CONTENTS. Long-Lasting Excellence

Transcription

1 Long-Lasting Excellence Annual Report 2016

2 Long-Lasting Excellence Annual Report 2016 Long-Lasting Excellence EKA Noodles Berhad (EKA) has been in Malaysia for nearly 15 years. With the ever-changing needs in the market, the company strives to improve its products and services in order to remain sustainable in the market. The noodles from EKA Noodles Berhad (EKA) are being picked up without losing its elasticity, showing that the company s visions to the future are strong and long-lasting. CONTENTS Notice of Annual General Meeting 2 Statement Accompanying Notice of Annual General Meeting Corporate Information 5 Corporate Structure 6 Management Discussion and Analysis 8 Directors Profiles 10 Corporate Governance Disclosures 13 Statement on Risk Management and Internal Control 4 21 Audit Committee Report 23 Additional Compliance Information 28 Corporate Social Responsibility Statement 29 Directors Responsibility Statement 30 Financial Statements Directors Report 31 Statement by Directors 36 Statutory Declaration 36 Independent Auditors Report 37 Statements of Profit or Loss and Other Comprehensive Income 40 Statements of Financial Position 42 Statements of Changes in Equity 43 Statements of Cash Flows 46 Notes to the Financial Statements 48 Supplementary Information on the Disclosure of Realised and Unrealised Profits or Losses 84 Analysis of Shareholdings 85 Analysis of Warrant Holdings 87 List of Properties 89 Proxy Form 91 ANNUAL REPORT

3 NOTICE OF ANNUAL GENERAL MEETING NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the 14 th Annual General Meeting ( AGM ) of the Company will be held at Lot 208, Phase II, Kuala Ketil Industrial Estate, Kuala Ketil, Kedah Darul Aman on Friday, 26 May 2017 at 2.00 p.m. for the following purposes:- AGENDA Ordinary Business 1. To receive the Audited Financial Statements for the financial year ended 31 December 2016 together with the Reports of Directors and Auditors thereon. 2. To re-elect Mr. Fong Yit Meng, a director who retires in accordance with the Article 102 of the Company s Constitution and who, being eligible, offers himself for re-election. 3. To re-elect Dato Dr. Chin Yew Sin (JP), a director who retires in accordance with the Article 102 of the Company s Constitution and who, being eligible, offers himself for re-election. 4. To re-elect Mr. Leong Woay Neoh Woay Hong, a director who retires in accordance with the Article 102 of the Company s Constitution and who, being eligible, offers himself for re-election. 5. To re-elect Mr. Lim Choo Hooi, a director who retires in accordance with the Article 102 of the Company s Constitution and who, being eligible, offers himself for re-election. Please refer to Note 6 Resolution 1 Resolution 2 Resolution 3 Resolution 4 6. To approve the payment of Directors Fees for the financial year ended 31 December Resolution 5 7. To approve the payment of Directors Benefits for the period from 31 January 2017 until Resolution 6 the conclusion of the next AGM of the Company. 8. To re-appoint Messrs. Afrizan Tarmili Khairul Azhar as auditors of the Company to hold Resolution 7 office until the conclusion of the next AGM of the Company and to authorise the directors to fix their remuneration. As Special Business: To consider and if thought fit, to pass with or without modifications, the following resolution as an Ordinary Resolution: 9. PROPOSED RENEWAL OF GENERAL MANDATE FOR THE DIRECTORS TO ALLOT AND Resolution 8 ISSUE SHARES IN THE COMPANY That, subject always to the provisions of the Companies Act, 2016, the Company s Constitution, the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the regulations, guidelines and practice notes issued from time to time by Bursa Securities or any other regulatory authorities, approval be hereby given for the Directors of the Company to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may deem fit, PROVIDED THAT the aggregate number of shares to be issued does not exceed 10% of the total number of issued shares of the Company and that the approval conferred by this resolution shall take effect immediately upon the passing of this resolution and shall continue to be in force until: (a) the conclusion of the AGM of the Company held next after the approval was given; (b) the expiration of the period within which the next AGM of the Company is required to be held after the approval was given, whichever is the earlier; or (c) revoked or varied at any time by an ordinary resolution passed by the shareholders in a general meeting; whichever is the earlier; That, the Directors of the Company be hereby authorised to enter into such transactions, arrangements, agreements and documents as are necessary with full power to assent to any conditions, modifications, variations and/or amendments as may be required by the relevant authorities or as the Directors, in their absolute discretion deem fit and in the best interest of the Company. And that, any Executive Director and/or the Secretary of the Company be hereby authorised to obtain the approval from Bursa Securities for the listing and quotation of the additional shares to be issued and to do all such acts and things as are necessary to give full effect to such transactions as authorised by this resolution. 10. To transact any other business of which due notice shall have been given in accordance with the Company s Constitution and the Companies Act, EKA NOODLES BERHAD ( U)

