UNITED U-LI CORPORATION BERHAD
UNITED U-LI CORPORATION BERHAD [
Co mp [Company No. 200001008131 (510737-H)] a n y No. 200001008131 ( 510737-H )] A NNU L REP O RT 2020
Corporate Office Contact Website UNITED U-LI CORPORATION BERHAD Tel : (+603) 5569 5999 www.uli.com.my Annual Report [Company No. 200001008131 (510737-H)] Fax : (+603) 5569 1666 No. 33, Jalan Kartunis U1/47 Email : [email protected] 2020 Temasya Industrial Park, Seksyen U1 40150 Selangor Darul Ehsan, Malaysia Table of Contents
002 | Corporate Information
004 | 5 - Year Group Financial Highlights
005 | Profile of Directors
008 | Key Senior Management
009 | Management Discussion And Analysis
014 | Statement on Risk Management And Internal Control
019 | Sustainability Report
028 | Corporate Governance Statement
039 | Audit And Risk Management Committee Report
043 | Additional Compliance Information
044 | Financial Statements
109 | Statement By Directors
110 | Statutory Declaration
111 | Independent Auditors’ Report
115 | Properties of The Group
117 | Analysis of Shareholdings
119 | Notice of Annual General Meeting
122 | Statement Accompanying Notice of Annual General Meeting
| Proxy Form Corporate Information
SECRETARIES Koay Soo Ngoh (MAICSA 0856746) [SSM PC No. 202008000755] Foo Li Ling (MAICSA 7019557) [SSM PC No. 201908001737]
REGISTERED OFFICE 62C, Jalan SS21/62 Damansara Utama 47400 Petaling Jaya Selangor Darul Ehsan Tel No. : +(603) 7727 2806/ 7729 3337 Fax No. : +(603) 7729 3619
BOARD OF DIRECTORS
Tan Sri Dato’ Seri Utama Haji Ismail Bin Haji Omar Teow Lai Seng (Chairman) (Executive Director) (Independent Non-Executive Director) Chim Wai Khuan Tan Sri Dato’ Wira Lee Yoon Wah (Independent Non-Executive Director) (Group Managing Director/Chief Executive Officer) Shariff Bin Mohd Shah Dato’ Lee Yoon Kong (Senior Independent Non-Executive Director) (Executive Director)
COMPANY NUMBER AUDIT AND RISK MANAGEMENT 200001008131 (510737-H) COMMITTEE Chim Wai Khuan – Independent Non-Executive Director STOCK EXCHANGE LISTING [Chairman] Main Board of Tan Sri Dato’ Seri Utama Haji Ismail Bursa Malaysia Securities Berhad Bin Haji Omar Stock Code : 7133 – Independent Non-Executive Director
Shariff Bin Mohd Shah SHARE REGISTRAR – Senior Independent Non-Executive Director Boardroom Share Registrars Sdn. Bhd. 11th Floor, Menara Symphony No. 5, Jalan Prof. Khoo Kay Kim NOMINATION AND REMUNERATION Seksyen 13 COMMITTEE 46200 Petaling Jaya Tan Sri Dato’ Seri Utama Haji Ismail Selangor Bin Haji Omar Tel No. : +(603) 7890 4700 – Independent Non-Executive Director Fax No. : +(603) 7890 4670 [Chairman]
Chim Wai Khuan AUDITORS – Independent Non-Executive Director Baker Tilly Monteiro Heng PLT Chartered Accountants Shariff Bin Mohd Shah – Senior Independent Non-Executive Director
2 United U-Li Corporation Berhad Corporate Information
(Cont’d)
