TPC PLUS BERHAD Company No T (Incorporated in Malaysia under the Companies Act, 1965)

Transcription

1 TPC PLUS BERHAD Company No T (Incorporated in Malaysia under the Companies Act, 1965) A N N U A L R E P O R T

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3 Contents Notice of Annual General Meeting 2 Corporate Information 5 Group Structure 6 Directors Profile 7 Chairman s Statement 9 Statement of Corporate Governance 10 Statement on Risk Management and Internal Control 13 Additional Compliance Information 15 Audit Committee Report 16 Statement on Directors Responsibility 19 Financial Statements 20 List of Properties 66 Analysis of Shareholdings 68 Directors Interests in the Company and Related Corporation 70 Proxy Form

4 2 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Twelfth Annual General Meeting of the Company will be held at the Conference Room, PT 1678, Mukim of Serkam, Merlimau, Melaka on Thursday, 25 June 2015 at 9.00 a.m. for the purpose of transacting the following business:- As Ordinary Business AGENDA 1. To receive the Audited Financial Statements for the year ended 31 December 2014 together with the Directors and Auditors Reports thereon. (Please refer to Explanatory Note A) 2. To approve the payment of Directors Fees amounting to RM35, for the year ended 31 December Resolution 1 3. To re-elect the following Directors who are retiring in accordance with Article 97 of the Company s Articles of Association:- 3.1 Dato Mohd Rosli Abdul Aziz 3.2 Mr Tan Peng Chan 3.3 Ms Chin Peck Li 4. To re-appoint Messrs Crowe Horwath as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 2 Resolution 3 Resolution 4 Resolution 5 As Special Business To consider and, if thought fit, pass the following resolutions:- 5. ORDINARY RESOLUTION Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 Resolution 6 THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued and paid-up share capital of the Company for the time being AND THAT the Directors be and are hereby further 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 continue in force until the conclusion of the next Annual General Meeting of the Company.

5 TPC PLUS BERHAD ( T) ANNUAL REPORT Notice of Annual General Meeting 6. ORDINARY RESOLUTION Proposed renewal of shareholders mandate on recurrent related party transactions of a revenue or trading nature Resolution 7 THAT subject always to the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad, approval be and is hereby given for the renewal of the mandate to Teck Ping Chan Agriculture Sdn Bhd, a wholly-owned subsidiary of the Company, to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.5 of the Circular to Shareholders dated 28 May 2015 with the related parties mentioned therein which are necessary for its day-to-day operations provided that the transactions are in the ordinary course of business and are on terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders. AND THAT such mandate shall commence immediately upon the passing of this resolution and shall continue to be in force until: a. the conclusion of the next Annual General Meeting ( AGM ) of the Company at which time it will lapse unless by a resolution passed at the meeting the mandate is renewed; b. the expiration of the period within which the next AGM is required to be held pursuant to section 143(1) of the Companies Act, 1965 ( the Act ) but shall not extend to such extension as may be allowed pursuant to section 143(2) of the Act; or c. revoked or varied by resolution passed by the shareholders in a general meeting, whichever is the earlier. AND THAT the Directors of the Company be empowered to complete and do all such acts and things as they may consider expedient or necessary to give effect to the mandate and transactions contemplated and authorised by this resolution. 7. To transact any other business of the Company of which due notice shall have been given. BY ORDER OF THE BOARD ONG SOO LENG (MAICSA ) Company Secretary Melaka 28 May 2015

6 4 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 Notice of Annual General Meeting Notes 1. Only depositors whose names appear in the Record of Depositors as at 18 June 2015 shall be entitled to attend the Twelfth Annual General Meeting or appoint a proxy, in the case of a corporation, a duly authorised representative to attend and vote in his/her stead. 2. A proxy may but need not be a member of the Company and a member may appoint only one person to be his proxy. 3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or, if the appointer is a corporation, the instrument appointing a representative must be either under its common seal or under the hand of an officer or attorney duly authorised. 4. The duly completed proxy form must be deposited at the Company s Registered Office at PT 1678, Mukim of Serkam, Merlimau, Melaka at least 48 hours before the time fixed for holding the Meeting or any adjournment thereof. Explanatory Note A. The Audited Financial Statements in Agenda 1 is meant for discussion only as the approval of shareholders is not required pursuant to Section 169(1) of the Companies Act, Hence, this agenda is not put forward for voting by shareholders of the Company. B. Resolution 6 Ordinary Resolution 6, if passed, is a renewal of the general mandate to empower the Directors to allot and issue shares of the Company up to a maximum of 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. A renewal of the general mandate will provide flexibility to the Company for any possible fund raising activities including but not limited to placing of shares for the purpose of funding future investment projects, working capital and/or acquisition. As at the date of this notice, no shares in the Company has been allotted and issued pursuant to the general mandate granted to the Directors at the Eleventh Annual General Meeting held on 26 June 2014 and which will lapse at the conclusion of the Twelfth Annual General Meeting. C. Resolution 7 Ordinary Resolution 7, if passed, will allow Teck Ping Chan Agriculture Sdn Bhd, a wholly-owned subsidiary of the Company, to enter into recurrent related party transactions in accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. This approval shall continue to be in force until the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting is required by the law to be held or revoked/varied by resolution passed by the shareholders in general meeting.

