FIBON FIBON BERHAD ANNUAL REPORT

Transcription

1 FIBON FIBON BERHAD ANNUAL REPORT

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3 CONTENTS Corporate Information Profile of Directors Chairman s Statement Group Structure Financial Highlights Audit Committee Report Statement on Corporate Governance Statement on Risk Management & Internal Control Statement on Directors Responsibilities Additional Compliance Information Financial Statements Analysis of Shareholdings List of Property Notice of Annual General Meeting Enclosed : Proxy Form

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5 ANNUAL REPORT 2015 Corporate Information BOARD OF DIRECTORS Pang Chee Khiong Executive Chairman Pang Fok Seng Managing Director Lim Wai Kiew Executive Director Pang Nyuk Yin Executive Director Datuk Mohamad Saleh Bin Mohd Ghazali Independent Non-Executive Director Chong Peng Khang Independent Non-Executive Director Dato Koh Chun Kiat Independent Non-Executive Director Chong Chee Siong Non-Independent Non-Executive Director COMPANY SECRETARY Noriah Binti Md Yusof (LS No ) AUDITORS Crowe Horwath (AF 1018) 52, Jalan Kota Laksamana 2/15, Taman Kota Laksamana, Seksyen 2, Melaka. Tel: (606) Fax: (606) SHARE REGISTRAR Symphony Share Registrars Sdn Bhd ( D) Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, Petaling Jaya, Selangor. Tel: (603) Fax: (603) /8152 PRINCIPAL BANKERS OCBC Bank (M) Berhad AmBank (M) Berhad United Overseas Bank (M) Berhad HSBC Amanah Malaysia Berhad Alliance Bank Malaysia Berhad REGISTERED OFFICE 31-04, Level 31, Menara Landmark, No. 12, Jalan Ngee Heng, Johor Bahru, Johor Darul Takzim. Tel: (607) Fax: (607) HEAD OFFICE 12A, Jalan 20, Taman Sri Kluang, Kluang, Johor Darul Takzim Tel: (607) Fax: (607) Website: STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name: Fibon Stock Code:

6 Profile of Directors Pang Chee Khiong Executive Chairman, Non-Independent Mr Pang Chee Khiong, a Malaysian aged 51 is a Non-Independent Executive Chairman since 25 March He has attended all four Board meetings held during the financial year under review. He has more than 27 years of experience in the industries such as plumbing, timber logging, construction and housing development. He is the brother to Pang Fok Seng and Pang Nyuk Yin. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any and he has no conflict of interest with the group. Pang Fok Seng Managing Director, Non-Independent Mr Pang Fok Seng, a Malaysian aged 49 is a Non-Independent Managing Director since 25 March He has attended all three out of four Board meetings held during the financial year under review. He has more than 21 years of experience in the advanced polymer matrix fibre composite industry. He is the brother to Pang Chee Khiong and Pang Nyuk Yin. He is the husband to Lim Wai Kiew. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any and he has no conflict of interest with the group. Pang Nyuk Yin Executive Director, Non-Independent Ms Pang Nyuk Yin, a Malaysian aged 55 is a Non-Independent Executive Director since 9 April She has attended all four Board meetings held during the financial year under review. She was in charge of production processes, sales, purchases and general administration from 1990 to 2003 in a private company. She is sister to Pang Fok Seng and Pang Chee Khiong. She maintains a clean record with regard to convictions for offences, other than traffic offences, if any and she has no conflict of interest with the group. 2

7 ANNUAL REPORT 2015 Profile of Directors cont d Lim Wai Kiew Executive Director, Non-Independent Ms Lim Wai Kiew, a Malaysian aged 49, is a Non-Independent Executive Director since 9 April She has attended all four Board meetings held during the financial year under review. She was a quantity surveyor in Singapore from 1990 to She was in charge of office management and administration in a private company from 1992 to She is wife to Pang Fok Seng. She maintains a clean record with regard to convictions for offences, other than traffic offences, if any and she has no conflict of interest with the group. Datuk Mohamad Saleh Bin Mohd Ghazali Independent Non-Executive Datuk Mohamad Saleh Bin Mohd Ghazali, a Malaysian aged 71 is an Independent Non-Executive Director. Among the committees established, he is the Chairman of the Audit Committee and the Nomination Committee. He was also the Chairman of the Remuneration Committee until 28 th February 2015 when he gave up the Chairmanship but continue to remain a member of the Remuneration Committee. Datuk Mohamad Saleh has withdrawn as the Chairman of Nomination Committee effective 31 st July 2015, however he remains as a member of the Nomination Committee. He is appointed as Director on 20 October He has attended all four Board meetings held during the financial year under review. He graduated from the University of Hawaii, United States with a Bachelor of Business Administration and went on to obtain his Masters of Business Administration from Ohio University in Athens, United States in Datuk Mohamad Saleh began his career by serving the Fishery Development Authority of Malaysia as an economist in 1972 and went on to lecture in Universiti Institut Teknologi Mara in Prior to retiring in November 1999 he was the Executive Director/ Chief Executive Officer of Bank Industri Malaysia Berhad (presently known as Bank Perusahaan Kecil & Sederhana Malaysia Berhad ) for eighteen years. His other working experiences encompasses being a marketing executive in Tourist Development Corporation of Malaysia, an assistant director in the Urban Development Authority, Malaysia and an assistant general manager in the Armed Forces Provident Fund in its investment department. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any. 3

