Annual Report for financial year ended 31 October 2015 ANNUAL REPORT 2015 ANNUAL REPORT 2015

Transcription

1 ADVENTA BERHAD ( M) ADVENTA BERHAD ( M) ANNUAL REPORT 2015 Annual Report 2015 for financial year ended 31 October 2015 ANNUAL REPORT 2015

2 Contents 02 Corporate Information 03 Group Corporate Structure 04 Chairman & Managing Director s Statement 06 Directors Profiles 09 Corporate Governance Statement 23 Audit Committee Report 28 Statement on Risk Management and Internal Control 30 Responsibility Statement by the Board of Directors 31 Financial Statements 98 List of Properties 99 Statistics of Shareholdings 102 Notice of Thirteenth Annual General Meeting 107 Location Map to AGM Form of Proxy

3 2 ADVENTA BERHAD ( M) Corporate Information BOARD OF DIRECTORS EDMOND CHEAH SWEE LENG Chairman/Senior Independent Non-Executive Director LOW CHIN GUAN Managing Director KWEK SIEW LENG Executive Director TOH SENG THONG Independent Non-Executive Director DATO DR. NORRAESAH BINTI HAJI MOHAMAD Independent Non-Executive Director AUDIT COMMITTEE TOH SENG THONG Chairman EDMOND CHEAH SWEE LENG Member DATO DR. NORRAESAH BINTI HAJI MOHAMAD Member NOMINATION COMMITTEE EDMOND CHEAH SWEE LENG Chairman TOH SENG THONG Member REMUNERATION COMMITTEE EDMOND CHEAH SWEE LENG Chairman LOW CHIN GUAN Member TOH SENG THONG Member COMPANY SECRETARY CHUA SIEW CHUAN (MAICSA ) PAN SENG WEE (MAICSA ) REGISTERED OFFICE 21, Jalan Tandang 51/205A, Seksyen 51, Petaling Jaya, Selangor Darul Ehsan Tel : Fax : SHARE REGISTRAR Securities Services (Holdings) Sdn. Bhd. Level 7, Menara Milenium, Jalan Damanlela Pusat Bandar Damansara Damansara Heights Kuala Lumpur Tel : Fax : PRINCIPAL BANKERS OCBC Bank (Malaysia) Berhad Standard Chartered Saadiq Berhad EXTERNAL AUDITORS Ernst & Young Unit 10 D-J, Level 10, Menara Zenith, Jalan Putra Square 6, Kuantan, Pahang, Malaysia INTERNAL AUDITORS PKF Advisory Sdn Bhd Level 33, Menara 1MK, Kompleks 1 Mont Kiara, No. 1, Jalan Kiara, Mont Kiara Kuala Lumpur STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad

4 ANNUAL REPORT Group Corporate Structure 100% Sun Healthcare (M) Sdn. Bhd. Distribution of medical and healthcare equipment, appliances and medical disposal products 100% Electron Beam Sdn. Bhd. Industrial and commercial sterilisation, warehousing and handling services 100% Lucenxia (M) Sdn. Bhd. Provision of home dialysis treatment 100% PTM Progress Trading & Marketing Sdn. Bhd. Provision of storage and warehousing services

5 4 ADVENTA BERHAD ( M) Chairman & Managing Director s Statement Ladies and Gentlemen, We are pleased to inform that our goals for 2015 were achieved across all sectors despite the stiff challenges in the market and the financial headwinds from the global slowdown and currencies instability. From the beginning of the year we said healthcare distribution will be one of the core areas of our expansion. We achieved 32% higher revenue this year. To sustain this growth momentum going forward, one of the main focus area will be to widen our product range. SKU grew from 605 to 680 this year and to 800 within 2 years. Diversifying into the surgical room sector has been the corner stone of our marketing drive, focusing on products of high value and performance. This will be built over the coming years into the country s leading source of operating room ( OR ) products. Hospital supplies is a core revenue business and we will continue to invest in this. Sun Healthcare s mission is to help hospital and healthcare groups reduce their product supply costs, while achieving overall operational efficiency through diversity in sourcing and inventory management. Our ability to bring together healthcare centres, general practitioners and vendors is the fundamental factor that sets us apart from the rest. We create better values along the supply chain by introducing new medical supplies that meets the changing medical techniques. With the operation of our new logistic centre at Subang and its integrated functions, we intend to achieve higher cost savings and faster consolidation throughput in the Klang Valley. This logistic centre shall be extended to include pharmaceutical stock management and distribution. To further strengthen logistics coverage in the northern region covering Penang, Kedah, Perlis and Langkawi, we opened a new warehouse facility at Kulim, Kedah, reaching out faster to our customers and shortening delivery time.

6 ANNUAL REPORT Chairman & Managing Director s Statement Financially, this sector suffered from the rapid depreciation in the Ringgit, with many contracts tied up from 6 to 12 months. The introduction of the GST was another hurdle since supplies to hospitals are not GST chargeable and has to be absorbed by the company. However, we managed to mitigate the full impact by several negotiated increases Sales RM23.2m RM30.6m +31.8% PBT RM0.57m RM0.78m + 37% ROE 40% 38% A new online portal, MyCare.com.my, allows partner physicians and their patients to purchase medical products and consumables online, creating the platform for off-site dispensing solution to general practitioners and post acute-care needs. This will be further expanded to geriatric care products. The Company is looking at acquisitions to scale up and move into more specific sectors in healthcare supplies. Since the acquisition of Electron Beam Sdn. Bhd. ( Electron Beam ) in 2012, the Company has grown 36% in revenue and 136% in annual earnings. We expect growth to be further enhanced next year with the introduction of new sterilization services in Q The new business is expected to generate 20% increase in sales. Current sterilization services is also expected to grow. Electron beam faced a slowdown in the last quarter, mainly from customers who had slower market demands. However cost savings measures undertaken successfully reduced the impact on the bottom line. As the regional economies developed into higher income status, the prevalence of diabetes and other contributing factors has pushed the rate of increase in End Stage Renal Disease (ESRD) to higher than 10% a year, making it one of the fastest growing non communicable disease. The company has invested in education and knowledge dissemination among healthcare workers on the meaningful impact on quality of life that Intellis can offer. Lucenxia is in a business with high sustainability and customer loyalty. We foresee a cautious start at the initial stage but expect exponential growth once patients acceptance and confidence level increases and by higher budgetary allocations from funding sources now that the rollout is approved. Being the only full service home dialysis provider with online patient monitoring and day / night dialysis capability, we are poised to change the landscape of dialysis in the country and around us. On behalf of the Board, we would like to take this opportunity to thank all our customer, suppliers, business partners and shareholders for being with us throughout this journey. We are here today because of your faith and confidence in us, that once again allows us to reach greater heights year after year. We would also like to thank the management teams and employees for their tireless commitment towards achieving the Group s goals and aspirations. We look forward to another successful year ahead with several new initiatives planned. EDMOND CHEAH SWEE LENG Chairman LOW CHIN GUAN Managing Director 2014 Sales RM9.9m PBT RM6.2m ROE 33% 2015 RM9.9m RM5.6m - 10% 23% Lucenxia (M) Sdn. Bhd. ( Lucenxia ) has completed its extensive clinical evaluation exercise together with the Ministry of Health. The outcome was above all expectations. This encouraging result allows the company to bring forward its official launch of the Intellis Home Dialysis to Jan We are very pleased to have reached this important milestone, being the first company in South East Asia to operate in this service, potentially of significant scale. Rollout into regional countries will be done in phases over the next 3 years.

