02 Notice of Annual General Meeting 05 Statement Accompanying The Notice of Annual General Meeting

Transcription

1 Scanwolf Corporation Berhad ( T) Annual Report Annual Report

2 CONTENTS 02 Notice of Annual General Meeting 05 Statement Accompanying The Notice of Annual General Meeting 06 Corporate Information 07 Board of Directors Profile 10 Chairman s Statement 13 Statement on Corporate Governance 21 Corporate Social Responsibility Statement 23 Statement on Risk Management and Internal Control 25 Audit Committee Report 28 Additional Compliance Information 29 Directors Report 34 Independent Auditors Report 36 Statements of Profit or Loss and Other Comprehensive Income 38 Statements of Financial Position 40 Statement of Changes in Equity 42 Statement of Cash Flows 45 Notes to the Financial Statements 104 Supplementary Information - Disclosure on Realised and unrealisd Profits or Losses 105 Statement by Directors 105 Declaration by the Director primarily responsible for the financial management of the Company 106 List of Group s Properties 107 Analysis of Shareholdings Form of Proxy ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 1

3 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of Scanwolf Corporation Berhad will be held at 10:00 a.m. on Friday, August 29, 2014 at Tembusu, 2nd Floor, Hotel Ibis Styles Ipoh, No. 18, Jalan Chung On Siew, Ipoh, Perak Darul Ridzuan for the following purposes:- As Ordinary Business AGENDA 1. To receive and adopt the Audited Financial Statements for the financial year ended March 31, 2014 and the Reports of the Directors and the Auditors thereon. 2. To approve the payment of Directors fees. (Resolution 1) (Resolution 2) 3. To re-elect the following Directors retiring in accordance with Article 103(1) of the Articles of Association of the Company:- (i) (ii) Dato Tan Sin Keat Lim Beng Huat (Resolution 3) (Resolution 4) 4. To re-elect the following Directors retiring in accordance with Article 110 of the Articles of Association of the Company:- (i) (ii) Ong Sing Guan Dato Lai Kok Heng (Resolution 5) (Resolution 6) 5. To appoint Auditors and to authorise the Directors to fix their remuneration. (Resolution 7) As Special Business 6. To consider and, if thought fit, to pass the following Ordinary Resolutions:- (i) Ordinary Resolution Proposed Renewal of Authority for Scanwolf Corporation Berhad to purchase its own ordinary shares of 0.50 each representing up to 10% of the issued and paid-up share capital of the Company THAT, subject to the provisions of the Companies Act, 1965, the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad and any applicable laws, rules, orders, requirements, regulations and guidelines for the time being in force or as may be amended, modified or re-enacted from time to time and the approvals of all relevant governmental and/or regulatory authorities (if any), the Company be and is hereby authorised to purchase such number of ordinary shares of 0.50 each in the Company ( Proposed Share Buy-Back ) as may be determined by the Directors of the Company ( Directors ) from time to time through Bursa Malaysia Securities Berhad upon such terms and conditions as the Directors may deem fit, necessary and expedient in the interest of the Company provided that the total aggregate number of shares purchased pursuant to this resolution shall not exceed 10% of the total issued and paidup share capital of the Company at any point in time of the said purchase(s); and that the Directors of the Company shall allocate an amount of funds which will not be more than the aggregate sum of the retained profits and share premium of the Company for the Proposed Share Buy-Back; 2 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

4 NOTICE OF ANNUAL GENERAL MEETING (cont d) AND THAT upon completion of the purchase by the Company of its own shares, the Directors are authorised to decide at their discretion to cancel all the shares so purchased and/or to retain the shares so purchased as treasury shares of which may be distributed as dividends to shareholders and/or to resell on the market of Bursa Malaysia Securities Berhad and/or to retain part thereof as treasury shares and cancel the remainder; AND THAT the Directors be and are hereby authorised and empowered to do all acts and things and to take all such steps and to enter into and execute all commitments, transactions, deeds, agreements, arrangements, undertakings, indemnities, transfers, assignments and/or guarantees as they may deem fit, necessary, expedient and/or appropriate in order to implement, finalise and give full effect to the Proposed Share Buy-Back with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments, as may be required or imposed by any relevant authority or authorities; AND THAT the Directors be and are hereby empowered immediately upon the passing of this Ordinary Resolution until the conclusion of the next annual general meeting of the Company at which time the authority shall lapse unless by ordinary resolution passed at a general meeting, the authority is renewed either unconditionally or subject to conditions; or the expiration of the period within which the next annual general meeting of the Company is required by law to be held; or the earlier revocation or variation of their authority through a general meeting whichever is the earliest, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date. (Resolution 8) (ii) Ordinary Resolution Authority to issue shares pursuant to Section 132D of the Companies Act, 1965 THAT subject always to the approvals of the relevant authorities, the Directors of the Company be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965 to issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors of the Company may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued capital of the Company as at the date of this Annual General Meeting and that the Directors of the Company be and are hereby empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. (Resolution 9) 7. To transact any other business of the Company for which due notice has been given. By Order of the Board CHAN CHEE KHEONG (MAICSA ) YEE CHOY LEAN (MAICSA ) Secretaries Ipoh July 25, 2014 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 3

