mechanical turnkey project and manufacturing services to multinational companies based in Malaysia. With Zoomic Automation, he had built its automation business to become an established regional supplier exporting mostly to countries in the Asian region. His business interests include manufacturing and trading of electronics, automation, industrial packaging, IT, HealthCare products. Besides Malaysia, he also manages and runs businesses in China and Thailand. He brings with him extensive business contacts and networks as well as vast hands on knowledge and skills on manufacturing management, business development and marketing. He is a member of the Remuneration Committee of the Company. He is the brother in law of Mr Khoo Hun Sniah, the Executive Director of the company. He is a substantial shareholder of MQ Technology Berhad. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years. SOO TEE WEI Malaysian, aged 40, appointed as Independent Non-Executive Director on March 19,. He graduated with a Diploma in Information Technology (IT) and Certificate in Financial Planning. He has many years of experience in IT industry specialising on implementation of web applications, marketing and cost-effective management of innovative customer and technical support strategies. His expertise is on analysis of organization s online presence and branding requirements, identify deficiencies and potential opportunities, and develop innovative solutions for increasing online branding and improving productivity. From 2003 to 2006, he was an associate partner of an independent financial advisor firm where he was responsible to provide training on IT and website marketing. During his tenure with Grow IT Marketing from 2007 to 2012, he was a Search Engine Optimization Specialist cum Website Developer. His responsibility was to manage more than 50 websites. He was contracted to manage a local listed company s website development and online marketing, a top trucks seller company s website and a top retread tyres manufacturer in Malaysia. He was also a Curriculum Developer for the Web Development Programming course where he was responsible for course development, lecture preparation and development of practical application exercises for web development. Currently, he is the Chief Executive Officer of Add Zee Media Sdn Bhd and Impress Publishing Sdn. Bhd. In relation to directorship in public company, he is an Executive 06 Annual Report

8 Profile Of Directors (Cont d) Director of Hytex Integrated Berhad and Wintoni Group Berhad, and an Independent Non-Executive Director of Ire-tex Corporation Berhad He is the Chairman of the Audit Committee and a member of Nomination Committee of the Company. He does not have any family relationship with any director and/ or major shareholder of the Company. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years. LIM SOON SENG Malaysian, aged 56, appointed as Independent Non-Executive Director on April 17,, and subsequently redesignated to Non-Independent Non-Executive Director on 11 July. He qualified as a Certified Public Accountant from the Malaysian Institute of Public Accountants in He is currently a member of the Malaysian Institute of Accountants. He has over 20 years working experience in audit, treasury and financial management with accounting firms such as Price Waterhouse and Touche Ross, and a multinational, Northern Telecom (Nortel). Besides Malaysia, he has also worked in Thailand. He was one of the key staff who was involved the the setting up, Nortel s manufacturing operations in Thailand. He was also formerly the Executive Director and Chief Financial Officer of Mlabs Systems Berhad, a public company listed on Mesdaq (now ACE) on KLSE. He was one of the pioneers of Mlabs who has managed and guided Mlabs from a start-up to its eventual listing in With Mlabs, he played a key role in restructuring and preparing the group for listing. He has also been involved in several start-up companies, helping them to commercialize R&D results and technologies developed by Malaysian public universities. He is the Chairman of Remuneration Committee, a member of the Nomination Committee and Audit Committee of the Company. He does not have any family relationship with any director and/ or major shareholder of the Company. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years. KHOO HUN SNIAH, Malaysian, aged 46, appointed as Executive Director on November 26,. He graduated with Double advance diploma in Computer & Telecommunication Engineering from Kolej Damansara Utama, P.J. Selangor. He worked in Imprimis Technology-Components (M) Sdn Bhd (later as Penang Seagate Sdn Bhd) as Maintenance Engineer from 1989 to Currently he is attached to Zoomic Technology (M) Sdn Bhd and Zoomic Automation (M) Sdn Bhd since He is mainly in charge of Printed Circuits Boards Design Engineering and Industrial Automation Product Development. Over the past 17 years, he has involved in supporting manufacturing processes for various industries such as EMS, RF, Hard-disk drive & Semiconductor. Through the years of experience, he has developed & deployed various types of technology for the company such as Vision Inspection Software for Disk-drive magnetic head, spring loaded pick-up head for pick and place system. Mr. Khoo has brought considerable knowledge in Electro-mechanic Design Engineering and Operation to the company. He is the Brother in law of Mr. Teh Eng Huat, a Director and substantial shareholder of MQ Technology Berhad. WONG YU SUN Malaysian, aged 62, appointed as Executive Director on March 13, He is a graduate of the Chartered Association of Certified Accountants, UK and is a member of the Malaysian Institute of Accountants. Prior to coming back to Malaysia in 1981, Mr Wong was trained in an audit firm in London. He has over 30 years of experience in the property development, construction and manufacturing industries and has held management positions with several public listed companies including on the AIM market of the London Stock Exchange. He currently acts as a corporate adviser to a number of companies listed on AIM and GXG markets, assisting them through his extensive experience in corporate finance. He does not have any family relationship with any director and/ or major shareholder of the Company. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years. Annual Report 07