4 NOTICE OF ANNUAL GENERAL MEETING (Cont d) FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend the 14 th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to issue a General Meeting Record of Depositors as at 22 May Only a depositor whose name appears on the Record of Depositors as at 22 May 2017 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf. By Order of the Board, P NG CHIEW KEEM (MAICSA ) TAN TONG LANG (MAICSA ) CHONG VOON WAH (MAICSA ) Secretaries Penang Date: 29 April 2017 NOTES ON APPOINTMENT OF PROXY (1) A proxy may but need not be a member of the Company. (2) For a proxy to be valid, the proxy form duly completed must be deposited at the registered office of the Company at A Menara BHL Bank, Jalan Sultan Ahmad Shah, Penang not less than forty-eight (48) hours before the time for holding the meeting. (3) A member shall be entitled to appoint one (1) or more proxies to attend and vote instead of him at the same meeting and where a member appoints more than one (1) proxy to vote at the same meeting, such appointment shall be invalid unless he specify the proportion of his shareholding to be represented by each proxy. (4) Where a member is an exempt authorised nominee which holds ordinary shares of the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies it may appoint in respect of each omnibus account it holds. (5) In the case of a corporate member, the proxy form must be executed under the corporation s common seal or under the hand of an officer or attorney duly authorised. EXPLANATORY Note on ordinary business (6) The Audited Financial Statements in Agenda 1 had been approved by the Board pursuant to Section 251(1) of the Companies Act Hence, this agenda does not require formal approval of shareholders of the Company and is meant for discussion pursuant to Section 248(2) of the Companies Act EXPLANATORY Note on SPECIAL business (7) The Resolution 8, if passed, will allow the Directors to allot and issue shares in the Company up to an amount not exceeding 10% of the total number of issued shares of the Company for the time being for such purposes as the Directors consider will be in the best interest of the Company. This authority, unless revoked or varied by the shareholders of the Company in a general meeting will expire at the conclusion of the next AGM. As at the date of this notice, there were no ordinary shares issued and allotted pursuant to the general mandate granted at the last AGM of the Company. The proposed renewal of general mandate for issuance of shares will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for the purpose of funding future investment, working capital and/or acquisition Annual Report The 2016 Annual Report is in CD-ROM format. Printed copy of the Annual Report shall be provided to the shareholder upon request within four (4) market days from the date of receipt of the verbal or written request. A copy of the Annual Report can also be downloaded at Shareholders who wish to receive the printed Annual Report and who require assistance in viewing the CD-ROM, kindly contact Puan Nor Azimah Binti Bulat at telephone no or your request to nor.azimah@ my.tricorglobal.com ANNUAL REPORT

5 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad Main Market Listing Requirements) ELECTION OF DIRECTORS No individuals are standing for election as directors at the forthcoming 14 th Annual General Meeting of the Company. GENERAL MANDATE FOR ISSUANCE OF SHARES The Resolution 8 tabled under Special Business as per the Notice of 14 th Annual General Meeting of the Company dated 29 April 2017 is a renewal of general mandate granted by shareholders of the Company at the last Annual General Meeting held on 26 May The proposed renewal of general mandate for issuance of shares will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for the purpose of funding future investment, working capital and/or acquisition. As at the date of notice of meeting, no new share has been issued pursuant to the general mandate granted at the last Annual General Meeting of the Company. 4 EKA NOODLES BERHAD ( U)

6 CORPORATE INFORMATION BOARD OF DIRECTORS Chairman / Independent Non-Executive Director Dato Sohaimi Bin Shahadan Group Managing Director Dato Sri Chin Seak Huat (JP) Executive Director Fong Yit Meng Independent Non-Executive Director Dato Dr. Chin Yew Sin (JP) Lim Choo Hooi Leong Woay Neoh Woay Hong AUDIT COMMITTEE Leong Woay Neoh Woay Hong (Chairman) Dato Dr Chin Yew Sin (JP) Lim Choo Hooi REMUNERATION COMMITEE Lim Choo Hooi (Chairman) Dato Dr. Chin Yew Sin (JP) Leong Woay Neoh Woay Hong NOMINATING COMMITEE Leong Woay Neoh Woay Hong (Chairman) Dato Dr. Chin Yew Sin (JP) Lim Choo Hooi COMPANY SECRETARIES Tan Tong Lang (MAICSA ) P ng Chiew Keem (MAICSA ) Chong Voon Wah (MAICSA ) AUDITORS Afrizan Tarmili Khairul Azhar (AF1300) Chartered Accountants N0. 2, Jalan Rampai Niaga 2 Rampai Business Park Kuala Lumpur Tel : Fax : BANKERS Public Bank Berhad Bank Kerjasama Rakyat Malaysia Berhad Bank Pertanian Malaysia Berhad SOLICITORS S. Raman & Co TC Lim & Co REGISTERED OFFICE A, Menara BHL Bank Jalan Sultan Ahmad Shah Penang Tel : Fax : REGISTRARS Tricor Investor & Issuing House Services Sdn. Bhd. Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South No. 8, Jalan Kerinchi Kuala Lumpur Tel : Fax : HEAD OFFICE Lot 208, Phase II Kuala Ketil Industrial Estate Kuala Ketil Kedah Darul Aman Tel : Fax : STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code : 7182 Stock Name : EKA PRINCIPAL PLACE OF BUSINESS Lot 208, Phase ıı, Kuala Ketil Industrial Estate, Kuala Ketil, Kedah Darul Aman. ANNUAL REPORT