5 NOTICE OF ANNUAL GENERAL MEETING (cont d) Notes: 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149 (1) (b) of the Companies Act, 1965 shall not apply to the Company. A member shall not be entitled to appoint more than two proxies to attend at the same meeting. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. 2. If a member having appointed a proxy to attend a general meeting attends such meeting in person, the appointment of such proxy shall be null and void in respect of such meeting and his proxy shall not be entitled to attend such meeting. 3. Where a member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991 ( SICDA ), it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account. 4. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) 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. An exempt authorised nominee refers to an authorised nominee defined under SICDA which is exempted from compliance with the provisions of subsection 25A (1) of SICDA. 5. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies. 6. The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, shall be deposited at the Company s registered office at 41, Jalan Medan Ipoh 6, Bandar Baru Medan Ipoh, Ipoh, Perak Darul Ridzuan not less than forty eight (48) hours before the time appointed for holding the meeting or adjourned meeting, as the case may be, at which the person named as proxy in such instrument proposes to vote, or in the case of a poll, not less than twenty four (24) hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid. 7. For the purpose of determining a member who shall be entitled to attend this meeting, the Company shall be requesting the Bursa Malaysia Depository Sdn. Bhd. to make available to the Company pursuant to Article 69 (2) of the Articles of Association of the Company and Paragraph 7.16 (2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at August 20, 2014 and only a Depositor whose name appear on such Record of Depositors shall be entitled to attend this meeting. 4 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

6 NOTICE OF ANNUAL GENERAL MEETING (cont d) Explanatory Notes To Special Business: 1. Resolution 8 Proposed Renewal of Authority for SCANWOLF CORPORATION BERHAD to purchase its own ordinary shares of 0.50 each representing up to 10% of the issued and paid-up share capital of the Company The resolution if passed, will empower the Directors of the Company to purchase the Company s shares up to ten percent (10%) of the issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the total retained profits and share premium of the Company. Please refer to the Share Buy-Back Statement dated July 25, 2014, which is dispatched together with the Company s Annual Report Please refer to the Circular to Shareholders dated July 25, 2014 for further information. 2. Resolution 9 Authority to issue shares pursuant to Section 132D of the Companies Act, 1965 The proposed adoption of the Resolution 9 is primarily to give flexibility to the Board of Directors to issue shares to such persons at any time in their absolute discretion without convening a general meeting. This authorisation will expire at the conclusion of the next Annual General Meeting of the Company. This is the renewal of the mandate obtained from the members at the last Annual General Meeting ( the previous mandate ). The purpose of this general mandate is for possible fund-raising exercises including but not limited to further placement of shares, for purpose of funding current and/or future investment project(s), working capital, repayment of borrowings and/or acquisitions. The previous mandate was not utilised and accordingly no proceeds were raised. STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27 (2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) Details of individuals who are standing for election as Directors There are no individuals who are standing for election as directors (excluding directors standing for a reelection) at Eighth Annual General Meeting of the Company. ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 5

7 CORPORATE INFOATION BOARD OF DIRECTORS Lim Beng Huat Independent Non-Executive Chairman Dato Loo Bin Keong Chief Executive Officer Dato Tan Sin Keat Executive Director Dato Lai Kok Heng Executive Director Teoh Teik Kean Executive Director Lau Tiang Hua Independent Non-Executive Director Ong Sing Guan Independent Non-Executive Director AUDIT COMMITTEE Ong Sing Guan (Chairman) Lau Tiang Hua Lim Beng Huat NOMINATION AND REMUNERATION COMMITTEE Lim Beng Huat (Chairman) Ong Sing Guan COMPANY SECRETARY Chan Chee Kheong (MAICSA ) Yee Choy Lean (MAICSA ) REGISTERED OFFICE 41, Jalan Medan Ipoh 6 Bandar Baru Medan Ipoh Ipoh, Perak Darul Ridzuan Tel: Fax: REGISTRAR Tricor Investor Services Sdn Bhd 41, Jalan Medan Ipoh 6 Bandar Baru Medan Ipoh Ipoh, Perak Darul Ridzuan Tel: Fax: STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code: 7239 PRINCIPAL BANKER Public Bank Berhad Malayan Banking Berhad HSBC Bank Malaysia Berhad AUDITORS Deloitte (formerly known as Deloitte KassimChan) Chartered Accountants 87, Jalan Sultan Abdul Jalil 30450, Ipoh, Perak Darul Ridzuan Tel: Fax: BUSINESS ADDRESS Lot PT404, Jalan Bota Mukim Belanja, Tronoh, Perak Darul Ridzuan Tel: Fax: ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

