ECOFIRST CONSOLIDATED BHD (15379-V) BOARD OF DIRECTORS 4 5 6 7 1. Dato Tiong Kwing Hee 1 2 3 2. Dato Syed Ariff Fadzillah Bin Syed Awalluddin 3. Dato (Dr) Teoh Seng Foo 4. Mr Ng Hock Heng 5. Dato Boey Chin Gan 6. Dato Teoh Seng Kian 7. Dato Amos Siew Boon Yeong 18
ANNUAL REPORT 2016 DIRECTORS PROFILE Dato Syed Ariff Fadzillah Bin Syed Awalluddin (Chairman/Independent Non-Executive Director) Male, Malaysian Dato Syed Ariff Fadzillah Bin Syed Awalluddin, aged 73, was appointed to the Board on 27 January 2006. He was re-designated to Chairman/Independent Non-Executive Director on 1 December 2009. He is also the Chairman of the Nominating Committee and a member of the Remuneration Committee and Audit Committee. He holds a Bachelor of Arts degree in History from University Malaya. He also holds a Diploma in Development Administration and a Master of Arts in International Relations. He started his career as an Assistant District Officer in Kulim, Kedah in 1967. He was an Assistant Secretary in the Public Service Commission, Kuala Lumpur between 1970 and 1972 before being transferred to the Ministry of Foreign Affairs. Prior to retiring in November 2001, he served as the Ambassador of Malaysia to the Kingdom of Thailand from 1996 to 2001, Ambassador to the Republic of Korea with joint accreditation to Mongolia (1992 to 1995) and Ambassador of Malaysia to Fiji with concurrent accreditations to Tuvalu, Tonga, Western Samoa, Kiribati and Nauru (1998 and 1991). His other foreign assignments include postings to Indonesia, Libya and Canada. He was also the Deputy Permanent Representative of the Permanent Mission of Malaysia to the United Nations between 1982 and 1986. From 1991 to 1992, he served as the Undersecretary of the Ministry of Foreign Affairs in charge of Southeast Asia and South Pacific. He also sits as Director on the boards of Berjaya Auto Berhad and Ikhmas Jaya Berhad. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May 2016. 19
ECOFIRST CONSOLIDATED BHD (15379-V) DIRECTORS PROFILE Dato (Dr) Teoh Seng Foo (President/Executive Director) Male, Malaysian Dato (Dr) Teoh Seng Foo, aged 60, was appointed to the Board on 5 May 1997. He was re-designated from the position of an Executive Deputy Chairman to President/Executive Director on 1 December 2009. He is also the Chairman of the Executive and Remuneration Committee. An accountant by profession, Dato Teoh is a Chartered Accountant of the Malaysian Institute of Accountants, a Chartered Management Accountant and Fellow Member of the Chartered Institute of Management Accountants, United Kingdom. Dato Teoh is also a Chartered Global Management Accountant. Dato Teoh has wide corporate experience, having held senior management positions in multi-national corporations such as Intel Technology, Woodward & Dickerson Inc., Coopers & Lybrand (now Pricewaterhouse Coopers) and Esquel. Dato Teoh was conferred the Honorary Doctorate in Business Administration by University of Abertay Dundee, United Kingdom. He is also a Patron of the University of Abertay Foundation based in United Kingdom. Dato Teoh currently holds board position as the Executive Director/ Deputy Chairman of Meda Inc. Berhad. He is a brother to Teoh Seng Aun and Dato Teoh Seng Kian (who is also his alternate director), who are major shareholders of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May 2016. 20
ANNUAL REPORT 2016 DIRECTORS PROFILE Dato Tiong Kwing Hee ( Chief Executive Officer/Executive Director) Male, Malaysian Dato Tiong Kwing Hee, aged 58, first joined the Board as an Alternate Director on 18 September 2008 and subsequently appointed as Executive Director/Chief Executive Officer on 2 January 2009. He is currently the Chief Executive Officer of the Company. He is also a member of management committee, namely Executive Committee and the Risk Management Committee. He is the Chairman of the Employee Share Option Scheme Committee. He obtained a Bachelor of Arts (Hons) majoring in Business Administration from Hanover College, United States of America in 1982 and a Master Degree in Business Economics from Miami University, United States of America in 1983. He started his career with Sim Lim Holdings Berhad in 1983 as Executive Officer in charge of corporate finance and was promoted to Manager in 1984 and General Manager in 1985. He left Sim Lim Holdings Berhad in 1987 following his venture into the timber industry and became a shareholder cum director of marketing in Wansuria Sdn Bhd. He was a substantial shareholder in London Pacific Ltd, a company listed on the New Zealand Stock Exchange between 1988 and 1994. In 1994, he left the timber industry when he sold off his stake in Wansuria Sdn Bhd. In 1995, he joined D-Systems Pte Ltd, a Singapore based company with exclusive distribution rights of drywall system from United States of America for Asia Pacific region, as the Chief Executive Officer. In 1997, he was head hunted on a two (2) years contract as an Executive Director of a listed company to prepare that company for a corporate restructuring. During the course of his career, he has been directly involved in various industrial sectors including corporate finance, financial services, manufacturing, plantations, property, construction, education, leisure, entertainment and mineral resources. He has extensive hands-on experience, knowledge and exposure in international business, corporate planning, restructuring and corporate turnaround. Dato Tiong is also currently the Executive Director and major shareholder of Mercury Industries Berhad. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all the five (5) Board meetings held during the financial year ended 31 May 2016. 21
