ANNUAL REPORT AN INTEGRATED PLASTIC MANUFACTURER

Transcription

1 ANNUAL REPORT 16 AN INTEGRATED PLASTIC MANUFACTURER

2 CONTENTS 02 NOTICE OF ANNUAL GENERAL MEETING 31 FINANCIAL STATEMENTS 05 CORPORATE INFORMATION 98 ANALYSIS OF SHAREHOLDINGS 06 CORPORATE STRUCTURE 101 ANALYSIS OF WARRANTS HOLDINGS 07 DIRECTORS PROFILE 103 ADDITIONAL COMPLIANCE INFORMATION 10 CHAIRMAN S STATEMENT 104 PROPERTIES OF THE GROUP 13 FIVE YEARS GROUP FINANCIAL SUMMARY FORM OF PROXY 15 CORPORATE GOVERNANCE STATEMENT 25 RESPONSIBILITY STATEMENT BY THE BOARD OF DIRECTORS 26 CORPORATE SOCIAL RESPONSIBILITY 27 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL 29 AUDIT COMMITTEE REPORT

3 SKP RESOURCES BERHAD NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting ( AGM ) of SKP RESOURCES BHD ( the Company ) will be held at Cempaka Room, Level 3, Hotel Bangi-Putrajaya, Off Persiaran Bandar, Bandar Baru Bangi, Selangor Darul Ehsan on Friday, 26 August 2016 at 11:00 a.m. or at any adjournment thereof to transact the following business:- ORDINARY BUSINESS 1. To receive the Audited Financial Statements of the Company for the financial year ended 31 March 2016 together with the Reports of the Directors and Auditors thereon. 2. To approve the payment of a final single-tier dividend of 3.50 sen per share for the financial year ended 31 March Please refer to Explanatory Note A Resolution 1 3. To re-elect the following Directors who retire in accordance with Article 84 of the Company s Articles of Association:- (a) (b) Chia Choong Kim; and Chew Teck Cheng Resolution 2 Resolution 3 4. To re-appoint Messrs. Ernst & Young as Auditors of the Company and to authorise the Board of Directors to fix their remuneration. Resolution 4 SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions with or without modifications, as Ordinary Resolutions of the Company:- 5. ORDINARY RESOLUTION 1 PROPOSED PAYMENT OF DIRECTORS FEES THAT the payment of Directors fees of RM177, in respect of the financial year ended 31 March 2016 be and is hereby approved. Resolution 5 6. ORDINARY RESOLUTION 2 RETENTION OF MR. KOH CHIN KOON AS AN INDEPENDENT DIRECTOR OF THE COMPANY THAT approval be and is hereby given to retain Mr. Koh Chin Koon, who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to retain his office as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012 ( MCCG 2012 ). Resolution 6 7. ORDINARY RESOLUTION 3 RETENTION OF MR. CHEW TECK CHENG AS AN INDEPENDENT DIRECTOR OF THE COMPANY THAT subject to the passing of Resolution no. 3, Mr. Chew Teck Cheng, who would on 30 November 2016, have served the Board as an Independent Non-Executive Director for a cumulative term of nine (9) years, be and is hereby retained as Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting. Resolution 7 2

4 ANNUAL REPORT 2016 NOTICE OF ANNUAL GENERAL MEETING cont'd 8. ORDINARY RESOLUTION 4 AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT 1965 THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and the approvals of the relevant governmental and/or regulatory authorities (if any), the Directors be and are hereby empowered to issue and allot new shares in the Company at any time, to such person or persons, upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per cent (10%) of the nominal value of the total issued and paid-up share capital of the Company at the time of issue AND THAT the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company. Resolution 8 9. To transact any other business of which due notice shall have been given in accordance with the Companies Act, NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS HEREBY GIVEN THAT a final single-tier dividend of 3.50 sen per share for the financial year ended 31 March 2016, if approved by the shareholders at the forthcoming Sixteenth Annual General Meeting, will be paid on 27 September The entitlement date for the payment is 5 September (a) (b) Shares transferred into the Depositor s Securities Accounts before 4.00 p.m. on 5 September 2016 in respect of transfer; and Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. By Order of the Board CHUA SIEW CHUAN (MAICSA ) PAN SENG WEE (MAICSA ) Company Secretaries Kuala Lumpur 29 July 2016 A depositor shall qualify for entitlement only in respect of:- Notes:- (a) In respect of deposited securities, only Members whose names appear in the Record of Depositors on 19 August 2016 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at this meeting. (b) A Member entitled to attend and vote at the meeting is entitled to appoint up to two (2) proxies to attend and vote instead of him. A proxy may but need not be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 need not to be complied with. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the Member to speak at the Meeting. (c) Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. (d) Where a Member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. (e) Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. (f) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. (g) The original instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority must be deposited at the Registered Office of the Company at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or at any adjournment thereof. (h) Any alteration in the instrument appointing a proxy must be initialed. 3