8 BOARD OF DIRECTORS PROFILE Lim Beng Huat Independent Non-Executive Chairman Lim Beng Huat, 62, was first appointed as our Independent Non-Executive Director on May 23, 2007 and was appointed as Independent Non-Executive Chairman on November 23, Upon completion of his secondary school in St Xavier s Institution, Penang, he joined Ban Hin Lee Bank Berhad (now known as CIMB Bank Berhad) in He held various managerial positions in the bank for a period of 35 years. He has since retired. Lim Beng Huat is also the Chairman of Nomination and Remuneration Committee and a member of Audit Committee. He has attended all four (4) Board Meetings held during the financial year ended March 31, He does not have any relationship with any Director and/or major shareholders of the Company nor does he have any conflict of interest with the Company. He has had no conviction for any offences within the past ten (10) years. Dato Loo Bin Keong Chief Executive Director Dato Loo Bin Keong, 56, was appointed as Chief Executive Director ( CED ) on April 2, He is one of the founders of Scanwolf Plastic Industries Sdn. Bhd. ( SPI ), a wholly-owned subsidiary of the Company, and served as its Chairman/CED until today. He is also the Chairman/CED of Scanwolf Building Materials Sdn. Bhd. ( SBM ) and Scanwolf Properties Sdn. Bhd. ( SPSB ), which is also a wholly-owned subsidiary of the Company. On March 13, 2012, he was appointed as one of the directors of Scanwolf Development Sdn. Bhd. ( SDSB ). Dato Loo Bin Keong has more than 30 years experience in the furniture fittings and plastic extrusion industries. He is credited with the early expansion and transformation of SPI into an integrated manufacturer of a wide range of extrusion products, specialising in edgebands and profiles. He has diverse practical experience in the marketing and management of the business. Dato Loo Bin Keong was a member of Nomination and Remuneration Committee until February 2014 to comply with the changes in the ruling by Bursa on composition of Nomination and Remuneration Committee members. He has attended all four (4) Board Meetings held during the financial year ended March 31, He does not have any relationship with any Director and/or major shareholders of the Company, nor does he have any conflict of interest with the Company except he is also the CED and substantial shareholder of the Company. He has had no conviction for any offences within the past ten (10) years. Dato Loo was conferred Darjah Indera Mahkota Pahang (D.I.M.P.) by Kebawah Duli Yang Maha Mulia Sultan Pahang Darul Makmur Sultan Haji Ahmad Shah on April 14, ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 7

9 BOARD OF DIRECTORS PROFILE (cont d) Dato Lai Kok Heng Executive Director Dato Lai Kok Heng, 53, was appointed as Executive Director on February 22, He is the Director of SDSB since the inception of the Company. Dato Lai has over 20 years experience in the property development industry and has completed over 1000 mixed development properties with gross development value of approximately 150 million. Dato Lai also sits on the Board of various private limited companies and is also a director of Ipoh City and Country Club. Dato Lai was conferred Darjah Indera Mahkota Pahang (D.I.M.P.) by Kebawah Duli Yang Maha Mulia Sultan Pahang Darul Makmur Sultan Haji Ahmad Shah on April 14, Dato Tan Sin Keat Executive Director Dato Tan Sin Keat, 50, was appointed as Executive Director on April 2, He is one of the founders of SPI and still served as its Executive Director. He also served as a Director of SBM and SPSB. Dato Tan Sin Keat has more than 20 years experience in the extrusion industry and is currently responsible for the product and business development aspect of the Group. His skill, knowledge and experience in various areas of PVC extrusion business, including machinery fabrication and colour matching, contributed immensely to the growth of the Group. Dato Tan Sin Keat has attended all four (4) Board Meetings held during the financial year ended March 31, He does not have any relationship with any Director and/or major shareholders of the Company, nor does he have any conflict of interest with the Company except he is also the Executive Director and substantial shareholder of the Company. He has had no conviction for any offences within the past ten (10) years. Dato Tan was conferred Darjah Indera Mahkota Pahang (D.I.M.P.) by Kebawah Duli Yang Maha Mulia Sultan Pahang Darul Makmur Sultan Haji Ahmad Shah on May 20, Teoh Teik Kean Executive Director Teoh Teik Kean, 57, was appointed as our Executive Director on April 2, He joined SPI in March 1, 2004 as Corporate Planner. Teoh Teik Kean graduated from Ungku Omar Polytechnic, Ipoh, Perak with a Diploma in Accountancy in Since his graduation, he has been working with a public listed local bank until he joined SPI on March 1, His last posting in the banking industry before joining SPI was as a Regional Business Development Manager. His contributions in SCB include ensuring the smooth and successful listing of the Group on the Second Board of Bursa Malaysia Securities Berhad. Teoh Teik Kean has attended all four (4) Board Meetings held during the financial year ended March 31, He does not have any relationship with any Director and/or major shareholders of the Company, nor does he have any conflict of interest with the Company except he is also the Executive Director and a shareholder of the Company. He has had no conviction for any offences within the past ten (10) years. 8 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