9 Financial Highlights Group Group Group Group 000 Group 000 Turnover 42,172 26,689 27,190 20,554 13,832 Profit/(Loss) Before Taxation 2,209 (4,303) (19,585) (8,158) (7,041) Profit/(Loss) After Taxation 2,695 (4,312) (19,437) (8,159) (7,031) No. of Share assumed in Issue ( 000) 230, , , , ,250 Earnings per Share (sen) 1.17 (1.87) (8.48) (3.66) (2.93) Turnover ( 000) Profit/(Loss) After Taxation ( 000) 42,172 2,695 (4,312) (19,437) (8,159) (7,031) 26,689 27,190 20,554 13, Turnover vs Profit/(Loss) After Taxation ( 000) Turnover Profit After Taxation 08 Annual Report

10 Statement Of Corporate Governance Malaysian code on Corporate Governance 2012 ( the MCCG 2012 ) recommends and lays out the important of the principles as a main factor in achieving the governance framework in managing and operating the business of a company. The Board of Directors ( the Board ) of MQ Technology Berhad trust and believe that with good Corporate Governance, the group would enhance business prosperity and maximize shareholder value. The Board will continue to review and evaluate the Group s corporate governance in order to exercise the best practices as set out in the code. The corporate Governance guideline below is to help the board to comply with the principles and best practice as recommended in the Code. 1. Establish clear roles and responsibilities 1.1 Clear functions of the Board and Management The Board is responsible for the overall management of the Company. The Board delegates the day to day management to the Executive Director ( ED ), save for the significant matters reserved for the Board s approval, such as financial results (quarterly or annually), declaration of dividends, review annual budget and business plan, issuance of new shares, expenditure above a certain limit, disposals or acquisition of significant fixed assets and etc. 1.2 Clear roles and responsibilities of the Board Reviewing and adopting a strategic plan for the Company The ED and Senior Management present to the Board the proposed annual business strategies and plans for the Board s review. The Board deliberates the business strategies and plans to ensure the Company is steering towards the correct direction, which is also reflecting the latest market conditions and internal capabilities. During the year, the Board reviews the actual against planned operational and financial performance of the Group on quarterly basis, where the ED or Senior Management will provide explanations on any material shortfalls and proposed corrective actions Overseeing the conduct of the Company s business The ED is responsible for overseeing the day-to-day management of the business and operations of the Group in respect of both its regulatory and commercial function. He is supported by a team of Senior Management consists of the head of respective departments or subsidiaries. A comprehensive summary of the significant business activities and financial performance of the Group are presented by ED and Senior Management to the Board on quarterly basis. Based on the mentioned reports or information provided, the Board is then able to assess the performance of the ED and Senior Management and their respective department, where the business and financial performance serve as the key performance indicator Succession planning The Remuneration Committee ( RC ) hold the responsibility to determine the fair remuneration package for Directors, with the main purpose to attract and retain the right candidates. As part of the succession planning, ED and Senior Management are encouraged to identify and to train those outstanding and potential subordinates, in order to prepare them to move up to a higher level of their career ladder Overseeing the development and implementation of a communication policy of the Company The Board has oversight on the Company to maintain an up-to-date corporate website, my. The website serves as a major platform to provide details of corporate information, financial results, latest news and events of the Company to the public, investors and shareholders. The website provides the platform to contact Company for corporate matter, investor relationship, or business potential, where the public, shareholders or investors are welcomed to enquire directly or to provide valuable feedback to the Company Reviewing the adequacy and integrity of the management information and internal controls system of the Company The Board has the ultimate responsibility for the adequacy and integrity of the Company s risk management and internal control system. Details of the system are set out in the Statement on Risk Management and Internal Control of this Annual Report. 1.3 Strategies promoting sustainability The Board has steered the Company in a business direction that promote sustainability in its business operation and corporate value. The Company has an ongoing product development process with the aim to continue improving the products quality, in order to preserve the well-known quality of its products. Annual Report 09