5 SKP RESOURCES BERHAD NOTICE OF ANNUAL GENERAL MEETING cont'd Explanatory Note A This agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the audited financial statements. As such, this item is not put forward for voting. Explanatory Notes on Special Business:- 1. Resolution 5 This proposed resolution is in accordance with Article 93 of the Company s Articles of Association. This resolution, if passed, will authorise the payment of Directors fees to Directors of the Company for their services as Directors during the financial year ended 31 March Resolution 6 Mr. Koh Chin Koon was appointed as Independent Non-Executive Director of the Company on 4 March 2005 and had served the Board for a cumulative term of more than nine (9) years. In accordance with the MCCG 2012, the Board of Directors of the Company, after having assessed the independence of Mr. Koh Chin Koon, regarded him to be independent, based amongst others, the following justifications and recommends that Mr. Koh Chin Koon be retained as Independent Non-Executive Director of the Company:- (i) (ii) (iii) He has met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements; He does not have any conflict of interest with the Company and has not been entering/is not expected to enter into contract(s) especially material contract(s) with the Company and/or its subsidiary companies; and The Board of Directors is of the opinion that Mr. Koh Chin Koon is an important Independent Non-Executive Director of the Board in view of his many years on the Board with incumbent knowledge of the Company, the Group s activities and corporate history. He has been providing invaluable contributions to the Board in his role as an Independent Non- Executive Director. 3. Resolution 7 Mr. Chew Teck Cheng was appointed as Independent Non-Executive Director of the Company on 30 November He would have served in that capacity for a cumulative term of nine (9) years by 30 November The Board recommends that Mr. Chew Teck Cheng should be retained to continue in office as Independent Non-Executive Director based on the following justifications:- (iv) (v) (vi) He has met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements; He does not have any conflict of interest with the Company and has not been entering/is not expected to enter into contract(s) especially material contract(s) with the Company and/or its subsidiary companies; and He is an important Independent Non-Executive Director of the Board in view of his many years on the Board with incumbent knowledge of the Company, the Group s activities and corporate history. He has been providing invaluable contributions to the Board in his role as an Independent Non-Executive Director Resolution 8 The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act 1965 at the forthcoming Annual General Meeting of the Company (hereinafter referred to as the "General Mandate"). This proposed resolution, if passed, will renew the authority given to the Directors of the Company to issue and allot new shares in the Company at any time, to such person or persons, upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the number of shares issued pursuant to this General Mandate, when aggregated with the nominal value of any such shares issued during the preceding twelve (12) months, does not exceed 10% of the total issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. The General Mandate procured and approved in the preceding year 2015 ("Previous Mandate") which was not exercised by the Company during the year, will expire at the forthcoming Sixteenth Annual General Meeting of the Company. There were no proceeds raised from Previous Mandate. With this renewed General Mandate, the Company will be able to raise funds expeditiously for the purpose of funding future investment, working capital and/or acquisition(s) without having to convene a general meeting to seek shareholders approval when such opportunities or needs arise.

6 ANNUAL REPORT 2016 CORPORATE INFORMATION BOARD OF DIRECTORS DATO GAN KIM HUAT Executive Chairman & Managing Director GAN POH SAN Executive Director CHIA CHOONG KIM Executive Director KOH CHIN KOON Senior Independent Non-Executive Director KOH SONG HENG Independent Non-Executive Director CHEW TECK CHENG Independent Non-Executive Director AUDIT COMMITTEE Koh Chin Koon, Chairman Koh Song Heng Chew Teck Cheng REMUNERATION COMMITTEE Chew Teck Cheng, Chairman Koh Chin Koon Dato Gan Kim Huat NOMINATION COMMITTEE Koh Song Heng, Chairman Chew Teck Cheng Koh Chin Koon COMPANY SECRETARIES Chua Siew Chuan (MAICSA ) Pan Seng Wee (MAICSA ) AUDITORS Ernst & Young Level 16-1, Jaya 99 Tower B, 99, Jalan Tun Sri Lanang Melaka, Malaysia Tel: Fax: REGISTERED OFFICE Level 7, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights Kuala Lumpur Tel: Fax: Web: HEAD OFFICE No. 421, 4 th Miles Jalan Kluang Batu Pahat Johor Darul Takzim Tel: Fax: Web: PRINCIPAL BANKERS Hong Leong Bank Berhad RHB Bank berhad United Overseas Bank (Malaysia) Berhad Malayan Banking Berhad SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel: ext 7014 Fax: STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad (Main Market) Stock Code: 7155 Stock Name: SKPRES WEBSITE 5

7 SKP RESOURCES BERHAD CORPORATE STRUCTURE (Listed on Main Market of Bursa Malaysia) 100% SYARIKAT SIN KWANG PLASTIC INDUSTRIES SDN BHD 100% GOODHART TECHNOLOGY SDN BHD 100% S.P.I. PLASTIC INDUSTRIES (M) SDN BHD 100% SUN SPARKLE SDN BHD 100% TAN BROTHERS BUSINESS MACHINES (SEGAMAT) SDN BHD 100% GOODHART INDUSTRIES SDN BHD 100% GOODHART LAND SDN BHD 100% PLASTICTECNIC (M) SDN BHD 100% BANGI PLASTICS SDN BHD 100% SUN TONG SENG MOULD-TECH SDN BHD 6