7 6 ADVENTA BERHAD ( M) Directors Profiles Standing from left to right: Dato Dr. Norraesah Binti Haji Mohamad Toh Seng Thong Kwek Siew Leng Sitting from left to right: Edmond Cheah Swee Leng Low Chin Guan

8 ANNUAL REPORT Directors Profiles EDMOND CHEAH SWEE LENG Chairman, Senior Independent Non-Executive Director Mr. Edmond Cheah Swee Leng, aged 61, a Malaysian, was appointed to the Board of Adventa Berhad on 9 August 2004 and is presently the Chairman of the Company. His last re-election as a director was on 24 April He is a member of the Audit Committee and Chairman of the Remuneration Committee and Nomination Committee. He is a Chartered Accountant by profession and a member of the Malaysian Institute of Accountants and Association of Chartered Accountants, England and Wales. He is also a certified financial planner. His professional experience has been in the fields of audit, merchant banking, corporate & financial advising, portfolio & investment management, unit trust management and financial planning. His career started with a professional accounting firm in London where he was an Audit Manager. He was the manager in charge of Portfolio Investment in a merchant bank in Malaysia and subsequently in charge of the corporate and planning division in a public listed company. Mr. Cheah was the Chief Executive Officer/ Executive Director and a member of the Investment Committee of Public Mutual Fund Berhad, the largest private unit trust management company in Malaysia. He was also a council member and Chairman of the Secretariat of the Federation of Investment Managers Malaysia (FIMM), and is a former Task Force Member on Islamic Finance for Labuan International Offshore Financial Centre (LOFSA), and a former member on the Securities Market Consultation Panel in Bursa Malaysia Securities Berhad. He attended all four (4) Board Meetings held during the financial year ended 31 October Mr. Cheah sits on the Board of Nylex Malaysia Berhad, Ancom Berhad and Ancom Logictics Berhad, all of which are listed on Bursa Malaysia Securities Berhad. He is also an Investment Committee Member and Director of MAAKL Mutual Berhad. LOW CHIN GUAN Managing Director Mr. Low Chin Guan, aged 56, a Malaysian, was appointed to the Board of Adventa Berhad on 12 April 2004 and is presently the Managing Director of the Company. His last re-election as a director was on 29 April He is also a member of the Remuneration Committee. He graduated as a Civil Engineer from the University of Manchester Institute of Science and Technology (UMIST), United Kingdom. Mr. Low founded the initial subsidiary of the Group in He has years of experience in project management, operations of manufacturing and assembly plants, financial control, strategic planning and marketing. In 2004, he formed Adventa Berhad to hold the various companies and manufacturing facilities under a single group management. He now leads the Group in the areas of strategic planning, business development, investments, acquisitions and key personnel recruitment. He is also actively involved in product development, particularly in technological directions. He attended all four (4) Board Meetings held during the financial year ended 31 October Mr. Low does not hold directorships in any other public listed company. He is the son of Madam Wong Koon Wong Kwan Mooi and the brother of Ms. Low Lea Kwan, who are substantial shareholders of the Company. He does not have any family relationship with any other director nor any conflict of interest in any business arrangement involving the Company, except as disclosed in the Financial Statements. He has no convictions for any offence within the past ten (10) years. He does not have any family relationship with any other director and/or substantial shareholder of the Company nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offence within the past ten (10) years.

9 8 ADVENTA BERHAD ( M) Directors Profiles KWEK SIEW LENG Executive Director Ms. Kwek Siew Leng, aged 49, a Malaysian, was appointed to the Board of Adventa Berhad on 12 April 2004 and is presently an Executive Director of the Company. Her last re-election as a director was on 21 April She is an Associate Member of the Chartered Institute of Management Accountants (CIMA) and a Chartered Accountant with the Malaysian Institute of Accountants (MIA). She has senior operations experience in audit and accounting prior to joining the Adventa Bhd group. Her prior employment in public practice includes stints in statutory and regulatory reporting, financial planning, budgeting and forecasting, taxation, managerial skills as well as system development in various fields. She joined one of the Company s subsidiaries as Finance Manager in 2002 and assumed the position of Group Finance Manager of Adventa Berhad in She was subsequently promoted to Finance Director in She is now responsible for the overall management and operations of the accounts and finance departments. She attended all four (4) Board Meetings held during the financial year ended 31 October She does not hold directorships in any other public listed company. She does not have any family relationship with any other director and/or substantial shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. She has no convictions for any offence within the past ten (10) years. TOH SENG THONG Independent Non-Executive Director Mr. Toh Seng Thong, aged 57, a Malaysian, was appointed to the Board of Adventa Berhad on 10 May His last re-election as a director was on 24 April He is the Chairman of the Audit Committee and a member of the Remuneration Committee and Nomination Committee. He graduated with a Bachelor of Commerce (Accounting) degree from the University of Canterbury, New Zealand in He is a Chartered Accountant by profession and a member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants, New Zealand Institute of Chartered Accountants, a Fellow member of the Malaysian Institute of Taxation and an Associate member of the Harvard Business School Alumni Club of Malaysia. Mr Toh has over 27 years experience in auditing, taxation and corporate advisory and financial advisory as a practicing Chartered Accountant of Malaysia. He started his own practice under Messrs S T Toh & Co in He attended all four (4) Board Meetings held during the financial year ended 31 October He sits on the Board of Latitude Tree Holdings Berhad and Malaysian Genomics Resource Centre Berhad, companies listed on Bursa Malaysia Securities Berhad. Mr. Toh does not have any family relationship with any other director and/or substantial shareholder of the Company nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offence within the past ten (10) years. DATO DR. NORRAESAH BINTI HAJI MOHAMAD Independent Non-Executive Director Dato Dr. Norraesah Binti Haji Mohamad, aged 67, a Malaysian, was appointed to the Board of Adventa Berhad on 8 November 2005 as an Independent Non- Executive Director of the Company. Her last re-election as a director was on 21 April She is also a member of the Audit Committee. Dato Dr. Norraesah holds a Doctorate Degree in Economics Science (International Economics and Finance) and a Masters in International Economics and Financial Relations from the University of Paris Pantheon- Sorbonne, France. She has more than 44 years of working experience in banking, consultancy and international trade and commerce. From 1972 to 1985, she worked with the International Trade Division of the Ministry of Trade and Industry and the Ministry of Finance before joining the corporate sector. From 1988 to 1990, Dato Dr. Norraesah was the Communications Manager of ESSO Production Malaysia Inc. and subsequently assumed the position of Managing Director with a consultant firm providing financial advisory services. She was also appointed as Chief Representative of Credit Lyonnais Bank in Malaysia and was the Chairman of Bank Rakyat from 2000 to She attended all four (4) Board Meetings held during the financial year ended 31 October Dato Dr. Norraesah currently also sits on the board of My E.G. Services Berhad, Malaysian Genomics Resource Centre Berhad and Utusan Melayu (Malaysia) Berhad, all listed on Bursa Malaysia Securities Berhad. She does not have any family relationship with any other director and/or substantial shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. She has no convictions for any offence within the past ten (10) years.