ECOFIRST CONSOLIDATED BHD (15379-V) DIRECTORS PROFILE Dato Amos Siew Boon Yeong (Independent Non-Executive Director) Male, Malaysian Dato Amos Siew Boon Yeong, aged 58, was appointed to the Board on 27 October 2005. He is also the Chairman of the Audit Committee and a member of the Remuneration Committee. He qualified as a Certified Public Accountant in 1984 and is currently a member of the Malaysian Institute of Certified Public Accountants, a Chartered Accountant with the Malaysian Institute of Accountants and an associate member of the Chartered Tax Institute of Malaysia. He started his auditing career and professional training with the accounting firm, Coopers & Lybrand in 1978 before establishing his own practice in 1988. He is currently the sole practitioner of the public accounting firm, Messrs. Siew Boon Yeong & Associates. He has vast experiences in auditing, tax planning, corporate finance and financial planning and has been involved in numerous assignments on merger and acquisitions, debt restructuring and liquidation. He is also a Director of SEG International Bhd. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all the five (5) Board meetings held during the financial year ended 31 May 2016. 22
ANNUAL REPORT 2016 DIRECTORS PROFILE Dato Boey Chin Gan (Independent Non-Executive Director) Male, Malaysian Dato Boey Chin Gan, aged 51, was appointed to the Board on 1 April 2009. He is also a member of the Audit and Nominating Committees. He obtained the Bachelor of Arts (Honours) from the University Kebangsaan Malaysia (UKM). Dato Boey is very active in the social economic development of the country. He has served as the Press Secretary to the Minister of Housing and Local Government of Malaysia for eleven (11) years from 1993 to 2004. In 2004, Dato Boey was the Kedah State Assemblyman. Dato Boey has vast experiences and extensive knowledge in administrative and strategic planning by virtue of his long service in government sectors. He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May 2016. 23
ECOFIRST CONSOLIDATED BHD (15379-V) DIRECTORS PROFILE Mr. Ng Hock Heng (Independent Non-Executive Director) Male, Malaysian Mr. Ng Hock Heng, aged 49, was appointed to the Board on 4 March 2015. He graduated with a Bachelor of Economics (Double Major in Banking & Accountancy) in 1990, a Bachelor of Laws in 1992 and obtained Masters of Laws (Distinctions) in 1995 from Monash University. He started his career in KPMG (Australia) as a Tax Consultant before advancing his career in Deloitte Touche Totmatsu (Australia & Hong Kong) as a Senior Tax Consultant in year 1993. In 1995, he joined Zaid Ibrahim & Co. and became a partner in 1999. He is also an associate of Certified Practising Accountants in Australia and was an Advocate and Solicitor of the High Court of Malaya. He was a Registered Foreign Lawyer of the Law Society of New South Wales. He is currently the Executive Director of Zico Holdings Inc. He has no family relationships with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. He has attended all five (5) Board meetings held during the financial year ended 31 May 2016. 24
ANNUAL REPORT 2016 DIRECTORS PROFILE Dato Teoh Seng Kian (Alternate Director to Dato (Dr) Teoh Seng Foo) Male, Malaysian Dato Teoh Seng Kian, aged 56, was appointed as Alternate Director to Dato (Dr) Teoh Seng Foo, the President, on 1 December 2009. He graduated with a Bachelor of Engineering (Mechanical) degree from Australia in 1984. He started his career with an Australian company specializing in manufacturing of building materials. Upon returning to Malaysia, he served as a director in a company involved in quarrying and infrastructure construction. He is currently the Managing Director of Meda Inc. Berhad. He is a major shareholder of the Company and is deemed to have an interest in all the shares held by the Company in the subsidiaries by virtue of his substantial interest in shares of the Company. He is a brother to Dato (Dr) Teoh Seng Foo, the President of the Company and Teoh Seng Aun, who is a major shareholder of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past five (5) years nor any public sanction or penalty imposed by the relevant regulatory bodies during the financial year. 25
ECOFIRST CONSOLIDATED BHD (15379-V) MANAGEMENT TEAM Dato Tiong Kwing Hee ( Chief Executive Officer/Executive Director) Male, Malaysian Please refer to Dato Tiong s profile under the section on the Directors Profile. 26
ANNUAL REPORT 2016 MANAGEMENT TEAM Ms Caroline Wambeck, aged 53, obtained her professional accounting qualification from the Chartered Institute of Management Accountants, United Kingdom. She has been with the since 1989, starting off as an executive. Over the years, she has been involved in the preparation of group financial statements, review of financial performance, budgeting, taxation and fund management. Ms Wambeck was appointed to the position of General Manager, Finance and Operations on 3 January 2012 handling mainly the s corporate finance, accounting, investment and treasury matters. Here, she headed the implementation of the s financial loan restructuring, capital restructuring exercise, land acquisition deals and funding arrangements, equity fund raising and property asset sale amongst others. Caroline Wambeck General Manager, Finance and Operations Female, Malaysian She has no family relationship with any Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no conviction for offences, other than traffic offences (if any), within the past five (5) years. Ms Lim Bee Teng, aged 31, was appointed as the s Legal Manager on 5 December 2014. She graduated with a Bachelor of Laws (LLB, Hons) degree from the University of London in 2008 and obtained the Certificate of Legal Practice in 2009. She was the corporate in-house legal counsel in AEON Retail prior to joining the. Ms Lim possesses a wide spectrum of experience in conveyancing, litigation, legal negotiations, corporate and commercial agreements. Lim Bee Teng Legal Manager Female, Malaysian She handles the s conveyancing matters including but not limited to the preparation of the sale and purchase