8 ANNUAL REPORT 2016 DIRECTORS' PROFILE DATO' GAN KIM HUAT Age 69, Malaysian, Male Executive Chairman and Managing Director Date of Appointment : 3 December 2002 Membership of Board Committees : Member of the Remuneration Committee Qualification and Working Experience : Dato Gan has over 30 years of experience in plastics injection moulding and is a well-known entrepreneur in the local plastics industry due to his wide knowledge of plastics manufacturing and network of contacts in the industry. Dato' Gan has also cultivated excellent relationships with the customers of the Group. Directorships of other public companies : Tecnic Group Berhad Family relationship with any director and/or : Dato' Gan is the father of Mr. Gan Poh San, the Executive Director of SKP major shareholder of SKP Conflict of interest with SKP, if any : Dato Gan does not have any conflict of interest with SKP except as disclosed in the financial statement Convictions for offences within the past five (5) years and any particulars of public sanction or penalty imposed by the relevant regulatory bodies during the financial year : Nil Number of board meetings attended in the : 4/5 financial year GAN POH SAN Age 41, Malaysian, Male Executive Director Date of Appointment : 3 December 2002 Membership of Board Committees : Nil Qualification and Working Experience : Mr. Gan received his Bachelor of Arts (Honours) majoring in Accounting and Finance from Staffordshire University and further obtained his MSc. in Finance from Imperial College (Management School), United Kingdom in In 1998, he joined Syarikat Sin Kwang Plastic Industries Sdn. Bhd., a whollyowned subsidiary of SKP, as a management trainee and was subsequently sent to Kai Japanese School and Nissei Plastics School in Japan to study Japanese language and plastic engineering respectively. His proficiency in speaking Japanese language enables him to communicate easily with the Group's Japanese customers. Directorships of other public companies : Tecnic Group Berhad Family relationship with any director and/or major shareholder of SKP : Mr. Gan is the son of Dato' Gan Kim Huat, the Executive Chairman and Managing Director of SKP Conflict of interest with SKP, if any : Mr. Gan does not have any conflict of interest with SKP except as disclosed in the financial statement Convictions for offences within the past five (5) years and any particulars of public sanction or penalty imposed by the relevant regulatory bodies during the financial year : Nil Number of board meetings attended in the : 5/5 financial year 7

9 SKP RESOURCES BERHAD DIRECTORS' PROFILE CHIA CHOONG KIM Age 68, Singaporean, Male Executive Director Date of Appointment : 3 December 2002 Membership of Board Committees : Nil Qualification and Working Experience : Mr. Chia graduated from the Singapore Polytechnic with a Diploma in Rubber and Plastics Technology in He was a Chemist with Malaysia Rubber Product Singapore Pte Ltd from 1972 to 1975 prior to joining Asahi Electronic Singapore Pte Ltd. He was sent to Japan Nissei Plastics Injection Machine Plant in Sakaki-Machi, Nagano Prefecture for training in thermoplastic injection moulding for both commodity and engineering plastic parts. In 1990, he was promoted to General Manager of Asahi Electronic Singapore Pte Ltd. He joined Syarikat Sin Kwang Plastic Industries Sdn Bhd in 1995 as the General Manager to oversee its overall operations. His specialty in plastics injection moulding parts and proficiency in Japanese language has strengthened the Group's relationship with the Japanese multi-national corporations. Directorships of other public companies : Nil Family relationship with any director and/or : Nil major shareholder of SKP Conflict of interest with SKP, if any : Nil Convictions for offences within the past five (5) : Nil years and any particulars of public sanction or penalty imposed by the relevant regulatory bodies during the financial year Number of board meetings attended in the financial year : 4/5 KOH CHIN KOON Age 46, Malaysian, Male Senior Independent Non-Executive Director 8 Date of Appointment : 4 March 2005 Re-designated as Senior Independent Non-Executive Director on 27 July 2014 Membership of Board Committees : Chairman of Audit Committee Member of Nomination Committee Member of Remuneration Committee Qualification and Working Experience : Mr. Koh Chin Koon completed his Bachelor Degree in University of Malaya in year 1995 and joined Malaysian Institute of Accountants (MIA) and Malaysian Institute of Taxation (MIT) in July 1999 and September 2000 respectively. He became an approved tax agent under Section 153(3)(b) of the Income Tax Act,1967. He was employed by Arthur Andersen & Co as a Tax Assistant after he completed his Bachelor Degree and promoted as a Tax Experience Senior during the employment. He left Arthur Andersen & Co and joined Chin & Co as a Tax Manager in February After having obtained a wide range of experience from his past employment involved in advising clients including private companies, public listed companies and quasi government organization, he set up Koh & Siow Management Services in May Directorships of other public companies : Nil Family relationship with any director and/or major : Nil shareholder of SKP Conflict of interest with SKP, if any : Nil Convictions for offences within the past five : Nil (5) years and any particulars of public sanction or penalty imposed by the relevant regulatory bodies during the financial year Number of board meetings attended in the : 4/5 financial year