8 Profile of Directors cont d Chong Peng Khang Independent Non-Executive Mr Chong Peng Khang, a Malaysian aged 35, is an Independent Non-Executive Director. He was appointed as Chairman of Remuneration Committee w.e.f. 1 March He is currently member of the Audit and Nomination Committee for the Group. He is appointed as Director on 20 October 2008 and has attended all four Board meetings held during the financial year under review. He holds a first class honours Bachelor of Accounting degree from Multimedia University, Malaysia. He is a Chartered Accountant by profession as well as a fellow of the Association of Chartered Certified Accountants (FCCA, United Kingdom) and also member of the Malaysian Institute of Accountants (MIA). He began his career as an auditor with Deloitte Kassim Chan and subsequently Ernst & Young, involving in audit and business advisory of companies from various industries. His experience covers audit and assurance engagements, corporate reporting and compliance, taxation and wide-ranging overseas exposures. He has previously headed the accounting and finance division of a public listed company listed on the Main Market of Bursa Malaysia Securities Berhad and responsible for the corporate finance, accounting, tax and cash flow functions of the company and its subsidiaries. He is currently a Director of a chartered accounting firm. He is also an independent non-executive director of another company listed on the Main Market of Bursa Malaysia Securities Berhad. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any. Dato Koh Chun Kiat Independent Non-Executive Dato Koh Chun Kiat, a Malaysian aged 31, is an Independent Non-Executive Director. He was appointed the Chairman of Nomination Committee since 1 August 2015 and currently a member of the Audit Committee. He is appointed as Director on 14 November 2012 and has attended all four Board meetings held during the financial year under review. He graduated with a Bachelor of Business majoring in Accounting and Financial Management from La Trobe University in Australia. He is a Chartered Accountant by profession as well as a member of the Malaysian Institute of Accountants, CPA Australia and Chartered Tax Institute of Malaysia. He started his career as senior associate with PricewaterhouseCoopers (PwC) from 2006 to He joined Sam Hoe Plantations Sdn Bhd in 2008 as an accountant and was promoted to senior accountant. His principal role was to supervise the financial accounting section of the department and liaise with auditors and tax agents. Presently, he is a partner of two audit firms. He is also an Approved Company Auditor under the Companies Act 1965 and Approved Tax Agent under the Income Tax Act He is the first person granted Approved GST Tax Agent under the GST Act 2014 in the Southern Region, Johor by the Ministry of Finance and served as GST panelist upon invitation by the Inland Revenue Board of Malaysia during the National Budget Seminar 2014, a yearly event for all tax practitioners. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any. 4

9 ANNUAL REPORT 2015 Profile of Directors cont d Chong Chee Siong Non-Independent Non-Executive Mr Chong Chee Siong, a Malaysian aged 40, is a Non-Independent Non-Executive Director. He is appointed as Director on 1 August He graduated with an Advanced Diploma in Commerce (Financial Accounting) from Tunku Abdul Rahman College. He started his career in mid tier audit firm and subsequently worked with Deloitte and Crowe Horwath. He had accumulated four years of auditing experience and four years of commercial experience before joining Fibon Berhad as General Manager in year His experience covers audit, due diligence audit, preparation of profit forecast, preparation of oversea reporting package, treasury management and corporate reporting. Currently, he is a director of two private limited companies. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any. [The rest of this page intentionally left blank] 5

10 Chairman s Statement On behalf of the Board of Directors of FIBON Berhad, I am pleased to present the Annual Report and Audited Financial Statements of the Group and of the Company for the financial year ended 31 May FINANCIAL PERFORMANCE For the financial year under review, the Group registered revenue of approximately RM 13.6 million, a decrease of 11.29% compared to the preceding year. Profit after tax decrease from RM 4.0 million to RM 3.6 million. The decrease is mainly due to decrease in sales of manufacturing goods. The Group continues maintaining a set of healthy and financially sound balance sheet with cash and cash equivalents of approximately RM 26 million. INDUSTRY OUTLOOK AND PROSPECTS Global economic prospect in 2015 is expected to be even more challenging for the year ahead against a backdrop of ongoing political, economic and financial uncertainties surrounding the Euro zone. The manufacturing business remains challenging and highly competitive, exacerbated by increasing raw material costs and the impact of the minimum wage policy implementation. The Board will strive to remain resilient and cautious in this challenging environment. We are committed to a continuous improving in our production and operational efficiencies, provision of quality products and meeting customer s delivery deadlines with an aim to increase our market share in this industry. DIVIDENDS The Board is pleased to recommend a proposed single tier final dividend of 1.05 cents per ordinary share for FYE 31 May The proposed dividend is subject to Shareholders approval at the forthcoming Annual General Meeting. The total dividends payable for the FYE 31 May 2015 would be approximately amounting to RM1.029 million, being a dividend payout ratio of approximately 28.2% of PAT of RM million. CORPORATE GOVERNANCE The Board of Directors of Fibon Berhad ( the Board ) recognises that its primary responsibility is to safeguard and promote the interests of the shareholders and stakeholders and to enhance the long-term value of the Company. The Board is fully committed to ensure a high standard of corporate governance is practiced throughout the organisation as the Board is mindful of the importance of accountabilities to the shareholders and all stakeholders in building a sustainable business. The Group will continue to endeavour to comply with all the key Principles and Best Practices of the Malaysian Code on Corporate Governance in its effort to observe high standards of transparency, accountability and integrity. APPRECIATION On behalf of the Board of Directors, we wish to thank the management and staffs of the Group for their diligence and dedication to the Group. To our valued shareholders and investors, we appreciate and thank you for your continued support and trust. To our valued customers, suppliers, bankers, regulatory agencies and business associates, our sincere gratitude for your support and partnership and looking forward to your collaboration in the coming years. Last but not least, thanks to our dedicated Board members for your exemplary service and advice to guide the Group forward. Pang Chee Khiong Chairman 6

