FIBON 2 0 1 7 FIBON BERHAD(811010-H) ANNUAL REPORT
CONTENTS Corporate Information 1 Profile of Directors 2 Management Discussion & Analysis 6 Group Structure 8 Financial Highlights 9 Audit Committee Report 11 Nomination Committee 15 Statement on Corporate Governance 16 Statement on Corporate Social Responsibility 27 Statement on Risk Management & Internal Control 34 Statement on Directors Responsibilities 36 Additional Compliance Information 37 Financial Statements 39 Analysis of Shareholdings 118 List of Properties 121 Share Buy-Back Statement 122 Notice of Annual General Meeting Proxy Form (Enclosed)
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ANNUAL REPORT 2017 Corporate Information BOARD OF DIRECTORS Pang Chee Khiong Executive Chairman Pang Fok Seng Managing Director Lim Wai Kiew Executive Director Datin Pang Nyuk Yin Executive Director Datuk Mohamad Saleh Bin Mohd Ghazali Senior Independent Non-Executive Director Chong Peng Khang Independent Non-Executive Director Chong Chee Siong Independent Non-Executive Director AUDIT COMMITTEE Datuk Mohamad Saleh Bin Mohd Ghazali (Chairman) Chong Peng Khang Chong Chee Siong NOMINATION COMMITTEE Datuk Mohamad Saleh Bin Mohd Ghazali (Chairman) Chong Peng Khang Chong Chee Siong REMUNERATION COMMITTEE Chong Peng Khang (Chairman) Pang Chee Khiong Datuk Mohamad Saleh Bin Mohd Ghazali Chong Chee Siong COMPANY SECRETARY Chua Siew Chuan (MAICSA 0777689) Sean Ne Teo (LS 0008058) AUDITORS BDO (AF 0206) Suite 18-04, Level 18, Menara Zurich, 15 Jalan Dato Abdullah Tahir, 80300 Johor Bahru, Johor. Tel: (607) 331 9815 Fax: (607) 331 9817 SHARE REGISTRAR Symphony Share Registrars Sdn Bhd (378993-D) Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor. Tel: (603) 7849 0777 Fax: (603) 7841 8151/8152 PRINCIPAL BANKERS OCBC Bank (Malaysia) Berhad AmBank (M) Berhad United Overseas Bank (Malaysia) Bhd HSBC Amanah Malaysia Berhad REGISTERED OFFICE No. 60-1, Jalan Lagenda 5, Taman 1 Lagenda, 75400 Melaka. Tel: (606) 288 0210 Fax: (606) 288 0570 HEAD OFFICE 12A, Jalan 20, Taman Sri Kluang, 86000 Kluang, Johor Darul Takzim Tel: (607) 773 6918 Fax: (607) 774 2025 Website: www.fibon.com.my E-mail: hexa@fibon.com.my STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name: FIBON Stock Code: 0149 WEBSITE www.fibon.com.my 1
Profile of Directors Pang Chee Khiong Executive Chairman Mr Pang Chee Khiong, Male, a Malaysian aged 53 is an Executive Chairman since 25 March 2008. He has attended all four (4) Board meetings held during the financial year under review. He has more than 29 years of experience in the industries such as plumbing, timber logging, construction and housing development. He is the brother to Pang Fok Seng and Datin Pang Nyuk Yin. He has not been convicted of any offences within the past five (5) years nor public sanction or penalty imposed by any regulatory bodies during the financial year, other than traffic offences, if any and he has no conflict of interest with the group. He is a member of the Remuneration Committee. Pang Fok Seng Managing Director Mr Pang Fok Seng, Male, a Malaysian aged 51 is a Managing Director since 25 March 2008. He has attended all four (4) Board meetings held during the financial year under review. He has more than 23 years of experience in the advanced polymer matrix fibre composite industry. He is the brother to Pang Chee Khiong and Datin Pang Nyuk Yin. He is the husband to Lim Wai Kiew. He has not been convicted of any offences within the past five (5) years nor public sanction or penalty imposed by any regulatory bodies during the financial year, other than traffic offences, if any and he has no conflict of interest with the group. Datin Pang Nyuk Yin Executive Director Datin Pang Nyuk Yin, Female, a Malaysian aged 57 is an Executive Director since 9 April 2008. She has attended all four (4) Board meetings held during the financial year under review. She was in charge of production processes, sales, purchases and general administration from 1990 to 2003 in a private company. She is the sister to Pang Fok Seng and Pang Chee Khiong. She has not been convicted of any offences within the past five (5) years nor public sanction or penalty imposed by any regulatory bodies during the financial year, other than traffic offences, if any and she has no conflict of interest with the group. 2
ANNUAL REPORT 2017 Profile of Directors cont d Lim Wai Kiew Executive Director Ms Lim Wai Kiew, Female, a Malaysian aged 51, is an Executive Director since 9 April 2008. She has attended all four (4) Board meetings held during the financial year under review. She was a quantity surveyor in Singapore from 1990 to 1991. She was in charge of office management and administration in a private company from 1992 to 2003. She is the wife to Pang Fok Seng. She has not been convicted of any offences within the past five (5) years nor public sanction or penalty imposed by any regulatory bodies during the financial year, other than traffic offences, if any and she has no conflict of interest with the group. Datuk Mohamad Saleh Bin Mohd Ghazali Senior Independent Non-Executive Director Datuk Mohamad Saleh Bin Mohd Ghazali, Male, a Malaysian aged 73, is appointed as Director on 20 October 2008 and has redesignated to Senior Independent Non- Executive Director on 26 April 2016. Among the committees established, he is the Chairman of Audit Committee and he is reappointed as the Chairman of Nomination Committee on 26 April 2016. He is also a member of the Remuneration Committee. He has attended four (4) Board meetings held during the financial year under review. Datuk Mohamad Saleh graduated from the University of Hawaii, United States with a Bachelor of Business Administration and went on to obtain his Masters of Business Administration from Ohio University in Athens, United States in 1972. He began his career by serving the Fishery Development Authority of Malaysia as an economist in 1972 and went on to lecture in Universiti Institut Teknologi Mara in 1973. Prior to retiring in November 1999 he was the Executive Director/ Chief Executive Officer of Bank Industri Malaysia Berhad (presently known as Bank Perusahaan Kecil & Sederhana Malaysia Berhad ) for 18 years. His other working experiences encompasses being a marketing executive in Tourist Development Corporation of Malaysia, an assistant director in the Urban Development Authority, Malaysia and an assistant general manager in the Armed Forces Provident Fund in its investment department. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He has not been convicted of any offences within the past five (5) years nor public sanction or penalty imposed by any regulatory bodies during the financial year, other than traffic offences, if any. 3
Profile of Directors cont d Chong Peng Khang Independent Non-Executive Director Mr Chong Peng Khang, Male, a Malaysian aged 37, is appointed as an Independent Non-Executive Director on 20 October 2008. He is the Chairman of Remuneration Committee and is currently members of the Audit Committee and Nomination Committee for the Group. He has attended all four (4) Board meetings held during the financial year under review. He holds a first class honours Bachelor of Accounting degree from Multimedia University, Malaysia. He is a Chartered Accountant by profession as well as a fellow of the Association of Chartered Certified Accountants (FCCA, United Kingdom) and also member of the Malaysian Institute of Accountants (MIA). He began his career as an auditor with Deloitte Kassim Chan and subsequently Ernst & Young, involving in audit and business advisory of companies from various industries. His experience covers audit and assurance engagements, corporate reporting and compliance, taxation and wide-ranging overseas exposures. He has previously headed the accounting and finance division of a public listed company listed on the Main Market of Bursa Malaysia Securities Berhad and responsible for the corporate finance, accounting, tax and cash flow functions of the company and its subsidiaries. He is currently a Financial Controller in a major Malaysian conglomerate company. He is also an independent non-executive director of Hock Heng Stone Industries Bhd. and TPC Plus Berhad. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He has not been convicted of any offences within the past five (5) years nor public sanction or penalty imposed by any regulatory bodies during the financial year, other than traffic offences, if any. [The rest of this page intentionally left blank] 4