7 TPC PLUS BERHAD ( T) ANNUAL REPORT CORPORATE INFORMATION BOARD OF DIRECTORS Lim Yeow Her Chairman/Managing Director Lim Yew Chua Executive Director Lim Yew Kwang Executive Director Lim Yew Piau Executive Director Dato Mohd Rosli Abdul Aziz Independent Non-executive Director Tan Peng Chan Independent Non-executive Director Chin Peck Li Independent Non-executive Director Audit Committee Dato Mohd Rosli Abdul Aziz (Chairman) Tan Peng Chan Chin Peck Li Board Nomination and Remuneration Committee Dato Mohd Rosli Abdul Aziz (Chairman) Tan Peng Chan Chin Peck Li Principal Bankers Bangkok Bank Berhad HSBC Bank Malaysia Berhad CIMB Bank Berhad Auditors Crowe Horwath (AF 1018) 52, Jalan Kota Laksamana 2/15 Taman Kota Laksamana, Seksyen Melaka Company Secretary Ong Soo Leng (MAICSA ) Registered Office PT 1678, Mukim of Serkam Merlimau Melaka Tel No. : Fax No. : Share Registrar Bina Management (M) Sdn Bhd Lot 10, The Highway Centre Jalan 51/ Petaling Jaya, Selangor Tel No. : Fax No. : Stock Exchange Listing Main Market Bursa Malaysia Securities Berhad

8 6 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 GROUP STRUCTURE AS AT 20 APRIL 2015 TPC PLUS BERHAD 100% 100% Teck Ping Chan Agriculture Sdn Bhd Teck Ping Chan (1976) Sdn Bhd 100% Mestika Arif Sdn Bhd

9 TPC PLUS BERHAD ( T) ANNUAL REPORT DIRECTORS PROFILE Lim Yeow Her Non-independent executive director Age 55, Malaysian Mr Lim Yeow Her was appointed to the Board of TPC Plus Berhad on 8 March He is also the Chairman and Managing Director of Huat Lai Resources Berhad and a director of all the subsidiaries of TPC Plus Berhad. Mr Lim Yeow Her has more than 30 years of experience in the poultry sector. In 1979, he joined a small poultry farm located in Melaka as a farm assistant and left in 1989 to start his own family business in poultry farming. He is responsible for the planning and overseeing of the development of the poultry farms since their inception. He is also actively involved in the development and expansion of the Group and the Company. Mr Lim Yeow Her is a brother of Mr Lim Yew Chua, Mr Lim Yew Kwang and Mr Lim Yew Piau and a substantial shareholder of the Company by virtue of his substantial shareholdings in Esprit Unity Sdn Bhd and Huat Lai Resources Berhad. Mr Lim Yeow Her does not have any conflict of interest in any business arrangement involving the Group and the Company and has not been convicted of any offences within the past ten years other than traffic offences, if any. Lim Yew Chua Non-independent executive director Age 48, Malaysian Mr Lim Yew Chua was appointed to the Board of TPC Plus Berhad on 8 March He is also a director of all the subsidiaries of the Company. Mr Lim Yew Chua has more than 20 years experience in poultry farming and is actively involved in the construction of new high-tech farms of the Group. Lim Yew Kwang Non-independent executive director Age 41, Malaysian Mr Lim Yew Kwang was appointed to the Board of TPC Plus Berhad on 8 March He is also a director of all the subsidiaries of the Company. Mr Lim Yew Kwang has more than 15 years experience in poultry farming and is currently responsible for the various aspects of the farms daily operations. Mr Lim Yew Kwang is a brother of Mr Lim Yeow Her, Mr Lim Yew Chua and Mr Lim Yew Piau. Mr Lim Yew Kwang does not have any conflict of interest in any business arrangement involving the Group and the Company and has not been convicted of any offences within the past ten years other than traffic offences, if any. Lim Yew Piau Non-independent executive director Age 38, Malaysian Mr Lim Yew Piau was appointed to the Board of TPC Plus Berhad on 8 March He is also a director of all the subsidiaries of the Company. Mr Lim Yew Piau has more than 15 years experience in poultry farming operations and is currently in charge of logistic and distribution of eggs to customers. Mr Lim Yew Piau is a brother of Mr Lim Yeow Her, Mr Lim Yew Chua and Mr Lim Yew Kwang. Mr Lim Yew Piau does not have any conflict of interest in any business arrangement involving the Group and the Company and has not been convicted of any offences within the past ten years other than traffic offences, if any. Mr Lim Yew Chua is a brother of Mr Lim Yeow Her, Mr Lim Yew Kwang and Mr Lim Yew Piau. Mr Lim Yew Chua does not have any conflict of interest in any business arrangement involving the Group and the Company and has not been convicted of any offences within the past ten years other than traffic offences, if any.