agreements, lease and tenancy agreements, land acquisition matters and preparation of various applications to relevant authorities. She was involved in the preparation of the various security documents pertaining to large financial loans and bridging agreements for the s development projects. She advises the on all legal matters including human resource matters. Ms Lim also provides legal training to the various departments of the on a regular basis. She has no family relationship with any Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no conviction for offences, other than traffic offences (if any), within the past five (5) years. Ms Chew Yet Gor, aged 52, was appointed as the s Human Resource and Administration Manager on 11 January 2010. She started her career in human resource after obtaining her Bachelor of Development Science from the National University of Malaysia. Prior to joining the, she was attached to a manufacturing company as the Human Resource and Administration Manager. She has a total of twenty five (25) years of experience in staff recruitment, payroll administration, compensation and benefits, training and development, performance management, human resource policies and procedures and employee relations. Currently Ms Chew is responsible of all human resources management and administration matters for the. Chew Yet Gor Human Resource and Administration Manager Female, Malaysian She has no family relationship with any Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no conviction for offences, other than traffic offences (if any), within the past five (5) years. 27
ECOFIRST CONSOLIDATED BHD (15379-V) MANAGEMENT TEAM Ms Janice Loh, aged 54, was recently appointed as General Manager, Marketing and Retail Leasing on 1 June 2016. Ms Loh obtained her certificate in Quality Management System and Assessment from University of Portsmouth, United Kingdom and has been involved in all aspects of property and shopping mall operations for the last thirty four (34) years. Her career in this industry previously was with MBF Property Services, City Square and Empire Tower in Jalan Tun Razak as well as Rivercity in Jalan Ipoh under Low Yat. She later took on the position as Director of Leasing and Marketing for Hatten retail properties in Malacca including Dataran Pahlawan, Hatten Square and Hatten City, then Henry Butcher Retail, in-charge of leasing, marketing, promotion, management and retail operation for Seremban Prima. Prior to joining the, Ms Loh was Vice President of Retail Leasing for See Hoy Chan, the Starling Mall. Janice Loh General Manager, Marketing and Retail Leasing Female, Malaysian At EcoFirst, Ms Loh is responsible for the development and performance of the marketing activities for the s property development projects and leasing activities in assigned projects. Her role is to drive, formulate and execute marketing and strategic leasing related transactions and matters effectively. She has no family relationship with any Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no conviction for offences, other than traffic offences (if any), within the past five (5) years. Ms Sally Tang, aged 43, was appointed to the position of General Manager, South City Plaza on 1 January 2015 where she is responsible for the entire operations of the s retail complex, South City Plaza, with a net lettable area of 800,000 sq.ft., located in Seri Kembangan, Selangor. She holds a Diploma in Computer Science and Information Technology. Her responsibilities include the daily operations, marketing, advertising and promotions, tenancy and maintenance for the complex. Having been with Low Yat, Luxor Properties and Henry Butcher Lim & Long Sdn Bhd prior to joining EcoFirst, Ms Tang has fourteen (14) years of experience in marketing, business development, property management, sales and leasing of residential and commercial lots, advertising and promotions and business development. Sally Tang General Manager, South City Plaza Female, Malaysian She has no family relationship with any Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no conviction for offences, other than traffic offences (if any), within the past five (5) years. Ms Wong Cheng Yee, aged 44, was appointed as Complex Manager of 1Segamat Mall on 17 January 2011 where she is responsible for the entire operations of the s retail complex with a net lettable area of 223,000 sq.ft., located in Segamat, Johor. Ms Wong graduated with a Bachelor of Arts (Hons) in Business Administration from Coventry University, United Kingdom. Prior to joining the, she has garnered eighteen (18) years of experience having worked in various industries such as hospitality, hypermarket, tertiary education and plantation. She has no family relationship with any Director and/or major shareholder of the Company. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no conviction for offences, other than traffic offences (if any), within the past five (5) years. Wong Cheng Yee Complex Manager, 1Segamat Mall Female, Malaysian 28
ANNUAL REPORT 2016 FIVE-YEAR GROUP STATISTICS Revenue (RM Million) Profit Before Tax and Non-controlling Interests (RM Million) Shareholders Funds (RM Million) 24.4 8.1 76.4 81.2 121.2 15.4 20.2 130.0 150.3 160.5 26.7 180.3 205.7 33.1 230.3 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Year Ended 31 May 2016 2015 2014 2013 2012 Revenue (RM Million) 121.2 81.2 24.4 76.4 160.5 Profit Before Tax and Non-controlling Interests (RM Million) 20.2 8.1 Profit Attributable to Sharehorlders (RM Million) 16.2 6.1 33.1 30.1 26.7 15.4 24.3 10.9 Shareholders Funds (RM Million) 230.3 205.7 180.3 150.3 130.0 Total Assets Employed (RM Million) 530.2 549.9 Basic Earnings Per Share (Sen) 2.22 0.87 440.5 4.63 403.1 440.2 3.73 1.68 Net Assets Per Share (RM) 0.30 0.28 0.28 0.23 0.20 Number of Shares Issued ( 000) 766,148 730,148 650,148 650,148 650,148 Note: The par value of the odinary share has been reduced by RM0.40 for each share, from RM0.50 each to RM0.10 each pursuant to the capital reduction excercise as disclosed in Note 22 of the Financial Statements. 29