10 ANNUAL REPORT Corporate Governance Statement The Board of Directors ( the Board ) is committed to its policy of managing the affairs of the Group with transparency, integrity and accountability by ensuring that a sound framework of best corporate practices is in place at all levels of the Group s business and thus discharging its principal responsibility towards protecting and enhancing long-term shareholders value and investors interest. The Board is pleased to report to the Shareholders that the best practices of good corporate governance having regard to the Recommendations stated under each Principle in the Malaysian Code on Corporate Governance 2012 ( the Code ) have generally been practiced within the Group throughout the financial year ended 31 October ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT 1.1. Clear functions of the Board and Management The Group acknowledges the pivotal role played by the Board in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholders value. To fulfill 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. The Board has delegated the authority to achieve the corporate objectives to the Managing Director. The Managing Director remains accountable to the Board for the authority that is delegated to him, and for the performance of the Group. The Board monitors the decisions and actions of the Managing Director and the performance of the Group to gain assurance that progress is being made towards the corporate objectives Duties and responsibilities The Board has overall responsibility for corporate governance, strategic direction, formulation of policies and overseeing the investment and business of the Company. The Board s responsibilities as outlined in the Board Charter include: a) reviewing and adopting the business plan and overall strategic directions for the Company including establishing company goals and ensuring that the strategies are in place to achieve them; b) establishing policies for strengthening the performance of the Company including ensuring that the Management is proactively seeking to build the business through innovation, initiative, technology, new products and the development of its business capital; c) overseeing the conduct of the Company s business to evaluate whether the business is being properly managed; d) identifying principal risks and ensuring the implementation of appropriate systems to manage these risks; e) succession planning, including appointing, training, fixing the remuneration of and where appropriate, replacing senior management members of the Group; f) developing and implementing an investor relations programme or shareholders communications policy for the Company; g) reviewing the adequacy and integrity of the Company s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines; h) deciding on necessary steps to protect the Company s financial position and the ability to meet its debts and other obligations when they fall due, and ensuring that such steps are taken; i) ensuring that the Company s financial statements are true and fair and conform to any applicable laws and/or regulations; and j) ensuring that the Company has appropriate corporate governance structures in place including standards of ethical behaviour, and promoting a culture of corporate responsibility. The Board of Directors delegates specific responsibilities to the respective Committees of the Board namely the Audit Committee, Nomination Committee, Remuneration Committee and Risk Management Committee in order to enhance business and corporate efficiency and effectiveness. The Chairman of the respective Committees will brief the Board on the matters discussed at the Committee meetings and minutes of these meetings are circulated to the full Board.

11 10 ADVENTA BERHAD ( M) Corporate Governance Statement ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT 1.2. Duties and responsibilities The Board Committees are entrusted with specific responsibilities to oversee the Company s affairs, in accordance with their respective Terms of References and operating procedures and the Board receives reports of their proceedings and deliberations. The Chairman of the respective committees will report to the Board the outcome of these meetings and such reports are incorporated into the Board papers. These committees were formed in order to enhance business and operational efficiency as well as efficacy. The Board remains fully responsible for the direction and control of the Company and of the Group. 1.3 Directors Code of Business Conducts and Ethics Code of Ethics The Board has adopted a Code of Conduct for the Directors of the Company, which covers a wide range of business practices and procedures. The Code of Conduct describes the standards of business conduct and ethical behaviour for Directors in the performance and exercise of their responsibilities as Directors of the Company or when representing the Company. Whistle Blowing As part of the Company s continuous efforts to ensure that good corporate governance practices are being adopted, the Company has established Whistle Blowing Policy to provide a clear line of communication and reporting of concerns for employees at all levels. 1.4 Strategies promoting sustainability The Company seeks to be a good corporate citizen in everything that it does. In promoting the Company s sustainability and Corporate Social Responsibility ( CSR ) which form part of the Company s strategies, the Company aims to:- a) Conduct every aspect of our business with honesty, integrity and openness, respecting human rights and the interests of our employees, customers and third parties; b) Respect the legitimate interests of third parties with whom we have dealings in the course of our business; c) Maintain the highest standards of integrity. The Company engages with the local community at a range of levels and its relationships with the various members of the local community are very important to the Company and are an essential part in the growth of the Company s business. In line with the Company s core values, the Company seeks to play a part in promoting socially inclusive policies and our community approach incorporates the following elements: Engagement with the local communities in which we operate on the quality of our services and any changes to those services; Working with local authorities, businesses and other interested parties to improve quality of life; Offering employment opportunities to all sectors of the community through non-discriminatory policies and promoting opportunities to disadvantaged and vulnerable groups; Promoting engagement between our staff and the community; Supporting local community groups and charities such as the Malaysian Society of Nephrology and hospitals, in both cash and kind. As the Company strives to achieve continual improvement in environmental performance, the Company is committed to:- Reducing pollution and the overall impact of our operations on the environment; Complying with, and where possible, exceeding applicable legal requirements relating to the environment; Actively promoting improved energy efficiency within our business in order to reduce the Company s contribution to climate change.

12 ANNUAL REPORT Corporate Governance Statement ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT 1.5 Access to information and advice The Board has full and timely access to information concerning the Company and the Group. The Board is provided with the relevant agenda and board papers in sufficient time, at least 7 days, prior to the meetings to enable them to obtain further explanation and clarification to facilitate informed decision-making. The Board papers include reports on the Group s financial, operational and corporate development. The Board has unrestricted access to all information within the Company, whether as a full board or in their individual capacity, which is necessary for discharge of its responsibilities and may obtain independent professional advice at the Company s expense in furtherance of their duties. 1.6 Qualified and competent Company Secretaries The Board is supported by a suitably qualified and competent Company Secretary and has access to the advice and services of the Company Secretary, who is responsible to ensure that the Board meeting procedures are followed and the applicable statutory and regulatory requirements are complied with. The Board is regularly updated and advised by the Company Secretaries who are qualified, experienced and competent on new statutory and regulatory requirements, and the resultant implications to the Company and Directors in relation to their duties and responsibilities. The Company Secretaries attend all Board and Board Committees meetings and ensure that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. The removal of Company Secretaries, if any, is a matter for the Board, as a whole, to decide. Every Director has unhindered access to the advice and services of the Company Secretaries. 1.7 Board Charter The Board has adopted a Board Charter which provides guiding principles for the Board to achieve the vision and mission of the Company and serves as a reference point for the Board s activities. In the Board Charter, the Board has established a formal schedule of matters reserved to the Board for its deliberation and decision in order to enhance the delineation of roles between the Board and management. The Board will periodically review this Board Charter from time to time to ensure it remains consistent with the Board s objectives and responsibilities and any new regulations that may have an impact on the discharge of the Board s responsibilities. The Board Charter is available in the Company s website. The Board also recognises the pivotal role of the independent directors in corporate accountability as they provide unbiased and independent views, advice and judgment. Mr. Edmond Cheah Swee Leng has been identified as the Senior Independent Non-Executive Director of the Board to whom concerns may be conveyed. 1.8 Succession Planning The Board views succession planning as an integral part of ensuring business continuity especially during challenging times and has taken steps to identity suitable talents within and without the company for training and promotion into senior positions. Periodic reviews were undertaken to assess suitability based on potential candidates capability, experience and qualification taking into account the business needs of the company.