10 8 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 Directors Profile Dato Mohd Rosli Abdul Aziz Independent non-executive director Age 67, Malaysian Dato Mohd Rosli Abdul Aziz was appointed to the Board of TPC Plus Berhad on 8 March He is the Chairman of the Company s Audit Committee and the Board Nomination and Remuneration Committee. Dato Mohd Rosli Abdul Aziz is also a director of Huat Lai Resources Berhad. Dato Mohd Rosli Abdul Aziz graduated with a Bachelor of Economics (Hon) degree from the University Malaya in 1970 and a Masters in Arts Economics from the University of Bombay and a M.Sc (Agricultural Economics) from the University of Winconsin, U.S.A. in 1973 and 1981 respectively. Dato Mohd Rosli Abdul Aziz joined one of the local banks as a Credit Officer in 1970 and was promoted to General Manager of the same bank in All in all, Dato Mohd Rosli Abdul Aziz has over 33 years of banking experience before his appointment as Director of the Company. Dato Mohd Rosli Abdul Aziz does not have any family relationship with any director or substantial shareholder of the Company. Dato Mohd Rosli Abdul Aziz also does not have any conflict of interest in any business arrangement involving the Group and the Company and has not been convicted of any offences within the past ten years other than traffic offences, if any. Tan Peng Chan Independent non-executive director Age 67, Malaysian Mr Tan Peng Chan was appointed to the Board of TPC Plus Berhad on 8 March He is a member of the Company s Audit Committee and the Board Nomination and Remuneration Committee. Mr Tan Peng Chan is also a director of Huat Lai Resources Berhad. After completing Senior Cambridge, Mr Tan Peng Chan joined Harrison & Crossfield (subsequently known as Golden Hope Plantations Berhad) as a junior staff. He was with Harrison & Crossfield for 23 years before joining IOI Corporation Berhad. Mr Tan Peng Chan retired as a Senior General Manager after 17 years with IOI Corporation Berhad. With 40 years of experience in the plantation industry, Mr Tan Peng Chan is now a life member of the Incorporated Society of Planters. Mr Tan Peng Chan is an uncle of Mr Lim Yeow Her, Mr Lim Yew Chua, Mr Lim Yew Kwang and Mr Lim Yew Piau. Mr Tan Peng Chan does not have any conflict of interest in any business arrangement involving the Group and the Company and has not been convicted of any offences within the past ten years other than traffic offences, if any. Chin Peck Li Independent non-executive director Age 44, Malaysian Ms Chin Peck Li was appointed to the Board of TPC Plus Berhad on 8 March She is a member of the Company s Audit Committee and the Board Nomination and Remuneration Committee. Ms Chin Peck Li is also a director of Huat Lai Resources Berhad. Ms Chin Peck Li obtained her first Accountancy Degree from the RMIT University in Australia. She is a Chartered Accountant with the Malaysian Institute of Accountants (MIA) and a member of the Australian Society of Certified Practising Accountants (ASCPA). She pursued her higher education and obtained her Masters in Finance in 1998 from RMIT University, Australia. Prior to establishing her own firm and companies which provide accounting, taxation, secretarial and related services, Ms Chin Peck Li was employed by a local university as a lecturer in Accountancy. Prior to that, she worked with Price Waterhouse where she gained experience in tax planning, accountancy research and staff supervision skills. Ms Chin Peck Li does not have any family relationship with any director or substantial shareholder of the Company. Ms Chin Peck Li also does not have any conflict of interest in any business arrangement involving the Group and the Company and has not been convicted of any offences within the past ten years other than traffic offences, if any.