ANNUAL REPORT 2017 Profile of Directors cont d Chong Chee Siong Independent Non-Executive Director Mr Chong Chee Siong, Male, a Malaysian aged 42, is appointed as a Non- Independent Non-Executive Director on 1 August 2015. He is redesignated to Independent Non-Executive Director on 1 August 2017. He graduated with an Advanced Diploma in Commerce (Financial Accounting) from Tunku Abdul Rahman College. He was appointed as members of Audit Committee, Nomination Committee and Remuneration Committee on 29 March 2016. He has attended all four (4) Board meetings held during the financial year under review. He started his career in mid tier audit firm and subsequently worked with Deloitte and Crowe Horwath. He had accumulated four (4) years of auditing experience and four (4) years of commercial experience before joining Fibon Berhad as General Manager in year 2008. His experience covers audit, due diligence audit, preparation of profit forecast, preparation of oversea reporting package, treasury management and corporate reporting. Currently, he is a director of several private limited companies. He is also an independent non-executive director of TPC Plus Berhad. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He has not been convicted of any offences within the past five (5) years nor public sanction or penalty imposed by any regulatory bodies during the financial year, other than traffic offences, if any. [The rest of this page intentionally left blank] 5
Management Discussion & Analysis OVERVIEW OF THE GROUP S BUSINESS AND OPERATIONS Fibon Berhad ( FIBON ) is a public listed company involved mainly in the manufacturing of advance polymer matrix fibre composites for the manufacturing of high-amperage insulators. To date, FIBON s products have been used for the development of high-amperage switchgears, switchboard systems, circuit breakers, turbines for generators and also infrastructure projects. FIBON is also involved in the business of providing financial services such as business loans, credit services, factoring, and invoice discounting through its subsidiary Fibon Capital Sdn. Bhd. FINANCIAL REVIEW For the financial year ended 31 May 2017 ( FYE2017 ), FIBON s revenue rose 9.33% to a record-high of RM18.5 million compared to RM16.9 million previously. The higher revenue was as a result from the increased sales of the highamperage insulators during the FYE2017. Profit before tax reduced by 12.83% to RM5.9 million in the FYE2017 from RM6.8 million a year ago, hence reducing profit after tax ( PAT ) to RM4.3 million from RM5.0 million during the same period. This was mainly attributable to provision for impairment loss of receivables in one of the subsidiary. The Group s financial position remains strong with total assets of RM47.0 million against total liabilities of only RM1.98 million with zero gearing. The Group has cash reserve of RM25.5 million as of the FYE2017. Net assets per share continue to improve from RM0.43 to RM0.46. The Board of Directors ( The Board ) is pleased to recommend a proposed single tier final dividend of 1.10 cents per ordinary share for the FYE 31 May 2017. The proposed final dividend is subject to the shareholders approval at the forthcoming Tenth Annual General Meeting. The total dividends for FYE 31 May 2017, if approved by shareholders, would approximately amount to RM1.078 million, making up a dividend payout ratio of approximately 25.0% of PAT of RM4.319 million. OPERATION REVIEW Electrical components and solutions are the driving factors of our core business. Therefore the need to upgrade our technical skills and maintain a competent team to stay competitive and provide innovative solutions remains crucial to our business. FIBON also needs to invest in human capital development while retaining technical key staffs. The research and development team is also important to provide development of new products and solutions to interface with today s technology and infrastructures. RISK EXPOSURE FIBON may not be fully shielded from the general business risks, as well as risks inherent in the underlying industries to which it provides products and services to. FIBON s business prospects are indirectly exposed to the clients industry risk whereby a portion of FIBON s clients are affected by the overall Oil & Gas (O&G) industry s economic outlook. As business activities soften within the O&G industry, clients of FIBON may experience a contraction in demand for their products, which follows with a trickle-down effect onto FIBON s supply of electrical components to the clients. The prolonged and collective effect of this risk may potentially affect FIBON s financial performances. The Group seeks to mitigate this risk though, amongst others, by constantly anticipating our needs through diligent costing, regularly monitoring our debtors position, constantly monitoring our expenditures, further exploring and implementing effective ways in customer engagement, expanding its customer base, product offerings, export market, and most importantly to develop innovative solutions to remain competitive. 6
ANNUAL REPORT 2017 Management Discussion & Analysis cont d INDUSTRY OUTLOOK & PROSPECTS The Management anticipates the outlook for the financial year ending 31 May 2018 will be challenging but remains optimistic for FIBON. To maintain FIBON s position as one of the leading pioneer of its industry, the company has been constantly striving to improve on productivity, quality, services, stable cash flows and strengthening the relationships with our customers and suppliers. Over the years, continuous improvement and innovation have continued to underpin everything we do, from our manufacturing processes to formulating polymeric materials in accordance to customers specifications and requirements. We will continue to harness our strengths in those areas to stay ahead of the competition and increase the barriers to entry. The Management will strive to remain resilient and cautious in this challenging environment. We are committed to a continuous improvement in our production and operational efficiencies, provision of quality products and meeting customer s delivery deadlines with an aim to increase our market share in this industry. The Board of Directors has recognized that its primary responsibility is to safeguard and promote the interests of the shareholders and stakeholders and to enhance the long-term value of the Company. 7
Group Structure FIBON BERHAD (811010-H) HEXA ANALISA SDN BHD (631511-M) 100 % 100 % FIBON AUSTRALIA PTY LTD (75138272330) FIBON UK LIMITED (6415424) 100 % 100 % 100 % FIBON ELECTRIC (M) SDN BHD (855200-A) FIBON CAPITAL SDN BHD (873938-A) 8
ANNUAL REPORT 2017 Financial Highlights Financial year ended 31 May 2013 2014 2015 2016 2017 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 16,674 15,318 13,588 16,904 18,481 Profit before taxation ( PBT ) 6,666 5,372 5,204 6,826 5,950 Profit after taxation ( PAT ) 4,905 4,003 3,651 5,002 4,320 EARNINGS PER SHARE ( EPS ) Gross EPS (sen)* 6.80 5.48 5.31 6.97 6.07 Net EPS (sen)* 5.01 4.09 3.73 5.10 4.41 * FYE 2013-2017: Computed based on the PBT and PAT for the relevant financial years under review and divided by the issued and paid up share capital of 98,000,000 Shares for the financial year. [The rest of this page intentionally left blank] 9
Financial Highlights cont d REVENUE AND PROFIT FROM ORDINARY ACTIVITY AFTER TAXATION (RM 000) NET EPS (SEN) 10