10 ANNUAL REPORT 2016 DIRECTORS' PROFILE CHEW TECK CHENG Age 60, Malaysian, Male Independent Non-Executive Director Date of Appointment : 30 November 2007 Membership of Board Committees : Chairman of Remuneration Committee Member of Audit Committee Member of Nomination Committee. Qualification and Working Experience : Mr. Chew graduated with a Diploma in Commerce (Financial Studies) from Tunku Abdul Rahman College (now known as Tunku Abdul Rahman University College). He is an associate member of the Association of Chartered Certified Accountants in 1983 and a member of the Malaysian Institute of Accountants (Chartered Accountant) in He is also a fellow member of the Association of Chartered Certified Accountants since He has been practising as a Chartered Accountant and approved company auditor since 1986 under Messrs. T. C. Chew & Co. Directorships of other public companies : Nil Family relationship with any director and/or : Nil major shareholder of SKP Conflict of interest with SKP, if any : Nil Convictions for offences within the past five (5) years and any particulars of public sanction or penalty imposed by the relevant regulatory bodies during the financial year : Nil Number of board meetings attended in the : 3/5 financial year KOH SONG HENG Age 59, Malaysian, Male Independent Non-Executive Director Date of Appointment : 29 February 2008 Appointed as Non-Independent Non-Executive Director on 29 February 2008 and was re-designated as Independent Non-Executive Director on 25 July 2012 Membership of Board Committees : Chairman of Nomination Committee Member of Audit Committee Qualification and Working Experience : Mr. Koh Song Heng graduated with a Bachelor of Art Degree with Honours, majoring in Law & Economic disciplines in Modern Studies in He has over 23 years of experience in management and administration of Local and Export Products development. Directorships of other public companies : Nil Family relationship with any director and/or : Nil major shareholder of SKP Conflict of interest with SKP, if any : Nil Convictions for offences within the past five (5) years and any particulars of public sanction or penalty imposed by the relevant regulatory bodies during the financial year : Nil Number of board meetings attended in the : 5/5 financial year 9

11 SKP RESOURCES BERHAD CHAIRMAN'S STATEMENT WE HIT A KEY MILESTONE IN FINANCIAL YEAR ( FY ) 2016, TODAY SKP RESOURCES BHD GENERATES OVER RM1 BILLION IN REVENUE IN THE EMS ( ELECTRONICS MANUFACTURING SERVICES ) SPACE AND ANOTHER THREE (3) DIFFERENT PLASTIC MANUFACTURING INDUSTRIES. 10

12 ANNUAL REPORT 2016 CHAIRMAN'S STATEMENT Dear Shareholders, FY 2016 was an extraordinary year for SKP Resources Bhd and I was extremely pleased with our accomplishments as an organisation. We hit a key milestone in FY 2016, today SKP Resources Bhd generates over RM1 billion in revenue in the EMS space and another three (3) different plastic manufacturing industries. Overview Financially, FY 2016 marked a period of strong execution across multiple fronts; including the 82% surge in our profit before tax to RM101 million, enabled by two (2) primary levers, i.e. the successful launching of our new Johor Bahru plant and the contribution from the acquisitions of the three (3) subsidiaries i.e. Plastictecnic (M) Sdn. Bhd., Bangi Plastics Sdn. Bhd., and Sun Tong Seng Mould-Tech Sdn. Bhd. ( Acquisitions ). Operation Review As anticipated, the growth in our business was largely driven by strong results in our EMS segment and supplemented by our recent Acquisitions as our team performed exceptionally well against a backdrop of challenging global economic conditions. We have made significant investments in strengthening our EMS and plastic manufacturing service offerings over the past few years, and these investments are beginning to show results. Our EMS business grew and improved profitability as we enhanced value proposition and providing innovative solutions. I believe we made solid progress towards delivering solutions in FY During the year, the Group has also successfully commenced operations on September 2015 in the new manufacturing facility, which was located adjacent to our current site in Johor Bahru. This new facility has enable the Group to increase traction with its key customers and also witness the launch of new programmes and product introduction in FY Our strategy and goal is clear, the Group aims to achieve a more balanced portfolio that has longer product lifecycles and increased earnings stability. The Group continues to broaden its core competencies to enhance its competitiveness and customer support, which will enable the Group to attain sustainable long-term performance and growth in the future. Financial Review For the FY 2016, the Group registered revenue of RM1.015 billion, a truly remarkable 64% higher compared to the previous year. Full year profit before tax for the FY 2016 was recorded at an even more impressive RM101 million, representing a 82% growth for the year. In FY 2016, the 64% growth in revenue to RM1.015 billion is achieved on the back of organic investments and strategically focused Mergers and Acquisitions transactions. We believe that this growth is poised to expand further in the years ahead. Our strong sustainable cash flow generation remains a strength of the SKP Group. This has enabled our investments in new areas as we continue to supplement our acquisition strategy with organic investments in new and differentiated manufacturing capabilities. The net cash position as at the Financial year ended 31 March 2016 was RM million. The strong level of sustainable cash flow generation also provides us an opportunity to consistently return value in the form of dividends to shareholders. We have distributed approximately RM100 million over the past nine (9) years. 11

13 SKP RESOURCES BERHAD CHAIRMAN'S STATEMENT Dividend In respect of FY 2016, the Board has declared a final single tier dividend of 3.50 sen per ordinary share. The total dividend payable of approximately RM41 million will be proposed for shareholders approval at the forthcoming Annual General Meeting. Moving Forward FY 2017 is poised for significant growth. We have a strong foundation in place to accelerate our path to profitable growth. As we continue our journey into FY 2017, we have many opportunities to drive our positive momentum carry over from the past few financial years. Looking ahead, I believe that this business is uniquely positioned to generate further growth and diversify for our company as we leverage on our engineering strength to drive the Group forward in the right direction. My management team and I will place emphasis on ensuring the Group success for many years to come. Appreciation On behalf of the Board of Directors, I would like to thank all of our management, staffs, fellow directors and business associates for their continued passion, loyalty and dedication to making SKP Resources Bhd successful. I would also like to thank all of our shareholders and business partners for your trust and support. Let us continue to work together in the coming years to achieve even greater success and impactful outcomes. Dato Gan Kim Huat Executive Chairman and Managing Director 12