GROUP PRINCIPAL BANKERS MANUFACTURING PLANTS United Overseas Bank (Malaysia) Berhad Lot PT 1481, Jalan Emas 1 39-45, Jalan Othman, 46000 Petaling Jaya Kawasan Perindustrian Nilai Selangor Darul Ehsan 71800 Nilai Negeri Sembilan Darul Khusus Hong Leong Bank Berhad Lot 43 & 45, Jalan USJ 10/1G Lot 7, Jalan 6/1 Taipan Triangle, 47620 Subang Jaya Kawasan Perindustrian Seri Kembangan Selangor Darul Ehsan 43300 Seri Kembangan Selangor Darul Ehsan Ambank (M) Berhad Level 18, Menara Dion, Jalan Sultan Ismail 25 & 27 Jalan Taming Lima 50250 Kuala Lumpur Taman Taming Jaya 43300 Seri Kembangan HSBC Bank Malaysia Berhad Selangor Darul Ehsan Unit 2A & 2A-A, Jalan USJ10/18 47610 UEP Subang Jaya, Selangor Darul Ehsan Lot 5 (PT7907), Jalan Balakong 43300 Seri Kembangan Selangor Darul Ehsan SOLICITORS Lot 44, Jalan Cetak Chooi & Company + Cheang & Ariff Tasek Industrial Estate Advocates & Solicitors 31400 Ipoh, Perak Darul Ridzuan 39 Court @ Loke Mansion 273A, Jalan Medan Tuanku, 50300 Kuala Lumpur
Tay & Helen Wong BRANCH OFFICE Suite 703, Block F, Phileo Damanasara I 1 Jalan Seroja 54 9 Jalan 16/11, 46350 Petaling Jaya Taman Johor Jaya Selangor Darul Ehsan 81100 Johor Bahru Johor Darul Takzim
HEAD/MANAGEMENT OFFICE 33, Jalan Kartunis U1/47 PRODUCTS MANUFACTURED Temasya Industrial Park, Seksyen U1 Cable Support Systems 40150 Shah Alam, Selangor Darul Ehsan Cable Management Systems Tel No. : +(603) 5569 5999 Floor Distribution Systems Fax No. : +(603) 5569 4170 e-mail : [email protected] Integrated Ceiling Systems Website : www.uli.com.my Light Fittings
Annual Report 2020 3 5 - Year Group Financial Highlights
Revenue Profit Before Tax Net Profit/(Loss) (RM’000) (RM’000) (RM’000)
201,072 199,962 203,520 193,462 159,163 43,482 27,352 6,683 1,401 5,683 31,119 19,141 2,851 (1,527) 3,509
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Shareholders’ Equity Total Assets Borrowings (RM’000) (RM’000) (RM’000)
270,493 285,278 287,403 285,876 287,207 335,059 364,059 343,193 363,266 343,363 34,817 47,618 35,605 50,133 33,173
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Debt/Equity Earnings/(Loss) Per Share Net Assets Per Share (%) (sen) (RM)
23.90 27.62 19.41 27.07 19.55 21.43 13.18 1.56 (0.70) 1.61 1.86 1.96 1.32 1.31 1.32
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
RM’000 2016 2017 2018 2019 2020 RM’000 RM’000 RM’000 RM’000 RM’000 Revenue 201,072 199,962 203,520 193,462 159,163 Profit Before Tax 43,482 27,352 6,683 1,401 5,683 Net Profit/(Loss) 31,119 19,141 2,851 (1,527) 3,509 Shareholders’ Equity 270,493 285,278 287,403 285,876 287,207 Total Assets 335,059 364,059 343,193 363,266 343,363 Borrowings 34,817 47,618 35,605 50,133 33,173 Debt/Equity (%) 23.90 27.62 19.41 27.07 19.55 Earnings per Share (sen) 21.43 13.18 1.56 (0.70) 1.61 Net Assets per Share 1.86 1.96 1.32 1.31 1.32
4 United U-Li Corporation Berhad Profile of Directors
TAN SRI DATO’ SERI UTAMA HAJI ISMAIL BIN HAJI OMAR Independent Non-Executive Director I Chairman
Tan Sri Dato’ Seri Utama Haji Ismail Bin Haji Omar, 67 years old and a Malaysian male, was appointed to the Board and as a member of the Audit and Risk Management Committee on 1st August 2018. He was appointed as Chairman of the Board and Chairman of the Nomination and Remuneration Committee on 28th February 2019.