11 ANNUAL REPORT 2015 Group Structure FIBON BERHAD 100 % HEXA ANALISA SDN BHD 100 % FIBON AUSTRALIA PTY LTD 100 % FIBON UK LIMITED 100 % 100 % FIBON ELECTRIC FIBON CAPITAL (M) SDN BHD SDN BHD FIBON BERHAD, incorporated on 25 March 2008, Malaysia HEXA ANALISA SDN BHD, acquired on 20 October 2008, Malaysia FIBON UK LIMITED, acquired on 16 April 2009, United Kingdom FIBON AUSTRALIA PTY LTD, incorporated on 14 July 2009, Australia FIBON ELECTRIC (M) SDN BHD, acquired on 9 November 2010, Malaysia. FIBON CAPITAL SDN BHD, acquired on 31 July 2013, Malaysia. (Previously known as Opes Management Sdn. Bhd.) 7

12 Financial Highlights Financial year ended 31 May RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 14,498 16,901 16,674 15,318 13,588 Profit before taxation ( PBT ) 5,945 6,226 6,666 5,372 5,204 Profit after taxation ( PAT ) 4,389 4,499 4,905 4,003 3,651 EARNINGS PER SHARE ( EPS ) Gross EPS (sen)* Net EPS (sen)* * FYE : Computed based on the PBT and PAT for the relevant financial years under review and divided by the issued and paid up share capital of 98,000,000 Shares for the financial year. [The rest of this page intentionally left blank] 8

13 ANNUAL REPORT 2015 Financial Highlights cont d REVENUE AND PROFIT FROM ORDINARY ACTIVITY AFTER TAXATION (RM 000) NET EPS (SEN) 9

14 Audit Committee Report for the financial year ended 31 May 2015 THE AUDIT COMMITTEE The present Audit Committee consists entirely of Non-Executive Directors. The Company has complied with the Listing Requirements of Bursa Malaysia Securities Berhad, which require all of Audit Committee members to be non-executive, with a majority of them being independent directors. In addition, two of the members of the Audit Committee are also the member of Malaysian Institute of Accountants ( MIA ) and the Chairman of the Audit Committee is an Independent Director. COMPOSITION AND MEETINGS The composition of the Audit Committee and their attendance at the 4 meetings held during the year are as follows: Name of Director Designation Attendance 1. Ensure the timely and accurate preparation and publication of financial statements of our Group; 2. Review the adequacy of provisions against contingencies and bad and/or doubtful debts; 3. Review internal control process and procedures, scope, internal audit findings and recommend actions to the Board; 4. Recommend and appoint external auditors and deal with any issues arising from their audit findings; 5. Review related party transactions that may arise within our Group; 6. Approve fees relating to external auditors; and 7. Address any accountability issues that may arise from time to time within our Group. Datuk Mohamad Saleh Bin Mohd Ghazali Chong Peng Khang Independent Non-Executive Director Independent Non-Executive Director; Member of the MIA Chairman 4/4 Member 4/4 Composition 1. The Audit Committee shall be appointed by the Board of Directors from amongst their members and comprising not less than three (3) members, of whom the majority shall be the Independent Non-Executive directors. Dato Koh Chun Kiat Independent Non-Executive Director; Member of the MIA TERMS OF REFERENCE Objectives Member 4/4 The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the Group. In addition, the Committee shall: 2. At least one of the members of the Audit Committee must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years of working experience or either must have passed the examinations specified in Part I of the schedule of Accountants Act 1967, or must be a member of one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountant Act, The members of the Audit Committee shall elect a chairman amongst themselves who shall be an Independent Non-Executive director. No alternate director shall be appointed as a member of the Audit Committee. 10