ANNUAL REPORT 2017 Audit Committee Report for the financial year ended 31 May 2017 COMPOSITION AND MEETINGS The present Audit Committee ( AC ) consists entirely of Non-Executive Directors. The Company has complied with the Listing Requirements of Bursa Malaysia Securities Berhad, which require all of AC members to be non-executive, with a majority of them being independent directors. In addition, one (1) of the members of the AC is the member of the Malaysian Institute of Accountants ( MIA ) and the Chairman of the AC is a Senior Independent Director. The composition of the AC and their attendance at the meetings held during the financial year are as follows: Name of Director Designation Attendance 2. Review the adequacy of provisions against contingencies and bad and/or doubtful debts; 3. Review internal control process and procedures, scope, internal audit findings and recommend actions to the Board; 4. Recommend and appoint external auditors and deal with any issues arising from their audit findings; 5. Review related party transactions that may arise within our Group; 6. Approve fees relating to external auditors; and 7. Address any accountability issues that may arise from time to time within our Group. Datuk Mohamad Saleh Bin Mohd Ghazali Chong Peng Khang Chong Chee Siong Senior Independent Non-Executive Director Independent Non-Executive Director; Member of the MIA Independent Non-Executive Director (Redesignated on 1.8.2017) TERMS OF REFERENCE Objectives Chairman 4/4 Member 4/4 Member 4/4 Membership 1. The AC shall be appointed by the Board of Directors from amongst their members and comprising not less than three (3) members, of whom the majority shall be the Independent Non-Executive directors. 2. At least one of the members of the AC must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years of working experience or either must have passed the examinations specified in Part I of the 1 st Schedule of the Accountants Act, 1967, or must be a member of one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountants Act, 1967. The principal objective of the AC is to assist the Board in discharging its statutory duties and responsibilities relating to corporate accounting system of internal control and management and financial reporting practices of the Group. In addition, the Committee shall: 1. Ensure the timely and accurate preparation and publication of financial statements of our Group; 3. The members of the AC shall elect a chairman amongst themselves who shall be an Independent Non-Executive director. No alternate director shall be appointed as a member of the AC. 4. If a result that the number of members is reduced below three (3), the Board of Directors shall, within three (3) months of the events, appoints such number of new 11
Audit Committee Report Membership (cont d) members as may be required to make the minimum number of three (3) members. 5. The Board of Directors and Nomination Committee will carry out annual assessment on the terms and performance of the audit committee and its members. Authority 1. The AC is authorised by the Board of Directors and have the authority to investigate any matter within its terms of reference and shall have unlimited access to both the internal and external auditors, as well as the employees of the Group. All employees are directed to cooperate with any request made by the Committee. 2. The Committee shall have unlimited access to all information and documents relevant to its activities, to the internal and external auditors, and to senior management of the Group. 3. The Committee shall have the authority to obtain independent legal or other professional advices as it considers necessary. 4. The Committee shall be able to convene meetings with the external auditors, excluding the attendance of the executive members of the Committee, whenever deemed necessary. 5. The AC shall have the power to establish Sub- Audit Committee(s) to carry out certain investigation on behalf of the Committee in such manner, as the Committee deem fit and necessary. Meetings / Quorum and Committee s Procedure The Committee is at liberty to determine the frequency of the meetings at least four (4) times annually or more frequently as circumstance dictate. The quorum shall consist of two (2) members, where the majority of members present must be independent non-executive Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present. The Chairman shall submit an annual report to the Board summarising the Committee s activities during the year and the related significant results and findings. The Committee shall meet at least once (1) a year with the Management, the Head of Internal Audit and External Auditors in separate sessions to discuss any matters without the presence of any executive member. The Committee shall regulate the manner of proceedings of its meetings, having regard to normal conventions on such matter. Attendance of the Meetings 1. The external auditors may be invited to attend to meetings. The Committee may invite any person to be in attendance to assist in its deliberations. The other directors and employees attend any particular AC meeting only at the AC s invitation, specific to the relevant meeting. 2. The Company Secretary shall be the Secretary of the Committee and shall be responsible for drawing up the agenda with concurrence of the chairperson and circulating it, supported by explanatory documentation to committee members prior to each meeting. Duties The duties of the AC include the followings: 1. To consider the appointment or reappointment of external auditors, the audit fee and matter relating to the resignation or dismissal of auditors, if any; 2. To review with the external auditors the audit plan, their evaluation of the system of internal accounting controls, their letter to management and the management s response; 12
ANNUAL REPORT 2017 Audit Committee Report Duties (cont d) 3. To review the quarterly and annual financial statements before submission to the Board of Directors for approval, focusing particularly on: Changes in accounting policies and practices; Significant and unusual events; To consider major findings of internal investigations and management s response. 6. To consider any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity; and Significant adjustments resulting from the audit; 7. To consider other topics as defined by the Board. The going concern assumption; and Compliance with accounting standard and other legal requirements 4. To discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management where necessary); 5. To do the followings where an internal audit function exists; Review the adequacy of the scope, function and resources of the internal audit function and that it has the necessary to carry out its work; Review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function; Review any appraisal or assessment of the performance of members of the internal audit function; Approve any appointment or termination of senior staff members of the internal audit function; (if any) Review the resignation of internal audit staff members and provide the staff member the opportunity to submit his reasons for resigning; (if any) and Reporting The AC is authorised to regulate its own procedures and in particular the calling of meetings, the notice to be given of such meetings, the voting and proceeding thereat, the keeping of minutes and the custody, production and inspection of such meetings. The minutes of meetings shall be circulated by the Secretary of the Committee to the Committee members and all the other Board members. ACTIVITIES OF THE AUDIT COMMITTEE There were four (4) AC meetings held during the financial year under review. The main activities undertaken by the AC during the financial year included the followings: Reviewed and commented on the unaudited quarterly financial results of the Group before recommending the same for Board s approval and to be released to Bursa Malaysia Securities Berhad ( Bursa Securities ) Reviewed the audit report and observations made by external auditors on the audited financial statements that require appropriate management action and the management s response thereon and reporting them to the Board. 13
Audit Committee Report ACTIVITIES OF THE AUDIT COMMITTEE (cont d) Provide such other function as requested by the AC Reviewed the internal audit reports, which highlighted the audit issues and management s response. Reviewed and approved the Statement of Corporate Governance, Statement of Risk Management and Internal Control and Audit Committee Report for inclusion in the Annual report Reviewed and approved appointment of new External Auditors BDO Reviewed the external auditors scope of work and audit plan. Conducted independent meetings with the External and Internal Auditors. Reviewed & approved the Terms of Reference of AC Discussed on potential impact of the new announcement of Foreign Administration Rules by Bank Negara Malaysia ( BNM ) on the Company. Discussed and noted changes in accounting policies / standards which are applicable to the Company. INTERNAL AUDIT FUNCTION The Board engaged an external professional firm to carry out internal audit function for the Group. The internal auditors report directly to the AC. The primary role of the internal auditors is to interalia; assist the AC on an ongoing basis to: Review the risk management framework; Evaluate the state of compliance with the Bursa Securities Listing Requirements, the Malaysian Code on Corporate Governance ( the Code ) and other statutory requirements; and 14