7 CORPORATE STRUCTURE History and Principal Activities EKA Noodles Berhad ( EKA ) was incorporated in Malaysia under the Companies Act, 1965 on 20 June 2002 as a public limited company under its present name. EKA is an investment holding company whilst the principal activities of its wholly-owned subsidiary companies, are as follows:- Subsidiary Company Date and place of Incorporate Issued and Paid-Up Capital Current Activities Kilang Bihun Bersatu Sdn Bhd Malaysia RM 17,441,860 Has ceased operation since January 2017 Rasayang Food Industries Sdn Bhd Malaysia RM 7,915,000 Has ceased operation since February 2017 Bersatu Noodles Industries Sdn Bhd Malaysia RM 1,000,000 Has ceased operation since May 2016 Bersatu Biotechnology (Johore) Sdn Bhd Kilang Bihun Bersatu (East Malaysia) Sdn Bhd Malaysia Malaysia RM 500,000 Has ceased operation since January 2017 RM 300,000 Has ceased operation since August 2016 Bersatu Sago Industries Sdn Bhd Malaysia RM 500,000 Has ceased operation since January 2017 Bersatu Sago Industries (Mukah) Sdn Bhd Malaysia RM 500,000 Has ceased operation since January 2017 EKA Foodstuff Sdn Bhd Malaysia RM 2 Has ceased operation since January EKA NOODLES BERHAD ( U)

8 CORPORATE STRUCTURE (Cont d) EKA NOODLES BERHAD ( U) 100% 100% 100% 100% Bersatu Biotechnology (Johore) Sdn Bhd Kilang Bihun Bersatu (East Malaysia) Sdn Bhd Rasayang Food Industries Sdn Bhd Bersatu Sago Industries (Mukah) Sdn Bhd 100% 100% 100% 100% Bersatu Sago Industries Sdn Bhd Kilang Bihun Bersatu Sdn Bhd Bersatu Noodles Industries Sdn Bhd EKA Foodstuff Sdn Bhd ANNUAL REPORT

9 MANAGEMENT DISCUSSION AND ANALYSIS EKA Noodles Bhd and its subsidiaries ( EKA ) is principally engaged in the manufacturing and marketing of all types of rice and sago sticks (vermicelli) and other related products. Our group is established participant in its market since 2002 and holding about 30% share market in country in past few years. In the past few years, we have strived to be the market leader of all types of rice and sago sticks (vermicelli) and other related products. Our cost reduction exercise is ongoing and we will improve our operation efficiency through maximisation of our resources. In order to maintain the popularity of our EKA brand and being a household name for more than a decade. We will also focus in the development of EKA brand through new innovative products, enhanced nutritional value and quality improvements to keep abreast with the fast changing market and consumers demand. Financial Year/Period 30/06/12 (18 Months) 30/6/13 (12 Months) 30/06/14 (12 Months) 30/12/15 (18 Months) 31/12/16 (12 Months) Revenue (RM 000) 123,310 97,155 90,334 97,005 23,910 Profit/(Loss) Before interest and (26,892) 5,745 (31,634) (6,867) (30,352) tax(rm 000) Finance cost (RM 000) 540 5,499 5,520 8,729 4,087 Net profit/(loss) (RM 000) (26,708) 688 (37,032) (14,909) (34,106) Shareholders equity (RM 000) 22,280 22,702 13,702 12,500 (21,606) Total assets (RM 000) 114, ,396 97,768 94,761 (59,171) Borrowing (RM 000) 66,439 73,945 68,311 67,274 69,435 Debt/Equity (%) (321) Earnings/(Loss) per share (Cents) (22) 0.57 (15.43) (4.78) (10.93) Net assets per share (Cents) (6.92) Dividend per share The Group registered a revenue of RM24.0 million for the financial year ended 31 December 2016 for 12 months result whilst, the revenue for the preceding financial period ended 31 December 2015 for 18 months result was RM97.0 million. Averagely, the monthly revenue for current financial year had decreased as compared to the preceding year end. This was mainly due to some of our existing customers had continually moved the consumption of bihun and laksa to other brands in the market since last financial period. The Group suffered losses before tax of RM34.4 million for the financial year ended 31 December 2016 as compared with losses before tax of RM14.9 million in the preceding financial period ended 31 December The huge losses were the result from the high fixed operation cost incurred such as staff costs and finance costs, impairment of receivables and property, plant and equipment. There are significant changes of total asset attributed by impairment of receivable and property, plant and equipment, uplifted of fixed deposits with licensed bank. There are no significant changes of total liabilities except trade and other payables due to the payment made to creditors. There is an increase of borrowing was solely due to interests charged by the banks in the financial year. EKA is experiencing declining sales in big fall, the new players have tried to capture the market share with the lower prices offer to the consumers for bihun and laksa. The group s loss before interest and taxation increased 346% in from RM6.8 million in 2015 to RM30.3 million in The increase was mainly due to high fixed operation cost incurred such as staff costs and finance costs, impairment of receivables and property, plant and equipment. With effect from January 2017, EKA have ceased operation for all plants to avoid more losses. 8 EKA NOODLES BERHAD ( U)