14 ANNUAL REPORT 2016 FIVE YEARS' GROUP FINANCIAL SUMMARY OPERATING RESULTS Revenue RM'000 1,015, , , , ,834 EBITDA RM' ,499 65,406 48,153 62,545 58,764 EBIT RM' ,366 55,799 39,763 53,790 49,650 Profit Before Taxation RM' ,366 55,799 39,763 53,789 49,646 Profit After Taxation RM'000 81,482 42,322 29,321 39,550 36,844 Profit Attributable to Equity Holders RM'000 81,551 42,253 29,321 39,550 36,844 KEY BALANCE SHEET DATA Total Assets RM' , , , , ,405 Total Borrowings RM'000 53, Paid-up Capital RM' ,950 90,000 90,000 90,000 60,000 Equity Attributable to Owners of the Company RM' , , , , ,939 VALUATION Basic Earnings/Net Earnings Per Share sen Gross Dividend (sen) sen 3.50* Net Asset Per Share RM PROFITABILITY RATIOS Return on Total Assets % Return on Capital Employed % Return on Equity (ROE) % GEARING RATIO Net Debt to Equity Attributable to Owners of the Company times * Include a final single-tier dividend of 3.50 sen per share proposed for shareholders' approval. 13

15 SKP RESOURCES BERHAD FIVE YEARS GROUP FINANCIAL SUMMARY REVENUE (RM 000) PROFIT BEFORE TAXATION (RM 000) 120, , ,000 80, , ,000 80, ,366 60,000 40,000 20, , , , ,267 60,000 40,000 20,000 49,646 53,789 39,763 55, BASIC EARNING/NET EARNING PER SHARE (SEN) NET ASSET PER SHARE (RM)

16 ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT The Board of Directors ( the Board ) of SKP Resources Bhd ( SKP or the Company ) recognises the importance of practising good corporate governance and strives to achieve this objective by enhancing shareholders value with corporate accountability and transparency. The Malaysian Code of Corporate Governance 2012 ( MCCG 2012 ) sets out broad principles and specifies recommendations on structures and processes which companies may adopt in making good corporate governance an integral part of business dealings and culture. Management has been, on an ongoing basis, reviewing, evaluating and implementing the new recommendations and requirements in its governance practices, where appropriate. Unless otherwise stated, the Board has adopted the recommendations of the MCCG PRINCIPLE 1: ESTABLISH CLEAR ROLES AND RESPONSIBILITIES Clear Functions of the Board and Management The Board is responsible for oversight and overall management of the Company. Key matters reserved for the Board s approval include the approval of financial results, dividend policy, issuance of new securities, annual business plan, annual financial budget, acquisition or disposal of material fixed assets and etc. To ensure the effective discharge of its function and responsibilities, the Board delegates some of the Board s authorities and discretion to the Executive Directors, representing the Management, as well as to properly constituted Board Committees. The Board Committees are entrusted with specific responsibilities to oversee the Company s affairs, in accordance with their respective Terms of References. At each Board meeting, minutes of the Board Committee meetings are presented to the Board. The respective Chairmen of the Board Committees will also report to the Board on key issues deliberated by the Board Committees. Clear Roles and Responsibilities The Board provides stewardship to the Group s strategic direction and operations, and ultimately the enhancement of long-term shareholders value. The Board is primarily responsible for: ensuring that the Group s goals are clearly established and that a strategic plan, which promotes sustainability, is in place to achieve them; adopting and monitoring progress of the Company s strategies, budgets, plans and policies; overseeing and evaluating the conduct and of the Company s business to evaluate whether the business is being properly managed; considering management recommendations on key issues including acquisitions and divestments, restructuring, funding and significant capital expenditure; succession planning including appointing and reviewing the compensation of the top management; ensuring the statutory accounts of the company and Group are fairly stated and conform with the relevant regulations including acceptable accounting policies that result in balanced and understandable financial statements; reviewing the risk management framework, processes, responsibilities and assessing whether they provide reasonable assurance that risks are managed within tolerable ranges; reviewing the adequacy and integrity of the Company s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines; and overseeing the development and implementation of investor relations and communication policy for the Group which promotes effective communication with shareholders and other stakehoders. The Board has delegated certain of its functions to several Board Committees such as the Audit Committee, Nomination Committee and Remuneration Committee which operate within clearly defined terms of reference. The Board reserves certain powers for itself and delegates certain matters, such as the day-to-day management of the Company to the Executive Directors and the Management. Such delegations are subject to approved authority limits. These are matters pertaining to:- recurring and non-recurring revenue expenditures (within the ordinary course of business); capital expenditures; and sourcing of business deals/investments. 15