ANNUAL REPORT 2017 Nomination Committee THE NOMINATION COMMITTEE The Nomination Committee ( NC ) of the Company consists entirely of Independent Non-Executive Directors. The composition of the NC and their attendance at the meetings held during the year are as follows: Name of Director Datuk Mohamad Saleh Bin Mohd Ghazali Senior Independent Non-Executive Director Chong Peng Khang Independent Non-Executive Director Chong Chee Siong Independent Non-Executive Director (Redesignated on 1.8.2017) Designation Attendance Chairman 1/1 Member 1/1 Member 1/1 ACTIVITIES OF NOMINATION COMMITTEE The following are the activities held by the NC during the financial year: Carried out the Board, Committee and Independence assessment. Discussed and nominated senior director to Senior Independent Director. Noted the NC Circular Resolution passed since the last Committee Meeting. Assessed the effectiveness of the Board as a whole and the contribution of each individual director. Recommended the Directors who are retiring by rotation at the forth coming AGM, pursuant to Constitution of the Company and the Companies Act 2016. Reviewed the redesignation of Non- Independent Non-Executive Director to Independent Non-Executive Director and recommended the same to the Board for approval. 15
Statement on Corporate Governance for the financial year ended 31 May 2017 INTRODUCTION The Board of Directors ( the Board ) of Fibon Berhad ( the Company ) is committed to exercise good corporate governance by supporting and applying the prescriptions of the principles and best practices set out in the Malaysian Code on Corporate Governance 2012 ( MCCG 2012 or the Code ). The Board is pleased to provide the following statement on how the Group has applied the principles and recommendations set out in the Code. Unless otherwise stated, the Board has throughout the financial year ended 31 May 2017 complied with the best practices indicated in the Code. The Board acknowledges the importance of achieving best practice in its standards of business integrity and corporate accountability and is committed to subscribe to the recommendations of the Code. PRINCIPLE 1 : ESTABLISH CLEAR ROLES & RESPONSIBILITIES The Board The Group recognises the important role played by the Board in the stewardship of the Group s direction and operations, and ultimately, the enhancement of long-term shareholders value. To fulfil this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. In fostering commitment towards MCCG 2012, the Board has established a Board Charter to ensure that all Board members are aware of their fiduciary duties and responsibilities for the proper stewardship of the Group to provide reasonable assurance for the success of the Group on sustainable manner. The Board is tasked with realisation of long term and sustainable shareholder s value and safeguarding the interests of stakeholders. Clear Function of the Board and the Management The Board is the ultimate decision-making body of the Company, and is responsible for oversight and overall management of the Group. It sets the strategic direction and vision of the Company and takes full responsibility in leading, governing, guiding and monitoring the entire performance of the Group. It enforces standards of accountability, with a view to enabling Management to execute its responsibility effectively and efficiently to meet the long term goals of the business. The Board has overall responsibility for putting in place a framework of good corporate governance within the Group, including the processes for financial reporting, risk management, internal control and compliance. The Board retains full responsibility for guiding and monitoring the Company in discharging its responsibilities. The various committees perform certain of the Board's functions and to provide it with recommendations and advices. The role of the Chairman is to ensure the orderly conduct and performance of the Board while the Managing Director and his management team are responsible for the implementation of the Board s decisions and the day-to-day running of the business in line with the Company's goals and policies. The role of the Executive Directors is to act as a steering committee and to collaborate with the Management in articulating the Group's vision, mission, values and strategies. It develops the Group's strategy, direction and business plan for the Board s approval to manage and drive the daily operational activities, important critical matters and set priorities to achieve the business objectives, including looking into manpower requirements and succession planning. Executive Directors are led by the Managing Director. Executive Directors take on the primary responsibilities for implementing the Group's business plans and managing the business activities. 16
ANNUAL REPORT 2017 Statement on Corporate Governance PRINCIPLE 1 : ESTABLISH CLEAR ROLES & RESPONSIBILITIES (con d) Clear Function of the Board and the Management (cont d) The role of the Independent Non-Executive Directors is particularly important as they provide unbiased and independent views, advice and judgment, and plays a pivotal role in decision making and corporate accountability. Independent Non-Executive Directors ensure that the business plans proposed by the Management are fully deliberated and examined objectively, taking into perspective the long term interests of the Company, its shareholders, other stakeholders and the community at large. Clear Roles and Responsibility The Board meets regularly to perform its functions, amongst others, as follows:- i) Reviewing and Adopting the Company s Strategy and Business Plan ii) The Board reviews and is adopting a strategic plan for the Group presented by the Management and guides the Group in promoting its core values, policies and, meeting targets and objectives. Overseeing the Conduct of the Company's Business To ensure the effective discharge of its functions and responsibilities, the Board delegates the day-to-day management of the Group's business to the Management. The Managing Director is responsible for the implementation of the Board's decisions, and the day-to-day operations of the Group's business and operational efficiency. The Managing Director drives the daily business activities of the Group. iii) Succession Planning The Board recognises the importance of succession planning in building long-term sustainable performance excellence for key management positions. It has identified potential candidates for senior managerial positions to ensure continuity of positions. iv) Overseeing the Development and Implementation of a Communication Policy for the Company The Board recognises the importance of keeping shareholders and investors informed of its latest business and corporate developments. The Board believes that an effective investor relationship is essential in enhancing value to its shareholders. The dissemination of information about the Group, its businesses and its activities is conducted via the timely release of quarterly financial results and announcements. During the financial period under review, the Company has been involved in investor relations activities, such as announcement to Bursa Securities and SC, meetings with local fund managers and research houses, to keep shareholders duly informed on the performance, development and operational activities of the Group. v) Matters Reserved for the Board s Decisions The responsibility for matters material to the Group is in the hands of the Board, with no individual Director having unfettered powers to make decisions. Matters reserved for the Board include discussions on matters of significance, such as, change of direction in strategy, changes related to structure and capital, changes in Board members, disposal and procurement of assets, Executive and Non- Executive Directors remuneration packages, approval of preliminary announcement of 17