10 MANAGEMENT DISCUSSION AND ANALYSIS (Cont d) EKA business is very competitive from other manufacturers operating in lower costs environment. In order to remain competitive in the market, EKA will emphasis on minimal wastage issue which may lower down the cost of products. This will be supported by continued training of production workers. The demand of bihun and laksa will continually increase with the increase of population in the country. Bihun and laksa are the basic food for every household in the country. Due to financial issue, EKA have ceased operation for all plants in West Malaysia and East Malaysia since January 2017 and expected for the new investor to restructure EKA. The Board of Directors has approved a dividend payout policy of not less than 75% of its consolidated profit after tax (excluding exceptional items) for the financial year ending 31 December 2016 onwards. However, such payments will depend upon a number of factors, including amongst others, the earnings, capital commitments, general financial conditions, distributable reserves and other factors to be considered by the Board. ANNUAL REPORT

11 DIRECTORS PROFILES Dato Sohaimi Bin Shahadan, aged 48, Male, Malaysian. Chairman,Independent Non-Executive Director Dato Sohaimi Bin Shahadan was appointed as Independent Non-Executive Chairman on 3 October He graduated from University Pertanian Malaysia with Masters in Corporate Communication, West Coast Institute Technology and Management, Perth, Australia with Masters in Business Administration, University Kebangsaan Malaysia with Bachelor in Business Administration. Currently, he is the Chairman of Pelaburan MARA Berhad (PMB) since 2013, an investment entity for Majlis Amanah Rakyat (MARA) and the Chairman of PDZ Holdings Berhad and also BHS Industries Berhad. While engaging in his business, Dato Sohaimi is also passionate in the political arena and holds the UMNO Supreme Council Member. In addition, he also served as Vice President IV of Malays Businessmen and Industrialist Association (PERDASAMA). Currently, he is the Independent Non-Executive Director of KUB Malaysia Berhad and Damansara Realty Berhad. He does not have any family relationship with any directors and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offences, if any. Dato Sri Chin Seak Huat, SSAP, DIMP, AMP, AMK, JP, aged 51, Male, Malaysian. Group Managing Director Dato Sri Chin Seak Huat was appointed as Chief Executive Officer of the Company on 26 July 2010 and subsequently promoted to Managing Director on 22 June He is responsible for day-to-day operation of the Group such as finance & control and corporate affairs as well as the formulating of business strategies. He started his business career as a sole proprietor and has been involved in the construction and property development business for the past 12 years. He formed a sole proprietor under the name of SH Construction Industries to undertake and execute his construction projects and has successfully completed some main projects over the years. Except for property development business, he is also extensively involved in sofa and furniture manufacturing, telecommunication business and corrugated cartons and sheetboards industry. Currently, he does not hold any other directorship of public companies and listed corporations. He does not have any family relationship with any directors and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offence, if any. 10 EKA NOODLES BERHAD ( U)

12 DIRECTORS PROFILES (Cont d) Fong Yit Meng, Aged 34, Male, Malaysian. Executive Director Fong Yit Meng was appointed as the Executive Director of the Company on 14 March He graduated with Bachelor Degree in Information Technology from Multimedia University. He runs a wholesale, distribution and industrial supplies business in Malaysia with presence in Bangkok, Thailand. He established Airbel Technologies Sdn Bhd, a MSC status company providing business process automation solution and cloud-based solutions. Presently he is also managing Stickerson Trading Sdn Bhd, a printing company in Penang. He is responsible for the finance and corporate affairs of the group as well as formulation and implementation of the group s corporate and business strategies to enhance profitability and growth. Currently, he does not hold any other directorship of public companies and listed corporations. He does not have any family relationship with any directors and/or major shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offences, if any. Dato Dr. Chin Yew Sin (JP), aged 57, Male, Malaysian. Independent Non-Executive Director Dato Dr. Chin Yew Sin (JP) was appointed as Independent Non-Executive Director of the Company on 14 March He is also a member of the Audit Committee, Nominating Committee and Remuneration Committee. He graduated from Universiti Malaya, Malaysia with a Bachelor of Jurisprudence Degree, Universiti Teknologi Malaysia with a Bachelor Degree of Engineering (Hons) Mechanical Engineering Degree, University of Bolton, UK with an Accountancy Degree, Heriot-Watt University, Scotland with a Master of Business Administration Degree, University of Newcastle, Australia with a Master of Marketing and Southern Cross University, Australia with a Doctorate in Business Administration. He was the Group Managing Director of Metronic Global Berhad from 2013 to Prior to that, he was the Group Deputy Chairman of Metronic Global Berhad from 2012 to Currently, he is the Executive Chairman of Dansomar (M) Sdn Bhd and also the Deputy Chairman of IBG Manufacturing Sdn Bhd. He is the Academic Advisor of Lim Kok Wing University of Creative Technology and also a Director of Southern University College, Skudai, Johore since Currently, he does not hold any other directorship of public companies and listed corporations. He does not have any family relationship with any directors and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offences, if any. ANNUAL REPORT