10 BOARD OF DIRECTORS PROFILE (cont d) Lau Tiang Hua Independent Non-Executive Director Lau Tiang Hua, 61, was appointed as our Independent Non-Executive Director on May 23, He is a member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants. He articled with Peat, Marwick, Mitchell & Co. and later served as an Audit Manager with Arthur Young & Co.. He was General Manager for Finance and Administration, with Star Publications (Malaysia) Berhad before starting his own practice in 1985 under the name of JB Lau & Associates which is now a member of Grant Thornton International network since January 1, Currently, he also sits on the board of Tomei Consolidated Berhad and Ewein Berhad. Lau Tiang Hua was the Chairman of the Audit Committee until his resignation as Chairman on November 25, He was then re-appointed as a member of the Audit Committee on the same day. He has attended all four (4) Board Meetings held during the financial year ended March 31, He does not have any relationship with any Director and/or major shareholders of the Company nor does he have any conflict of interest with the Company. He has had no conviction for any offences within the past ten (10) years. Ong Sing Guan Independent Non-Executive Director Ong Sing Guan, 48, was appointed as an Independent Non-Executive Director of SCB on November 19, He is a member of Malaysia Institute of Accountants and Chartered Tax Institute of Malaysia. Ong Sing Guan graduated with Diploma In Financial Accounting from Tunku Abdul Rahman College. He was a senior Tax Consultant (Tax Manager) in PricewaterhouseCoopers from 1992 to He joined Best Store Corporation Sdn. Bhd. as Financial Controller/General Manager from 2005 to 2011 before moving to Konsortium Bas Express Semenanjung (M) Sdn. Bhd. as Financial Controller from 2011 to Presently he is the Director of T.H. Yew & Co. and Guan Management Services. Ong Sing Guan was appointed the Chairman of the Audit Committee on November 25, He has attended one (1) out of four (4) Board Meetings held during the financial year ended March 31, He does not have any relationship with any Director and/or major shareholders of the Company nor does he have any conflict of interest with the Company. He has had no conviction for any offences within the past ten (10) years. ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 9

11 CHAIAN S STATEMENT Dear Shareholders, On behalf of the Board of Directors of Scanwolf Corporation Berhad ( SCB or the Company ), I am pleased to present to you the Annual Report and Audited Financial Statements of the Company and its subsidiaries (collectively referred to as the Group ) for the financial year ended March 31, THE YEAR IN REVIEW The financial year ended March 31, 2014 continued to be as challenging as the last financial year for the Group. The pricing pressure from China products, inflationary pressure caused by the implementation of minimum wage since early 2013 and coupled with the hike in electric tariff, negatively impacted the Manufacturing Concern bottom-line. Under such adverse circumstances, the Management has taken extra effort in reviewing and adopting various measures to enable us to adapt to the changing business environment. Fortunately, revenue from our Development Subsidiary has helped in cushioning the financial position of SCB. In the face of the challenging market conditions, your management will continue to take pro-active steps to manage our resources more efficiently and to remain vigilant in order to stay on top of the situation. FINANCIAL PERFOANCE During the financial year ended March 31, 2014, the Group recorded a revenue of 43.6 million compared to 36.8 million in 2013 and with a loss after tax of 1.0 million (2013: 1.9 million). The performance for the financial year under review had shown improvement as a result of improved revenue contribution from the property deveopment segment while the manufacturing segment had shown improved margins for this financial year resulting from the various cost saving measures and better product formulation which contribute to better margins with competitive pricing. On the whole, the business environment for the financial year can be considered to be challenging in view of the rising costs of almost all production components, particularly the onset of higher operating expenses arising from the implementation of the minimum wage rates in Malaysia effective since January 2013 and the escalating overheads during the financial year. However, despite the loss after tax of 1.0 million, the Group s EBITDA remains positive at 3.7 million. DIVIDEND The Company is not proposing any dividend payment in the forthcoming Annual General Meeting. 10 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