15 ANNUAL REPORT 2015 Audit Committee Report TERMS OF REFERENCE (Cont d) 4. If a result that the number of members is reduced below three (3), the Board of Directors shall, within three (3) months of the events, appoints such number of new members as may be required to make the minimum number of three (3) members. Authority 1. The Audit Committee is authorised by the Board of Directors and have the authority to investigate any matter within its items of reference and shall have unlimited access to both the internal and external auditors, as well as the employees of the Group. All employees are directed to co-operate with any request made by the Committee. 2. The Committee shall have unlimited access to all information and documents relevant to its activities, to the internal and external auditors, and to senior management of the Group. 3. The Committee shall have the authority to obtain independent legal or other professional advices as it considers necessary. 4. The Committee shall be able to convene meetings with the external auditors, excluding the attendance of the executive members of the Committee, whenever deemed necessary. 5. The Audit Committee shall have the power to establish Sub-Audit Committee(s) to carry out certain investigation on behalf of the Committee in such manner, as the Committee deem fit and necessary. Meetings Attendance of the Meetings 1. The external auditors may be invited to attend to meetings. The Committee may invite any person to be in attendance to assist in its deliberations. The other directors and employees attend any particular audit committee meeting only at the audit committee s invitation, specific to the relevant meeting. 2. The Company Secretary shall be the Secretary of the Committee and shall be responsible for drawing up the agenda with concurrence of the chairperson and circulating it, supporting by explanatory documentation to committee members prior to each meeting. Duties The duties of the Audit Committee include the followings: 1. To consider the appointment or reappointment of external auditors, the audit fee and matter relating to the resignation or dismissal of auditors, if any; 2. To review with the external auditors the audit plan, their evaluation of the system of internal accounting controls, their letter to management and the management s response; 3. To review the quarterly and annual financial statements before submission to the Board of Directors for approval, focusing particularly on: Changes in accounting policies and practices; Significant and unusual events; The Committee is at liberty to determine the frequency of the meetings at least four times annually. The quorum shall consist of two (2) members, where the majority of members present must be independent directors. Significant adjustments resulting from the audit; The going concern assumption; and Compliance with accounting standard and other legal requirements 11

16 Audit Committee Report TERMS OF REFERENCE (Cont d) 4. To discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management where necessary); 5. To do the followings where an internal audit function exists; meetings, the notice to be given of such meetings, the voting and proceeding thereat, the keeping of minutes and the custody, production and inspection of such meetings. The minutes of meetings shall be circulated by the Secretary of the Committee to the Committee members and all the other Board members. Review the adequacy of the scope, function and resources of the internal audit function and that it has the necessary to carry out its work; Review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function; Review any appraisal or assessment of the performance of members of the internal audit function; Approve any appointment or termination of senior staff members of the internal audit function; Review the resignation of internal audit staff members and provide the staff member the opportunity to submit his reasons for resigning; and To consider major findings of internal investigations and management s response. ACTIVITIES OF THE AUDIT COMMITTEE There were four (4) Audit Committee Meetings held during the financial year under review. The main activities undertaken by the Audit Committee during the financial year included the followings: Reviewed and commented on the quarterly financial result before recommending the same for Board s approval. Reviewed the audit report and observations made by external auditors on the audited financial statements that require appropriate management action and the management s response thereon and reporting them to the Board. Reviewed the external auditors scope of work and audit plan. Reviewed the internal audit reports, which highlighted the audit issues and management s response. 6. To consider any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity; and 7. To consider other topics as defined by the Board. Reporting The Audit Committee is authorised to regulate its own procedures and in particular the calling of INTERNAL AUDIT FUNCTION The Board engaged an external professional firm to carry out internal audit function for the Group. The internal auditors report directly to the Audit Committee. The primary role of the internal auditors is to interalia; assist the Audit Committee on an ongoing basis to: Review the risk management framework; 12

17 ANNUAL REPORT 2015 Audit Committee Report INTERNAL AUDIT FUNCTION (Cont d) Evaluate the state of compliance with the Bursa Securities Listing Requirements, Malaysian Code on Corporate Governance ( the Code ) and other statutory requirements; and Provide such other function as requested by the Audit Committee 13