13 12 ADVENTA BERHAD ( M) Corporate Governance Statement STRENGTHEN COMPOSITION OF THE BOARD 2.1 Nomination Committee The Board has established a Nomination Committee, consisting of two (2) Directors who are Independent Non- Executive Directors of the Company. The principal objectives of the Nomination Committee in line with its Terms of Reference are: To assist the Board of Directors in their responsibilities in nominating new nominees to the Board of Directors. To assess the performance of the Directors of the Company on an on-going basis. The Nomination Committee overseas matters relating to the nomination of new Directors, annually reviews the required mix of skills, experience, independence, assessment of Independent Directors, reviews succession plans and boardroom diversity, overseas training courses for Directors and other requisite qualities of Directors and also conducts an annual assessment of the effectiveness of the Board as a whole, its Committees and the contribution of each individual Director. The members of the Nomination Committee during the financial year are as follows:- Chairman : Mr. Edmond Cheah Swee Leng Senior Independent Non-Executive Director Member : Mr. Toh Seng Thong Independent Non-Executive Director The Nomination Committee may meet at least once a year or more frequently as deemed necessary. During the financial year ended 31 October 2015, the Committee had one (1) meeting and details of attendance of each committee member is as follows: Name of Directors No. of meetings attended/held % Mr. Edmond Cheah Swee Leng 1/1 100 Mr. Toh Seng Thong 1/ Develop, maintain and review criteria for recruitment processes and annual assessment of Directors Appointment Process The Board, through the Nomination Committee s annual appraisal, believes that the current composition of the Board brings the required mix of skills and core competencies required for the Board to discharge its duties effectively. The Nomination Committee is also responsible for making recommendations to the Board on the suitability of candidates nominated for appointment to the Board and Board Committees. A formal and transparent procedures for appointment of directors are set out in the Terms of Reference of the Nomination Committee. The decision as to who should be appointed is the responsibility of the full Board after considering the recommendations of the Committee. The Company Secretaries will ensure that all appointments are properly made; all the necessary information is obtained as well as all legal and regulatory obligations are met. Re-election of Directors Any Director appointed during the year is required under the Company s Articles of Association to retire and seek re-election by the shareholders at the following Annual General Meeting ( AGM ) immediately after their appointment. The Articles also require that one-third of the Directors including the Managing Director retire by rotation and seek re-election at each AGM and that each Director shall submit himself/herself for re-election at least once in every three (3) years. The Directors to retire from office at the forthcoming AGM are Mr Low Chin Guan and Mr. Toh Seng Thong.

14 ANNUAL REPORT Corporate Governance Statement STRENGTHEN COMPOSITION OF THE BOARD 2.2 Develop, maintain and review criteria for recruitment processes and annual assessment of Directors Board Evaluation The Board regularly evaluates its performance and the governance processes that support the Board s work with the aim of improving individual contributions, effectiveness of the Board and its committees and the Group s performance. During the financial year under review, the Nomination Committee had reviewed:- the effectiveness of the board as a whole and of the committees of the Board and the contribution and performance of each individual Director; the independence of the independent Directors; recommended training need for Directors; and the Directors who are subject to retirement by rotation at the forthcoming Annual General Meeting ( AGM ), and are eligible for re-election. The effectiveness of the Board is assessed in the areas of Board mix, composition and governance, quality of monitoring and decision-making as well as Board responsibilities. The effectiveness of the committees of the Board are assessed in terms of composition and governance, skills and competencies, and duties and responsibilities in accordance with their respective Terms of Reference. The evaluation process also involved a self and peer review, where the Directors will assess their own performance and that of their fellow Directors. Gender Diversity The Board is presently of the view that there is no necessity yet to fix a specific gender diversity policy as the Board has two (2) female directors. The appointment of any Director(s) should be based on their merit, qualification and working experience. 2.3 Remuneration policies and procedures Remuneration committee The members of the Remuneration Committee consist of two (2) Non-Executive Directors and one (1) Executive Director and meet as and when required. The principal function of the Remuneration Committee is to assist the Board in their responsibilities in assessing the remuneration packages of the Executive Directors. The Remuneration Committee oversees matters relating to the review and assessment of the remuneration packages of the executive directors in all forms, with or without other independent professional advice or other outside advice, ensure the levels of remuneration be sufficiently attractive and be able to retain directors needed to run the Company successfully, structure the component parts of remuneration so as to link rewards to corporate and individual performance and to assess the needs of the Company for talent at Board level at a particular time. The members of the Remuneration Committee shall comprise wholly or mainly of Non-Executive Directors. The current members of the Remuneration Committee are: Chairman : Mr. Edmond Cheah Swee Leng Senior Independent Non-Executive Director Members : Mr. Toh Seng Thong Independent Non-Executive Director Mr. Low Chin Guan Managing Director

15 14 ADVENTA BERHAD ( M) Corporate Governance Statement STRENGTHEN COMPOSITION OF THE BOARD 2.3 Remuneration policies and procedures Remuneration committee The Remuneration Committee may meet at least once a year or more frequently as deemed necessary. During the financial year ended 31 October 2015, the Committee had one (1) meeting and details of attendance of each Committee member is as follows: Name of Directors No. of meetings attended/held % Mr. Edmond Cheah Swee Leng 1/1 100 Mr. Toh Seng Thong 1/1 100 Mr. Low Chin Guan 1/1 100 During the financial year under review, the Remuneration Committee has deliberated on the following: The remuneration packages of the Executive Directors Directors Remuneration The objective of the Company s policy on Directors remuneration is to ensure that the level of remuneration is sufficient to attract and retain high profile Directors with a wealth of industry experience. The aggregate Directors remuneration paid or payable or otherwise made to all Directors of the Company who served during the financial year are shown as follows:- Other Category Fees Salaries Emoluments Total RM RM RM RM Executive Directors 57, , , ,472 Non-Executive Directors 192, ,456 The number of Directors whose total remuneration falls within the following bands is as follows:- Range of Remuneration Executive Directors Non-Executive Directors RM50,001 - RM100,000-3 RM100,001 RM150, RM200,001 RM250, Audit Committee The Audit Committee s composition, duties & responsibilities, terms of reference and activities are set out on pages 23 to 27 of this Annual Report.

16 ANNUAL REPORT Corporate Governance Statement REINFORCE INDEPENDENCE 3.1 Annual Assessment of Independence The Board recognises the importance of independence and objectivity in the decision-making process. The Independent Directors bring their respective knowledge and experience and provide independent judgement to the Board. The Board is committed in ensuring that Independent Directors are capable and willing to make decisions in the best interests of the Company and the shareholders free from interest or influence and are independent of the Management. The Independent Directors namely, Mr Edmond Cheah Swee Leng, Mr Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad fulfilled the criteria of Independence as prescribed under the Main Market Listing Requirements ( MMLR ). The key criteria for the appointment of an Independent Director is one who is not a member of the management (a Non-Executive Director) and who is free of any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Board composition complies with the MMLR which requires that at least two (2) Directors or one-third (1/3) of the Board of the Company, whichever is the higher, to be Independent Directors. 3.2 Tenure of Independent Directors The Board opts to deviate from Recommendation 3.2 of the Code which states that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, an independent Director may continue to serve in the Board subject to the Director s re-designation as a non-independent Director. Both the Nomination Committee and the Board have assessed the independence of Mr. Edmond Cheah Swee Leng, Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad and are satisfied with the skills, contribution and independent judgment that the said Independent Non-Executive Directors bring to the Board in facilitating decision processes of the Company. The Board is of the view that even though the tenure of Mr. Edmond Cheah Swee Leng, Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad has exceeded nine (9) years, there are significant advantages to be gained from long-serving Directors who not only possess tremendous insight but also in-depth knowledge of the Company s business and affairs. Key justifications for retaining them as Independent Non-Executive Directors are as follows:- Mr. Edmond Cheah Swee Leng, Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad fulfill the criteria under the definition on Independent Director as stated in the Listing Requirements of Bursa Malaysia Securities Berhad and therefore, are able to bring independent and objective judgment to the Board; Mr. Edmond Cheah Swee Leng, Mr. Toh Seng Thong and Dato Dr. Norraesah Binti Haji Mohamad understand the Company s business operations which enable them to contribute actively and effectively during deliberations or discussions at Audit Committee and Board meetings, as the case may be; A chartered accountant by profession, Mr. Edmond Cheah Swee Leng s professional experience in the fields of audit, merchant banking, corporate and financial advising, portfolio and investment management, unit trust management and financial planning, would enable him to provide the Board and Board Committees, as the case may be, with pertinent and a diverse set of expertise, skills and competence; Mr. Toh Seng Thong s experience of over 27 years in auditing, taxation and corporate advisory and financial advisory as a practicing Chartered Accountant of Malaysia would enable him to lead the Audit Committee and serve the Board effectively by providing invaluable insight into the Company s business, thereby increasing his contribution to the Company; and Dato Dr. Norraesah Binti Haji Mohamad served the Government of Malaysia from 1972 to 1988 for a total of 16 years before leaving the public sector to join the private sector and her working experience of more than 44 years in banking, consultancy and international trade and commerce would enable her to contribute actively and effectively in expressing her views and in participating in deliberations and decision making of the Audit Committee and the Board.