12 CHAIAN S STATEMENT (cont d) BUSINESS DEVELOPMENT Plastic Extrusion Manufacturing The plastic extrusion manufacturing business continues to be under immense competition from similar products coming out of China which are selling at unimaginable low prices. During the year under review, your management had taken various cost-saving measures as well as reviewing the formulation of our products to enable our products to be manufactured at a cheaper cost. The Research and Development department is tasked with reviewing the production flowchart, the formulation and the costing and to make the necessary recommendations to enable our products to remain competitive and profitable. The measures that your management has implemented and further refined include the extrusion of wider edge-banding that will be cut into required width. Also in the plan is to purchase a new machine for the extrusion of wider edge band rolls that can be cut into multiple strips thus reducing production cost. The review of our formulation also enables us to produce various grades of edge-banding products to suit the price appetite of the different types of buyers in the market. Your management continues to explore and experiment with new production methods and will place more emphasis on experimenting with new formulation to keep pace with our competitors. In addition, your management is always on a lookout for opportunities available to increase overall productivity such as minimising wastages and optimising production capacity without sacrificing staff morale and management effectiveness. Property Development Scanwolf has two flagship development projects, namely, Kampar Putra and Taman Harmoni in Perak. The 180 million Kampar Putra project, an integrated self-contained township, comprising a mix of residential and commercial units, are located on 59 acres leasehold land. This township is easily accessible via the North-South Highway. It is located within the vicinity of Kampar, Perak and is nearby to Universiti Tunku Abdul Rahman and Kolej Tunku Abdul Rahman. Taman Harmoni with gross development value of 27 million, offers a mix of residential and commercial properties. The project is located within Bidor, Perak and is easily accessible via the North-South Highway too. For the financial year ended 31 March 2014, both projects achieved sales of 14.9 million as compared to 7.5 million in the previous financial year. To date, a total of 16 commercial units in Kampar Putra had been completed and were handed over to the buyers with certificate of fitness for occupancy. The increase in building material cost is directly escalating the cost of construction. However, the continuous growth of the country s Gross Domestic Product, supervised float of our currency and the continuing low interest rate regime are some of the mitigating factors that are helping to sustain the demand of properties. Moving Forward Prospect and Business Outlook Malaysia s GDP growth projection for 2014 is expected to improve slightly at 5% as compared to 4.7% in Meanwhile, global trend in the manufacturing sector is forecasted to improve from 3.2% to 3.8% in With the forecasted positive trend of our Country s economy and further contributions from our property development segment, we are expecting an improvement in our bottom line. ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 11

13 CHAIAN S STATEMENT (cont d) For the financial year 2015, our strategy for manufacturing segment is to build on our existing markets and to revisit old customers in the Asean, Middle East and the Indian Continent. Our key emphasis this year is to regain our market position in these regions and also locally with the main focus on improving product quality, increasing product range and providing efficient service. For this financial year, our domestic sales have been trending better than previous year. This is an indication that our strategy adopted is positive. Our Group will further fine tune and enhance the approach. In addition, our Group will continue to explore new potential foreign markets by participating in international trade fairs for our products. The Group will continue to be prudent in its management practices to ensure cost effectiveness, improve staff development and productivity as well as implement good business practices and strategies to remain competitive so as to meet the challenges ahead. With young working force seeking their first house and proximity to the North-South Highway, the Group believes that sales of our affordable housing development are promising. According to RHB Research, Malaysia s property sector will recover in the second half of 2014, driven by a stronger 2014 gross domestic product growth outlook. The Group expects its property development business to continue with its upwards momentum. With the Group s on-going and upcoming Phase 2 project in Bidor, Perak, the Board of Directors is cautiously optimistic an improved results for the financial year ending March 31, Acknowledgement The Board of Directors would like to express our sincere appreciation to the following:- i) Management and staff for their continuous dedication, commitment and loyalty to the Group. The commitment of the management, staff and Board of Directors as well as the co-operation and support of customers and shareholders will be the foundation for the Group to meet new challenges in the years ahead. ii) iii) Our customers, shareholders, business associates, government authorities and bankers for their continuous confidence and support in SCB. Mr. Neoh Choo Kean, our Chairman since 2008, who retired during this financial year, for his invaluable guidance and exemplary leadership during his tenor as the Chairman of the Board. Our thanks also to Mr. Leuk Sing King, who resigned as Executive Director of the Group and we wish them both all the very best in their future endeavours. My personal vote of thanks also to my fellow Directors for the excellent team work, cooperation, assistance and advice which help to contribute to the effectiveness of the Board meetings. LIM BENG HUAT Independent Non-Executive Chairman 12 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