11 Statement Of Corporate Governance (Cont d) 1. Establish clear roles and responsibilities (Cont d) 1.4 Access to information and advice The Board is provided with sufficient and timely information to enable them to discharge its duties effectively. The Board may seek independent professional advice on any matter connected with the discharge of their responsibility, at the Company s expense. The Board has direct access to the Senior Management to attain any information relating to the Company s business and affairs in discharging their duties. Senior Management is also invited to attend the Board and Audit Committee meetings, as and when required, in order to provide further explanation and presentation to the members of the Board and Audit Committee. 1.5 Company Secretary The Company Secretary attends all Board and Board Committee meetings and ensures that meetings are properly convened. The Company Secretary also ensures that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. All Directors have access to the advice and service of the Company Secretary. 1.6 Board charter The Board has formally adopted a Board Charter which provides guidance to the Board in the fulfillment of its roles, duties and responsibilities. The Board Charter was drawn up in line with the Board s commitment to comply with relevant legislations, regulations and the principles of good corporate governance. The Board Charter outlines the composition and structure of the Board, the Board s powers, duties and responsibilities, and processes and procedures for Board meeting. The Board Charter will be reviewed periodically and updated from time to time to reflect changes to the Company s policies, procedures and processes as well as changes to legislations and regulations. The Board Charter is available on the Company s website at 2. Strengthen composition 2.1 Nomination Committee The Nomination committee is comprised entirely of Non-Executive Directors and the members are: Name Na Chiang Seng (Appointed on April 23, ) Dr. Ch ng Huck Khoon (Appointed on March 13, 2015) Soo Tee Wei (Appointed on April 23, ) Lim Soon Seng (Appointed on April 23, ) Lim Teong Lee (Ceased on April 17, ) Teh Su Kang (Resigned on April 23, ) Henry Khoo Peng Yeam (Appointed on March 4, ) (Resigned on April 23, ) Designation Chairman (Independent Non-Executive) Member (Independent Non-Executive) Member (Independent Non-Executive) Member (Non-Independent Non-Executive) Member (Independent Non-Executive) Member (Independent Non-Executive) Member (Independent Non-Executive) The primary function of the Nomination Committee is to consider and propose new directors on the Board and / or Board Committee by considering the required mix of skills, experience, expertise, knowledge, qualification and other core competencies required for the position. The Nomination Committee also reviews the adequacy of the committee structures, size and composition of the Board in order to establish an effective Board and make recommendations with regard to any adjustments that are deemed necessary. The Nomination Committee meetings are held as and when required and at least once every year to assess the contribution of each individual Director, the effectiveness of the Board as a whole and the Committees of the Board. During the financial year under review, three (3) meetings were held to undertake the following activities:- a. Review and proposing to the board members, the suitable candidate to be member of the Audit Committee and Nomination Committee. b. Evaluate and recommending to the Board, the retiring directors to stand for re-election at the forthcoming AGM. c. Assessing the size and composition of the Board. d. Assessing the effectiveness and performance of the board as a whole, directors and its sub-committee for. 10 Annual Report

12 Statement Of Corporate Governance (Cont d) 2. Strengthen composition (Cont d) 2.1 Nomination Committee (Cont d) The meetings were attended by:- Name Attendance Na Chiang Seng 2/2 Soo Tee Wei 2/2 Lim Soon Seng 2/2 Lim Teong Lee 1/1 Teh Su Kang 1/1 2.2 Remuneration Committee The Remuneration Committee is comprised majority of Independent Non-Executive Directors and the members are: Name Lim Soon Seng (Appointed on April 23, ) Teh Eng Huat (Appointed on April 23, ) Na Chiang Seng (Appointed on April 23, ) Lim Teong Lee (Ceased on April 17, ) Tan Cheow Boon (Resigned April 23, ) Teh Su Kang (Resigned on April 23, ) Designation Chairman (Non-Independent Non-Executive) Member (Executive Director) Member (Independent Non-Executive) Chairman (Independent Non-Executive) Member (Managing Director) Member (Independent Non-Executive) The Remuneration Committee is responsible for recommending to the Board the remuneration packages of Executive Directors. The Executive Directors should play no part in determining their individual remuneration while the determination of the remuneration payable to Non-Executive Directors should be a matter for the Board as a whole with individual Directors abstaining from discussion and voting in respect of their individual remuneration. During the financial year under review, one (1) meeting was held to review of remuneration package for Executive Director. The meeting was attended by:- Name Attendance Lim Soon Seng 1/1 Teh Eng Huat 1/1 Na Chiang Seng 1/1 The amounts of remuneration paid to the Directors during the financial year ended 31 December were as follows: Category Fees () EPF & other emoluments () Total () Executive Directors 139, ,506 1,065,152 Non-Executive Directors 116, ,097 The number of Directors whose remuneration is within the following bands is as follows: Remuneration Band Number of Directors 50,000 and below 100, , , , , , , , , , , ,000 Executive Non-Executive Annual Report 11