18 Statement on Corporate Governance for the financial year ended 31 May 2015 INTRODUCTION The Board of Directors ( the Board ) of Fibon Berhad ( the Company ) is committed to exercise good corporate governance by supporting and applying the prescriptions of the principles and best practices set out in Malaysian Code on Corporate Governance 2012 ( MCCG 2012 or the Code ). The Board is pleased to provide the following statement on how the Group has applied the principles and recommendations set out in the Code. Unless otherwise stated, the Board has throughout the financial year ended 31 May 2015 complied with the best practices indicated in the Code. The Board acknowledges the importance of achieving best practice in its standards of business integrity and corporate accountability and is committed to subscribe to the recommendations of the Code. The Board The Group recognises the important role played by the Board in the stewardship of the Group s direction and operations, and ultimately, the enhancement of long-term shareholders value. To fulfil this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. In fostering commitment towards MCCG 2012, the Board has established a Board Charter to ensure that all Board members are aware of their fiduciary duties and responsibilities for the proper stewardship of the Group to provide reasonable assurance for the success of the Group on sustainable manner. The Board is tasked with realisation of long term and sustainable shareholder s value and safeguarding the interests of stakeholders. Board Meeting The Board ordinarily meets at least four (4) times a year at quarterly intervals with additional meeting convened when urgent and important decisions need to be taken between the scheduled meetings. During the financial year ended 31 May 2015, the board met on four (4) occasions, where it deliberated upon and considered a variety of matters including the Group s financial results, major investments and strategic decisions and the business plan and direction of the Group. The present Board of Directors headed by the chairman is comprised of: 4 Non-Independent Executive Directors 3 Independent Non-Executive Directors 1 Non-Independent Non-Executive Director The composition of the Board is basically in compliance with the Bursa Securities Listing Requirements and the Code. The Board composition has been balanced to reflect the interests of the major shareholders, management and minority shareholders. Collectively, the Directors bring a wide range of business and financial experience relevant to the direction of the Group. The Board noted that one of the recommendations of the MCCG 2012 is that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. In case of any Independent Director exceeding cumulative term of nine (9) years, he / she should be re-designated to be Non-Executive Director or shareholders approvals would need to be obtained in order for he / she to remain as Independent Director. Amongst the Board members, all the tenure of three (3) Independent Non-Executive Directors have not exceeded cumulative term of nine (9) years. Another recommendation of the MCCG 2012 states that the positions of Chairman and Chief Executive Officer / Managing Director should be held by different individuals, and the Chairman must be a non-executive member of the Board. Otherwise, the Board should comprise of majority independent directors. Currently, the rules of the Chairman and 14

19 ANNUAL REPORT 2015 Statement on Corporate Governance Managing Director are held by 2 separate Executive Directors as the Board opines that there is sufficient balance of Executive and Independent Non- Executive Directors on the Board such that decisions made are fully discussed and examined taking into account the long-term interest of shareholders, employees, customers and the many communities with whom the Group conducts its business. The board has been able to discharge its duties professionally and effectively, uphold good governance standards in their conduct. The board will constantly review this recommendation and work towards its compliance. Details of Directors attendance at Board Meetings held in the financial year ended 31 May 2015 are as follows: Name of Directors Datuk Mohamad Saleh Bin Mohd Ghazali No. of Meetings Attended 4/4 Koh Chun Kiat 4/4 Chong Peng Khang 4/4 Pang Chee Khiong 4/4 Pang Fok Seng 3/4 At the forthcoming Annual General Meeting, Pang Chee Khiong and Datuk Mohamad Saleh bin Mohd Ghazali are due to retire pursuant to Article 121 and Chong Chee Siong is due to retire pursuant to article 126 of the Company s Articles of Association. The Board, through the Nomination Committee, appraises the composition of the Board and believes that the current composition brings the required mix of skills and core competencies for the Board to discharge its duties effectively. New appointees will be considered and evaluated by the Nomination Committee. The Nomination Committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensure that all appointments are properly made and that legal and regulatory obligations are met. Directors Remuneration The Directors remuneration is linked to experience, scope of responsibility, seniority, performance and industry information. Details of Directors remuneration for the year ended 31 May 2015 are as follows: Pang Nyuk Yin 4/4 Lim Wai Kiew 4/4 Appointment of Directors Description Executive Directors Non Executive Directors Fees Salaries and Bonus Total 195,300 1,910,277 2,105,577 74,400-74,400 The Nomination Committee task is to assist the Board to evaluate and recommend candidates for appointments to the Board. In accordance with the Company s Articles of Association ( the Articles ), all new Directors who are appointed by the Board during a financial year, will retire at the following Annual General Meeting. The Articles also provide that at least one-third (1/3) of the Directors for the time being, or if their numbers is not in multiple of three (3), then the number nearest to one-third (1/3) shall retire from office provided always that all Directors including the Managing Director/Executive Director shall retire from office at least once every three years but shall be eligible for re-election. The number of Directors whose remuneration falls within the following bands is: Description Executive Directors Non Executive Less than RM50,000-3 RM50,000 RM100, RM100,000 RM150, RM150,000 RM200, RM200,000 RM300, RM300,000 RM400, RM400,000 RM500,000 RM500,000 RM600,000 RM600,000 RM700,000 RM800,000 RM900,000 RM900,000 RM1,000,