17 16 ADVENTA BERHAD ( M) Corporate Governance Statement REINFORCE INDEPENDENCE 3.3 Separation of position of the Chairman and Managing Director There is a clear division of responsibility between the Chairman and the Group Managing Director to ensure that there is a balance of power and authority. The Chairman leads the Board and facilitates its work. He engages directly with the Group Managing Director to understand and oversee the strategy implementation and performance delivery. He is responsible for ensuring the processes of the Board are effective in carrying out its duties and responsibilities, including the timely provision of sufficient relevant information on financial and non-financial matters. The Chairman, in conjunction with the Managing Director and Company Secretary, sets agendas for the meetings of the Board that focus in strategic direction and performance of the Group. The Group Managing Director is responsible for the day to day management of the Group s operations and business as well as implementation of the Board s policies and decisions. 3.4 Board composition and balance The Board has five (5) members comprising:- Two (2) Executive Directors including one (1) Managing Director and three (3) Non-Executive Directors, including one (1) Senior Independent Non-Executive Chairman. The Board composition is in compliance with Paragraph 15.02(1) of the MMLR of Bursa Malaysia Securities Berhad ( Bursa Securities ) and Recommendation 3.4 of the Code, wherein it states that the positions of Chairman and Chief Executive Officer (in this case, the Managing Director) should be held by different individuals, and the Chairman must be a non-executive member of the Board. The Board members have a wide range of business, financial and technical experience. The mixed skills and experiences are vital for the successful direction of the Group. A brief profile of each Director is presented on pages 6 to 8 of this Annual Report. FOSTER COMMITMENT 4.1 Time Commitment The Board meets on a quarterly basis and additionally as required. The general agenda of the meetings includes discussion over minutes of previous meetings, quarterly financial results of the Group and any other issues requiring the Board s deliberation and approval. The agenda for each Board meeting is circulated to all the Directors for their perusal prior to the convening of each meeting to enable Directors to obtain further clarifications/explanations prior to the meeting to ensure smooth proceeding of each meeting. The proceedings and resolutions reached at each Board meeting are minuted and signed by Chairman of the meeting. Besides Board meetings, the Board exercises control on matters that require Board s deliberation and approval through circulation of Directors Resolutions. The Board held four (4) meetings during the financial year. Record of each Director s meeting attendance during the year under review is set out below:- Name of Directors No. of meetings attended/held % Mr. Edmond Cheah Swee Leng 4/4 100 Mr. Low Chin Guan 4/4 100 Ms. Kwek Siew Leng 4/4 100 Mr. Toh Seng Thong 4/4 100 Dato Dr. Norraesah Binti Haji Mohamad 4/4 100

18 ANNUAL REPORT Corporate Governance Statement FOSTER COMMITMENT 4.1 Time Commitment Time Commitment and Protocol for accepting new directorships The Board is satisfied with the level of time commitment extended by the Directors in fulfilling their roles and responsibilities as Directors of the Company. This is evidenced by the attendance record of the Directors at Board meetings. Directors are expected to have the relevant expertise in order to contribute positively to the Company s performance and to give sufficient time and attention to carry out their responsibilities to the Company and Group. The Board obtains this commitment from its new members at the time of appointment. The Board has established policies and procedures where a Director should notify the Chairman officially, before accepting any new directorship from any other company and the notification shall set out the expectation and an indication of time commitment that will be spent on the new appointment. This is so that Directors are able to devote sufficient time commitment to their roles and responsibilities as Directors of the Company. Any Board member shall not hold more than five (5) directorships in listed companies at any one time. 4.2 Directors Training All the Board members have attended the Mandatory Accreditation Programme ( MAP ) as required by the MMLR. There continues to be an awareness of the importance and benefits of attending and participating in training and continuing education programmes aimed at enhancing the Directors knowledge, skills and level of contribution to the company. During the financial year under review, the directors attended the following training:- 1) Mr Edmond Cheah Swee Leng Capital Market Director Programme for Fund Management (Modules 1, 2B, 3 & 4) organised by the Securities Industry Development Corporation on 31 July ) Mr Low Chin Guan In-house training 3) Ms Kwek Siew Leng OECD/G20 Base Erosion and Profit Shifting Project organised by Deloitte Malaysia In-house training 4) Mr Toh Seng Thong National Tax Conference 2014 organised by Inland Revenue Board on 12 November 2014 Audit Committee Conference 2015 organised by Institute of Internal Auditors on 24 March 2015 Directors Corporate Governance Series: Building Effective Finance Function by Bursa Malaysia on 10 August ) Dato Dr Norraesah Binti Haji Mohamad 11th World Islamic Economic Forum 2015 organised by WIEF Foundation on 3 5 November 2015

19 18 ADVENTA BERHAD ( M) Corporate Governance Statement UPHOLD INTERGRITY IN FINANCIAL REPORTING 5.1 Compliance with applicable financial reporting standards In presenting the annual audited financial statements and quarterly announcement of results to shareholders, the Directors aim to present a balanced and understandable assessment of the Group s position and prospects. The Audit Committee assists the Board by reviewing the information to be disclosed in the financial statements, to ensure completeness, accuracy, adequacy and compliance with applicable financial reporting standards. The composition, summary of activities and terms of reference of the Audit Committee can be found in the Audit Committee Report on pages 23 to 27 of this Annual Report. The Statement of Directors Responsibility in respect of the Audited Financial Statements pursuant to paragraph 15.26(a) of the MMLR and pursuant to the Statement of Directors Responsibility of the Companies Act 1965 is set out on page 30 of this Annual Report. 5.2 Assessment of suitability and independence of external auditors Through the Audit Committee, the Company has established a transparent and appropriate relationship with the Group s External Auditors. From time to time, the Auditors highlighted to the Audit Committee and the Board on matters that require the Board s attention. The external auditors provide mainly audit-related services to the Company. Due to the familiarity of the Company, the external auditors also undertake certain non-audit services such as regulatory reviews and reporting and other services. A summary of the activities of the Audit Committee during the year is set out in the Audit Committee Report on pages 23 and 27 of this Annual Report. RECOGNISE AND MANAGE RISKS 6.1 Sound framework to manage risks The Board has ultimate responsibility for reviewing the Company s risks, approving the risk management framework and policy and overseeing the Company s strategic risk management and internal control framework. The Company has in place an on-going process for identifying, evaluating and managing significant risks that may affect the achievement of the business objective of the Group. The Board through the audit Committee and Risk Management Committee reviews the key risks identified on a regular basis to ensure proper management of risks and that measures are taken to mitigate any weaknesses in the control environment. In addition, the Company developed its Risk Management Policy and Procedure Document with an embedded Enterprise Risk Management ( ERM ) framework. The ERM framework is designed to:- establish the context for an embedded ERM framework within the Group; formalize the ERM functions across the Group; sensitize staff more strongly to risk identification, measurement, control, ongoing monitoring, responsibilities and accountabilities; coordinate and standardize the understanding and application of ERM within the Group; and prove compliance by the Board of the Company with its organizational obligations and duties of care and diligence in accordance with the Code via a structured documentation system.