13 Statement Of Corporate Governance (Cont d) 2. Strengthen composition (Cont d) 2.3 Audit Committee The composition of the Committee its term of reference and attendance of meeting by each of the Committee Member are set out on page 16 to 18 of this Annual Report. 3. Reinforce independence 3.1 Annual assessment on independence The Company has three (3) Independent Directors. The Board has assessed and satisfied that these independent Directors have the ability to exercise independent judgement at all times. 3.2 Tenure of independent directors In compliance with the recommendation of MCCG 2012, all of the Independent Directors of the Company has tenure not exceeding a cumulative term of nine (9) years. 3.3 Composition of the Board The current Board has seven (7) members, comprising three (3) Executive Directors and four (4) Non-executive Directors. Majority of the Non-Executive Directors are independent, hence the Company is in compliance with the requirement stated in Rule 3.08 of the Ace Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ), where at least two (2) directors or one-third (1/3) of the total number or Directors, whichever is higher, are to be Independent Directors. The Board considers that its present composition is optimal based on the Group s operations and it reflects a fair mix of financial, technical and business experiences that are necessary for the successful direction of the Group. 3.4 Re-election of Directors In accordance with the Company s Articles of Association, Directors who are appointed by the Board either to fill a casual vacancy or as an additional to the Board shall hold office only until the next Annual General Meeting ( AGM ) and shall then be eligible for re-election. The articles also provide that one-third or the number nearest to one-third (1/3) of the Directors shall retire from office at every AGM and if eligible, may offer themselves for re-election. Each Director shall retire at least once in every three (3) years. 4. Foster commitment 4.1 Time commitment The Board meets on a scheduled basis at least four (4) times a year and additional Board meetings are convened when necessary. During the financial year, the Board has convened five (5) meetings. Name of Directors Attendance Lim Soon Seng 3/3 Teh Eng Huat 4/4 Soo Tee Wei 4/4 Na Chiang Seng 4/4 Tan Cheow Boon 4/4 Chin Tee Kheng 2/2 Lim Teong Lee 2/2 Teh Su Kang 1/2 Henry Khoo Peng Yeam 1/1 4.2 Directors training All Directors have attended and successfully completed the Mandatory Accreditation Programme prescribed by Bursa Malaysia. The Directors will continue to attend any other training programs to keep them abreast with the current developments of the industry and the current changes in laws and regulations where appropriate. Conferences, seminars and training programs attended by Directors during the financial year are as follows: Name of Director Date Programmes/Seminar Teh Eng Huat 2 nd December 2015 Budget, Good and services Tax (GST) and its impact on Capital Market Na Chiang Seng December GST introduction Soo Tee Wei December GST introduction Lim Soon Seng 2 nd December 2015 Budget, Good and services Tax (GST) and its impact on Capital Market Khoo Hun Sniah 2 nd December 2015 Budget, Good and services Tax (GST) and its impact on Capital Market Dr. Ch ng Huck Khoon 12 th November AMLA, FATCA, Chinese Wall & Prevention of Insider Trading 12 Annual Report