Statement on Corporate Governance PRINCIPLE 1 : ESTABLISH CLEAR ROLES & RESPONSIBILITIES (con d) Clear Roles and Responsibility (cont d) vi) Matters Reserved for the Board s Decisions (cont d) interim and final results that need authorization from time to time. Formalised Ethical Standards through Code of Conduct The Board has adopted a Code of Ethics and Conduct ( COC ) for Directors and employees towards their customers, business partners, communities and shareholders. It sets out the ethical standards and underlying core ethical values to guide actions and behaviors of all Directors and employees in conducting the day-to-day duties and operations of the Group. The Management and employees are expected to observe high standards of integrity and fair dealing in relation to customers, business partners, staff and regulators in the network locations where the Company operates. Supply and Access to Information The Board recognises that the decision-making process is highly dependent on the quality of information furnished. In furtherance of this, every Director has access to all information within the Company through the following means:- Members of Senior Management attend Board and Board Committee meetings by invitation to report on areas of their responsibility including financial, marketing, operational, corporate, regulatory, business development, audit matters and information technology updates, for the Board s decision making and effective discharge of the Board s responsibilities. Meetings with the External Auditors are also held without the presence of Management and Executive Directors. The Board and Board Committee papers are prepared and circulated to the Directors or Board Committee Members at least seven (7) days before the Board and Board Committee meetings. The AC meets with the Management, Internal Auditors and External Auditors regularly to review their audit plans and reports, and obtain updates and observations on internal control system and financial reporting matters. Qualified and competent Company Secretaries The Board is regularly updated and advised by the Company Secretaries who are qualified, experienced and knowledgeable on statutory and regulatory requirements relating to the Companies Act, 2016 ( the Act ), the Main Market Listing Requirements of Bursa Securities ( MMLR ) and Corporate Governance, and the implications to the Company and the Directors in relation to their duties and responsibilities. The Company Secretaries facilitate the flow of information to the Board and its committees. The Directors have ready and unrestricted access to the advice and services of the Company Secretaries pertaining to Board policies, procedures, the Act, MMLR, MCCG 2012, and timing of material announcements, to enable them to discharge their duties effectively. The Company Secretaries also keep the Directors and Principal Officers informed of the closed period for trading in the Company s shares. Besides direct access to the Management, Directors may obtain independent professional advice at the Company s expense, if considered necessary. The Company Secretaries maintain all secretarial and statutory records of the Company and Group. Board Charter The Board Charter aims to ensure that all Directors acting on behalf of the Company are aware of their fiduciary duties and responsibilities as Board 18
ANNUAL REPORT 2017 Statement on Corporate Governance PRINCIPLE 1 : ESTABLISH CLEAR ROLES & RESPONSIBILITIES (con d) Board Charter (cont d) members. It also aims to ensure that all Directors understand the various legislations and regulations affecting their conduct and that they apply principles and practices of good corporate governance in all their dealings in respect of and on behalf of the Company. The Directors are expected to act in a professional manner and discharge their duties with high ethical values, honesty and accountability with strong commitment to good corporate governance practices. The Board Charter was formalised and adopted on 27 May 2013 by the Board which sets out the roles, responsibilities, authorities and operation of the Board and Board Committees. All Board members are aware of their duties and responsibilities. The Board Charter also outlines: The division of responsibilities and powers between the Board and management, the different committees established by the Board, and position of the Chairman and the Managing Director; Set out processes and procedures for convening Board meetings; The Board s commitment in upholding integrity in financial reporting; List of matters reserved for decision by the Board; and Board s access to information and independent advice. The Board Charter serves as a reference providing guidance to prospective and existing Board members and Management on the fiduciary and stewardship functions of the Company s Directors. It also entrusts Board members and employees to apply the principles and practices of good Corporate Governance in all their dealings in respect of and on behalf of the Company; to help foster a culture of honesty and accountability and uphold the core values of integrity when dealing with ethical issues. PRINCIPLE 2 : STRENGTHEN COMPOSITION The Board Composition and Management The control environment sets the tone for the Group and is driven by an effective Board consisting of competent individuals with appropriate specialised skills and knowledge to ensure capable management of the Group. The appointment of Independent Directors is carefully considered to ensure that the Board is well balanced on views, advice, judgment and decision making. The Board comprises seven (7) members, of whom four (4) are Executive Directors and three (3) are Independent Non-Executive Directors. It is a balanced Board and comprises professionals from various backgrounds and with the relevant experience and expertise that would add value to the Group. The mix of experience and talent is vital for the strategic success of the Group. The Board has met the requirement of at least onethird (1/3) of the number of Directors shall be Independent Non-Executive Directors. The Board has also met the diversity in age and ethnicity in varying degrees. The Board delegates the implementation of its strategy to the Company s Management. However, the Board remains ultimately responsible for corporate governance and the affairs of the Company. With their diverse backgrounds, professional experience and wide mix of skills, the Board can manage and run the Group s operations effectively and efficiently. Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors 19
Statement on Corporate Governance PRINCIPLE 2 : STRENGTHEN COMPOSITION (cont d) Appointment of Directors The Nomination Committee task is to assist the Board to evaluate and recommend candidates for appointments to the Board. In accordance with the Company s Articles of Association ( the Articles ), all new Directors who are appointed by the Board during a financial year, will retire at the following Annual General Meeting. The Articles also provide that at least one-third (1/3) of the Directors for the time being, or if their numbers is not in multiple of three (3), then the number nearest to one-third (1/3) shall retire from office provided always that all Directors including the Managing Director shall retire from office at least once every three (3) years but shall be eligible for re-election. At the forthcoming Tenth Annual General Meeting (10 th AGM), Datin Pang Nyuk Yin and Mdm Lim Wai Kiew are due to retire pursuant to Article 121 of the Company s Constitution and being eligible, have offered themselves for re-election. Datuk Mohamad Saleh bin Mohd. Ghazali, who above the age of 70 years was re-appointed at the Ninth AGM held on 25 October 2016 to hold office until the conclusion of Tenth AGM and Datuk has offer himself for re-appoinment at the upcoming AGM. The Board, through the Nomination Committee, appraises the composition of the Board and believes that the current composition brings the required mix of skills and core competencies for the Board to discharge its duties effectively. New appointees will be considered and evaluated by the Nomination Committee. The Nomination Committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretaries will ensure that all appointments are properly made and that legal and regulatory obligations are met. Diversity Policy The Group is an equal opportunity employer and does not practice discrimination of any form, whether based on age, gender, ethnicity throughout the organisation. The Board practices gender diversity and has two (2) female Directors which represents 28.5% of seats at Board level, out of a total of seven (7) Directors, even though it does not have a formalised policy on setting targets for female candidates. The Group will continue to identify suitable candidates for appointment to the Board based on merit and competence and the contribution that each potential candidate can bring to further strengthen the Board. The evaluation of the suitability of candidates as Board members is solely based on the candidates competency, character, time commitment, knowledge and experience in meeting the needs of the Group. Annual Assessment The NC compiles and conducts on an annual basis the following evaluation:- The effectiveness of each Director s ability to contribute to the effectiveness of the Board and the relevant Board Committees; The effectiveness of the Board Committees and the Board as a whole; Independent Directors self-assessment; The External Auditors performance and independence; and private sessions with the External Auditors. All assessments and evaluations carried out by the NC are properly documented. The assessment and comments by Directors are summarised pertaining to the effectiveness of the Board and its Board Committees, are tabled at the NC meeting. The NC Chairman will then report to the Board on the results of the Directors assessment and evaluation. 20