13 DIRECTORS PROFILES (Cont d) Lim Choo Hooi, aged 47, Male, Malaysian. Independent Non-Executive Director Lim Choo Hooi was appointed as Independent Non-Executive Nominating Director on 14 March He is also the chairman of the Remuneration Committee, a member of Audit Committee and a member of Nominating Committee. Lim Choo Hooi graduated from the University of Malaya LLB (Hons) Malaya in 1995, He was admitted and enrolled as an advocate & solicitor of the High Court of Malaya in February 1996 He chambered and later practiced as Legal Assistant in Messrs. Ban Eng, Annual & Foong from 1996 until 1997 where he formed and set up a partnership legal firm under the name of Messrs. J. Tan & C. H. Lim. He provides wide range of civil and commercial litigation such as land matters, banking litigation, corporate litigation, commercial litigation and other matters. His conveyancing practices offer practical and cost effective legal services on investigation, acquisition, financing, construction, development and sales of every type of commercial and residential project. Currently, he does not hold any other directorship of public companies and listed corporations. He does not have any family relationship with any directors and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offences, if any. Leong Woay Neoh Woay Hong, aged 50, Male, Malaysian. Independent Non-Executive Director Leong Woay Neoh Woay Hong was appointed as Independent Non-Executive Director on 14 March He is also the Chairman of the Audit Committee, Chairman of Nominating Committee and a member of Remuneration Committee. He graduated with a Diploma in Commerce (Financial Accounting) from Kolej Tunku Abdul Rahman. He later obtained his Association of Chartered Certified Accountants, United Kingdom qualification and was admitted as a member of both the Malaysian Institute of Accountant (MIA) and the Association of Chartered Certified Accountants, United Kingdom (ACCA) in He is currently a Chartered Accountant registered with MIA and a Fellow of ACCA, United Kingdom. He is also a Certified Financial Planner with Financial Planning Association of Malaysia. He began his career in 1991 as an Audit Assistant in Neoh WM Lam & Co and was promoted to an Audit Manager in Subsequently in 2010, he was promoted to Principal of Aljeffridean Chartered Accountants. Presently, he is also a Partner of Tax Advisory PLT, a position he has held since Currently, he does not hold any other directorship of public companies and listed corporations. He does not have any family relationship with any directors and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offences, if any. 12 EKA NOODLES BERHAD ( U)

14 CORPORATE GOVERNANCE DISCLOSURES The Board of Directors of EKA Noodles Berhad is pleased to provide this statement which sets out the corporate governance practices of the Company with reference to the Principles and Recommendations of the Malaysian Code of Corporate Governance 2012 ( Code ). This statement is made in compliance with Paragraph of the Main Market Listing Requirements of Bursa Securities. PRINCIPLE 1 CLEAR ROLES AND RESPONSIBILITIES The Board There are presently 6 Board members, comprising 4 independent non-executive directors and 2 executive directors. The current composition of the Board represents a mix of skills, knowledge, ethnicity and age which assists the Board in discharging its stewardship and responsibilities. The profile of each director is set out in the Directors Profile section of this Annual Report. The Board is well balanced with the presence of independent non-executive directors. The roles of the independent non-executive directors are vital as they provide independent views and added perspectives to the Board s decision making process. The Board is assisted by 4 Board Committees namely, the Audit Committee, Nominating Committee, Remuneration Committee and Risk Management Committee, each with predefined terms of references and responsibilities. The Chairman of the respective Board Committees shall then report the outcome of their meetings to the Board. On ad-hoc matters which are to be resolved urgently, the Board will set up a task force committee comprising wholly the senior management. The task force committee reports to the Managing Director whose role is to ensure the task are accomplished within the timeframe set by the Board. Roles and Responsibilities The Board, in discharging its stewardship role delegates authority and vests accountability in respect of the Group s day to day operations with a management team led by the Managing Director. The Group s organisation chart has clear reporting lines and authorities of the Board and those applicable to the management. Key matters reserved for the Board s approval are inclusive of but not limited to approving of financial statements and quarterly results, new appointments to the Board, material purchases and/or disposals of the Group s fixed assets, new investments, corporate restructuring, joint ventures set up and related party transactions. Additionally, the Board also assumed the oversight role in relation to the Group s business performances, succession planning, risk management and implementation of appropriate systems to manage identified risks, investor relations, systems of internal control as well as compliances of relevant applicable laws and regulations. There is a clear division of responsibilities between the Chairman and the Managing Director. The Chairman of the Company, Dato Sohaimi Shahadan is an independent director. He has no executive function and is responsible for orderly conduct and proceedings of meetings. The Managing Director of the Company, Dato Sri Chin Seak Huat (JP) is responsible for formulating policies and strategies, the corporate affairs of the Company and the overall operation and financial performance of the Group. The Managing Director is assisted by the management team in implementation of policies and running the day-today operations of the Group. Board Charter The primary objective of the Board Charter is to provide guidance to the Board in discharging its roles, functions, duties and responsibilities. The Board Charter will be reviewed from time to time to ensure their relevance and compliance. The last review of the Board Charter was on 25 April 2017 and the updated Board Charter is available on the Company s website ( ANNUAL REPORT