14 Statement Of Corporate Governance (Cont d) 5. Uphold integrity in financial reporting 5.1 Compliance with applicable financial reporting standards The Board aims to provide a balanced and understandable assessment of the Group s and the Company s financial performance, financial position and prospects primarily through the annual financial statements and quarterly announcements of results to shareholders. The Audit Committee is responsible to review the annual financial statements and quarterly announcements of results to ensure that an effective and efficient financial reporting process are in place and appropriate accounting policies have been adopted and applied consistently. The accounting policies of the Company are in compliance with the latest Malaysian Financial Reporting Standards ( MFRS ). The annual financial statements and quarterly announcements reports prepared are in compliance with the requirements of MFRS, Companies Act 1965 and ACE Market Listing Requirements of Bursa Securities. 5.2 Assessment of suitability and independence of external auditors The Board has established a transparent and professional relationship with the Company s external auditors through Audit Committee. The Audit Committee assesses the performance of the external auditors in terms of suitability, objectivity and independence of their services. The Audit Committee will then recommend their reappointment to the Board, subject to shareholders approval in the AGM. 6. Recognize and manage risks 6.1 Internal audit function The Board has appointed an independent firm for internal audit function of the Company. Details of the internal audit function are set out in the Statement on Risk Management and Internal Control of this Annual Report. 7. Ensure timely and high quality disclosure 7.1 Corporate disclosure policy The Company refers to ACE Market Listing Requirements of Bursa Securities as a fundamental basis for the ongoing disclosure and announcement to Bursa Securities. The Senior Management is responsible to highlight to the Board any corporate matters or issues warrant for disclosure or announcement to Bursa. 7.2 Leverage on information technology for effective dissemination of information The Board is committed in providing accurate, useful and timely information about the Company, its business and its activities. Realizing the importance of timely and thorough dissemination of material information to the shareholders, investors and the public at large, the Company maintains an open communications policy with its shareholders, investors and the public at large, and welcome feedback from them. The Company made timely releases of quarterly interim and full year audited financial results, annual reports and announcements to Bursa Securities. All corporate information and financial results are available on the Company s corporate website, 8. Strengthen relationship between Company and shareholders 8.1 Encourage shareholder participation at general meetings The Company dispatches its notice of AGM to shareholders at least 21 days before the AGM date. This is to allow the shareholders to have adequate time to make necessary arrangements to attend the AGM either in person, by corporate representative or by proxy. 8.2 Effective communication and proactive engagement The AGM is the key element of the Company s dialogue with its shareholders. At the AGM shareholders are encouraged to ask questions about the resolutions being proposed, about the Company s operations in general or about the annual reports of the Company and of the Group. All the Directors, senior management and external auditors are available in the AGM to provide responses to questions from the shareholders. The company has identified Dr Ch ng Huck Khoon as the Senior Independent Non-Executive Director to be the dedicated contact person of the company. Dr Ch ng Huck Khoon can be contacted through his dr.chng@mqtech.com.my for any queries and feedbacks. Conclusion This Statement on Corporate Governance is established by the Board in conjunction with the Board s approach and consideration of how the Company has, throughout the year, applied the principles and recommendations in the MCCG 2012 in conjunction with the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad. It considers that this Statement provides the information necessary on how the MCCG 2012 has been applied throughout the year. The Statement is made in accordance with the resolution of the Board dated 19 May Annual Report 13

15 Statement On Risk Management And Internal Control INTRODUCTION The Board of Directors of MQ Technology Berhad is pleased to present its Statement on Risk Management and Internal Control ( Statement ) for the financial year ended 31 December. This Statement has been prepared pursuant to Chapter 15.26(b) of the Bursa Malaysia Securities Berhad ( Bursa Securities ) ACE Market Listing Requirements, and in accordance with the Statement on Risk Management & Internal Control - Guideline for Directors of Listed Issuers (the Guidelines ). This Statement outlines the nature of the risk management and internal controls of the Group. BOARD RESPONSIBILITY The Board recognises and acknowledges the importance and the responsibilities of a good risk management practices and a sound internal controls which includes the establishment of an appropriate control environment and framework, and the review of the effectiveness, adequacy and integrity. The system of risk management and internal control is meant to effectively manage business risk towards the achievement of objectives, to enhance the value of shareholders investments and to safeguard the Group s assets. Due to the inherent limitations of the system of internal control, such system is designed to manage rather than eliminate the risks of failure to achieve the Group s corporate objectives. Therefore, the system can only provide a reasonable and not absolute assurance against material misstatement or loss. RISK MANAGEMENT FRAMEWORK The Board recognises the importance of the risk management framework to manage the risk within the Group and to identify, evaluate and manage significant risks of the Group which effect the achievement of the Group s corporate objectives. As part of the integral process of risk management after taking over by the new management, the Group is in the process of formalising a risk management framework in which significant risks will be identified, quantified and documented. A risk profile of the Group will be complied with to help the Board and senior management to prioritise their focus on areas of high risk. Subsequently, the risk profile and internal controls will be updated periodically. The functional management is given a clear line of accountability and delegated authorities were established as part of the internal control efforts through the standard operating practices. The senior management is responsible for identifying, managing and reporting of significant risks on an ongoing basis and all significant risk matters are brought to the attention of the Executive Directors. INTERNAL CONTROL SYSTEM The Board maintains an organisational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures. The Board meets regularly and has a schedule of matters that are brought to it for decision making process in order to ensure effective control over strategic, financial, operation and compliance issues can be maintained. The following outlines the main elements of the Group s internal control system: i. Having an organisational structure that ensures segregation of duties among employees so that there is an appropriate level of checks and balances on the activities of individual employee. ii. iii. iv. Supplying comprehensive financial and management reports to the Audit Committee and the Board on a quarterly basis for review. Stringent recruitment policy is set to ensure that only capable and competent staffs are employed which in turn ensures each operating unit is functioning effectively. The Group s performance is monitored through management and operational meeting attended by Senior Management. The Executive Directors are involved in the day to day operations of the Group. v. Internal policies and procedures are updated regularly to reflect changing risk or to resolve operational deficiencies. The Group s internal control systems are continually being reviewed and enhanced to ensure that changes in the Group s business and operating environment are adequately managed. 14 Annual Report