14 STATEMENT ON CORPORATE GOVERNANCE The Board of Directors of Scanwolf Corporation Berhad ( SCB ) remains committed to upholding the highest standards of corporate governance throughout the Group. The prescriptions in the Malaysian Code of Corporate Governance 2012 ( The Code ) set a strong foundation for the Board and its Committees to carry out their roles effectively, promote timely and balance disclosure, safeguard the integrity of financial reporting, emphasising the importance of risk management and internal controls and encouraging shareholders participation in general meetings. The Board believes that strong corporate governance underpins SCB s mission of sustainable, long-term growth of the Group s businesses and is therefore an integral part of our culture. The enhancement and improvement of SCB s corporate governance standards in accordance with applicable laws and regulations is an on-going exercise. The Board is pleased to share the manner in which the principles of the Code have been applied within the Group in respect of the financial year ended March 31, 2014 and the extent to which the Company has complied with the recommendations of the Code during the financial year ended March 31, BOARD OF DIRECTORS The Board of SCB undertakes full responsibility of controlling and providing the direction for the Group in formulating policies, setting strategic focus and priorities and overseeing viable investments and the sound operations of the Group. In compliance with the Main Market Listing Requirements, the Board comprises of four (4) executive directors and three (3) independent non-executive directors. The profile of each director is presented on pages 7 to 9 of this Annual Report. Board Balance The Board of SCB has a good combination of directors with appropriate skills in management, operational and decision-making processes and enjoys the benefit of good balance in terms of participating minds during deliberation and discussions. The members of the Board have always acted independently in expressing their thoughts and views without any influence from any other members. This enables the Board to operate in an atmosphere of equitable power and authority, thus avoiding situations where individuals or a group of individual may seek to dominate. All members of the Board are individuals who are committed to business integrity and professionalism. Their extensive work experiences in various fields enable them to exercise balance and sound judgment on issues of group strategy, performance, resource planning and utilization and standards of conduct. With their extensive work experience and diversity of skills, the Board has been able to provide clear and effective collective leadership to the Group and has brought informed and independent judgement to the Group s strategy and performance. Division of Roles and Responsibilities between Non-Executive Chairman and the Chief Executive Director There is a clear accepted division of responsibility between the Non-Executive Chairman of SCB and its Chief Executive Director ( CED ). The positions of the Chairman and the CED are held by separate persons to ensure a clear demarcation of responsibilities. The Non-Executive Chairman is entrusted, along with the other members of the Board, the task of developing the Group s overall business policies and strategic direction whilst the CED is responsible for the implementation of such policies and decisions as well as serve as a link to the Board in providing feedbacks on the business operations. The CED, in his day-to-day management of the Company, is ably assisted by the Executive Directors. ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 13

15 STATEMENT ON CORPORATE GOVERNANCE (cont d) Roles and Responsibilities of the Board The Board Charter (which is available on SCB s corporate website) clearly sets out the role, functions, composition, operation and processes of the Board. All Board members are aware of their duties and responsibilities. The Board Charter acts as a source of reference and primary induction literature for prospective Board members and Management. It is also intended to assist the Board in assessing its collective performance and that of each individual Director. The Board Charter will be reviewed periodically to ensure that any updated on relevant laws and regulations are duly incorporated. During the financial year under review, the Board retained full and effective control over the affairs of the Group. The primary focus of the Board is on the overall strategic planning, performing periodic reviews of business and financial performance, adopting and reviewing risk management, exercising internal controls and enforcing legal statutory compliance. The presence of independent non-executive directors further strengthens the Board in providing unbiased and independent views, advices and judgements as well as to safeguard the interest of the minority shareholders. The Board also contributes to the formulation of policies and decision-making through their expertise and experience. Apart from the above, the Board s more specific responsibilities include the following:- Reviewing and guiding the Group s corporate strategy and adopting a strategic plan for the Group through the development of risk policy, annual budgets and long term business plans, reviewing major capital expenditures and acquisitions. Monitoring corporate performance and the conduct of the Group s business and ensuring compliance to best practices and principles of corporate governance. Identifying and implementing appropriate systems to manage principal risks. The Board undertakes this responsibility through the Audit Committee. Ensuring the existence of and reviewing the adequacy and soundness of the Group s financial systems, internal control systems and management systems in compliance with applicable standards and laws and regulations. Developing and implementing an investor relation programme as well as a shareholders communication policy for the Group. Board Meetings Board meetings are planned ahead and the meeting dates are approved in advance by the Board at each quarterly meeting to enable the directors to plan and adjust their schedules to ensure good attendance and the expected degree of attention given to the Board agenda. A minimum of four (4) scheduled meetings are planned for the financial year. The scheduled meetings of the Board are timed to take into account the need to review and deliberate on the Group s quarterly financial results before their announcement to Bursa Malaysia Securities Berhad. 14 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