11 TPC PLUS BERHAD ( T) ANNUAL REPORT CHAIRMAN S STATEMENT On behalf of the Board of Directors ( Board ), I am pleased to present the Annual Report and the Audited Financial Statements of TPC Plus Berhad and its group of companies ( the Group ) for the financial year ended 31 December Overview 2014 was a pivotal year for the Group with several groundbreaking changes, challenges, achievements and learning experiences. On 28 February 2014, it was announced that the Company had been classified as an affected listed issuer under Practice Note 17 ( PN17 ) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ). Following this, we have submitted a regularisation plan to Bursa Securities for its approval on 11 September As of today, we have yet to receive the approval from Bursa Securities for the regularisation plan. Financial Performance For the year ended 31 December 2014, the Group registered a revenue of approximately RM million as compared to a revenue of approximately RM million for the year ended 31 December The Group recorded a profit after tax of approximately RM4.764 million for the year ended 31 December 2014 against a loss after tax of approximately RM4.073 million in the financial year ended 31 December Earnings per share of the Group have increased to RM5.96 for the year ended 31 December 2014 from a loss per share of RM5.09 in the year ended 31 December The overall improvement in the Group s financial performance during the financial year ended 31 December 2014 was mainly due the increase in average selling price per egg and stable feed price. Prospects Moving forward, we foresee a challenging year ahead due to market competitiveness, volatility of raw material prices and the implementation of goods and services tax starting from 1 April With improvement in farms conditions and effective cost management, the Board is hopeful that the Group will perform better in Corporate Social Responsibility The Group has always been aware of its corporate social responsibility in the community it operates in and will continue all corporate social responsibility activities carried out in the previous financial year. In recognizing the importance of such responsibilities, the Group had undertaken several activities during the financial year ended 31 December 2014:- 1. Reducing our carbon footprint by recycling paper in the office and reducing energy consumption by switching off lights and electrical equipment during lunch hour. 2. Conducted in-house training programmes for the employees and sponsored the employees to attend relevant external training programmes to increase efficiency and productivity. 3. Provided adequate medical benefit as well as hospitalization for deserving staff. 4. Supported the community by providing financial assistance for projects undertaken by local schools and places of worship. 5. Sponsoring of eggs to the needy and less privileged Appreciation On behalf of the Board of Directors, I would like to express my deep and sincere gratitude to our management and staff for their continued dedication and commitment in contributing towards the success of the Group. Our appreciation also goes to our corporate and legal advisers and all parties involved for their assistance and support during the preparation of the Company s regularisation plan. Warmest thanks to our customers, suppliers, business associates, shareholders, financial lenders and authorities for their support and confidence in the Group. Last but not least, my heartfelt thanks and gratitude to my fellow Board members for providing valuable advice and guidance at our Board meetings. LIM YEOW HER Chairman/Managing Director

12 10 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 STATEMENT OF CORPORATE GOVERNANCE The Board of Directors ( the Board ) of TPC Plus Berhad ( the Company ) is pleased to state below how the Company has applied the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 ( the Code ). Establish clear roles and responsibilities The Executive Directors are generally responsible for the making and implementing of operational and corporate decisions while the Non-Executive Directors play an important role in corporate accountability by providing unbiased and independent views, advice and judgment in safeguarding the interests of the minority shareholders. Board members are provided with the agenda and all the relevant documents and information prior to each Board meeting to enable them to have a comprehensive understanding of the issues to be deliberated upon in order to arrive at an informed decision. The Directors have direct access to the management staff and Company Secretary for all information relating to the Group s business and affairs as well as external and independent professional advisers at the Company s expense whenever such services are required. Strengthen composition Article 95 of the Company s Articles of Association provides that the Board shall comprise not less than 2 and not more than 10 Directors. The Board currently has 7 members comprising 4 Executive Directors and 3 Independent Non- Executive Directors. This complies with the Main Market Listing Requirements ( MMLR ) of Bursa Malaysia Securities Berhad ( Bursa Securities ) which requires one third of the Board to be Independent Directors. The Board Nomination and Remuneration Committee ( BNRC ) which comprises the following Directors all of whom are Independent Non-Executive Directors Dato Mohd Rosli Abdul Aziz - Chairman Chin Peck Li - Member Tan Peng Chan - Member will meet as and when required to:- i. recommend candidates with an optimal mix of qualifications, skills and experience to the Board of Directors of the Company and the Group; ii. assess the contribution of each individual Director and overall effectiveness of the Board; and/or iii. recommend the size and composition of the Board of the Company and the Group. Procedures relating to the appointment and re-election of Directors are contained in the Company s Articles of Association. One third of the Board of Directors or if their number is not three or a multiple of three, then the number nearest to one third are required to submit themselves for re-election at each Annual General Meeting ( AGM ) provided that all Directors shall retire from office at least once every 3 years. Newly appointed Directors will hold office until the AGM following their first appointment and shall be eligible for re-election but shall not be taken into account in determining the number of Directors who are to retire by rotation at the AGM. The BNRC will ensure that the level of remuneration is sufficient to attract and retain the Directors to run the Company successfully. Executive Directors are remunerated by taking into consideration their experience, responsibilities and performance. In the case of Non-Executive Directors, the level of remuneration is reflected by the qualifications, skills and experience of the Directors and balanced with their expected roles and responsibilities. The BNRC will proposed to the Board on the Directors fees payable and the ultimate decisions will be made by the Board with the Director concerned abstaining from participating in the decision in respect of his own fee. The Directors fees are subject to the approval of the shareholders of the Company at its AGM. The details of the Directors Remuneration are disclosed under Note 27 of the financial statements for the financial year ended 31 December 2014 in page 53 of this Annual Report.