15 CORPORATE GOVERNANCE DISCLOSURES (Cont d) PRINCIPLE 1 CLEAR ROLES AND RESPONSIBILITIES (CONT D) Whistle Blowing Policy The Board had established a Whistle-Blowing Policy which sets out a formal communication channel for employees and stakeholders of the Group to communicate matters of concern in good faith and without fear of reprisal. The Whistle-Blowing Policy is available on the Company s website ( Code of Business Conduct As part of governance process, the Board had formalised and adopted the Code of Business Conduct which outlines the business conducts and practices in the Group which is applicable to all directors, employees and any other persons who represent the Group in executing their duties and functions of the Group. The Code of Business Conduct is available on the Company s website ( Business Sustainability The Group s sustainability strategies ideally cover community, marketplace, workplace and environment. The details are set out in Corporate Social Responsibility Statement section of this Annual Report. Supply of Information All directors have unrestricted access to any information pertaining to the Group including direct access to the management, Company Secretaries as well as other advisers, if any, appointed by the Company in facilitating their decision making process and discharging their duties effectively. The directors may also seek independent professional advice at the Company s expense. However, the director concerned must seek the approval of the Board before incurring such expenses. Meeting agendas and relevant board papers are circulated at least 7 days in advance to directors to enable them to participate effectively in the meetings. Senior managements are invited to Board meetings to provide explanations, information or updates on the Group s business operation matters that may be raised by the Board. The proceedings of all meetings of the Board and Board Committees are duly compiled in the minutes and the said minutes are kept at the registered office of the Company. All statutory records and minutes of the Company are accessible by the directors at the registered office during office working hours. Company Secretaries The Company Secretaries are responsible for the secretarial function of the Company. The Company Secretaries issue notices of meetings after the agendas are firmed by the management and shall attend the meetings of the Board, Board Committees and shareholders to record the proceedings of such meetings. The Company Secretaries also ensures the statutory registers are properly updated and maintained at the registered office of the Company. Every member of the Board is provided with the Company s Corporate Calendar that has details of compliance issues, closed periods, meeting schedules and events. The directors are also regularly updated on circulars received from Bursa Securities as well as amendments or changes to the Listing Requirements which are relevant to the Company. All the Company Secretaries are qualified to act as company secretaries under Section 235(2) of the Companies Act, 2016 and they regularly attend continuous development programmes conducted by various professional bodies including the programmes in corporate governance organised by Bursa Malaysia. 14 EKA NOODLES BERHAD ( U)

16 CORPORATE GOVERNANCE DISCLOSURES (Cont d) PRINCIPLE 2 - STRENGTHEN COMPOSITION Nominating Committee The Nominating Committee was established on 14 February 2004, comprising exclusively non-executive directors, a majority of whom are independent and the existing members are:- Chairman : Leong Woay Neoh Woay Hong (Appointed on 25 April 2017) Members : Dato Dr Chin Yew Sin (JP) (Appointed on 25 April 2017) Lim Choo Hooi (Appointed on 25 April 2017) The Nominating Committee was established with defined terms of reference and in particular, the following duties relating to assessment or selection of directors:- 1. new candidates for appointment to the Board or to fill casual vacancies; 2. the directors who are seeking re-election; 3. the effectiveness of the Board as a whole & its Board Committees; 4. the performance of individual directors; 5. the independence of independent directors; 6. Boardroom Diversity, Directors Trainings and any other duties as required by the Board; and 7. term of office and the performance of Audit Committee and its members. The Nominating Committee had met once during the financial year ended (FYE) 31 December 2016 with full members being present. During the FYE 31 December 2016, the Nominating Committee had carried out the following activities: 1. Assessment of the Board and Board Committees 2. Assessment of the performance of individual directors 3. Assessment of the independence of independent directors 4. Assessment of the directors seeking for re-elections at the forthcoming annual general meeting 5. Assessment of the term of office and the performance of the Audit Committee and its members Annual Assessment The assessment of the Board and Board Committees are carried out by way of questionnaires in regard to mix of skills, knowledge, competency, proceeding of meetings, experiences, timely reporting and so forth. Whilst the assessments of individual directors and independent director are carried out by way of self-assessment questionnaires sent to the directors concerned. The questionnaires cover amongst others the character, integrity, contributions in meetings, quality of input, understanding of role, time commitment and so forth. The responses to the questionnaires are then sent to the Nominating Committee for evaluations. The Nominating Committee will deliberate based on their ratings and makes its recommendations to the Board. The Nominating Committee, upon its recent annual assessment carried out, is satisfied that the current size and composition of Board, Board Committees and its directors are adequately appropriate for its purpose with relevant mix of skills, experience, ethnicity and age. Appointment & Re-election The Nominating Committee is also responsible to assess the suitability of new candidates before appointment to the Board as well as recommending the directors who are standing for re-election at the annual general meeting of the Company. The assessment of new candidate is based on his education, relevant skills, experience, professionalism, integrity, sound judgement and independency. The Nominating Committee will assess and table its recommendation to the Board. The Board will then consider the recommendation of the Nominating Committee and make the final decision as to the new appointment of director. The Company Secretary then ensures the relevant procedures relating to the appointment of the new director are properly executed. ANNUAL REPORT