ANNUAL REPORT 2017 Statement on Corporate Governance PRINCIPLE 2 : STRENGTHEN COMPOSITION (cont d) Directors Remuneration The Directors remuneration is linked to experience, scope of responsibility, seniority, performance and industry information. Details of Directors remuneration for the year ended 31 May 2017 are as follows: Description Executive Directors Non-Executive Directors Fees Salaries and Bonus Total 207,600 3,624,670 3,832,270 83,900-83,900 The number of Directors whose remuneration falls within the following bands is: Description Executive Directors Non Executive Less than RM50,000-4 RM50,000 RM100,000 - - RM100,000 RM150,000 - - RM150,000 RM200,000 - - RM200,000 RM300,000 - - RM300,000 RM400,000 - - RM400,000 RM500,000 - - RM500,000 RM600,000 - - RM600,000 RM700,000 1 - RM800,000 RM900,000 1 - RM900,000 RM1,000,000 1 - RM1,000,000 RM1,100,000 - - RM1,100,000 RM1,200,000 - - RM1,200,000 RM1,300,000 - - RM1,300,000 RM1,400,000 1 - PRINCIPLE 3 : REINFORCE INDEPENDENCE Assessment of Independence The Board recognizes the importance of independence and objectivity in the decisionmaking process as advocated in the MCCG 2012. The Board is committed to ensure that the independent directors are capable of exercising independent judgment and are not involved in any relationship with the Group, acting in the best interests of the Company. The Independent Directors of the Company fulfilled the criteria of Independence as prescribed under the MMLR of Bursa Securities. The Board, via NC, has developed the criteria to assess independence and formalised the current independence assessment practice. In addition, the Independent Directors signed a confirmation of independence annually. Separation of positions of the Chairman and the Group Managing Director To ensure balance of authority, increased accountability and a greater capacity for independent decision-making, the roles of the Chairman and the Managing Director (MD) are distinct and separate with a clear division of responsibilities between the Chairman and the MD. The Executive Chairman, Pang Chee Khiong ( PCK ) is pivotal in creating the conditions for overall Board and individual Director s effectiveness. His responsibility is to run the Board and set its agenda taking into account the issues and concerns of all Board members. He ensures Board Members receive accurate, timely and clear information about the Company s performance to enable the Board to make sound decisions, and encourages active engagement by all Board Members. He is responsible for the approval of all Group policies, ensuring they adhere to and conform to the highest standards. He also ensures the orderly conduct and management of the Board, and Board Committees performance. PCK is an effective Executive Chairman who upholds the highest standards of integrity and provides coherent leadership in representing the Company s vision and mission and understanding the needs of various stakeholders. Pang Fok Seng ( PFS ), the MD is responsible for developing the Group s objectives and strategies for approval by the Board having regard to the Group s responsibilities to its various stakeholders. PFS is also charged with implementing the Board s directions, managing the day-to-day business operations, including chairing the Executive Committee and communicating its decisions and recommendations to the Board. His duties include 21
Statement on Corporate Governance PRINCIPLE 3 : REINFORCE INDEPENDENCE (cont d) Separation of positions of the Chairman and the Group Managing Director (cont d) driving the Group s performance and reviewing its operational results and strategic directions of the Group s business. He undertakes the responsibility of identifying and executing new business opportunities. PFS also ensures the Board that appropriate risks and internal controls are in place. All decisions of the Board are based on the decision of the majority of the Board Members and matters are deliberated with active participation of the three (3) Independent Non-Executive Directors. Therefore, no individual Director dominates the decision making process unless duly authorised by the Board. Nevertheless, functionally and for all purposes and intent, the responsibilities of the MD are executed by delegating authority to designated Senior Management to ensure that division and accountability in essence are separated. Further, all decisions on matters reserved for the Board are made after due deliberation by the Board and the Board Committees, where required. The MCCG 2012 recommends that the majority of the Board members must comprise of Independent Directors in the event that the Board Chairman is not an Independent Director. In spite of this, the Board is of the view that this recommendation is currently satisfied by the strong proactive participation of the Independent Non-Executive Directors expressing their impartial, independent opinions strongly without fear or favour on important issues that affect the Company and/or the interest of the various stakeholders. Composition of the Board Presently, the Board comprises three (3) Independent Non-Executive Directors and four (4) Executive Directors. This composition complies with Paragraph 15.02 of the MMLR of Bursa Securities which requires at least two (2) directors or one third (1/3) of the Board, whichever is the higher, to be independent. The profiles of the Directors are set out on this Annual Report. The Executive Directors take on the primary responsibility of the day-to-day running of the Group s business, as well as, implementing the policies and decisions of the Board. The Independent Non-Executive Directors act independently of management and do not participate in any business dealings and are not involved in any other relationship with the Group that may impair their independent judgment and decision making. They provide a broader view and independent assessment to the Board s decision making process by acting as an effective check and balance. Together, the four (4) Executive Directors and three (3) Independent Non-Executive Directors are a balanced Board and comprises professionals from various backgrounds with depth and breadth of experience, expertise and perspectives which would add value to the Group. The Executive Directors have cumulatively, a wealth of knowledge and experience, gained insights from different fields and expertise that include finance, audit, marketing, manufacturing, research and development functions in the industry. They each uphold different functions of the Company and contribute cohesively to the success and well being of the Group. PRINCIPLE 4 : FOSTER COMMITMENT Board Meeting The Board ordinarily meets at least four (4) times a year at quarterly intervals with additional meeting convened when urgent and important decisions need to be taken between the scheduled meetings. During the financial year ended 31 May 2017, the Board met on four (4) occasions, where it deliberated upon and considered a variety of matters including the Group s financial results, major investments and strategic decisions and the business plan and direction of the Group. The composition of the Board is basically in compliance with the Bursa Securities MMLR and the Code. The Board composition has been 22