ECOFIRST CONSOLIDATED BHD (15379-V) CORPORATE GOVERNANCE STATEMENT The Board of Directors ( Board ) of EcoFirst Consolidated Bhd ( the Company ) supports the Principles and Recommendations as promulgated by the Malaysian Code on Corporate Governance 2012 ( the Code ); and recognises the importance of enhancing shareholders value through building a sustainable business by implementing and maintaining high standards of corporate governance in managing the business affairs of the Company. The Board is pleased to report herewith on how the Code has been applied throughout the Company, and to a certain extent the Company and its subsidiaries ( the ). PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES 1.1 Establish clear functions reserved for the Board and those delegated to Management The Board has established clear functions between the Board and the Management, where the Board is effectively responsible, but not limited to the following functions:- a) Setting Vision and Mission, and strategic plans for the. Such plans would include the formulation of budgets and forecasts; b) Approval of financial statements, both for regulatory and management reporting; c) Setting dividend policy for shareholders; d) Appointment of auditors, both external and internal, and the company secretary. The external auditors shall then be recommended for approval by the shareholders; e) Succession planning for both the Board and the Senior Management of the ; f) Setting authority limits within which Management decisions are to be made, in line with good corporate governance and the applicable limits imposed by regulatory bodies; g) Approval of significant changes in the internal accounting policies and procedures; and h) Ascertaining the risk management framework and internal control system for the. Further details of the Board s key roles and responsibilities are outlined in Paragraph 1.2 below. The Executive Directors and the Management are then tasked with implementing the strategies, policies and decisions of the Board, overseeing the administration and management of the day-to-day operations of the business, for sustainability and growth of the. Budgets and projections are implemented and monitored on a regular basis by the Board to ensure that the Company s goals are met. 1.2 Establish clear roles and responsibilities in discharging its fiduciary and leadership functions The Board recognises the key roles it plays in charting the strategic direction of the and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:- Reviewing and adopting a strategic plan for the addressing the sustainability of the s business; Overseeing the conduct of the s business and evaluating whether or not its businesses are being properly managed; Identifying principal business risks faced by the and ensuring the implementation of appropriate internal controls and mitigating measures to address such risks; Ensuring that all candidates appointed to senior management positions are of sufficient calibre, including having in place programmes to provide for the orderly succession of senior management personnel and members of the Board; Overseeing the development and implementation of shareholder communications policy; 30
ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (continued) 1.2 Establish clear roles and responsibilities in discharging its fiduciary and leadership functions (continued) Reviewing the adequacy and integrity of the s internal control and management information systems; and Determining the remuneration of Executive Directors and recommending the fees of Non-Executive Directors of the Company for shareholders approval, with the individuals concerned abstaining from discussions of their own remuneration. To assist in the discharge of its stewardship roles, the Board has established board committees, namely the Audit Committee, Remuneration Committee and Nominating Committee to examine specific matters within their respective terms of reference as approved by the Board and each committee head reports to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board. 1.3 Formalise ethical standards through a code of conduct and monitoring of its compliance The Code of Ethics and Conduct, which is formulated to enhance the standard of corporate governance and promote ethical conduct, is to be observed by the Directors and employees of the. The Board recognizes the importance on adherence to the Code of Ethics and Conduct and takes measures to put in place a process to ensure its compliance. A copy of the Code of Ethics and Conduct can be viewed at the Company s website, www.ecofirst.com.my. The said Code will be reviewed from time to time for changes and new developments in the external and internal environment. 1.4 s strategies to promote sustainability The Board is mindful of the importance of business sustainability and, in developing the corporate strategy of the, its impact on the environmental, social and governance aspects. The s activities on corporate and social responsibilities for the year under review are disclosed in the Chairman s Statement of this Annual Report. 1.5 Allows the Board access to information and advice The Board is allowed access to all information pertaining to the, at the Company s expense, including the appointed external service providers, namely the Company s Internal and External Auditors Tax Advisors and Company Secretary. The Management supplies the Board with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters; either for Board meetings or upon specific requests by the Board. Such information is provided in a timely manner to allow for sufficient time for dissemination and understanding by Board members. If required, the Directors, collectively and individually, are also entitled to seek external independent professional advice at the Company s expense. During the financial year under review, the Board met five (5) times, with details of attendance of each member as outlined in the Directors Profile Section of this Annual Report. 