20 Statement on Corporate Governance Directors Training The Group acknowledges the importance of continuous education and training to the Board members. During the financial year, Ms Lim Wai Kiew has attended the following sessions: i) Taklimat PCB Sebagai Cukai Muktamad organised by the LHDN Malaysia, Kluang (19 Nov 2014) ii) Program Hand Holding dan Kursus Cukai Barang & Perkhidmatan Sektor Pengilangan organised by Royal Malaysian Custom Department. (3 Dec 2014) iii) GST Challenge 2.0 organised by China Press (8 Dec 2014) iv) Program Hand Holding Cukai Barangan dan Perkhidmatan (CBP) Sektor Pengilangan organised by Royal Malaysian Custom Department.(26 Feb 2015) v) Program GST Bersama Pelangan organised by Royal Malaysian Custom Department (2 July 2015) vi) Program Hand Holding dan Kursus Cukai Barang & Perkhidmatan Bagi Syarikat Pengecualian 14(2) organised by Royal Malaysian Custom Department.(10 Aug 2015) Mr. Chong Peng Khang had attended the following sessions:- i) Strategies to Maximise Capital Allowance and Reinvestment Allowance Claims (18 September 2014) ii) FADE Training (3 November 2014) iii) GST Hand Holding Program (3 December 2014) iv) Economic Developments and Outlook 2015 (26 March 2015) v) New Public Rulings for 2014 and 2015 (13 April 2015) Dato Koh Chun Kiat had attended the following sessions: i) Industry Focused GST Workshops- GST for Property Developers & Construction Industry ii) Understand and applying the 24 Malaysian GST Tax Codes iii) GST and its impact on employee benefits iv) Seminar Percukaian Kebangsaan 2014 iv) The 2015 Budget Seminar v) New Public Ruling - the latest developments ACCOUNTABILITY AND AUDIT Financial Reporting The Board takes responsibility for ensuring that the financial statements of the Group and of the Company give a true and fair view of the state of affairs of the Group and of the Company as required under Section 169 (15) of the Companies Act, Efforts are made to ensure that the financial statements comply with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia. The Board also ensures the accurate and timely release of the Group s quarterly and annual financial results to Bursa Malaysia. External Audit Function The Company s independent external auditors fill an essential role by enhancing the reliability of the financial statements of the Group and of the Company and giving assurance of that reliability to users of these financial statements. The external auditors, Messrs. Crowe Horwath had reported to the members of the Company on their findings which has been included as part of the Group s and the Company s financial reports with respect to the 16

21 ANNUAL REPORT 2015 Statement on Corporate Governance audit on the statutory financial statements for the year ended 31 May In doing so, the Group and the Company have established a transparent arrangement with the auditors to meet their professional requirements. From time to time, the auditors highlight to the Audit Committee and the Board on matters that require the Board s attention. Internal Control The Board is fully aware of its responsibility to safeguard and enhance the value of shareholders in the Group. Since the listing of the Company, the Board has continuously placed emphasis on the need for maintaining a sound system of the internal control. Corporate Disclosure Policy The company has in place a policy stipulating the basic principles and procedures of corporate disclosure in order to communicate and disseminate material information impartially to stakeholders on timely, accurate, clear and complete manner, in accordance with Main Market Listing Requirements and other applicable laws and regulations. The policy forms part of the Company s internal rules and regulations and applies to all Directors, officers and employees of the Group and at the same time clearly expresses its commitment on transparent, quality and timely disclosure of Material Information to all stakeholders. RELATIONS WITH SHAREHOLDERS AND INVESTORS Annual General Meeting Annual General Meeting ( AGM ) is the principal forum for dialogue with shareholders. At the Company s AGM, shareholders have direct access to the Board and are given opportunities to ask questions. The shareholders are encouraged to participate in the question and answer session. The Chairman of the Board in the AGM often presents to the shareholders, the Company s operations in the financial year and outlines future prospects of the Group. Further, the Group s Company Secretary could provide shareholders and investors with a channel of communication on which they can provide feedback to the Group. Queries regarding the Group may be conveyed to the Company Secretary at the Company s registered address. Investor Relations In line with the Main Market Listing Requirements, shareholders, investors and member of public can access the company s announcements, quarterly financial results, annual reports, circulars to shareholders etc via the company s website. 17

22 Statement on Corporate Governance Corporate Social Responsibilities Company recognises the importance of Corporate Social Responsibilities and is committed to conduct its business activities in a socially, economically and environmentally sustainable manner. The Company has taken a proactive approach wherever possible to provide monetary contributions to nonprofitable and charitable organisations. As a part of the activities, the Company accepts undergraduates from local Universities and Colleges to perform and complete their industrial training. AGAPE SHELTER KLUANG Agape Shelter Kluang is a welfare home for poor underprivileged children. It was established in the year 1990 and currently has 18 underprivileged children with age ranging from 6 to 20 under its care. The community provides a conducive and homely environment for the healthy emotional, intellectual, physical and spiritual development of the children and to reach out and to touch the lives of the children in partnership with the public. It is managed by a Board assisted by 4 full time staff and 5 volunteers. All the expenses are funding from public donations and Government annual grants. Fibon Berhad has made regular visits and contributions to the shelter home. 18

23 ANNUAL REPORT 2015 Statement on Corporate Governance MIRIAM HOME CANOSSIAN SISTERS The Miriam Home for the aged, established in the year 1982, is located along the Kluang - Air Hitam Road, It is operated by the Canossian Sisters assisted by workers and volunteers. It provides the much-needed shelter for the poor and elderly of all races and religions who are either alone in the world or abandoned by kith and kin. The residents at this home are all senior citizens in their twilight years, with the youngest being 65 years old and the most senior at 101 years old. Most do not have the means to support themselves. Miriam Home provides them with a better living environment, whether emotionally, physically or spiritually. Miriam Home is the place where they can spend their twilight years in comfort, interaction with other people of their age and to receive visitors as well as volunteers from non-governmental organisations who come by to cheer them up. We at Fibon Berhad, as a part of caring community, pay regular visits and make donations to the Miriam Home. 19