17 SKP RESOURCES BERHAD CORPORATE GOVERNANCE STATEMENT Formalised Ethical Standards through Code of Ethics and Conduct The Company s Code of Ethics and Conduct sets forth the standards of conduct required for all directors, officers, managers and employees of SKP and its Group of Companies with the objective of ensuring their proper behavior and ethical conduct. The Code of Ethics and Conduct covers all aspects of the Company s business operations, such as customer relationships, personal benefits, conflict of interest, confidentiality, dealing in securities of the company, protection of assets and funds, accuracy of public communication, quality management and environment management, health and safety, fair and courteous behaviors and etc. In addition, the Company s Whistle Blowing Policy seeks to foster an environment where integrity and ethical behavior are maintained and any illegal or improper action and/or wrongdoing in the Company may be exposed. The Whistleblowing Policy provides an avenue for any person including all employees of SKP and its Group of Companies to report concerns about any suspected and/or known improper conduct that they may observe in SKP. The Code of Ethics and Conduct and Whistle Blowing Policy are in place and posted on the Company s website at Strategies Promoting Sustainability The Board has adopted a Sustainability Policy which addresses the impact of the Group s businesses on environmental, social and governance ( ESG ) elements. As such, the ESG aspects are considered by the Board in its corporate strategies. Access to Information and Advice The Board meets on a quarterly basis with additional meetings held whenever necessary. The Board is supplied with adequate and timely information in the form and quality as appropriate to enable them to discharge their duties. Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors for them to deliberate on the issues to be raised at the meetings. Notices of meetings are sent to the Directors at least seven (7) days in advance and the meeting papers are made available to the Directors at least three (3) days prior to the meetings. The Executive Directors and/or other relevant Board members and/or senior management of the Group will provide comprehensive explanation of pertinent issues and recommendations. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making. Proceedings of Board meetings are recorded and signed by the Chairman. The Directors whether as a full board or in their individual capacity have access to all information of the Company on a timely basis in an appropriate form and quality necessary to enable them to discharge their duties and responsibilities. All Directors have access to the advice and services of the Company Secretaries and to obtain independent professional advice, whenever necessary, at the expense of the Group. The appointment and removal of Company Secretaries are matters for the Board as a whole. Qualified and Competent Company Secretaries The Board is satisfied with the performance and support rendered by the Company Secretaries to the Board in the discharge of its functions. The Company Secretaries play an advisory role to the Board in relation to the Company s constitution, Board s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Company Secretaries support the Board in managing the Company s governance model, ensuring it is effective and relevant. The Company Secretaries also ensure that deliberations at the Board meetings are well-captured and minuted. 16

18 ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT Board Charter The Board Charter sets out roles, functions, composition and responsibilities of the Board of Directors of SKP and is to ensure that all Board members acting on behalf of the Company are aware on their duties and responsibilities as Board members. The Board Charter is established to provide guidance and clarity for the Board s roles and responsibilities as well as the powers between the Board and the Management, the different committees established by the Board, between the Executive Chairman and Executive Directors. The Board Charter of the Company is in place and posted on the Company s website. This Board Charter would act as a source reference and primary induction literature to provide insights to prospective Board members and senior management. In addition, it will assist the Board in the assessment of its own performance and of its individual Directors. The Board Charter was last reviewed on 15 July 2016 and the latest copy is posted on the Company s website at PRINCIPLE 2: STRENGTHEN COMPOSITION Composition of the Board As at the date of this statement, the Board of SKP comprises the Executive Chairman and Managing Director, two (2) Executive Directors and three (3) Independent Non-Executive Directors. The profiles of the members of the Board are provided in this Annual Report on pages 7 to 9. The Board is responsible for overseeing the conduct and performance of the Group s businesses and provides oversight for the Group s internal controls. The Board is of the opinion that the interests of shareholders of the Company are fairly represented through the current composition and its size constitutes an effective Board to the Company with competent individuals with the wide spectrum of knowledge, skills and experience. The Executive Directors are responsible for the overall daily operations, implementation of Board policies and decisions and making operational decisions. Apart from the above, the Company practices a clear demarcation of responsibilities and a balance of power and authority. The three (3) Independent Directors of the Company provide the Board with a good mix of industry-specific knowledge plus broad business and commercial experience. They provide guidance, unbiased, fully balanced and independent views, advice and judgment to many aspects of the Group s strategy so as to safeguard the interests of minority shareholders and to ensure that the highest standards of conduct and integrity were maintained by the Group. If the need arises, the Company will consider increasing the number of Independent Directors to ensure the balance of power and authority on the Board. Gender Diversity The Board has established a Board Diversity Policy which sets out the approach to diversity on the Board and Senior Management of the Company. Although the Board Diversity Policy does not set a specific target on the composition of the Board and Senior Management in terms of gender, age or ethnicity, the Board shall endeavour to achieve greater diversity as and when the opportunity arises. The Board is currently well represented by individuals drawn from distinctly diverse professional backgrounds in the fields of manufacturing, engineering, finance, taxation, law and economics. Additionally, the Group is an equal opportunity employer and all appointments and employments are based strictly on merits and are not driven by any racial, age or gender bias. Nomination Committee In line with Principle 3 of the MCCG 2012, the Board, with the assistance of the Nomination Committee, is required to review the independence of the Company s Independent Non-Executive Directors on an annual basis. The Board adopts the definition of an Independent Non-Executive Director as provided by the Listing Requirements, and such definition is used as criteria for Directors independence assessment, which has been carried out at the date of this Statement. 17