ANNUAL REPORT 2017 Statement on Corporate Governance PRINCIPLE 4 : FOSTER COMMITMENT (cont d) Board Meeting (cont d) balanced to reflect the interests of the major shareholders, management and minority shareholders. Collectively, the Directors bring a wide range of business and financial experience relevant to the direction of the Group. The Board noted that one (1) of the recommendations of the Code is that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. In case of any Independent Director exceeding cumulative term of nine (9) years, he/she should be re-designated to be Non-Executive Director or shareholders approvals would need to be obtained in order for him/her to remain as Independent Director. The tenure of two (2) Independent Non-Executive Directors would be exceeded cumulative term of nine (9) years. Details of Directors attendance at Board Meetings held in the financial year ended 31 May 2017 are as follows: Name of Directors Datuk Mohamad Saleh Bin Mohd. Ghazali No. of Meetings Attended 4/4 Chong Peng Khang 4/4 Pang Chee Khiong 4/4 Pang Fok Seng 4/4 Datin Pang Nyuk Yin 4/4 During the financial year, Mr Pang Chee Khiong, Mr Eddie Pang Fok Seng, Datin Pang Nyuk Yin attended the following sessions: i) Release of The Malaysian Code on Corporate Governance organised by the Securities Commission Malaysia (26 April 2017) Mdm Lim Wai Kiew had attended sessions : the following i) Program Hand Holding dan Kursus Cukai Barang & Perkhidmatan bagi Sektor Pengilang (14 September 2016) ii) Release of The Malaysian Code on Corporate Governance organised by the Securities Commission Malaysia (26 April 2017) iii) Taklimat Kumpulan Wang Pembangunan Sumber Manusia (PSMB) (16 August 2017) Mr. Chong Peng Khang had attended the following sessions:- i) Nominating Programme Part 2 Effective Board Evaluations (10 August 2016) ii) Regulatory Updates Recent Amendments to Listing Requirements in 2015 & 2016 (28 September 2016) iii) Goods & Services Tax (GST) Workshop 2016 (5 October 2016) iv) Budget 2017 Tax Seminar (1 November 2016) Lim Wai Kiew Chong Chee Siong 4/4 4/4 v) GST Procurement and Accounts Payable (15 March 2017 16 March 2017) Directors Training The Group acknowledges the importance of continuous education and training to the Board members. vi) vii) Related Party Transactions (RPT) Their Implications to the Board of Directors, Audit Committee & Management (11 May 2017) Strategising HR for Performance Excellence (31 May 2017) 23
Statement on Corporate Governance PRINCIPLE 4 : FOSTER COMMITMENT (cont d) Directors Training (cont d) Mr Chong Chee Siong had attended the following session: i) Future Of Audit Reporting - The Game Changer For Boardroom (27 June 2016) PRINCIPLE 5 : UPHOLD INTEGRITY OF FINANCIAL REPORTING ACCOUNTABILITY AND AUDIT Financial Reporting The Board is committed to provide a balanced, clear and comprehensive assessment of the Group s financial position and prospects by making sure the financial statements and quarterly announcements. The Board takes responsibility for ensuring that the financial statements of the Group and of the Company give a true and fair view of the state of affairs of the Group. Efforts are made to ensure that the financial statements comply with the provisions of the Companies Act 2016 and the applicable approved accounting standards in Malaysia. The Board also ensures the accurate and timely release of the Group s quarterly and annual financial results to Bursa Securities and SC accordingly. Statement on Directors' Responsibility In reviewing all the published annual and quarterly financial statements during the financial year ended 31 May 2017, the Directors took due care and reasonable steps to ensure compliance with the applicable accounting standards in all material aspects. For this purpose the Directors are updated and briefed by the external auditors on the current accounting practices and applicable financial reporting standards and IC Interpretation, at least once a year. A statement by the Directors of their responsibilities for preparing the financial statements is set out under the Statement on Directors Responsibility on this Annual Report. External Audit Function The Company s independent external auditors fill an essential role by enhancing the reliability of the financial statements of the Group and of the Company and giving assurance of that reliability to users of these financial statements. The external auditors, Messrs. BDO had reported to the members of the Company on their findings which has been included as part of the Group s and the Company s financial reports with respect to the audit on the statutory financial statements for the financial year ended 31 May 2017. In doing so, the Group and the Company have established a transparent arrangement with the auditors to meet their professional requirements. From time to time, the auditors highlight to the Audit Committee ( AC ) and the Board on matters that require the Board s attention. Assessment of Suitability and Independence of External Auditors The Board maintains a transparent and professional relationship with the Group s external auditors through the AC. The criteria for the external auditors assessment include quality of services, sufficiency of resources, communication and interaction, audit planning, independence, objectivity and professional skepticism. In determining the independence of the external auditors, the AC reviewed and assessed all aspects of their relationships with them including the processes, policies and safeguards adopted by the Group and the external auditors relating to audit independence. The AC also reviewed and assessed the external auditor s performance and independence. The Group s external auditors are invited to attend the AC meetings on a quarterly basis. Copies of the internal audit report are given to the external auditors at the meeting for their comments and notation. The AC meets the external auditors to review the scope and adequacy of the audit 24
ANNUAL REPORT 2017 Statement on Corporate Governance PRINCIPLE 5 : UPHOLD INTEGRITY OF FINANCIAL REPORTING (cont d) Assessment of Suitability and Independence of External Auditors (cont d) process, updates on the financial reporting standards, the financial statements and their audit findings. In addition, the external auditors are invited to attend the Company s AGM and are available to answer any questions from shareholders on the conduct of the statutory audit and the contents of the Annual Audited Financial Statements. During the financial year ended 31 May 2017, the AC met with the external auditors without the presence of the Management and Executive Directors. The external auditors have declared their independence to the Group and their compliance with the By-Laws of the Malaysian Institute of Accountants. Internal Control The Board is fully aware of its responsibility to safeguard and enhance the value of shareholders in the Group. Since the listing of the Company, the Board has continuously placed emphasis on the need for maintaining a sound system of the internal control. RELATIONS WITH SHAREHOLDERS AND INVESTORS Annual General Meeting Annual General Meeting ( AGM ) is the principal forum for dialogue with shareholders. At the Company s AGM, shareholders have direct access to the Board and are given opportunities to ask questions. The shareholders are encouraged to participate in the question and answer session. The Chairman of the Board in the AGM often presents to the shareholders, the Company s operations in the financial year and outlines future prospects of the Group. Further, the Group s Company Secretary could provide shareholders and investors with a channel of communication on which they can provide feedback to the Group. Queries regarding the Group may be conveyed to the Company Secretary at the Company s registered address. Investor Relations In line with the MMLR, shareholders, investors and member of public can access the company s announcements, quarterly financial results, annual reports, circulars to shareholders etc via the company s website. Corporate Disclosure Policy The company has in place a policy stipulating the basic principles and procedures of corporate disclosure in order to communicate and disseminate material information impartially to stakeholders on timely, accurate, clear and complete manner, in accordance with MMLR and other applicable laws and regulations. The policy forms part of the Company s internal rules and regulations and applies to all Directors, officers and employees of the Group and at the same time clearly expresses its commitment on transparent, quality and timely disclosure of Material Information to all stakeholders. PRINCIPLE 6 : RECOGNISE AND MANAGE RISKS Risk Management Internal control system is principally designed to cater for the business needs and manage the potential business risks of the Group. The Board acknowledges its responsibility for maintaining a sound system of risk management through internal audit controls function in the Group. These controls provide reasonable but not absolute assurance against material misstatement, loss or fraud. The Group has in place a Whistle Blowing Policy to eradicate unethical behavior in the workplace, and as avenue for employees to raise concerns in good 25