13 TPC PLUS BERHAD ( T) ANNUAL REPORT Statement of Corporate Governance Reinforce independence The concept of independence adopted by the Board is in tandem with the definition of an independent director in the MMLR. During the financial year ended 31 December 2014, none of the Independent Directors is an employee of the Company or is engaged in any type of business dealings with the Company that could materially interfere with his/her unfettered and independent judgement. All Independent Directors who have served the Company for an aggregate of more than 9 years will seek shareholders approval to retain as an independent director at every AGM. During the financial year ended 31 December 2014, none of the Independent Directors has served the Company for 9 years or more. Currently the functions of the Chairman and Managing Director is combined but the Board is comfortable that there is no undue risk involved since all major and significant matters were referred to the Board for consideration and approval. Moreover, the Independent Directors are able to provide an element of objectivity, independent judgement and check and balance on the Board. The Code states that the Board must comprise a majority of independent directors where the chairman is not an independent director. Although the Chairman of the Company is not an Independent Director, the 3 Independent Non- Executive Directors fairly reflects the investment in the Company by shareholders other than the major shareholders. Foster 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 Board met 4 times during the financial year ended 31 December 2014 and all the Directors attended every meeting held except Ms Chin Peck Li who attended 3 of the 4 meetings. The Board acknowledges that continuous training is important to enable the Directors to effectively discharge their duties and hence will continue to undergo relevant training programmes that will aid the Directors in the discharge of their duties and responsibilities more effectively. The training programmes attended by the Directors during the financial year ended 31 December 2014 were as follows: Director Lim Yeow Her Lim Yew Chua Lim Yew Kwang Lim Yew Piau Dato Mohd Rosli Abdul Aziz Tan Peng Chan Training 2015 Budget outlook 2015 Budget outlook 2015 Budget outlook 2015 Budget outlook Detecting, preventing & reporting financial irregularities & fraud Nominating & remuneration committees what every director should know Ethics and the board of directors Managing in uncertainty: surviving the turbulence Chin Peck Li Indirect taxation series practical application and new insights (Series 1) Latest tax developments on employers statutory requirements in 2014, including the implications of employee Indirect taxation series practical application and new insights (Series 2) Accounting for construction contracts, property development & real estate activities and borrowing costs GST advanced ; Planning on registration, transitional period implementation, etc. National tax seminar budget seminar

14 12 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 Statement of Corporate Governance Uphold integrity in financial reporting The Board took due care and reasonable steps to ensure that the annual financial statements and quarterly reports give a true and fair view of the Group s state of affairs. The Board is assisted by the Audit Committee in ensuring the accuracy and completeness of the information to be disclosed. The External Auditors have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements. Recognise and manage risks The Board recognises the importance of maintaining a sound internal control system for the Group to achieve its objectives within an acceptable risk profile as well as safeguarding shareholders investment and the Group s assets. An overview of the state of internal controls within the Group is set out in the Statement on Risk Management and Internal Control on pages 13 to 14 of this Annual Report. Ensure timely and high quality disclosure The Company is committed to providing clear, accurate and timely disclosure of all material information pertaining to its performance and operations to its shareholders and the general public. Although the Company does not have any corporate disclosure policies and procedures, all disclosure requirements as set out in the MMLR are complied with at all times. Printed Circular to Shareholders and Annual Report are sent to shareholders. These Circular and Annual Report could also be accessed by the shareholders and the investing public electronically through Bursa Securities and the Company s website at and respectively. Announcements and quarterly results of the Company and Group are also accessible through these same websites. Strengthen relationship between company and shareholders The Company s AGM remains the principal forum for dialogue and interaction with shareholders during which the shareholders may seek clarifications and comment on the Group s businesses and financial performance. The Board is of the opinion that the number of shareholders and the level of attendance at the Company s general meetings do not warrant the introduction of poll voting for all resolutions. However, the Board notes that poll voting may be mandated by the regulators for resolutions relating to defined situations, and in such circumstances, poll voting will be carried out.