24 Statement on Corporate Governance CHE LUAN KHOR DIALYSIS CENTRE, KLUANG. Che Luan Khor Dialysis Centre is a non-profitable and charitable organisation located in Kluang in the state of Johor. It was incorporated in Malaysia in August 1998 to provide haemodialysis services to the needy. Che Luan Khor Dialysis Centre is equipped with the latest medical equipment for haemodialysis treatment. The centre is managed by a group of professional personnel such as Medical Doctor, Registered Nurses and Experienced Technicians and assisted by around 200 volunteers to provide excellent treatments for some 75 haemodialysis patients. The centre caters to around 30 patients on daily basis. Fibon had given donation with the hope to ease their medical expenses. 20

25 ANNUAL REPORT 2015 Statement on Corporate Governance KIWANIS CLUB OF KLUANG MANDARIN Kiwanis Club of Kluang Mandarin was established in the year 2007 with the mission of providing support and assistance to persons with physical disabilities. Their main aims are providing day care services and simple education for the disabled people. Currently there are around 33 disabled persons ranging from 7 to 40 years olds attached to the club. It has a team of 7 teachers, 1 administration staff and 2 volunteers helping out at the club. Kiwanis Club has been a very active club for the last 10 years. It has held various activities for the unfortunates and together with their families. Fibon as part of caring community, paid a visit and donated small token of contribution. 21

26 Statement on Corporate Governance HANDICAPPED AND DISABLED ASSOCIATION STATE OF JOHORE, KLUANG Handicapped and Disable Association State of Johore (Kluang) is a charitable organisation for the physically and mentally disabled person of all ages, races and religions in Malaysia. It was officially opened on the 16th July, The organisation aims at providing a shelter and home for the forgotten citizens of our society, providing them with daily needs and neccessities, foods, clothings and medical attention. Currently it is taking care of 25 handicapped and disabled persons of different races and genders with age ranging from 13 to 72 years old. The organisation has total of 8 staffs and workers including a cook, a teacher, a nurse, 2 day caretakers and 2 night caretakers to look after the residents in this home. The center also provide teaching and training to the handicapped and disabled persons. It depends fully on donations and contributions from governmental and nongovernmental organisations for the daily running of the home. Fibon as part of caring community, paid a visit and donated a small token of contribution to the home. 22

27 ANNUAL REPORT 2015 Statement on Corporate Governance PERTUBUHAN KEBAJIKAN ANAK-ANAK YATIM DAMO, KLUANG Pertubuhan Kebajikan Anan-Anak Yatim Damo, Kluang is a non-profitable welfare home for orphans and single family children. It was established about 10 years ago and currently has 18 children (single family and orphans) of different races and faiths staying at the center. The center was established with the aim of providing a home and education for the needy. Currently there are only 2 volunteers including Mr Damo helping at the center. Fibon Berhad has made regular visits and contributions to the center. 23

28 Statement on Corporate Governance LEE MEH YEN (IC NO ) Madam Lee Meh Yen was diagnosed with cancer of the colon and undergone surgical operation in October 2014 to remove the tumors. During the operation, a section of the colon was removed and reconnection of the colon was not possible. After the surgery, normal passing of body waste was not possible. Daily passing of body wastes has to be done through an opening in the wall of the abdomen. Special adhesive and plastic bags are required to be fitted to the abdomen to collect the waste. The costs of these special plastic bags are huge and are a burden to Mdm. Lee Meh Yen. She needs a daily constant supply of these plastic bags and find it difficult to afford to buy them. Fibon has come to know of her difficulty and predicament and has come up with some funds and donated some special plastic bags for her daily use. 24

29 ANNUAL REPORT 2015 Statement on Corporate Governance CHAY YOON KOY ( ) Mr Chay Yong Koy, a father of three girls of age 4, 11 and 14 years old, was diagnosed with stage 4 cancer of the lymph in April The cancer had since spread to the nose and eyes causing the right eye blinded. He had to go through 25 rounds of electrotherapy follow with another 6 rounds of chemotherapy to treat the cancer. The enormous medical expenses were too much for his meager income working as a laborer and fruit harvester in an oil plant plantation. He urgently needed contributions from whoever or wherever to lighten the heavy burden from the medical expenses. Fibon has come to know of his predicament and has donated some contribution to help in the medical expenses. 25

30 Statement on Corporate Governance DONATIONS We at Fibon believe that charity is a continuous journey in the betterment of the life for the disadvantaged, forgotten, neglected or disabled. They deserve a better life with loves and caring from the society. We at Fibon may not be able to fully relieve their pains and sufferings but we believe with our little contribution, we at least can give them some cheers, loves and urgent financial supports to let them lead a better life. Below is a list of communities requiring support from the public. Should anyone is interested to contribute to these communities, we are always here to provide the necessary assistance required. 1. AGAPE SHELTER KLUANG 2. CHE LUAN KHOR DIALYSIS CENTRE, KLUANG. 3. HANDICAPPED AND DISABLED ASSOCIATION STATE OF JOHORE, KLUANG 4. KIWANIS CLUB OF KLUANG MANDARIN 5. MIRIAM HOME CANOSSIAN SISTERS, KLUANG 6. PERTUBUHAN KEBAJIKAN ANAK-ANAK YATIM DAMO, KLUANG 7. LEE MEH YEN ( ) 8. CHAY YOON KOY ( ) 26