1.6 The Board has to be supported by a suitably qualified and competent Company Secretary The Board recognises that the Company Secretary is a central source of information for the provision of relevant advice on compliance and policy issues as set out by the Board and external regulatory bodies, such as Bursa Malaysia Securities Berhad ( Bursa Securities ), the Suruhanjaya Syarikat Malaysia and the Securities Commission Malaysia ( SC ). The Board is supported by the Company Secretary pertaining to corporate secretarial matters which include, among others, convening of Board and general meetings, preparation of circular resolutions and minutes of meetings, maintenance of statutory registers and records, release of announcements to Bursa Securities and SC, and advising the Board on compliance with the relevant laws and regulations. 1.7 The Board should formalise, periodically review and make public its Board Charter The Board has established the Board Charter as a source of reference to the Board in the fulfilment of its roles, duties and responsibilities, which are in line with the recommendations of the Code. The Board reviews this Board Charter from time to time, and will make amendments where necessary, consistent to the Board s objectives, current laws and regulations and best practice. A copy of the Board Charter can be viewed at the Company s website, www.ecofirst.com.my. 31
ECOFIRST CONSOLIDATED BHD (15379-V) CORPORATE GOVERNANCE STATEMENT PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD 2.1 Establishment of a Nominating Committee The Nominating Committee comprises wholly of Non-Executive Directors, and its members, as at the date of this Annual Report are as follows:- Dato Syed Ariff Fadzillah Bin Syed Awalluddin (Chairman) - Independent Non-Executive Director Dato Boey Chin Gan - Independent Non-Executive Director Ng Hock Heng (appointed on 6 September 2016) - Independent Non-Executive Director Dato Syed Ariff is also the Senior Independent Director, identified by the Board to whom shareholders can channel their concerns to, via the Company s website: www.ecofirst.com.my. During the year, the Nominating Committee held a total of three (3) meetings, all of which were fully attended by the members of the Nominating Committee, during which the following activities were carried out:- a) Reviewed and assessed the Board structure, size and composition as well as the Board s and individual Director s required mix of skills, experience and other qualities. b) Reviewed and assessed the effectiveness of the Board, Committees of the Board and the contribution of each individual Director. c) Reviewed and assessed the Directors standing for re-election and re-appointment and recommended the same to the Board for consideration. d) Reviewed the term of office and performance of the Audit Committee and its members. 2.2 Nominating Committee to develop, maintain and review criteria to be used in the recruitment process and annual assessment of Directors Part of the terms of reference of the Nominating Committee includes the following responsibilities:- assessment and recommendation to the Board the candidature of new Directors; appointment of Directors to board committees; review of Board s and Senior Management s succession planning; and outlining training programmes for the Board. The Nominating Committee has implemented a formal and transparent selection process for the identification of new Directors, which includes assessment of ideal composition of the Board, and the suitability of the candidate in meeting the needs of the Board and the Company. Similarly, the appointment of Directors to the board committees would be made under a similar formal and transparent process, taking into account the Director s competencies, commitment and ability to contribute effectively. The Nominating Committee has formalised a practical and transparent succession planning process for the Board, where amongst others, each Director is requested to identify names of persons suitable as board members, for submission and review by the Nominating Committee. The Nominating Committee has also set broad criteria for each Director to achieve during the year. Details of these programmes are outlined in Paragraph 2.3 below. The Board acknowledges that gender diversity is one of the key attributes to an effective and balanced board. At the moment, the Board is of the opinion that the current composition of the Board is balanced and effective, with a good mix of skills and experience from the different background of both Executive and Non-Executive Directors. Details of the profiles of the Board are available on the Directors Profile Section of this Annual Report. 32
ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD (continued) 2.3 Establish formal and transparent remuneration policies and procedures for the Board The Board has established a Remuneration Committee to oversee the function of remunerating the Board in a manner that attracts, retains and motivates Directors, and its membership comprise:- Dato (Dr) Teoh Seng Foo (Chairman) - President/Executive Director Dato Syed Ariff Fadzillah Bin Syed Awalluddin - Independent Non-Executive Director Dato Amos Siew Boon Yeong - Independent Non-Executive Director The components of Directors remuneration are structured so as to link rewards to corporate and individual performance in the case of Executive Directors. The Remuneration Committee shall also adopt the approved employees share option scheme to add to the remuneration of its Executive Directors. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the individual Non-Executive Director concerned. During the financial year under review, two (2) Remuneration Committee meetings were held and attended by all its members. The Remuneration Committee reviewed and recommended to the Board, the remuneration for the Executive Directors of the Company and further recommended the Non-Executive Directors fees to the Board for shareholders approval at the Company s Annual General Meeting. Details of the remuneration of the Board for the financial year under review are as follows:- 1. Aggregate remuneration of the Directors categorised into appropriate components:- Remuneration Fee and others Total RM RM RM Executive Directors - 1,452,116 1,452,116 Non-Executive Directors 176,000-176,000 2. The number of Directors of the Company in each remuneration band is as follows:- Range of Remuneration Number of Director Executive Non-Executive Nil 1* - RM50,000 and below - 4 RM600,001 to RM650,000 1 - RM800,001 to RM850,000 1 - * Alternate Director PRINCIPLE 3 - REINFORCE INDEPENDENCE OF THE BOARD 3.1 Assessment of the Independent Directors At present, the Board of the Company is made up of six (6) Directors, with four (4) being Independent. The Nominating Committee has formalised an assessment policy and procedure for the Independent Directors, to ensure that these Directors continue to be independent and bring objective judgement to the Board. As the Nominating Committee comprise wholly of Independent Directors, the assessment is thus carried out by the Non-Independent Directors, namely the President and Chief Executive Officer ( CEO ). Similarly, for the re-election of Independent Directors, the Non-Independent Directors together with other Independent Directors who are not named in the re-election has undertaken assessment of the state of independence of the Independent Directors. 33
ECOFIRST CONSOLIDATED BHD (15379-V) CORPORATE GOVERNANCE STATEMENT PRINCIPLE 3 - REINFORCE INDEPENDENCE OF THE BOARD (continued) 3.2 Tenure of Independent Director The Board does not have term limit for its Independent Directors and is of the view that the independence of the Independent Director should not be determined by their tenure of service. The Board is confident that the Independent Directors themselves, having provided all the relevant confirmations on their independence, will be able to determine if they can continue to being independent and objective judgement on Board deliberations and decision making. The Board currently has two (2) Directors who have served exceeding the tenure of nine (9) years, i.e. Dato Syed Ariff Fadzillah Bin Syed Awalluddin ( Dato Syed Ariff ) and Dato Amos Siew Boon Yeong ( Dato Amos ). As recommended by the Code, the Board, upon recommendation by the Nominating Committee, has considered the tenure of Dato Syed Ariff and Dato Amos. Based on the assessment, the Board has concluded that Dato Syed Ariff and Dato Amos remain to be independent and recommended that they continue to act as an Independent Non-Executive Directors based on the following justifications:- a) They have fulfilled the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements of Bursa Securities and thus, would be able to function as a check and balance, bringing an element of objectivity to the Board; b) They have been with the Company for more than nine (9) years and are familiar with the Company s business operations ; and c) They have exercised due care during their tenure as Independent Non-Executive Directors of the Company and have carried out their duties proficiently in the interest of the Company and the shareholders. 3.3 Retention of Independent Director whose tenure exceeds a cumulative term of nine (9) years The Board would seek shareholders approval at the Forty-Third AGM on the proposed retention of Dato Syed Ariff and Dato Amos as Independent Non-Executive Directors of the Company. 3.4 Positions of the Chairman and the CEO should be held by two (2) different individuals, and the Chairman must be a Non-Executive Director The Board is pleased to report that the Company has identified separate individuals holding the positions of the Chairman and CEO. The Chairman, namely Dato Syed Ariff, who is also an Independent Non-Executive Director, is responsible for the orderly conduct and effectiveness of the Board, whereas Dato Tiong as the CEO, is responsible for the implementation of the Board s policies and decisions, and maintaining the operational conduct of the. Besides the above, the President plays a supporting role to the CEO. 3.5 Where the Chairman is not an Independent Director, the majority of the Board must comprise of Independent Directors Notwithstanding that the Board is headed by an Independent Chairman, the Board itself comprise majority of Independent Directors. PRINCIPLE 4 - FOSTER COMMITMENT OF DIRECTORS 4.1 Time commitment and protocols for new Directors The Board of the Company acknowledges the need to devote sufficient time to carry out their responsibilities for the Company. It is also the Board s policy for Directors to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements allow a Director to sit on the boards of five (5) listed issuers. Such notification is expected to include an indication of time expected to be spent on the new appointment. 34
ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 4 - FOSTER COMMITMENT OF DIRECTORS (continued) 4.2 Access to appropriate continuing education programmes The Board, via the Nominating Committee, continues to identify and has attended appropriate briefings, seminars, conferences and courses to keep abreast of their respective areas of expertise and enhance their skills through appropriate continuing education programmes. During the period under review, the Directors have attended the following programmes:- Name Programme Date Dato Syed Ariff Fadzillah The MNRB 11th CEO Conference 10-11 September 2015 Bin Syed Awalluddin (Sofitel Lisbon Liberdade, Lisbon) Dato (Dr) Teoh Seng Foo Finding Opportunity in Adversity 12 November 2015 2016 Market Outlook 18 February 2016 Dato Tiong Kwing Hee Corporate Financial Reporting 10 December 2015 Are You Making The Right Decisions People Management For Leaders Program 6 May 2016 Dato Amos Siew Boon Yeong Listed Company Director Programme 7 July 2015 National Tax Conference 2015 25-26 August 2015 Preparing to Transit from PERS to MPERS 2-3 October 2015 Seminar Percukaian Kebangsaan 2015 29 October 2015 Dato Boey Chin Gan Ring the Bell for Gender Equality 11 March 2016 Ng Hock Heng Mandatory Accreditation Programme 10-11 June 2015 Ring the Bell for Gender Equality 11 March 2016 Dato Teoh Seng Kian Advocacy Sessions on Management Discussion 30 July 2015 (Alternate Director to & Analysis for CEO & CFO of listed Issuers Dato (Dr) Teoh Seng Foo) Best Practices in Inspecting and Identifying 13-14 August 2015 Building Defects and Maintenance CG Breakfast Series with Directors : 9 September 2015 How to Maximize Internal Audit Apart for the abovementioned programmes, the Company Secretary keeps the Board abreast on the relevant guidelines on statutory and regulatory requirements from time to time at Board meetings. The External and Internal Auditors also briefed the Board members on any changes to the Malaysian Financial Reporting Standards and internal audit guidelines that affect the financial statements and internal controls of the. 35
ECOFIRST CONSOLIDATED BHD (15379-V) CORPORATE GOVERNANCE STATEMENT PRINCIPLE 5 - UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY 5.1 Financial statements must comply with applicable financial reporting standards The Board acknowledges its responsibility for the quality, correctness and completeness of the financial statements of the Company and the, hence sufficient time and efforts are put aside to review and to ensure that the financial statements are prepared in accordance with applicable financial reporting standards. In order to achieve this objective, the Board has entrusted the Audit Committee in ensuring that this responsibility is carried out effectively. The Audit Committee, which is headed by Dato Amos, who himself is a qualified member of the Malaysian Institute of Accountants, reviews the financial statements not only against past results but with the inclusion of budgeted and forecast figures as well. A Statement by Directors on their responsibilities in preparing the Annual Financial Statements is set out in page 38. 5.2 Policies and procedures to assess the suitability and independence of External Auditors The Board upholds the integrity of financial reporting by the Company, and hence the Audit Committee has established procedures in assessing the suitability and independence of the External Auditors. Amongst others, such procedures include the following:- The provision of written assurance by the External Auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the Malaysian Institute of Accountants. The scrutiny of non-audit services prior to acceptance of any appointment. The Audit Committee undertakes rigorously review of the terms of the non-audit services, to determine if such services would impair the independence of the External Auditors. The annual assessment formally adopted by the Audit Committee on the suitability and independence of External Auditors. Having separate sessions with External Auditors without the presence of Management to allow for frank and candid dialogue with the External Auditors. PRINCIPLE 6 - RECOGNISE AND MANAGE RISKS 6.1 Sound framework to manage risks The Board affirms its overall responsibility for the on the implementation of an effective risk management system, and internal control system. The Board via the Audit Committee ensures that actions are taken to review the adequacy, integrity and effectiveness of these systems. Details of the risk management framework and its corresponding action plans taken to mitigate the risks are outlined in the Statement on Risk Management and Internal Control Section of this Annual Report. 6.2 Establish an internal audit function The Board, through the Audit Committee, has appointed Internal Auditors to review the implementation of the internal control systems to ensure that the system is viable and robust. Further details of the activities of the Internal Auditors are available in the Audit Committee Report Section of this Annual Report. The Audit Committee also undertakes an annual assessment of the suitability and performance of the Internal Auditors, including the qualifications of the team and resources available, and holds separate sessions with the Internal Auditors without the presence of Management to allow for frank and candid dialogue. 36
ANNUAL REPORT 2016 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 7 - ENSURE TIMELY AND HIGH QUALITY DISCLOSURE 7.1 Implementation of appropriate corporate disclosure policies and procedures The Board is aware of the need to establish an internal corporate disclosure policies and procedures which are practical and in compliance with the disclosure requirements imposed by Bursa Malaysia Listing Requirements. The Board has also ensured that apart from the regulatory requirement of public announcements via the Bursa Link, the Annual Report, being a key source of information which is available for each shareholder, contains easy and comprehensive details of the business, the financial performance of the Company and corporate policies and procedures. In addition, and as outlined further below, the Company has a dedicated website that discloses the necessary corporate reports and information for the public s viewing. Whilst the Board attempts to be as transparent as possible in its corporate disclosure policies and procedures, it must be mindful of the legal and regulatory framework surrounding the release of material and price-sensitive information. Therefore certain information, such as release of corporate proposals, financial results and other market sensitive details will not be disseminated to the shareholders without first making the official announcement to the Bursa Link for public release. 