15 TPC PLUS BERHAD ( T) ANNUAL REPORT STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTRODUCTION Pursuant to paragraph 15.26(b) and Practice Note 9 of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) for the Main Market and as guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers ( the Guidelines ), the Board of Directors ( the Board ) of TPC Plus Berhad is pleased to include a statement on the state of the Group s system of risk management and internal control in this Annual Report. BOARD S RESPONSIBILITY The Board recognises the importance of good risk management practices and sound internal controls as a platform to good corporate governance. The Board acknowledges its overall responsibility for maintaining a sound system of risk management and internal control, and for reviewing its adequacy and integrity. The Board confirms that these processes have been in place for the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company. Due to the inherent limitations in any risk management and internal control system, such system put into effect by the Management are designed to manage rather than eliminate the risks that may impede the achievement of the Group s business objectives. Therefore, the risk management and internal control system can only provide reasonable and not absolute assurance against material misstatement, error or loss. Risk Management The Board is dedicated to strengthening the Group s risk management to manage its key business risks within the Group and to implementing appropriate controls to manage these risks. Risk Management is regarded by the Board to be an integral part of the business operations. At the strategic level, business plans and business strategies formulated by the Senior Management are discussed to ensure proposed plans and strategies are in line with the Group s risk appetite. At the operational level, the respective Head of Departments are responsible for managing the risks of their departments. If there are any control activities formulated due to changes in the key business risks faced by the Group or the emergence of new key business risks, they will be discussed during management meetings and highlighted to the Board for review on the adequacy and effectiveness of the control activities formulated. The abovementioned risk management practices of the Group served as the on-going process to identify, evaluate and manage significant risks. Internal Control System The key features of the Group s internal control systems are described below: Board of Directors/Board Committees Board Committees i.e. Audit Committee and Nomination and Remuneration Committee have been established to carry out duties and responsibilities delegated by the Board and are governed by written terms of reference. Meetings of the Board of Directors and the respective Board Committees are held to review the financial and operational performance of the Group. Organisation Structure and Authorisation Procedures The Group has a formal organization structure in place to ensure appropriate level of authority and responsibilities are delegated accordingly to competent staffs in achieving operational effectiveness and efficiency. The authorisation procedures for key processes are stated in the Group s policies and procedure with the authority limits established.

16 14 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 Statement on Risk Management and Internal Control Internal Control System (Cont d) Policies and Procedures Documented policies and procedures are in place and are regularly reviewed and updated to ensure that it maintains its effectiveness and continues to support the Group s business activities at all times as the Group continues to grow. Human Resource Policy Guidelines on human resource management are in place to ensure the Group s ability to operate in an effective and efficient manner by employing and retaining adequately competent employees who possess the necessary knowledge, skill and experience in carrying out their duties and responsibilities effectively and efficiently. Information and Communication Information critical to the achievement of the Group s business objectives are provided by the Senior Management to the Board. This allows matters that require the Board s attention to be highlighted for review, deliberation and decision making on a timely basis. Monitoring and Review Operational and management meetings are held to discuss and review the Group s business plans, financial and operational performance. The quarterly financial statements containing key financial results and comparisons are presented to the Board for their review, consideration and approval. INTERNAL AUDIT FUNCTION The Group relies on the in-house internal audit function to provide the required level of assurance that the risk management and internal control system are effective in mitigating organisational risks and achieve the Group s corporate objectives. Reviews were conducted during the financial year by internal audit function to ensure that the Group s policies and procedures are being complied with, safeguard the Group s assets and perform cost reviews on the Group s operations. The cost involved in the internal audit function during the year ended 31 December 2014 amounted to approximately RM25, Assurance Provided by the Managing Director In line with the Guidelines, the Managing Director, being the highest ranking executive in the Company and the person primarily responsible for the management of the financial affairs of the Company, had provided assurance to the Board that the Group s risk management and internal control system operated adequately and effectively in all material aspects in meeting the Group s objectives during the financial year under review. The Board is of the view that the risk management and internal control systems are operating satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group s Annual Report. The Board continues to take pertinent measures to review and, where necessary, improve the Group s risk management and internal control systems in meeting the Group s strategic objectives. CONCLUSION The Board is of the view that the Group s risk management and internal control system are adequate to safeguard shareholders investments and the Group s assets. However, the Board is also cognizant of the fact that the Group s system of internal control and risk management practices must continuously evolve to meet the changing and challenging business environment. Therefore, the Board will, when necessary, put in place appropriate action plans to further enhance the existing risk management and internal control system. This statement was approved by the Board of Directors on 24 April 2015.