He holds a Bachelor of Law (Hons) LL.B, International Islamic University of Malaysia.
He started his career as an InvestigationO fficer in the Criminal Investigation Department (CID) of Rthe oyal Malaysian Police Force.
For the first twenty five years of his career, he was assigned to various police departments in several States in the country. Apart from criminal investigation, he also served as an Investigator in the Traffic Department, as Police Prosecutor in the magistrate courts, as an Administrator and Area Inspector and as Investigator in the Disciplinary branch of the Federal Police Headquarters in Bukit Aman.
In 1992, he was promoted to the rank of Deputy Superintendant of Police. He continued to serve at the Federal Police Headquarters in the Criminal Department, Commercial Department and Narcotics Department. In 2005, with the rank of Deputy Commissioner of Police, he was tasked to head the Selangor Police Contingent as the Chief Police Officer of the State. Having successfully served in Selangor, he was further promoted as Director of Management, with the rank of Commissioner at the Federal Police Headquarters in Bukit Aman and subsequently promoted as the Deputy Inspector General of Police in 2007.
In September 2010, the Yang Di Pertuan Agong affirmed him as the Inspector General of Police and he successfully completed his term of service in May 2013. After his brilliant career, he was again appointed by His Majesty to be the Malaysian Ambassador for France from 2013 to 2015.
He is also a Member of the Malaysia Anti-Corruption Advisory Board (ACAB).
He does not have any family relationship with any Director and/or any major shareholder of the Group and has no direct interest of share in ULC.
He has not been convicted of any offences other than traffic offences – if any – within the past five years and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. He attended all Board meetings held by the Company during the financial year ended 31st December 2020.
TAN SRI DATO’ WIRA LEE YOON WAH Group Managing Director I Chief Executive Officer
Tan Sri Dato’ Wira Lee Yoon Wah, a Malaysian male aged 61, was appointed to the Board on 21st February 2002.
He completed his secondary education in 1975 and is one of the founders of the ULC Group. He has more than 20 years experience in the electrical industry. Presently, he is in charge of the overall management and growth of the Group. He is credited for charting the growth of the Group since its inception from a small operation to the industrial concern that it is today. As the driving force behind the Group’s growth, he is also responsible for the overall business development, strategic planning as well as the business and corporate development of the Group.
He sits on the Board of all the subsidiaries of the Group. He is the brother of Dato’ Lee Yoon Kong – a major shareholder and Director of the Company – and has a direct interest of 6,492,772 shares and an indirect interest of 81,000,000 shares in ULC.
He has not been convicted of any offences other than traffic offences – if any – within the past five years and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. He attended all the Board meetings held by the Company during the financial year ended 31st December 2020.
Annual Report 2020 5 Profile Of Directors
(Cont’d)
DATO’ LEE YOON KONG Executive Director
Dato’ Lee Yoon Kong, a Malaysian male aged 60, was appointed to the Board on 21st February 2002.
He is another founder member of the ULC Group. He holds a Diploma in Electrical Engineering. Prior to joining United U-LI (M) Sdn. Bhd., a subsidiary company of ULC, he worked as an electronics technician with Amateur Photo Store Sdn. Bhd., the local agent for Akai products in Malaysia, from 1979 to 1983. He has more than 20 years experience in the electrical industry and has contributed significantly towards the growth of the Group.
Presently, he is responsible for the technical, production and manufacturing functions of the Group. He also sits on the Board of all the subsidiaries in the Group. He is the brother of Tan Sri Dato’ Wira Lee Yoon Wah – a major shareholder and Director of the Company – and has a direct interest of 5,800,869 shares and an indirect interest of 81,000,000 shares in ULC.
He has not been convicted of any offences other than traffic offences – if any – within the past five years and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. He attended all the Board meetings held by the Company during the financial year ended 31st December 2020.