19 SKP RESOURCES BERHAD CORPORATE GOVERNANCE STATEMENT A Nomination Committee has been established by the Board comprising three (3) independent non-executive directors as follows:- (a) Mr. Koh Song Heng (Chairman, Independent Non-Executive Director) (b) Mr. Chew Teck Cheng (Member, Independent Non-Executive Director) (c) Mr. Koh Chin Koon (Member, Senior Independent Non-Executive Director) MCCG 2012 recommends that the Nomination Committee shall be chaired by a Senior Independent Non-Executive Director. However, the Board is of the opinion that Mr. Koh Song Heng, an Independent Non-Executive Director, is ideal as Chairman of the Nomination Committee given his experience and available time commitment although he is not a Senior Independent Non- Executive Director. Develop, Maintain and Review the Criteria for Recruitment and Annual Assessment of Directors The functions of the Nomination Committee shall be as follows:- To recommend to the Board, candidates for directorships proposed by Management and, within the bounds of practicability, by other senior executive or any director or shareholder. To recommend to the Board, directors to fill seats on Board Committees. To annually assess the effectiveness of the Board as a whole, Board Committees and the contributions of each individual Director, taking into consideration the required mix of skills, expertise, experience and other requisite qualities including core competencies contributed by the Directors. To consider other matters as referred to the Committee by the Board. To recommend to the Board the re-election of Directors who retire at annual general meetings. In respect of the appointment of Directors, the Company practices a clear and transparent nomination process which involves the following:- (1) Identification of candidates; (2) Evaluating suitability of candidates; (3) Discussion with the candidates on the proposed appointment; (4) Deliberation by the Nomination Committee; and (5) Recommendation to the Board. In the process of selecting and evaluating candidates for the Board, the Nomination Committee takes into consideration suitability for the role, Board balance and composition, mix of skills, experience, knowledge and other qualities as well as diversity in terms of gender, age and ethnicity. The Nomination Committee shall meet at least once a year or more frequently as deemed necessary. The following activities were carried out during the financial year under review:- assessed the performance of the Board as the whole and Board Committees; assessed the performance of the individual Directors; considered and recommended to the Board the Directors who are due for retirement at the annual general meeting and being eligible for re-election; considered and recommended that the independent Director whose term had exceeded a cumulative period of nine (9) years be retained as independent Director; and assessed the independence of each of the independent Director. The Board considers the recommendation by the Nomination Committee with regards to the Directors who retire by rotation at the Company s forthcoming Annual General Meeting and their re-election. The Directors who are seeking for re-election by rotation in accordance with Article 84 of the Company s Articles of Association are Mr. Chia Choong Kim and Mr. Chew Teck Cheng. 18

20 ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT Remuneration Policy A Remuneration Committee has been established by the Board comprising two (2) Independent Non-Executive Directors and one (1) Executive Director as follows:- (a) Mr. Chew Teck Cheng (Chairman, Independent Non-Executive Director) (b) Dato Gan Kim Huat (Member, Executive Chairman and Managing Director) (c) Mr. Koh Chin Koon (Member, Senior Independent Non-Executive Director) The Remuneration Committee is authorised by the Board to establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. The Chairman of the Committee may request for a meeting as and when deemed necessary. The remuneration of Directors shall be the ultimate responsibility of the full Board after considering the recommendations of the Committee. The Committee is generally responsible to:- establish and recommend to the Board the policy framework in determining the terms of employment and elements of remuneration of Executive Directors and to review changes to the policy from time to time, so as to ensure that the Company attracts and retains the Directors needed to run the Group successfully. ensure that a strong link is maintained between the level of remuneration and individual performance against agreed targets, the performance-related elements of remuneration forming a significant proportion of the total remuneration package of executive directors. review and recommend on an annual basis the remuneration of Executive Directors in all its forms, irrespective whether the remuneration is drawn from the Company or its Group of Companies. consider other matters as referred to the Committee by the Board. The objective of the Group is to ensure that the Group attracts and retains Directors of the calibre needed to run the Group successfully. The Executive Directors are to be appropriately rewarded giving due regard to the corporate and individual performance. The level of remuneration of non-executive Directors reflects their experience and level of responsibility undertaken by them. The remuneration of the Executive Directors is performance related which are compatible if not higher to the market rate in order to attract, motivate and retain them to run the Company. The Company also reimburses reasonable expenses incurred by Directors where required, in the course of carrying out their duties as Directors. The Remuneration Committee shall meet at least once a year or more frequently as deemed necessary. The following activities were carried out during the financial year under review:- Reviewed and approval of the remuneration packages of the Executive Directors for the financial year ended 31 March 2016; Reviewed and approval of the performance bonus for the Group s Executive Directors for the financial year ended 31 March 2015; and Reviewed and approval of the Directors Fees for the financial year ended 31 March The Board has established a Remuneration Policy which sets out remuneration principles and guidelines for the Executive Directors and Non-Executive Directors of the Company. The current remuneration policy for the Non-Executive Directors comprises the following:- Directors Fees The sum of RM30,000 per annum for each Non-Executive Director. Meeting Allowance The Non-Executive Directors are paid an attendance allowance of RM500 for each Board meeting that they attend. 19