16 Statement On Risk Management And Internal Control (Cont d) INTERNAL AUDIT FUNCTION The Board has outsourced its internal audit function to an independent professional firm. During the financial year under review, the internal auditors conducted reviews based on an approved internal audit plan and the results of these reviews were tabled at the Audit Committee meetings. The internal auditors have also carried out follow-up reviews to ensure that recommendations for improving the internal control systems were being implemented satisfactorily. The cost incurred for internal audit for the financial year was 12,000. During the course of their internal audits, the internal auditors have identified areas that required improvement. These areas were duly highlighted in the internal audit reports along with internal audit recommendations. In addition, the Audit Committee and the senior management work closely with the internal auditors to review accounting and control issues to ensure significant issues are brought to the attention of the Board. CONCLUSION The Board is of the view that it has taken the necessary steps to enhance the system of risk management and internal control of the Group and that the improved system is adequate for the current level of operations. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS This Statement has been reviewed by the external auditors as required under Chapter for inclusion in the annual report. Based on their review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe the Statement is inconsistent with the understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls. This statement was made in accordance with a Board of Directors Resolution dated 19 May Annual Report 15

17 Audit Committee Report AUDIT COMMITTEE Name of Director Soo Tee Wei (Appointed as member on April 23, ) (Redesignated as Chairman on July 11, ) Dr. Ch ng Huck Khoon (Appointed on February 17, 2015) Na Chiang Seng (Appointed on April 23, ) Lim Soon Seng (Appointed as Chairman/member on April 23, ) (Redesignated as member on July 11, ) Lim Teong Lee (Ceased on April 17, ) Teh Su Kang (Resigned on April 23, ) Henry Khoo Peng Yeam (Appointed on March 4, ) (Resigned on April 23, ) Designation Chairman Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director Member Non-Independent Non-Executive Director Chairman Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director TES OF REFERENCE 1. MEMBERSHIP a) The Audit Committee shall be appointed by the Board from amongst their members and comprising not less than three (3) members, exclusively Non-Executive Directors of whom majority shall be the Independent Directors. b) At least one of the members of the Audit Committee 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 of working experience and either must have passed the examinations specified in Part I of the schedule of Accountants Act, 1967, or must be a member of one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountant Act, 1967 or fulfills such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad ( Bursa Securities ). c) The members of the Audit Committee must elect a Chairman among themselves who is an Independent Director. No alternate direct shall be appointed as a member of the Audit Committee. d) If a member of the Audit Committee, for whatsover reason ceases to be a member with a result that the number of members is reduced below three (3), the Board shall, within three (3) months of the event, appoints such number of new members as may be required to make the minimum number of three (3) members. 2. ATTENDANCE AT MEETINGS The Head of Finance and Head of Internal Audit, if any will attend the meetings. At least twice a year, the Committee shall meet with external/internal auditors, excluding the attendance of the other directors and employees of the Company. The Company Secretary shall be the secretary of the Committee. 3. FREQUENCY AT MEETINGS Meetings will be held not less than four times a year. The external auditors may request a meeting if they consider that one is necessary. The quorum for any meeting shall be two members of the Committee who shall be Independent Directors. 4. AUTHORITY The Committee is authorized by the Board to investigate any activity within its term of reference. It is authorized to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. 16 Annual Report