TEOW LAI SENG Executive Director
Teow Lai Seng, a Malaysian male of 58 years, was appointed to the Board on 21st February 2002.
He has more than 20 years working experience in the electrical industry. He holds a Diploma in Electronics Engineering and worked as the technical and service technician with Amateur Photo Store Sdn. Bhd. prior to joining United U-LI (M) Sdn. Bhd., a subsidiary company of ULC, as the Factory Supervisor in 1982.
He was promoted to the post of Factory Manager in 1990 and is responsible for the management and production operations of the factory. He also sits on the Board of several subsidiary companies in the Group. He does not have any family relationship with any Director and/or any major shareholder of the Group and has a direct interest of 13,500 shares in ULC.
He has not been convicted of any offences other than traffic offences – if any – within the past five years and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. He attended all the Board meetings held by the Company during the financial year ended 31st December 2020.
CHIM WAI KHUAN Independent Non-Executive Director
Chim Wai Khuan, a Malaysian male aged 70, was appointed to the Board on 21st February 2002. He is the Chairman of the Audit and Risk Management Committee and a member of the Nomination and Remuneration Committee.
He is an Accountant by training and is currently a member of the Malaysian Institute of Accountants. He has vast experience in the areas of accounting, audit, tax and corporate secretarial as well as consultancy matters, having served in various capacities both in the United Kingdom and in Malaysia from 1975 to 2000. Currently, he practices as a Corporate and Management Consultant and also manages his own audit practice under the name of WKC & Co.
He also sits on the Board of several private limited companies. He does not have any family relationship with any Director and/ or any major shareholder of the Group and has a direct interest of 700,000 shares in ULC.
He has not been convicted of any offences other than traffic offences – if any – within the past five years and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. He attended all the Board meetings held by the Company during the financial year ended 31st December 2020.
6 United U-Li Corporation Berhad Profile Of Directors
(Cont’d)
SHARIFF BIN MOHD SHAH Senior Independent Non-Executive Director
Shariff bin Mohd Shah, a 71 years old Malaysian male, was appointed to the Board on 1st October 2003. He is a member of Audit and Risk Management Committee, and Nomination and Remuneration Committee.
He graduated with a Bachelor of Economics (Hons.) from University Malaya. Upon graduation, he joined the government’s Administrative and Diplomatic Service T(P D) in 1971 and was posted to the Government Staff Training Centre (INTAN) and then to the Ministry of Foreign Affairs (Wisma Putra). He left government service in 1975 to join Borneo Company (1975) Sdn. Bhd. as Marketing Executive until 1978.
He was a Marketing Director of the National Livestock Development Corporation between 1978 until 1981. He took up an appointment as Manager, Guthrie Malaysia Trading Corporation in 1983 and was the Senior General Manager of the company when he left in 1997. He has extensive experience in the international trading and marketing sectors.
He does not have any family relationship with any Director and/or any major shareholder of the Group and has a direct interest of 658,692 shares in ULC. He has not been convicted of any offences other than traffic offences – if any – within the past five years and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the financial year. He attended all the Board meetings held by the Company during the financial year ended 31st December 2020.
Annual Report 2020 7 Key Senior Management
CHOONG CHEE YEONG Group Financial Controller
Choong Chee Yeong, a Malaysian male 47 years of age, joined the Company in May 2005. He is a member of the Risk Management Committee. He is a member of the Malaysian Institute of Accountants. He began his career as an Audit Executive with a medium-sized audit firm before joining a light fittings manufacturer as an Assistant Accountant in June 2002. A year later, he was promoted to the post of Accountant. He has been the Group Financial Controller of United U-LI group of companies since 2005. He does not have any family relationship with any Director and/or any major shareholder of the Group and has no conflict of interest with the Company. He has no conviction for any offences other than traffic offences, if any, within the past five years. He has never been imposed of any public sanction or penalty by any regulatory bodies.