Statement on Corporate Governance PRINCIPLE 6 : RECOGNISE AND MANAGE RISKS (cont d) Risk Management (cont d) faith without fear of reprisal. The Group also has established a risk management framework to identify, evaluate and manage risks that may affect the achievement of the business objectives of the Group. The Board has delegated its authority to the AC to assist the Board in fulfilling its fiduciary responsibilities relating to system of internal control and risk management processes, corporate accounting, management and financial reporting practices of the Group. The Board has appointed an external independent internal audit firm reporting to AC, the firm provides outsources services of internal auditing which covers Governance, Risk and Control. [The rest of this page intentionally left blank] 26
ANNUAL REPORT 2017 Statement on Corporate Social Responsibility for the financial year ended 31 May 2017 CORPORATE SOCIAL RESPONSIBILITIES The Company recognises that Corporate Social Responsibility (CSR) connecting and strengthening our communities by responsibly contributing to their development and well being. Hence, CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community at large. THE COMMUNITY The Group believes that Companies live within the community and they are inter-dependent on one another. The Group is committed to provide continuous support to various activities as carried out by the charitable organisation throughout Malaysia through sponsorship of monetary contributions for those communities in need. As a part of the activities, the Company also accepts undergraduates from local Universities and Colleges to perform and complete their industrial training. FACILITY AID FOR SCHOOL CHILDREN The weight of school bags has long been a concern for parents & professionals such as musculoskeletal experts and physiotherapist. There are increasing numbers of reports on back injuries, nerve damage in neck and shoulder and subsequently affecting students to focus on study and school works due to heavy school bags. Fibon Berhad had taken part in sponsoring lockers to schools. School children will then be able to make use of these lockers to keep their books and reduce the total weight of books in the school bags. This will reduce back and nerve injuries due to carrying heavy text books and thus be better for students in the future. Academic research by the University of Salford also revealed that good storage solutions in schools contribute towards an effective learning environment. 27
Statement on Corporate Social Responsibility SCHOOL DEVELOPMENT FUNDS Fibon believes that education is the most important thing one can do to his or her life and the most powerful tool to make the world a better place. Fibon puts strong emphasis on education. From time to time, Fibon makes regular contributions to school development funds. SPORT & RECREATIONAL SPONSORSHIP Fibon sponsors to sport enthusiasts to nurture youth s interest and talents. With this token donation, we aim to encourage youth to develop their skill and open up new option for their future. 28
ANNUAL REPORT 2017 Statement on Corporate Social Responsibility DONATION TO NON-PROFIT CHARITABLE ORGANISATION Fibon makes a token of contribution to dialysis centre as part of support to their health program. Besides, we also contributed aids to the handicapped, disabled and old folk s home. We stress the importance of education and wellbeing of the orphans too by subsidising assistance to the orphanage home. AGAPE SHELTER KLUANG Agape Shelter Kluang is a welfare home for the poor and underprivileged children. It was established in the year 1990. It provides a conducive and homely environment for the unfortunate children. It is managed by a voluntary board assisted by full time staff and social volunteers. All the expenses are funded by public donations and Government annual grants. Fibon makes regular visits and contributions to the shelter home. MIRIAM HOME The Miriam Home for the aged, established in the year 1982, is located along the Kluang - Air Hitam Road. It is operated by the Canossian Sisters assisted by workers and volunteers. It provides the much-needed shelter for the poor and elderly of all races and religions who are either alone in the world or abandoned by kith and kin. The residents at this home are all senior citizens in their twilight years. Most do not have the means to support themselves. Miriam Home provides a better living environment to the needed one by physically or spiritually. Miriam Home is the place where they can spend their twilight years in comfort, interaction with other people of their age and to receive visitors as well as volunteers from non-governmental organisations who come by to cheer them up. We at Fibon Berhad, as a part of caring community, pay regular visits and make donations to the Miriam Home. 29
Statement on Corporate Social Responsibility HANDICAPPED AND DISABLE ASSOCIATION STATE OF JOHORE (KLUANG) Handicapped and Disable Association State of Johore (Kluang) is a charitable organisation for the physically and mentally disabled person of all ages, races and religions in Malaysia. It was established on the 16th July, 2008. The organisation aims at providing a shelter and home for these forgotten citizens of our society, provide them with the daily needs and neccessities, foods, clothings and medical attention. The organisation has a cook, a teacher, a nurse, day caretakers and night caretakers to look after the residents in this home. It depends fully on donations and contributions from governmental and non-governmental organisations for the daily running of the home. CHE LUAN KHOR DIALYSIS CENTRE, KLUANG Che Luan Khor Dialysis Centre (CLKDC) is a non-profit charitable organisation located in Kluang in the state of Johor. It was incorporated in Malaysia in August 1998 to provide haemodialysis services to the needy. CLKDC is equipped with the latest medical equipment for haemodialysis treatment and is managed by a group of professional personnel such as medical doctors, registered nurses and experienced technicians and assisted by approximately 200 volunteers to provide excellent treatments and care for some 75 haemodialysis patients. The centre caters to around 30 patients on daily basis. Fibon makes regular donations with the hope to ease their medical expenses. 30
ANNUAL REPORT 2017 Statement on Corporate Social Responsibility PERTUBUHAN KEBAJIKAN ANAK-ANAK YATIM DAMO, KLUANG Pertubuhan Kebajikan Anan-Anak Yatim Damo, Kluang is a non-profit welfare home providing education and a home for orphans and children from single-parent families. It has been operating for more than ten years. The centre is run by Mr. Damo with helps from volunteers. Currently orphans and children from single-parent families of different races and faiths are staying at the center. Fibon Berhad makes regular visits and contributions to the centre. [The rest of this page intentionally left blank] 31
Statement on Corporate Social Responsibility TEAM BUILDING ACTIVITY AND FAMILY DAY Fibon has a great responsibility to take our employees by treating them fairly and ethically. We organise a number of sports and exciting events to engage our employees openly, honestly and respectfully and we are committed to providing a workplace that promotes employee happiness and promotes their health and well-being. Other than that, we also offer a working environment that is respectful, and we see our employees as individuals who deserve opportunities to develop. THE ENVIRONMENT The Company recognizes the importance of environment in which the business is operated on and have placed their efforts in making it an environmental friendly place to work on. (i) Save Energy Employees are encouraged to switch off non-essential electrical machinery, equipments and appliance when not in use. (ii) Save Trees The Company has implement and practice recycling paper waste to reduce the usage of paper. (iii) Recycle of waste Waste materials were recycled back to production if they are reusable. 32