18 Audit Committee Report (Cont d) 5. ROLES AND RESPONSIBILITIES The roles and responsibilities of the Committee shall include: a) to recommend the appointment of the external auditors, their audit fee and any question of their resignation of dismissal to the Board. b) to discuss the nature and scope of the audit with the external auditors before the audit commences. c) To review the financial statements of the Company and the Group before submission to the Board, focusing particularly on:- public announcements of results and dividend payments; any changes in accounting policies and practices; major judgmental areas; significant adjustments resulting from the audit; the going-concern assumption; compliance with accounting standards; and compliance with stock exchange and legal requirements. d) to discuss problems and reservations arising from the interim and final audits and any matters the external/internal auditors may wish to discuss (in the absence of management where necessary). e) to review the internal audit programme, consider the major findings of internal audit investigations and management s response and ensure co-ordination between the internal and external auditors. f) 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. g) to review the appraisal or assessment of the performance of the staff fo the internal audit function. h) to approve any appointment or termination of senior staff of the internal audit function. i) to keep under review the effectiveness of internal control system and, in particular, review external auditors management letter and management s response. j) to review any related party transactions that may arise within the Company or the Group. k) to carry out such other functions and consider other topics, as may be agreed upon by the Board. 6. REPORTING PROCEDURES The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. 7. ATTENDANCE OF MEETINGS During the financial year ended 31 December, the Audit Committee held five (5) meetings to discuss the matters relating to the accounting and reporting practices of the Group and the Company. Details of attendance of the Committee Members are as follows:- Audit Committee Members Attendance Soo Tee Wei 3/3 Na Chiang Seng 3/3 Lim Soon Seng 3/3 Lim Teong Lee 2/2 Teh Su Kang 1/2 Henry Khoo Peng Yeam 1/1 Annual Report 17

19 Audit Committee Report (Cont d) 8. SUMMARY OF ACTIVITIES The following activities were undertaken by the Audit Committee during the five (5) meetings in discharging their duties and responsibilities:- a) Reviewed the draft quarterly results and year-end financial statements before submission to the Board for approval. b) Reviewed with external auditors on their audit planning memorandum on the statutory audit of the Group for the financial year ended 31 December. c) Reviewed the state of internal control with external auditors on findings and recommendation. d) Reviewed with external auditors on the results and issues arising from their audit of the financial statements for the year end and their resolutions of such issues highlighted in their report to the Committee. e) Considered and recommended the external auditors for re-appointment. f) Reviewed and discussed the internal audit report issued by the internal auditors for audit assignments carried out during the year. g) Considered the adequacy of management actions taken on internal and external audit reports. h) Review the recurrent related party transactions entered into by the Group. 9. INTERNAL AUDIT At present, the Group does not have an in-house internal audit department. The Board has outsourced the internal audit function to an independent professional firm. The cost incurred for the internal audit for financial year was 12,000. The internal auditors will carry out the internal audit assignments based on the internal audit plan. Any findings arising from the internal audit review has been reported to the Audit Committee. The internal auditors will, on a continuous basis, advise the management on areas of improvement and initiate follow-up action to determine the extent of implementation of their recommendations. This Statement was made in accordance with a Board of Directors Resolution dated 19 May Annual Report

20 Statement Of Directors Responsibilities The Companies Act, 1965 requires the directors to prepare the annual audited financial statements for each financial year which gives a true and fair view of the state of affairs, the results and cash flows of the Company and of the Group. The Directors considered that in preparing these financial statements of the Company and of the Group for year ended 31 December, the Directors have considered the Group and the Company has used appropriate accounting policies, and are consistently applied and supported by reasonable and prudent judgments and estimates were made. That Malaysian Financial Reporting Standards issued by the Malaysian Accounting Standards Board have been applied and the preparation of the financial statements is on a going concern basis. The Directors are responsible for ensuring that the Company and the Group maintains proper accounting records which disclose, with reasonable accuracy, the financial position of the Company and of the Group, which enable them to ensure that the financial statements comply with the Companies Act, The Directors have general responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Company and the Group, and to prevent and detect fraud and other irregularities. This Statement was made in accordance with a Board of Directors Resolution dated 19 May Annual Report 19