31 ANNUAL REPORT 2015 Statement on Risk Management & Internal Control for the financial year ended 31 May 2015 INTRODUCTION The Malaysian Code of Corporate Governance ( The Code ) prescribes that all listed issuers should have an internal audit function and all risks areas identified. The Principals and Best Practises in the Malaysian Code on Corporate Governance state that the Board should maintain a sound system of internal control to safeguard shareholders investments and the Group s assets. Paragraph 15.26(b) of the Bursa Securities Main Market Listing Requirements also echoed that the Board is ultimately responsible for the Group s system of internal control and for reviewing the effectiveness of the internal control system. Internal control system is primarily designed to cater for the business needs and manage the potential business risks of the Group. There are inherent risks in any systems of internal control, as such systems are designed to mitigate rather than eliminate the likelihood of fraud and error. Accordingly, these systems can provide only reasonable and not absolute assurance against material misstatement or loss. The concept of reasonable assurance also recognises that the cost of control procedures should not exceed the expected benefits. The Board is committed to maintain a sound system of internal control in the Group and is pleased to provide the following Statement on Internal Control ( Statement ) pursuant to paragraph 15.26(b) of the Bursa Securities Main Market Listing. Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the Statement on Internal Control: Guidance for Directors of Public Listed Companies. BOARD RESPONSIBILITIES The Board acknowledges its responsibility for maintaining a sound system of internal control to safeguard shareholders investments and the Group s assets and for reviewing the adequacy and integrity of the system. It should be appreciated that such a system is designed to manage the principle business risks that may impede the Group from achieving business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. The system of internal controls cover financial, organisational, operational and compliance controls to safeguard shareholders investment and the Group s assets. RISK MANAGEMENT The Board understands that risk management plays an important role in identify risk areas which impede the achievement of the Group s corporate objectives. As such the Group strives to identify and manage its risks faced by the Group during the year during their monthly management meetings. KEY ELEMENTS OF THE INTERNAL CONTROL SYSTEM Internal controls are embedded in the Group s operations as follows: Organisation Structure The Group has in place an organisation structure with clearly defined lines of responsibilities and functionality which promotes appropriate levels of accountability for risk management, control procedures and effectiveness of operations. Board and Management Meetings Strategic planning and detailed target setting for each area of business are discussed during management meetings. The Management holds monthly meetings to monitor actual results, and significant variances are being investigated and management action taken, where necessary, as well as listening to feedback of the daily operational issues. 27

32 Statement on Risk Management & Internal Control Performance Management Framework Management reports are generated on a monthly and quarterly basis to facilitate the Board and the Group s management to perform review on the business units. The Group s management information system has been upgraded to provide management with better reporting system. The reporting and review encompass financial and nonfinancial matter for compliance and daily operational use. Limits of Authority Defined level of authorities and lines of responsibilities from business divisions up to the Board level is established to ensure accountabilities and responsibilities for risk management and control activities. Operational Policies and Procedures The Group s policies and procedures form an integral part of the internal control system to safeguard the Group s assets against material losses and to ensure a systematic running of the daily operation. Regular reviews are performed to ensure that documentation remains current and relevant. Audit Committee The AC reports to the Board on a quarterly basis the activities of the internal audit function and deliberate on the internal audit reports. The AC also ensures that the adequacy and effectiveness of the internal controls and procedures and that there are continuous efforts by management to address and resolve areas with control weakness. Internal Audit Functions The internal audit function provides assurance of the effectiveness of the system of internal controls within the Group. Internal audit efforts are directed towards areas with significant risks as identified by the AC and the Management. The Group had engaged an external independent internal auditor to assist the AC, and by extension, the Board. The scope covers the audit of business units and operations as agreed with management. From time to time, the scope is reviewed by the AC to ensure its relevancy and effectiveness. The internal audits advise management on areas for improvement and subsequently reviews the extent to which its recommendations have been implemented, and reports directly to the AC on a quarterly basis. The cost incurred for the external independent internal audit services in respect of the financial year 31 May 2015 was RM28, In Fibon Berhad, the Managing Director is defined as the highest ranking executive in the Group hence, the person responsible for carrying out corporate policies established by the Board and whose main responsibilities include developing and implementing high-level strategies, making major corporate decisions, managing the overall operations and resources of the Group, and acting as the main point of communication between the Board and corporate operations. The Corporate Finance Manager is defined as the person primarily responsible for the management of the financial affairs of the company (such as record keeping, financial planning and financial reporting), by whatever name called. On 30 July 2015, based on the letter by both the Managing Director and the Corporate Finance Manager provides the assurance to the Group s Board that the Group s risk management and internal control system is operating adequately and effectively. The monitoring, review and reporting arrangements provides reasonable assurance that the structure of controls and its operations are appropriate to the Group s operations and that risks are at an acceptable level throughout the Group s businesses. Such arrangements, however, do not 28