16 STATEMENT ON CORPORATE GOVERNANCE (cont d) Board meetings are also scheduled to facilitate review of financial and operational performance of the Group at appropriately paced intervals. Additional meetings are held as and when deemed necessary. The agenda for the Board meetings are discussed and cleared with the Chairman prior to the meeting dates. All Board papers for consideration are distributed in advance to ensure the directors have sufficient time to prepare for the relevant discussion during the meetings. The Board receives support and guidance in discharging its duties and responsibilities from the Company Secretary. The Company Secretary is required to update the Board on the latest rules and regulations from Bursa Malaysia Securities Berhad and all other relevant governmental authorities. There were four (4) meetings held during the financial year ended March 31, All Directors attended all the meetings. In addition, the Executive Directors meet regularly to discuss corporate strategy, business operations and results of the business units in the Group. Board Committees To ensure its effectiveness in the periodic monitoring, deliberating and safeguarding of shareholders interest, the Board has delegated certain of its responsibilities to the Board Committees which operate within clearly defined Terms of Reference to carry out their responsibilities in a supporting role to the Board. These Board Committees provide added assurance and accountability to shareholders. The Board Committees, comprising of members from the Board itself, are empowered to deliberate and examine issues delegated to them and provide feedbacks to the Board with their recommendations and comments. The Board Committees are as follows:- Audit Committee The Audit Committee operates under a clearly defined terms of reference stating its roles and responsibilities in ensuring the quality and integrity of the practices of the Group. The Audit Committee comprises of three (3) Board members, all of whom, including the Chairman, are independent non-executive directors. The selection of members of the Audit Committee is designed to ensure a balance in the members roles and responsibilities within the Committee. The principal objective of the Committee is to assist the Board in ensuring the Group s process of assessing internal controls, corporate governance and other compliance requirements of the Group have been, and are in full effect. In accordance with the best practices of corporate governance, the Audit Committee presents its report on pages 25 to 27 of this Annual Report. Nomination and Remuneration Committee The primary responsibility of the Nomination and Remuneration Committee is to ensure proper Board succession for the Group by considering and recommending eligible candidates for directorship in the Board. ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 15

17 STATEMENT ON CORPORATE GOVERNANCE (cont d) The Committee s duties and other responsibilities include:- i. Making appropriate recommendations to the Board on matters of renewal, extension, retirement, appointment and re-appointment of director. ii. Assessing and recommending suitable candidate for directorship and ensuring an appropriate plan for Board succession for the Group. iii. Reviewing annually the mix of skills and experience and the effectiveness of the Board as a whole, the committees of the Board and contributions of each individual director to the decision making process of the Board. iv. Reviewing and recommending to the Board the remuneration policy and framework for the directors remuneration and benefits including those for executive directors and key senior management personnel, ensuring that the level of remuneration and benefits are sufficiently competitive to attract, motivate and retain a team of executive directors and key management executives to manage the Group successfully and profitably. v. Reviewing and recommending to the Board the contributions and performance of executive directors and key management executives on an annual basis to determine the level of rewards, both monetary and non-monetary, to be awarded to them based on the Group s financial performance. vi. To evaluate and recommend to the Board, any other policies and matters related to payments to directors and key management executives as may be referred to it by the Board from time to time. The Committee consists of two (2) directors of which both are independent non-executive directors. During the financial year under review, the Nomination and Remuneration Committee met a total of four (4) times. SUPPLY OF INFOATION Every member of the Board has full and unrestricted access to senior management within the Group and is entitled to advice and services of the Company Secretary. The Board members are supplied with required and timely information which allow them to discharge their responsibilities effectively and efficiently. Prior to each meeting, every director is given the complete agenda and a set of Board papers for each agenda item to be deliberated. The Directors have the consent of the Board, whether acting as full Board or in their individual capacity to take independent professional advice, where necessary, in furtherance of their duties. However, no such advice was sought by any of the directors during this financial year. 16 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

18 STATEMENT ON CORPORATE GOVERNANCE (cont d) APPOINTMENT AND RE-ELECTION OF DIRECTORS Appointment of Directors The Board appoints its members through a formal process that is consistent with the Company s Articles of Association. The proposed appointment of new members to the Board, as well as proposed re-appointment and re-election of directors seeking re-election at the Annual General Meeting are recommended by the Nomination and Remuneration Committee to the Board for approval. New members of the Board are encouraged to undergo an in-house company training programme to familiarize with the operation of the Group. Re-election of Directors In accordance with the Articles of Association of the Company, one-third of the Board of Directors shall retire from office at each Annual General Meeting and, subject to eligibility, may offer themselves for re-election. Directors who are appointed by the Board during any part of the year shall hold office until the next Annual General Meeting of the Company and they shall retire and be eligible for re-election. DIRECTORS REMUNERATION The Board has empowered the Nomination and Remuneration Committee to deliberate, examine and propose the compensation level of remuneration for directors guided by the need to attract and retain directors with the right calibre and experience to run the Group successfully. The Nomination and Remuneration Committee is charged with the responsibility to set the framework and benchmark values on compensation and benefits in line with market norms and industry practices. The Committee strives to ensure adoption of fair structure of compensation comparable to those organizations of similar size, market sector and business complexity. Details of the Directors remuneration for the financial year ended March 31, 2014 are as follows:- Benefits-in- Other Fees Salaries Kind Emoluments Total Category Executive Directors 60,000 1,041,157 87, ,758 1,463,265 Non-Executive Directors 83, ,000 Total 143,000 1,041,157 87, ,758 1,546,265 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 17