17 CORPORATE GOVERNANCE DISCLOSURES (Cont d) PRINCIPLE 2 - STRENGTHEN COMPOSITION (CONT D) Appointment & Re-election On the assessment of existing directors who are seeking re-election at the annual general meeting of the Company, the Nominating Committee will assess amongst others their regular and timely attendance at meetings, performance, contributions and so forth. Boardroom Diversity The Board acknowledges the recommendation of the Code to establish a policy formalising its approach to boardroom diversity and to take steps to ensure that women candidates are sought as part of its recruitment exercise. In this regards, the Nominating Committee will consider woman representative on the Board in its future selection process should need arises. Apart from gender diversity in boardroom, the Board embraces diversity in ethnicity and age as essential combinations to strengthen the composition of the Board. Currently, the composition of the Board has a diverse blend of ethnicity, age, culture and expertise required in facilitating different insights and perspectives in achieving an effective board stewardship. The Nominating Committee, upon its recent assessment carried out, is satisfied with the current composition of the Board and is of the view that a fixed policy is not required at this juncture. Remuneration Committee The Remuneration Committee was established on 14 February 2004, comprising mainly independent non-executive directors and the members are:- Chairman : Lim Choo Hooi (Appointed on 25 April 2017) Members : Leong Woay Neoh Woay Hong (Appointed on 25 April 2017) : Dato Dr Chin Yew Sin (JP) (Appointed on 25 April 2017) The Remuneration Committee is responsible for reviewing and recommending the remuneration package of executive directors to the Board. The Remuneration Committee is objective, fair and transparent in its process to ensure a competitive remuneration are in place to motivate, reward and retain calibre directors to manage the business of the Group. None of the executive directors participate in determining their respective remuneration packages. The remuneration framework is reflective of the executive directors level of responsibilities, experiences, length of services and individual performances. The Remuneration Committee will also consider the similar industry remuneration as a benchmark and the financial performance of the Group when making its recommendations to the Board. The Remuneration Committee also review the remuneration to be paid to non-executive directors based on their level of responsibilities and commitment required. However, the Board as a whole determines the remuneration of the non-executive directors, and the individual director concerned shall abstain from deliberation on his own remuneration. The directors fees determined by the Board are subject to shareholders approval at the annual general meeting. Executive Directors Company Level Details of the directors remuneration for FYE 31 December 2016 are as follows:- Non- Executive Directors Total (RM) Executive Directors Group Level Non- Executive Directors Total (RM) Salaries & Allowances 486, , , ,923 Statutory Contributions 58,470 58,470 58,470 58,470 Fees Benefits-in-kind 92,052 92,052 92,052 92,052 Meeting Allowances 11,000 22,000 33,000 11,000 22,000 33, EKA NOODLES BERHAD ( U)

18 CORPORATE GOVERNANCE DISCLOSURES (Cont d) PRINCIPLE 2 - STRENGTHEN COMPOSITION (CONT D) Remuneration Committee (Cont d) The number of directors whose total remuneration falls into the following bands comprises:- Remuneration bands (RM) Executive Directors Company Level Non-Executive Directors Executive Directors Group Level Non-Executive Directors Less than RM50, ,001 to 100, ,001 to 600, PRINCIPLE 3 - REINFORCE INDEPENDENCE Assessment of Independent Directors The Board values the importance of the role of independent directors to strengthen the Board as a whole. The role of independent directors is to bring independent and objective judgment to the Board which mitigates risks arising from conflict of interests or undue influence from interested parties. Where any director has an interest in any matter under deliberation, he is required to declare his interest and abstain from participating in the discussions and voting on the matter. There are presently 4 independent non-executive directors representing more than 1/3 of the Board. None of the tenure of the independent directors exceeds a cumulative term of 9 years. The Nominating Committee is responsible to assess the independent directors who have serves the Company for more than 9 years, in which the directors concern are assessed by the ratings of their self-assessment questionnaires. The Board will then consider and recommend the independent directors for re-appointment at the annual general meeting. The Nominating Committee will assess the independence of the independent directors annually. The assessment is carried out by way of questionnaires sent to the independent directors to self-evaluate their independence in addition to the criteria of independence set out in the Main Market Listing Requirements. The Nominating Committee will then assess and table its recommendations to the Board. The Nominating Committee, upon its recent annual assessment carried out, is satisfied that the independent directors of the Company have been able to discharge their responsibilities in an independent manner. PRINCIPLE 4 FOSTER COMMITMENT Board Commitments The Board meets on a scheduled basis, at least four (4) times a year to review and approve the quarterly and year end financial results. Additional meetings will be convened as necessary when there are urgent and important matters that require the Board s deliberations. The Board also resolves and approves certain Company s matters via circular resolution. The Circular resolutions are drawn up with detailed information and must be signed by a majority of the directors. For governance practices, the existing directors are encouraged to notify the Board before they accept any new directorships and of his time commitment to make positive contributions to the Board. Any Board members or substantial shareholders is responsible to ensure his recommended candidate is able to commit in fulfilling the role as a director of the Company before sending the candidate s profile to the Nominating Committee for evaluation. None of the directors of the Company hold more than 5 directorships in public listed companies. ANNUAL REPORT