17 TPC PLUS BERHAD ( T) ANNUAL REPORT ADDITIONAL COMPLIANCE INFORMATION 1. Options, warrants or convertible securities exercised During the financial year ended 31 December 2014, no shares have been issued by the Company pursuant to the exercise of options under the Company s Employees Share Option Scheme. 2. Employees share option scheme There is only one employee share scheme in existence during the financial year ended 31 December No option has been granted under the Company s Employees Share Option Scheme which is for a period of 10 years and expiring on 19 August Sanctions and/or penalties imposed The Company is not aware of any sanctions/penalties imposed on the Company, its subsidiaries, Directors or Management by the relevant regulatory bodies save and except for the private reprimand letter dated 9 July 2014 from Bursa Malaysia Securities Berhad to the Company in respect of the breach of paragraph 8.04(3) of the Main Market Listing Requirements ( MMLR ) read together with paragraph 4.1(a) of PN17 of the MMLR. 4. Non-audit fees paid to external auditors During the financial year ended 31 December 2014, no non-audit fees was incurred for services rendered to the Group by Crowe Horwath, the Company s external auditors, or a firm or a corporation affiliated to Crowe Horwath. 5. Recurrent related party transactions The recurrent related party transactions conducted during the financial year ended 31 December 2014 pursuant to the shareholders mandate given to Teck Ping Chan Agriculture Sdn Bhd ( TPCA ) are as follows:- Amount Transacted Related party Nature of transaction Nature of relationship (RM) Huat Lai Resources Sale of eggs by HLRB is a major shareholder of TPC 2,397, Berhad ( HLRB ) TPCA to HLRB holding 52.91% direct interest in TPC. Purchase of feed, 45,553, livestock and eggs by TPCA from HLRB Huat Lai Feedmill Purchase of feed HLFM is a wholly-owned 19,024, Sdn Bhd ( HLFM ) by TPCA from HLFM subsidiary of HLRB HLRB Processing Sales of spent layers HLPR is a wholly-owned 1,922, Sdn Bhd ( HLPR ) by TPCA to HLPR subsidiary of HLRB Huat Lai Paper Purchase of egg trays HLPP is a wholly-owned 1,904, Products Sdn Bhd by TPCA from HLPP subsidiary of HLRB ( HLPP ) 6. Material contracts involving directors and major shareholders interest There was no material contracts subsisting at the end of the financial year or entered into since the end of the previous financial year by the Company or its subsidiaries which involved the interests of Directors or major shareholders.

18 16 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 AUDIT COMMITTEE REPORT COMPOSITION OF AUDIT COMMITTEE The Audit Committee appointed by the Board of Directors comprises the following Independent Non-Executive Directors:- Dato Mohd Rosli Abdul Aziz - Chairman / Independent Non-Executive Director Chin Peck Li - Member / Independent Non-Executive Director Tan Peng Chan - Member / Independent Non-Executive Director TERMS OF REFERENCE Objectives 1. Provide assistance to the Board of Directors in fulfilling its statutory and fiduciary responsibilities for examinations of the Group and Company and in monitoring its accounting and financial reporting practices. 2. Determine that the Group and Company has adequate administrative, operational, and internal accounting controls and that the Group and Company is operating in accordance with its prescribed procedures and codes of conduct. 3. Serve as an independent and objective party in the review of the financial information presented by management for distribution to shareholders and the general public. 4. Provide direction and controls over the internal audit function and the external auditors. Membership 1. The committee shall be appointed by the Board and shall consist of:- a. No fewer than 3 members of whom all must be non-executive directors, with a majority of them being independent directors; and b. At least 1 member of the audit committee must fulfil the following requirements:- (i) Must be a member of the Malaysian Institute of Accountants ( MIA ); or (ii) If he is not a member of MIA, he must have at least 3 years working experience and:- must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad. 2. No alternate director shall be appointed as a member of the audit committee. 3. The members of the audit committee shall elect a Chairman from among their number who shall be an independent director.

19 TPC PLUS BERHAD ( T) ANNUAL REPORT Audit Committee Report Functions and Responsibilities 1. To review the following and report the same to the Board of Directors of the Company:- a. with the external auditor, the audit plan; b. with the external auditor, his evaluation of the system of internal controls; c. with the external auditor, the audit report; d. the assistance given by the employees of the Group and Company to the external auditor; e. the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; f. the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; g. the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on: changes in or implementation of major accounting policy changes; significant and unusual events; and compliance with accounting standards and other legal requirements; h. any related party transaction and conflict of interest situation that may arise within the Group and Company including any transaction, procedure or course of conduct that raises questions of management integrity; i. any letter of resignation from the external auditors of the Group and Company; and j. whether there is reason (supported by grounds) to believe that the Group s and Company s external auditor is not suitable for re-appointment; and 2. Recommend the nomination of a person or persons as external auditors. Authority The audit committee shall, in accordance with a procedure to be determined by the Board of Directors:- 1. have authority to investigate any matter within its terms of reference; 2. have the resources which are required to perform its duties; 3. have full and unrestricted access to any information pertaining to the Group and Company; 4. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; 5. be able to obtain independent professional or other advice; and 6. be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Group and Company, whenever deemed necessary.