19 STATEMENT ON CORPORATE GOVERNANCE (cont d) The number of Directors whose remuneration fell within the following bands is shown below:- Director s Remuneration Executive Directors Non-Executive Directors Below 50, ,001 to 350, ,001 to 400, ,001 to 500, The Directors fees payable are subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company. DIRECTORS TRAINING All Directors have attended the Mandatory Accreditation Programme prescribed by Bursa Malaysia Securities Berhad. The Directors are encouraged to attend continuing education programmes, seminars or forums to keep abreast with current developments in the market place and with new statutory and regulatory requirements. They are provided with updates from time to time, in particularly during board meetings, relevant new laws and regulations affecting their directorship and also any other relevant compliances requirements. During the financial year ended March 31, 2014, the Directors of the Company attended the following courses and seminars. NAMES OF DIRECTORS TITLES OF SEMINARS/COURSES/WORKSHOPS Lim Beng Huat Risk Management and Internal Control Workshop for Audit Committee An Integrated Assurance on Risk Management and Internal Control Is Our Line of Defence Adequate and Effective? Advocacy Sessions on Corporate Disclosure for Directors Dato Loo Bin Keong 7 Habits of Highly Effective People Today s Vision Tomorrow s Reality Dato Lai Kok Heng Mandatory Accreditation Programme for Directors of Public Listed Companies Dato Tan Sin Keat 7 Habits of Highly Effective People Today s Vision Tomorrow s Reality Teoh Teik Kean 7 Habits of Highly Effective People Today s Vision Tomorrow s Reality Ong Sing Guan Merger and Affiliation Seminar 2013 National Tax Seminar 2013 Introduction to IFRS (FRS) for SME Highlights of Revised and Re-drafted Clarified Standards Interview for Approved Company Auditor and Liquidator Evening Talk Public Rulings Goods and Services Tax (GST) A Preparatory Course for GST Consultants and Accountants (3 Sessions) Mandatory Accreditation Programme for Directors of Public Listed Companies 18 ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD

20 STATEMENT ON CORPORATE GOVERNANCE (cont d) ACCOUNTABILITY AND AUDIT Financial Reporting The Board acknowledges its responsibility to ensure that the Group s financial statements presents a true and fair assessment of the state of affairs and are in accordance with the applicable and approved accounting standards in Malaysia and the provisions of the Companies Act, The Board is also committed to provide the highest level of disclosure possible to ensure integrity and consistency of financial reports. The Group publishes full financial statements annually and condensed financial statements quarterly as required by Bursa Malaysia Securities Berhad s Listing Requirements. The Audit Committee assists the Board in scrutinizing information for disclosure to ensure accuracy, adequacy and completeness. The Statement by the Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 105 of this Annual Report. The Statement of Directors Responsibility is also enclosed in page 105 of this Annual Report. Internal Control The Board acknowledges its overall responsibility for continuous maintenance of a sound system of internal control to safeguard shareholders investments and Company s assets. The Internal Audit function which was outsourced, acts as support to the Board through the Audit Committee to undertake review, assess and provide feedbacks on the effectiveness of the internal control systems in place and the compliance of the operating system to such controls. The Internal Auditors reports to the Board s Audit Committee which reviews the tasks and results of the audit assignment periodically. The Internal Auditors operate independently from the management of the Group. In line with the requirement of the Bursa Malaysia Securities Berhad, a Statement on Risk Management and Internal Control is set out from pages 23 to 24 in this Annual Report. Relationship With Auditors The Group s internal and external auditors continue to provide independent assurance to shareholders on the Group s operational controls and financial statements. The Group, through the Audit Committee, has established a transparent and appropriate relationship with the auditors to meet their professional requirements. The auditors are invited to attend the Audit Committee meetings as and when required apart from the scheduled meetings when the external auditors present their planning and the audited financial statements of the Group to the Committee. During such meetings, the auditors highlight and discuss the nature, scope of the audit, internal controls and problems that may require the attention of the Board. During the financial year under review, the Audit Committee met a total of 2 times with the external auditors. Meetings with auditors were held without the presence of the management. ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD 19

21 STATEMENT ON CORPORATE GOVERNANCE (cont d) SHAREHOLDERS COMMUNICATIONS The Board is continuously maintaining adequate communication with shareholders by dissemination of information on performance and strategic decisions via the distribution of Annual Reports, Circulars, Quarterly Financial Reports, press releases and announcements. The Annual General Meeting ( AGM ) of the Group provides a forum for shareholders to participate effectively in the deliberation on the Group s affairs including resolutions tabled at the AGM. All shareholders have had direct access to Board members at the AGM. STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF THE CODE In compliance with the Best Practices of the Code, the Board hereby provides the assurance that it has maintained a high standard of corporate governance throughout the Group and has strived to achieve the highest level of integrity and ethical standard in all its business dealings. This statement is made in accordance with the resolution of the Board of Directors dated June 13, ANNUAL REPORT 2014 SCANWOLF CORPORATION BERHAD