19 CORPORATE GOVERNANCE DISCLOSURES (Cont d) PRINCIPLE 4 FOSTER COMMITMENT Board Commitments (Cont d) The Nominating Committee, upon its recent annual assessment carried out, is satisfied with the level of commitment given by the directors towards fulfilling their roles and responsibilities. During the FYE 31 December 2016, all the directors had attended at least 91.42% of the total number of Board meetings held. Meanwhile, full attendance was recorded for meetings of Board Committees held. The Board is satisfied that its directors including the non-executive directors holding multiple board representations are able to and have been devoting sufficient time to discharge their responsibilities adequately. During the FYE 31 December 2016, a total of 5 Board of Directors meetings held. The attendances of the directors are set below:- Directors Number of meetings attended Dato Sohaimi Bin Shahadan 5/5 Dato Sri Chin Seak Huat (JP) 5/5 Khor Wooi Lip (Resigned on 29 November 2016) 5/5 Low Beng Seng (Resigned on 02 December 2016) 5/5 Raja Nazrin Bin Raja Ghazilla (Resigned on 14 March 2017) 4/5 Dato Ahmad Zaffry Bin Sulaiman (Resigned on 14 March 2017) 3/5 Yee Yit Yang (Resigned on 25 April 2017) 5/5 PRINCIPLE 4 FOSTER COMMITMENT Directors Training The Board acknowledges the importance of continuous development of its directors and encourages them to partake in continuous development or training programmes to further enhance their skills and knowledge. In this respect, the Board has not set a training policy and therefore, its directors need to, on continuous basis evaluate and determine their training needs especially on recent developments in corporate governance, regulations and laws. All the directors had attended the Mandatory Accreditation Programme (MAP) prescribed by Bursa Securities. During the FYE 31 December 2016, trainings or seminars attended by the directors are as follows: Name Yee Yit Yang Description of Training Company Law Total revamp with huge tax planning opportunities Save as disclosed above, the other directors did not participate in any structured trainings during the financial period due to their work commitments. PRINCIPLE 5 UPHOLD INTEGRITY IN FINANCIAL REPORTING Financial Reporting The board aims to provide and present a balance and meaningful assessment of the group s financial performance and prospects at the end of the financial period, primarily through the annual financial statements and quarterly announcements of financial results as well as the chairman s statement in the annual report. The board is assisted by the audit committee in overseeing the group s financial reporting quality and processes. The Board assumes the responsibilities in ensuring the financial statements of the Group and of Company give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of their results and cash flows for the financial year then ended. 18 EKA NOODLES BERHAD ( U)

20 CORPORATE GOVERNANCE DISCLOSURES (Cont d) PRINCIPLE 5 UPHOLD INTEGRITY IN FINANCIAL REPORTING (CONT D) Financial Reporting (Cont d) In preparing the financial statements, the directors have ensured the Malaysian Financial Reporting Standards ( MFRS ) and the Malaysian Companies Act, 1965 have been complied. Further, the directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates where applicable. During the FYE 31 December 2016, the Audit Committee assisted the Board in reviewing the financials and statutory compliance of the quarterly financial statements and the annual audited financial statements of the Company. External Auditors The Audit Committee meets with the External Auditors at least twice a year to discuss the conduct and concerns arising from their audit without the presence of the executive directors or management of the Company. The External Auditors report their audit findings including any other pertinent matters pertaining to the audit of the Group s financial statements to the Audit Committee. The Audit Committee will then report to the Board on matters that necessitate the Board s attention. The Audit Committee is responsible to appraise and assess the performance and independence of the External Auditors by way of questionnaires and discussions with the audit engagement partner to ensure their independence, objectivity and professionalism. The questionnaires cover amongst others the quality of work, competency, manpower resources and so forth. The existing auditors, Messrs. Afrizan Tarmili Khairul Azhar ( AFTAAS ) had confirmed to the Audit Committee in writing that they are, and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements. The Audit Committee, upon its recent annual assessment carried out, is satisfied with the suitability of AFTAAS based on their work done and independence and had recommended to the Board for their re-appointment at the forthcoming annual general meeting. PRINCIPLE 6 RECOGNISE AND MANAGE RISK Risk Management The Board acknowledges its responsibility for establishing a sound framework to manage risks and maintaining a sound systems of internal control to safeguard the shareholders investment and the Group s assets. An overview of risk management and the state of internal control within the Group is set out in the Statement on Risk Management and Internal Control section of this Annual Report. Internal Audit Function The internal audit function of the Group is outsourced to an independent firm to audit and monitor the compliance of the Group s policies, procedures and the effectiveness of the Group s internal control systems. The Internal Auditors reports directly to the Audit Committee. The Internal Auditors will review the systems of internal control of the Group covering functional areas based on the audit plan approved by the Audit Committee. The Internal Auditors will then report their findings, recommendations for improvements and the management responses to the Audit Committee. The progress in the implementation of the agreed actions is being monitored through follow up reviews by the Internal Auditors. The Audit Committee will report to the Board on the progress and findings of the internal audit function. Further details of the internal audit function are set out in the Audit Committee Report section of this Annual Report. ANNUAL REPORT