20 ANNUAL REPORT Corporate Governance Statement RECOGNISE AND MANAGE RISKS 6.1 Sound framework to manage risks The RMC comprises the following members:- Chairperson : Ms. Kwek Siew Leng Members : Mr. Daniel Peh : Mr. Choy Wah Wei : Mr. Robert Hill The key features of the Risk Management framework are set out in the Statement of Risk Management and Internal Control of the Company on page 28 to 29 of this Annual Report. 6.2 Internal audit function The Board has established an internal audit function within the Company, which is led by the out-sourced Internal Auditor, PKF Advisory Sdn Bhd, who reports directly to the Audit Committee. Details of the Company s internal control system and framework as set out in the Statement on Risk Management and Internal Control together with the Audit Committee Report of this Annual Report. ENSURE TIMELY AND HIGH QUALITY DISCLOSURE 7.1 Corporate Disclosure Policy Information Disclosure The Board has in place a policy to ensure disclosure of information is in accordance with the disclosure requirements under the MMLR and other applicable laws. 7.2 Leverage on information technology for effective dissemination of information The Group maintains a website at where shareholders as well as members of the public are invited to access the latest information on the Group. Alternatively, they may obtain the Group s latest Annual Report and announcements via the Bursa Securities website at The Company will upload the internal corporate policies in the Corporate Governance section at the Company s website in due course. Information is disseminated via the Company s annual reports, circulars to shareholders, quarterly financial results, press releases and various announcements made from time to time. The Policy on Corporate Communications and Disclosure adopted by the Company is to ensure that the Company has in place efficient procedures for the management of information which at the same time, will promote accountability in relation to the disclosure of material information as well as to build good investor relations with the investing public that inspires trust and confidence. Shareholders and other interested parties may contact the Executive Director, to address any concerns by writing or via telephone or facsimile as follows:- Address : Adventa Berhad No 21, Jalan Tandang 51/205A, Seksyen 51, Petaling Jaya, Selangor Darul Ehsan, Malaysia Tel : Fax : Website :

21 20 ADVENTA BERHAD ( M) Corporate Governance Statement STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS 8.1 Encourage shareholder participation at general meetings The Board fully recognises the rights of shareholders and encourages them to exercise of their rights at the Company s AGM. It has also been the Company s practice to send the Notice of the AGM and related papers to shareholders at least twenty-one (21) days before the meeting. The date, venue and time of these meetings are determined to provide the maximum opportunity for as many shareholders as possible to attend and participate either in person, by corporate representative or by proxy. 8.2 Encourage poll voting The Board supports the use of poll votes to ensure a fair voting process. At the Eleventh AGM, the Chairman reminded the attending shareholders of their right to demand for poll voting. Nonetheless, no request for poll voting was received during the AGM. The Board would consider employing electronic means for poll votes for substantive resolutions in future general meetings. 8.3 Communication with Shareholders and Investors The Company recognises the importance of keeping shareholders and investors informed of the Group s business and corporate developments. The AGM and Extraordinary General Meeting remains the principal forum for dialogue with shareholders where they may seek clarifications on the Group s businesses. Shareholders are given reasonable time to ask questions pertaining to issues in the Annual Report, corporate developments on the business of the Group and resolutions proposed and to vote on all resolutions proposed. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Those unable to attend are allowed to appoint proxies to attend and vote on their behalf. During the meeting, the Managing Director and the Executive Directors are prepared to provide responses to queries and to receive feedback from the shareholders. External auditors are also present to provide their professional and independent clarification on issues of concern raised by the shareholders, if any. The importance of keeping shareholders informed of developments concerning the Group is high on the agenda. The shareholders are kept abreast of all important developments concerning the Group through regular and timely dissemination of information via quarterly financial announcements through Bursa Securities website, distribution of annual report and various other announcements made during the year. These will enable the shareholders, investors and members of public to have an overview of the Group s performance and hence, will enable them to make any informed investment decision relating to the Group. The Company s website, provides an avenue for information, such as dedicated sections on corporate information, including financial information and announcements. The website is continuously updated to ensure that the information contained within is correct.

22 ANNUAL REPORT Corporate Governance Statement OTHER INFORMATION PURSUANT TO THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD 1. Utilisation of Proceeds The total gross proceeds of RM61.11 million from Proposed Disposal (after the Proposed Distribution) shall be utilised in the following manner: Purpose Payment for the purchase consideration of acquisition of Electron Beam Sdn. Bhd. Working capital for Sun Healthcare (M) Sdn. Bhd. Working capital for Electron Beam Sdn. Bhd. Working capital for Lucenxia (M) Sdn. Bhd. Future business expansion opportunities Estimated expenses in relation to the Proposals Estimated time frame for utilisation from completion of the Proposed Disposal Within 1 month Within 12 months Within 12 months Within 24 months Within 24 months Within 1 month Amount utilised as at Balance not utilised as at Reclassification Amount Amount RM 000 RM 000 RM 000 RM 000 9,000-9,000-12,000-12,000-5,000-5,000-20,000 12,614 # 32,614-12,614 (12,614) # - - 2,500-2,500-61,114-61,114 - # The funds allocated for future business expansion opportunities is re-allocated to Lucenxia (M) Sdn. Bhd. as working capital in view of the trials still in progress and further investment needed in patient care education and training into rural region. 2. Recurrent Related Party Transactions of Revenue Nature At the Annual General Meeting held on 21 April 2015, the Company obtained a Shareholders Mandate to allow the Group to enter into recurrent related party transactions of a revenue or trading nature. In accordance with Section of Practice Note 12 of the Bursa Securities Berhad Listing Requirements, the detail of recurrent related party transactions conducted pursuant to the Shareholders Mandate are disclosed as follows: Related Party Interest Director/ Interested Major Shareholder Nature of Transaction Value of Transactions from 21 April 2015 up to 29 February 2016 RM 000 Aspion Group Mr Low Chin Guan (a) Purchases of gloves from the Aspion Group 12,726 (b) Provision of sterilisation and warehouse and 5,845 handling services to the Aspion Group (c) Sales of non-gloves products to the Aspion Group 96

23 22 ADVENTA BERHAD ( M) Corporate Governance Statement OTHER INFORMATION PURSUANT TO THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD 3. Share Buy-Back The Company did not purchase any of its own shares during the financial year under review. 4. Depository Receipt Programme The Company did not sponsor any depository receipt programme during the financial year under review. 5. Imposition of Sanctions/Penalties There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year under review. 6. Non-Audit Fees During the financial year under review, the Group s non-audit fees paid or payable to the External Auditors amounted to RM7, Variation in Results There was no material variance between the results of the financial year and the unaudited results previously announced. The Company did not make any release on the profit estimate, forecast or projections for the financial year. 8. Profit Guarantee There was no profit guarantee given by the Company during the financial year under review. 9. Material Contracts Involving Directors and Major Shareholders There were no material contracts involving the Company and its subsidiaries with directors and major shareholders of the Company either still subsisting at the end of the financial year ended 31 October 2015 or entered into since the end of the previous financial year. 10. Contracts Relating to Loans There were no material contracts relating to loans entered into by the Company involving Directors and/or substantial shareholders. 11. Options, Warrants or Convertible Securities The Company did not issue any options, warrants or convertible securities during the year under review.