MOHD HANIFF HASHIM General Manager Corporate Affairs I HR
Mohd Haniff Hashim, a Malaysian male aged 59, joined the Company in March 2005. He is responsible for the corporate, management and human resource functions of the Group. He is also a member of the Risk Management, Safety and ISO Committees. He graduated with a Bachelor of Science in Industrial Chemistry from theU niversity of New South Wales, Sydney, Australia in 1984. Prior to joining United U-LI Group, he served in various senior management positions with the ICI Group of Companies in Malaysia and Singapore and has attended Senior Management programs organised by Harvard and University of Michigan Business schools. He does not have any family relationship with any Director and/or any major shareholder of the Group and has no conflict of interest with the Company. He has no conviction for any offences other than traffic offences, if any, within the past five years. He has never been imposed of any public sanction or penalty by any regulatory bodies.
LEE YOOK CHOO Group Procurement Manager
Lee Yook Choo, a Malaysian female aged 58, joined the Company in March 2005. Prior to joining the United U-LI Group, she had accumulated more than 20 years experience working with a local glass manufacturer and a steel producer. She holds a Diploma in Secretarial Studies from Stamford College. She is the younger sister of Tan Sri Dato’ Wira Lee Yoon Wah and Dato’ Lee Yoon Kong, who are Directors of the Group. She has no conflict of interest with the Company. She has no conviction for any offences other than traffic offences, if any, within the past five years. She has no public sanction or penalty imposed on her by any regulatory bodies.
AZRIL KARIM ANWAR BATCHA Plant Manager
Azril Karim, a Malaysian male aged 40, joined the company in May 2005. He graduated with Honors in Electrical and Electronics Engineering from Lincoln University, United Kingdom in 2003. He started his career in the Lighting division. Since then he has accumulated over 15 years work experience within the Group and has served particularly within the Engineering, Production and Management roles. He is a member of the Risk Management, Safety and ISO committees. He does not have any family relationship with any Director and/or any major shareholder of the Group and has no conflict of interest with the Company. He has no conviction for any offences other than traffic offences, if any, within the past five years. He has never been imposed of any public sanction or penalty by any regulatory bodies.
8 United U-Li Corporation Berhad Management Discussion and Analysis
Disclaimer
This section provides the management’s overview of the Group’s operations and financial performance for the financial year ended 31st December 2020 (FY2020). Analytical disclosures made herein were based on management information made available that may not have been specifically audited and were made to the extent that these did not compromise competitively sensitive information.T his section may also contain opinions and forward-looking views. As such, readers’ discretion is advised.
Dear valued shareholders,
Without a doubt, 2020 has been one of the most challenging years as the world faced an unprecedented and tumultuous health and economic landscape caused by the COVID-19 pandemic. The imposition of lockdown policies in many countries in response to the pandemic had negatively affected many businesses worldwide and slowed down global trade since early 2020.
At the local front, everyone was affected by the imposition of the Movement ControlO rder from 18th March 2020. Many small and medium size businesses ceased to operate, while many construction projects were remodelled or rescheduled. These invariably contributed to a decline in demand for the Group’s products. Our Group began to progressively resume business operations by end of April 2020 following the easing of restrictions imposed with industries allowed to operate.
Despite the tremendous headwinds and challenges faced, our Group succeeded in recording a modest Profit after tax improvement for financial year 2020.
OVERVIEW OF THE GROUP’S BUSINESS & OPERATIONS
For the financial year under review, the Group operated under extremely uncertain and challenging market conditions, especially during the first half of the Year, as Malaysia’s GDP contracted by 17.1% in Quarter 2 following the imposition of the Movement Control Order.
Nevertheless, we managed to navigate through these adversities by maintaining our perseverance and focus to deliver sustainable financial results to our stakeholders.T hrough consistent execution of our objectives and strategies, we are still on track to deliver on our commitments, which includes:
1. to deliver long-term profitability and sustainable growth; 2. to strengthen capacity and productivity so as to cement the Group’s position in the regional and domestic markets that had been built and sustained over the years; and 3. To promote good business ethics and corporate governance.