21 SKP RESOURCES BERHAD CORPORATE GOVERNANCE STATEMENT Directors will abstain from discussion and voting on decisions in respect of their own remuneration. The Directors fees are to be approved by shareholders at the Annual General Meeting based on recommendations of the Board. Details of Directors remuneration for the financial year ended 31 March 2016 are as follows:- Group Non-Executive Directors (RM) Remuneration Executive Directors (RM) Total (RM) Directors Fees* 99,500 90, ,500 Salaries and other emoluments 6,767,400-6,767,400 Pension Costs defined contribution plans 22,037,784-22,037,784 Bonus 5,545,840-5,545,840 Benefit-in-kind 7,680-7,680 Total 34,458,204 90,000 34,548,204 * For Company level, payment of Directors fee of RM177,000 in respect of financial year ended 31 March 2016 (Executive Directors: RM87,000 and Non-Executive Directors: RM90,000 is subject to the members approval at the forthcoming Annual General Meeting. The number of Directors whose remuneration during the financial year ended 31 March 2016 falls in each band of RM50,000 are as follows:- Range of remuneration Group Number of Executive Directors Number of Non-Executive Directors RM1 RM50,000-3 RM600,001 RM650, RM5,800,001 RM5,850, RM6,950,001 RM7,000, Total 3 3 At this point, the Board of SKP is of the view that disclosure of the remuneration bands of the Directors is sufficient and details of the remuneration of each director are not disclosed for security and confidentiality reasons. PRINCIPLE 3: REINFORCE INDEPENDENCE Annual Assessment of Independence In line with MCCG 2012, the Board with the assistance of the Nomination Committee assessed the independence of the Independent Non-Executive Directors annually, taking into account the individual Director s ability to exercise independent judgment at all times and to contribute to the effective functioning of the Board. The Independent Non-Executive Directors are not employees and they do not participate in the day-to-day management as well as the daily business of the Company. They bring an external perspective, constructively challenge and help develop proposals on strategy, scrutinize the performance of Management in meeting approved goals and objectives, and monitor risk profile of the Company s business and the reporting of monthly business performances. The Board is satisfied with the level of independence demonstrated by all the Independent Non-Executive Directors and their ability to act in the best interest of the Company. 20

22 ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT Tenure of Independent Directors One (1) of the recommendation of the MCCG 2012 states that the tenure of an independent director should not exceed a cumulative term of nine (9) years. However, the Nomination Committee and the Board have determined at the annual assessment carried out that Mr. Koh Chin Koon and Mr. Chew Teck Cheng, who had served the Board for more than nine (9) years and who would on 30 November 2016 have served the Company for more than nine (9) years, respectively, remain objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. The length of their service on the Board does not in any way interfere with his exercise of independent judgment and ability to act in the best interests of the Company. The Board is of the view that there are significant advantages to be gained from retaining Mr. Koh Chin Koon and Mr. Chew Teck Cheng as Independent Non-Executive Directors in view of their many years on the Board with incumbent knowledge of the Company, the Group s activities and corporate history. Mr. Koh Chin Koon and Mr. Chew Teck Cheng, members of the Malaysian Institute of Accountants have vast experience in the fields of accounting and taxation which would enable them to lead the Audit Committee and serve the Board effectively by providing invaluable insight into the Company s business. Shareholders Approval for the Retention of Independent Non-Executive Director The Board is satisfied with the skills, contribution and independent judgment that Mr. Koh Chin Koon and Mr. Chew Teck Cheng bring to the Board. In view thereof, the Board recommends and supports their re-appointment as Independent Non-Executive Directors of the Company which are tabled for shareholders approval at the forthcoming Annual General Meeting of the Company. Chairman and Managing Director The position of the Executive Chairman and Managing Director is held by Dato Gan Kim Huat. This is perceived as appropriate and of benefit to the Group due to his extensive knowledge and experience in the Group s business, products, policies and administration matters. He is primarily responsible for the orderly conduct and effectiveness of the Board. The Board is mindful of the combined roles but is comfortable that there is no undue risk involved as the Executive Directors will be informed and consulted before the Executive Chairman/Managing Director makes any decision and all major matters and issues are referred to the Board for consideration and approval. The roles and contributions of Independent Directors also provide an element of objectivity, independent judgement and check and balance to the Board. PRINCIPLE 4 : FOSTER COMMITTEMENT Time Commitment The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. The attendance record of the Directors at the Board meetings are set out in the table below:- Directors Attendance Dato Gan Kim Huat 4/5 Mr. Gan Poh San 5/5 Mr. Koh Chin Koon 4/5 Mr. Chia Choong Kim 4/5 Mr. Chew Teck Cheng 3/5 Mr. Koh Song Heng 5/5 To ensure that the Directors have the time to focus and fulfill their roles and responsibilities effectively, one (1) criterion as agreed by the Board for determining candidates for the pool of potential Directors is that they must be able to commit sufficient time to the Company. The Directors are required to submit updates on their other directorships and shareholdings to the Company Secretaries. Such information is used to monitor the number of directorships held by the Directors and to notify the Companies Commission of Malaysia, where applicable. To facilitate the Directors time planning, an annual meeting calendar is prepared and circulated to them before the beginning of every year. It provides the scheduled dates for meetings of the Board and Board Committees as well as the Annual General Meeting. 21