24 ANNUAL REPORT Audit Committee Report INTRODUCTION The Board of Directors of the Company (the Board ) is pleased to present the report of the Audit Committee for the financial year ended 31 October A. MEMBERSHIP The current members of the Audit Committee are: Chairman : Mr. Toh Seng Thong Independent Non-Executive Director Members : Mr. Edmond Cheah Swee Leng Senior Independent Non-Executive Director Dato Dr. Norraesah Binti Haji Mohamad Independent Non-Executive Director B. TERMS OF REFERENCE The Terms of Reference of the Committee are as follows: 1. Composition of Members The Board shall appoint the Audit Committee members from amongst themselves, comprising no fewer than three (3) non-executive directors. The majority of the Audit Committee members shall be independent directors. In this respect, the Board adopts the definition of independent director as defined under Bursa Malaysia Securities Berhad Main Market Listing Requirements ( MMLR ). All members of the Audit Committee shall be financially literate and at least one (1) member of the Audit Committee must:- (a) (b) be a member of the Malaysian Institute of Accountants ( MIA ); or if he is not a member of the MIA, he must have at least three (3) years of working experience and: i. he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or ii. he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or (c) fulfill such other requirements as prescribed or approved by Bursa Securities. No alternate director of the Board shall be appointed as a member of the Audit Committee. The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three (3) years to determine whether such Audit Committee and members have carried out their duties in accordance with their Terms of Reference. Retirement and Resignation If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member resulting in non-compliance with the composition criteria as stated in paragraph 1 above, the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy. 2. Chairman The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an Independent Director. In the absence of the Chairman of the Audit Committee, the other members of the Audit Committee shall amongst themselves elect a Chairman who must be an Independent Director to chair the meeting.

25 24 ADVENTA BERHAD ( M) Audit Committee Report B. TERMS OF REFERENCE 3. Secretary The Company Secretary shall be the Secretary of the Audit Committee and as a reporting procedure, the Minutes shall be circulated to all members of the Board. 4. Meetings The Audit Committee shall meet regularly, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at anytime at the Chairman s discretion. Upon the request of the External Auditors or the Internal Auditors (if any), the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the auditors believe should be brought to the attention of the Directors or shareholders. Notice of the Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee waives such requirement. The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Finance Director, the head of internal audit and the External Auditors in order to be kept informed of matters affecting the Company. The Finance Director, the head of internal audit and a representative of the External Auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. The Audit Committee shall be able to convene meetings with the External Auditors, the Internal Auditors, or both, without executive Board members or employees present whenever deemed necessary and at least twice a year with the External Auditors. Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote. 5. Minutes Minutes of each meeting shall be kept at the registered office and distributed to each member of the Audit Committee and also to the other members of the Board. The Audit Committee shall report on each meeting to the Board. The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting. 6. Quorum The quorum for the Audit Committee meeting shall be the majority of members present whom must be Independent Directors. 7. Objectives The principal objectives of the Audit Committee are to assist the Board in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries. In addition, the Audit Committee shall: (a) (b) (c) (d) evaluate the quality of the audits performed by the Internal and External Auditors; provide assurance that the financial information presented by management is relevant, reliable and timely; oversee compliance with laws and regulations and observance of proper codes of conduct; and determine the quality, adequacy and effectiveness of the Group s control environment.

26 ANNUAL REPORT Audit Committee Report B. TERMS OF REFERENCE 8. Authority The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company, (a) (b) (c) (d) (e) have explicit authority to investigate any matter within its Terms of Reference, the resources to do so, and full access to information. All employees shall be directed to co-operate as requested by members of the Audit Committee; have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the Internal and External Auditors and senior management of the Company and Group; obtain independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary; have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity (if any); and where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the MMLR, the Audit Committee shall promptly report such matter to Bursa Securities. 9. Duties and Responsibilities The duties and responsibilities of the Audit Committee are as follows: (a) (b) (c) (d) To consider the appointment of the External Auditors, the audit fee and any question of resignation or dismissal, any letter of resignation from the External Auditors and whether there is reason (supported by grounds) to believe that the External Auditors are not suitable for re-appointment before making recommendations to the Board of Directors and recommend the nomination of a person or persons as External Auditors; To discuss with the External Auditors before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved; To review with the External Auditors his evaluation of the system of internal controls and his audit report; To review the quarterly and year-end financial statements of the Board, focusing particularly on:- any change in accounting policies and practices; significant adjustments arising from the audit; the going concern assumption; and compliance with accounting standards and other legal requirements. (e) (f) (g) (h) 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); To review the External Auditors management letter and management s response; To review the adequacy and effectiveness of risk management, internal control and governance systems relating to the accounting and reporting practices of the Company; To do the following, in relation to the internal audit function:- ensure that the internal audit function is independent of the activities it audits and the Internal Auditors shall report directly to the Audit Committee. The head of internal audit shall be responsible for the regular review and/or appraisal of the effectiveness of the risk management, internal control and governance processes within the Company; review the adequacy of the scope, functions and competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; review the internal audit programmes and results of the internal audit process and, where necessary, ensure that appropriate actions are 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; and take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his/her reasons for resigning;

27 26 ADVENTA BERHAD ( M) Audit Committee Report B. TERMS OF REFERENCE 9. Duties and Responsibilities The duties and responsibilities of the Audit Committee are as follows: (i) (j) (k) (l) (m) (n) (o) (p) To consider any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity; To report its findings on the financial and management performance and other material matters to the Board; To consider the major findings of internal investigations and management s response; To verify the allocation of employees share option scheme ( ESOS ) in compliance with the criteria as stipulated in the by-laws of ESOS of the Company, if any; To determine the remit of the internal audit function; To establish policies governing the circumstances under which contracts for the provision of non-audit services can be entered into and procedures that must be followed by the External Auditors; To consider other topics as defined by the Board; and To consider and examine such other matters as the Audit Committee considers appropriate. C. MEETINGS OF THE AUDIT COMMITTEE The Audit Committee met four (4) times during the financial year under review and details of attendance of each member are as follows:- Name No. of meetings attended/held Toh Seng Thong Chairman 4/4 Edmond Cheah Swee Leng 4/4 Dato Dr. Norraesah Binti Haji Mohamad 4/4 Representatives of management, the Internal Auditors and the External Auditors also attended the meetings at the invitation of the Committee. D. SUMMARY OF ACTIVITIES The Audit Committee met at scheduled times; with due notices of meetings issued, and with agendas planned so that issues raised in respect of financial statements were deliberated and discussed in a focused and detailed manner. In line with the Terms of Reference of the Committee, the following activities were carried out during the financial year under review:- Reviewed and evaluated the scope of works and audit plans of the Internal and External Auditors; Reviewed the quarterly and year-to-date unaudited financial statements, prior to deliberation and approval by the Board; Reviewed the Audited Financial Statements of the Group and of the Company and recommended for Board s approval; Reviewed and discussed the External Auditors audit report and areas of concern; Reviewed and discussed the External Auditors management letter and management s response; Reviewed and assessed the risk management activities of the group; Reviewed the Internal Auditors reports pertaining to the state of internal control on operating units within the Group and appraised the adequacy and effectiveness of management s response in resolving the audit issues reported;

28 ANNUAL REPORT Audit Committee Report D. SUMMARY OF ACTIVITIES In line with the Terms of Reference of the Committee, the following activities were carried out during the financial year under review:- Reviewed the proposed audit fees for the Internal and External Auditors in respect of their audit of the Group for the financial year; Met with the External Auditors twice during the year without the presence of any executive Board members and employees of the Group; Reviewed the draft Circular to Shareholders in relation to the Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature and Statement of Risk Management and Internal Control for inclusion in the 2014 Annual Report, and recommended the same for Board s approval; Reviewed related party transactions and the adequacy of the Group s procedures and processes in identifying, monitoring, reporting and reviewing related party transactions in a timely and orderly manner; and Noted emerging financial reporting issues pursuant to the introduction of new accounting standards and additional statutory and regulatory disclosure requirements. E. INTERNAL AUDIT FUNCTION The Group has in place an internal audit function whose principal responsibility is to undertake regular and systematic reviews of the internal control system so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively in the Group and the Company. The internal audit function reports directly to the Audit Committee to ensure its independent status within the Group. The Audit Committee is assisted in discharging its duties and responsibilities with respect to the adequacy and integrity of the system of internal controls within the Group by an independent consulting firm, PKF Advisory Sdn. Bhd., to whom the internal audit function has been outsourced. The internal audits were performed using a risk based approach and focused on:- reviewing identified high risk areas for compliance with established policies, procedures, rules, guidelines, laws and regulations; evaluating the adequacy of controls for safeguarding assets; and identifying business risks which have not been appropriately addressed. The Internal Auditors carry out audit assignments based on an audit plan that is reviewed and approved by the Audit Committee. The reports of the audits undertaken were forwarded to the management for their attention and necessary action and then presented to the Audit Committee for deliberation. During the financial year under review, the Internal Auditors undertook the following activities:- reviewed the adequacy and integrity of the Group s internal control systems relating to the Fixed Asset and Inventory Management of the Group; ascertained inventory reports are accurate, complete and timely; physical counts of stocks taken in the prescribed manner and accurately recorded; reviewed the effectiveness of document controls for key supporting procedures; ensured assets are tagged, in working condition and safeguarded; and reported to the Audit Committee its internal audit findings and the response and rectification undertaken by the management. The professional fees incurred for the internal audit function in respect of financial year ended 31 October 2015 amounted to approximately RM 16,600. This Audit Committee Report is made in accordance with a resolution of the Board dated 3 February 2016.