Since the resumption of operations in end of April 2020, the Group quickly adapted to the new normal in operating and health procedures whilst observing full compliance to Government SOPs. As demand improved when more customers were allowed to operate, we focussed on fulfilling outstanding delivery requirements whilst maintaining optimum production rate.
Annual Report 2020 9 Management Discussion and Analysis
(Cont’d)
GROUP PERFORMANCE
In FY2020, the Group experienced a 17.73% decline in revenue at RM159.16 million compared to RM193.46 million in FY2019.
Both the Group’s Cable Support System (CSS) division and Light Fittings (Lighting) division recorded decreases in revenue performance. CSS division registered a 15.87% decrease in year-on-year revenue whilst Lighting division registered a 25.66% year-on-year decrease. The decline is mainly attributed to the lower overall demand especially from both the construction and retail sectors.
On the export front, performance of the Group’s products in the regional markets were affected by OVC ID-19 related border closures. Consequently, the Group’s export revenue decreased to RM20.02 million, which contributed to 12.58% of total revenue in FY2020, compared to RM31.78 million, which contributed to 16.42% of total revenue in FY2019.
Meanwhile, the Group’s operating cost for FY2020 also experienced a decrease largely due to implementation of cost saving strategies and reduced employee costs within the Group.
Consequently, Profit BeforeT ax (PBT) for FY2020 improved by 305.70 % to RM5.68 million when compared to PBT of RM1.40 million in the previous financial year.
Correspondingly, Earnings Per Share (EPS) increased to 1.61 sen per share when compared to negative 0.7 sen per share in FY2019.
Balance Sheet
Inventories in FY2020 are established at RM58.06 million compared to RM79.11 million in FY2019, which represented a decline of 26.61%.
Meanwhile, trade receivables at RM72.54 million in FY2020 represented a 7.50% year-on-year decrease against RM78.42 million for FY2019.
Income
Total cost of sales (COS) for FY2020 was 72.51% of total revenue compared to 75.95% for FY2019, reflecting a decrease of 3.44%. Additionally, administrative expenses for FY2020 reduced toR M26.82 million compared to RM34.20 million for FY2019 largely attributed to cost saving strategies implemented.
This reduction in direct and administrative costs helped to mitigate the impact of lower revenue experienced during FY2020.
As a result, the Group’s gross profit increased to 27.49% of total revenue in FY2020 compared to 24.05% in FY2019, an improvement by 3.44%.
Human Resource
The Group maintains our commitment to capacity building and talent management to transform the Group’s capacity to a higher level in human capital management. In FY2020, our efforts in this area were curtailed due to MCO related restrictions in group based activities and upskilling programmes.
The Group recognised that it employs a significant amount of foreign labour in its workforce who are normally engaged on a three-year contract duration. Further contract renewals are subject to government approvals and policy changes. In compliance to government SOPs, the Group has completed mandatory Covid-19 swab tests for our foreign workforce and voluntary testing of most our local employees in December 2020.
Meanwhile, the Group continue to promote for a safer workplace environment in compliance to government SOPs through constant reminders and engagement with employees.
10 United U-Li Corporation Berhad Management Discussion and Analysis
(Cont’d)
GROUP PERFORMANCE (CONT’D)
Operations
The Group continues to seek improvements in its manufacturing processes to enhance quality and liberate production efficiencies. These were achieved by implementing enhancements throughout the production processes, which include
• Increased Automation
Continued efforts on automating the most labour intensive aspects of the production process, such as roll forming, spot welding, shearing and coil slitting. We also utilise industrial robots especially in welding operation to improve efficiency and effectiveness.
• Downtime Reduction
efficient downtime planning and the utilisation of high-quality consumable parts led to superior performance of our machinery. This directly contributed to an increase in production capacity to meet consumer demands.
• Waste Reduction
through continuous monitoring and tighter process controls, we constantly seek for reduction in waste generation from our operations.