20 18 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 Audit Committee Report Meetings 1. Meetings will be held not less than four times a year and the Committee may establish procedures from time to time to govern its meetings, keeping of minutes and its administration. 2. The external auditors or internal auditors may request a meeting if they consider one necessary. 3. The agenda for each meeting shall be circulated at least 7 days before each meeting to the Committee members, the external auditors and all those who are required to attend the meeting. 4. Participants may be invited from time to time to attend the meeting depending on the nature of the subject under review. These participants may include directors, senior management, internal auditors and external auditors. 5. The quorum shall be two third of the Committee with the majority present being independent directors. If the Chairman is unable to attend any meeting, any other independent member present shall act as Chairman. 6. All resolutions of the Committee shall be adopted by a simple majority vote, each member having one vote. In case of equality of votes, the Chairman shall have a second or casting vote. 7. The Company Secretary shall act as the Secretary of the Committee. MEETINGS AND ATTENDANCE The Committee met 4 times during the financial year ended 31 December 2014 and all the Committee Members attended every meeting held except for Ms Chin Peck Li who attended 3 of the 4 meetings. EMPLOYEES SHARE OPTION SCHEME There was no option allocated pursuant to the Company s Employees Share Option Scheme during the financial year ended 31 December SUMMARY OF ACTIVITIES OF THE COMMITTEE The Audit Committee has carried out its duties in accordance with its terms of reference during the financial year. The main activities undertaken by the Committee were the review of the Audit Planning Memorandum and the Group s unaudited quarterly financial results with the Management and External Auditors before recommending the same to the Board of Directors for their consideration and approval.

21 TPC PLUS BERHAD ( T) ANNUAL REPORT STATEMENT ON DIRECTORS RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS The Directors are required to prepare financial statements for each financial year which have been made out in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards and give a true and fair view of the state of affairs of the Group and Company at the end of the financial year and of the results and cash flows for that year then ended. The Directors are satisfied that in preparing the financial statements of the Group and Company for the financial year ended 31 December 2014:- 1. appropriate accounting policies were adopted and applied consistently; 2. judgments and estimates were prudently and reasonably made; and 3. all applicable accounting standards were followed. The Directors have also ensured that the proper accounting records kept disclose with reasonable accuracy the financial position of the Group and Company and enable the Directors to ensure that the financial statements comply with the Companies Act, 1965 and MASB approved accounting standards. The Directors are also responsible for taking steps that are reasonably available to them to safeguard the assets of the Group and Company and to detect and prevent fraud and other irregularities. This statement is made in accordance with a resolution of the Board of Directors dated 24 April 2015.

22 Financial Statements Directors Report 21 Statement by Directors 25 Statutory Declaration 25 Independent Auditors Report 26 Statements of Financial Position 28 Statements of Profit or Loss and Other Comprehensive Income 29 Statements of Changes in Equity 30 Statements of Cash Flows 32 Notes to the Financial Statements 33

23 TPC PLUS BERHAD ( T) ANNUAL REPORT DIRECTORS REPORT The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding and provision of management services. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS THE GROUP THE COMPANY RM RM Profit after taxation for the financial year 4,764,195 (812,046) Attributable to: Owners of the Company 4,764,195 (812,046) DIVIDENDS No dividend was paid or declared since the end of the previous financial year and the directors do not recommend the payment of any dividend for the current financial year. RESERVES AND PROVISIONS All material transfers to or from reserves or provision during the financial year are disclosed in the financial statements. ISSUES OF SHARES AND DEBENTURES During the financial year:- (a) (b) there were no changes in the authorised and issued and paid-up share capital of the company; and there were no issues of debentures by the company. OPTIONS GRANTED OVER UNISSUED SHARES During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company. BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and that no allowance for impairment losses on receivables is required. At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the allowance for impairment losses on receivables in the financial statements of the Group and of the Company.

24 22 TPC PLUS BERHAD ( T) ANNUAL REPORT 2014 Directors Report CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES The contingent liabilities are disclosed in Note 34 to the financial statements. At the date of this report, there does not exist:- (a) (b) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company, which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year. HOLDING COMPANIES The immediate and ultimate holding companies are Huat Lai Resources Berhad and Esprit Unity Sdn. Bhd., respectively. Both the aforesaid holding companies are incorporated in Malaysia.