29 28 ADVENTA BERHAD ( M) Statement on Risk Management and Internal Control INTRODUCTION Pursuant to Paragraph (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ) and the Principles and Best Practices provisions relating to internal control provided in the Malaysian Code on Corporate Governance 2012 ( the MCCG 2012 ), the Board of Directors ( the Board ) of listed issuers are required to include in their Annual Report a Statement on the state of its Risk Management and Internal Control. The following Statement on Risk Management and Internal Control has also been prepared in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. BOARD RESPONSIBILITIES The Board affirms its overall responsibility for the Group s system of internal control which includes the establishment of an appropriate control environment and risk management framework as well as reviewing its adequacy and integrity. Due to the limitations that are inherent in any internal control system, the Group s system of internal control can only manage rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. Notwithstanding this, the Board requires that the procedures and controls in place are subject to regular review as part of an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. The Board has received assurance from the Managing Director, Finance Director and the management team of the Group that the Group s risk management and internal control systems have been operating adequately and effectively, in all material aspects, during the financial year under review and up to the date of this Statement. The Board has extended the responsibilities of the Audit Committee to include the role of reviewing and monitoring the effectiveness of the Group s internal control system. The Audit Committee receives assurance reports from the Internal Auditors on findings from audits carried out at operating units, and the External Auditors on areas for improvement identified during the course of statutory audit. The Reports of the Audit Committee is set out on pages 23 to 27 of the Annual Report. RISK MANAGEMENT FRAMEWORK The oversight of the Group s risk management process is the responsibility of the Managing Director who is assisted by the heads of department of the respective operating companies. During the year, the Group monitored significant risks and risk mitigation strategies on an ongoing basis through its management at the Risk Management Committee ( RMC ) meetings and Board meetings. Under the purview of the RMC, the respective heads of each operating subsidiary and department of the Group are empowered with the responsibility of managing their respective operations. Its functions include, inter alia: developing risk management framework; coordinate the updating of the risk profile; monitor the implementation of action plans; and review and assess the applicability of the control environment in mitigating risk. In view of a constantly changing environment and competitive landscape, the Board is committed in maintaining a system of internal control that comprises the following environment, key processes and monitoring systems: The Audit Committee, through the RMC, reviews the adequacy and effectiveness of the Group s risk management and internal control procedures as well as any internal control issues identified by the Internal and External Auditors; An annual risk assessment analysis that assists the management to continuously identify significant risks associated with key processes within a changing business and operating environment; An annual budgeting process that establishes monthly budgets for each business unit against which performance is monitored on an ongoing basis; Monthly business reports and management accounts are submitted by the respective business units for review by senior management; Disaster recovery plans including fire prevention monitoring process, adequate insurance coverage and computer IT monitoring process to help ensure the risk of system failure and outages is minimised; and Segregation of duties and limits of authority are practised to ensure accountability and responsibility.

30 ANNUAL REPORT Statement on Risk Management and Internal Control INTERNAL AUDIT The internal audit function adopts a risk-based approach and prepares its strategies and plans for Audit Committee s approval prior to execution of internal audit assessments. Internal audit reviews the internal controls in the key activities of the Group s businesses. The internal audit team from PKF Advisory Sdn. Bhd. ( PKF ), the independent consulting firm to which the internal audit function has been outsourced, assesses the adequacy and integrity of the internal control system based on the scope of work approved by the Audit Committee and reports to the Audit Committee on its findings and recommendations for improvement. The Internal Auditor also reviews the extent to which its recommendations have been accepted and implemented by the Management. The Audit Committee reviews internal audit reports and management responses thereto and ensures significant findings especially control deficiencies are adequately addressed and rectified by the Management of the operating units concern. The Audit Committee reviews internal control matters and update the Board on significant issues for the Board s attention and action. The Internal Auditors, which report directly to the Audit Committee, conducts reviews on the adequacy and effectiveness of the Group s system of internal controls that the management has put in place. These audits review the internal controls in the key activities of the Group s business based on a 3-year detailed internal audit plan approved by the Audit Committee. Based on these audits, the Internal Auditors provide the Committee with annual reports highlighting observations, recommendations and management action plans to improve the system of internal control. During the financial year ended 31 October 2015, the Audit Committee with the assistance of the external professional consulting firm, PKF, reviewed the adequacy and integrity of the Group s internal control systems relating to the following processes:- Fixed assets; and Inventory. OTHER KEY ELEMENTS OF INTERNAL CONTROL Apart from risk management and internal audit, the Group s system of internal controls comprises the following key elements:- a well defined organisational structure with clear reporting lines and accountabilities; clearly defined internal policies and procedures for key processes to ensure full compliance by all operating units and to minimise operating risks; a close monthly monitoring and review of financial results and forecasts for all operating units by the Managing Director; and clear reporting structures to ensure proper monitoring of the Group s operations together with regular quarterly reports which monitor the Group s performance. CONCLUSION For the financial year under review and up to the date of approval of this Statement, the Board is of the view that the Group s system of internal control and risk management is sound and adequate enough to safeguard the shareholders investments and the Group s assets. There was no material internal control failure which resulted in material losses or contingencies during the financial period under review. The Board and management will, when necessary, put in place appropriate actions to further enhance the Group s system of internal control. This statement was made in accordance with a resolution of the Board dated 3 February 2016 and has been duly reviewed by the External Auditors, pursuant to paragraph of the Listing Requirements.

31 30 ADVENTA BERHAD ( M) Responsibility Statement By the Board of Directors In preparing the annual financial statements of the Group and of the Company, the Directors are collectively responsible to ensure that these financial statements have been prepared to give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and the results and cash flows of the Group and the Company in accordance with applicable approved accounting standards in Malaysia, the provisions of the Companies Act 1965 and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. In preparing the financial statements for the financial year ended 31 October 2015 set out on pages 38 to 97 of this Annual Report, the Directors have applied appropriate accounting policies on a consistent basis and made judgements and estimates that are reasonable and prudent. The Directors have responsibility for ensuring that proper accounting records are kept which disclose with reasonable accuracy the financial position of the Group and the Company and which enable them to ensure that the financial statements comply with the Companies Act The Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. This statement is made in accordance with a resolution of the Board of Directors dated 3 February 2016.

32 Financial Statements 32 Directors Report 35 Statement by Directors 35 Statutory Declaration 36 Independent Auditors Report 38 Statements of Comprehensive Income 39 Statements of Financial Position 41 Statements of Changes in Equity 43 Statements of Cash Flows 45 Notes to the Financial Statements 97 Supplementary Information