7.2 Leverage on information technology for effective dissemination of information In the Company, a dedicated website www.ecofirst.com.my - is in place where employees alongside the public can access to, where pertinent information, such as the ones listed below, are displayed:- The Company s Vision and Mission statement The Company s latest financial performance Corporate Social Responsibility activities taken by the Company Message from the CEO PRINCIPLE 8 - STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS 8.1 Shareholders participation at general meetings The Board acknowledges the importance of general meetings as an avenue for the shareholders not only to exercise their rights to vote, but to be heard as well. As such, the Board has taken steps to encourage shareholders participation by implementing the following steps:- Notices for the general meetings are issued on timely manner, ahead of the twenty-one (21) days notice requirement as stipulated by Bursa Securities. The additional time given to shareholders allows them to make necessary arrangements to attend and participate either in person, by corporate representative, by proxy or by attorney. Adequate questions and answers time is allocated for each resolution to be passed, where shareholders are given the opportunity to seek clarification on matters pertaining to the Company. The Management and External Auditors are also invited to attend the general meetings, and are available to answer to queries relating to the respective subject matter. The Board, through their appointed share registrars shall consider the adoption of electronic voting to facilitate greater shareholder participation. 8.2 Poll voting The electronic voting, once adopted would enhance poll voting. For the moment, shareholders are informed of their rights to demand for a poll voting at the commencement of the general meeting. 8.3 Effective communication and proactive engagements with shareholders The Board recognises the importance of direct engagement with shareholders to provide a better appreciation of the Company s objectives, quality of its management and challenges, whilst making the Company aware of shareholders expectations and concerns. As such, the Company has via its website, included a Contact Us link where shareholders and the public can direct their queries to. 37
ECOFIRST CONSOLIDATED BHD (15379-V) STATEMENT OF DIRECTORS RESPONSIBILITY IN PREPARING THE ANNUAL FINANCIAL STATEMENTS The Directors are legally required, in accordance with the Companies Act, 1965, to prepare financial statements, which present a true and fair view of the state of affairs, and of the results of the operations of the and the Company and in preparing the financial statements for the financial year ended 31 May 2016, the Directors have: ensured compliance with applicable approved accounting standards in Malaysia; adopted and consistently applied appropriate accounting policies; and made judgements and estimates that are prudent and reasonable. The Directors are responsible for ensuring that proper accounting records are maintained, which disclose with reasonable accuracy, the financial position of the and also to ensure that the financial statements comply with applicable approved accounting standards in Malaysia. In addition, the Board is responsible for the proper safeguarding of the s assets and to take reasonable steps for the prevention and detection of fraud and other irregularities. 38
ANNUAL REPORT 2016 OTHER INFORMATION Material Contracts Except as disclosed in Note 29(a) of the Financial Statements, there were no material contracts subsisting at the end of the financial year or entered into since the end of the previous financial year by the Company or its subsidiaries, which involved the interests of the Directors and major shareholders other than contracts entered into in the normal course of business. Audit Fees During the financial year, the amount of audit fees paid/payable to the External Auditors by the and the Company were RM175,000 and RM52,000 respectively. Non-Audit Fees During the financial year, the amount of non-audit fees paid/payable to the External Auditors by the and the Company were RM23,500 and RM11,000 respectively. Employees Share Option Scheme ( ESOS ) The Company s shareholders at the Extraordinary General Meeting held on 20 June 2014 approved the establishment of a new employees share options scheme governed by the Bylaws for the eligible employees and directors of the Company and its active subsidiary companies ( ESOS ). The ESOS is for a period of five (5) years from 22 August 2014. The ESOS may be extended/renewed for a further period of five (5) years. As at the end of the financial year, the Company has yet to grant options under the ESOS. Utilisation of Proceeds Raised from Corporate Proposal On 25 February 2016, the Company announced its proposal to undertake a private placement of up to 107,083,588 new ordinary shares of RM0.10 each in the Company, representing up to ten percent (10%) of the issued and paid up share capital of the Company at an issue price to be determined and announced later ( Private Placement ). During the financial year, the Company raised RM8.46 million from the 1st tranche of the Private Placement by way of issuance of 36,000,000 new ordinary shares of RM0.10 each at an issue price of RM0.235 per share. The Company has not utilized the proceeds raised as at the end of the financial year. Recurrent Related Party Transaction of a Revenue Nature There was no recurrent related party transaction of a revenue nature, which requires shareholders mandate during the financial year. 39