Dividends
Whilst the Group maintain its premise of rewarding our shareholders, the Group did not have a dividend pay-out policy for the financial year under review. However, we concede to our obligations as a responsible corporate citizen and continue to honour the Group’s commitment to enhance shareholder value. Towards this objective, the Group had been paying good dividends in the past.
For FY2020, the Board of Directors had recommended an interim dividend of 1.0 sen amounting to a pay-out of RM2.178 million, which was paid on 4th February 2021.
SEGMENT PERFORMANCE
Cable Support System (CSS) Division
The Cable Support System (CSS) division continue to be the Group’s largest core business. Performance in the first half of the year was poor due to weak demand coming from a subdued festive period and subsequent closures from OVC ID-19 related lockdowns. By the second half of the year, business gradually recovered as more customers reopened and business conditions improved. The government’s effort to open up the economy through various fiscal programmes also helped, with the restart of various high impact development projects.
The CSS division registered a total revenue amounting toR M131.91 million for FY2020, which was a 15.87% decrease compared to RM156.80 million for FY2019. On the other hand, PBT for FY2020 soared to RM9.10 million, compared to RM3.59 million for FY2019.
The Group is confident that this division will maintain its growth momentum as the CSS business remains a core pillar to the nation’s construction industry.
Annual Report 2020 11 Management Discussion and Analysis
(Cont’d)
SEGMENT PERFORMANCE (CONT’D)
Light Fittings (Lighting) Division
For the financial year under review, the Light Fittings (Lighting) division registered a total revenueR of M27.25 million, reflecting a 25.66% decline, compared to RM36.66 million for FY2019. Overall demand for both conventional lighting as well asE L D lighting were lower in FY2020. The lighting sector remain intensely competitive, with many short term importers causing numerous brands to proliferate, resulting in compressed margins.
There was a smaller loss before tax of RM2.96 million compared to RM7.35 million for FY2019. The loss in FY2020 was also partly attributed to provisions for slow-moving inventories and impairment loss on receivables.
KEY FINANCIAL RATIOS
The key financial ratios as listed below presents the Group’s measurement on profitability, liquidity, gearing and valuation for the financial year under review.
FY2020 FY2019
Profitability Return on Equity (Net Earnings/Equity) 1.22% (0.53%)
Liquidity Current Ratio (Current Assets/Current Liabilities) 4.78 3.63
Gearing Debt to Equity (Total Liabilities/Equity) 0.20 0.27
Valuation Net Asset per Share (RM/Share) 1.32 1.31
Liquidity remains as the key area of focus for the Group. The management emphasizes on strategies to further strengthen the liquidity of the Group. The Group strived to maintain a Current Ratio of three and above, which indicates we are able to effortlessly settle our short-term obligations.T he Group’s cash position remains healthy atR M84.41 million in FY2020 compared to RM65.93 million in FY2019.
ASSETS
For the financial year under review, total assets of the Group decreased toR M343.36 million from RM363.27 million in FY2019. This is mainly attributed to decrease in Trade Receivables and Inventories.
Inventories registered a decrease at RM58.06 million from RM79.11 million in FY2019.
12 United U-Li Corporation Berhad Management Discussion and Analysis
(Cont’d)
CORPORATE SOCIAL RESPONSIBILITY
As a responsible corporate citizen, the Group fulfils its commitment to Corporate SocialR esponsibility (CSR) by integrating CSR within its daily business operations.
The Group actively promotes the 3R (Reduce, Reuse and Recycle) concept in each of our factories. Employees are encouraged to reuse excess metal by constructing storage shelves for our products. Scrap paper is often utilised to jot down notes to reduce paper wastage. Old documents and newspapers are recycled to reduce carbon footprints. Energy saving practice such as switching off lights and air conditioning system during break time and after working hours continue to be emphasised throughout all our factories.
With regards to enhancing the ergonomic aspects of staff working conditions, combined with the specialties contributed by the Light Fittings division, all the lighting within the head office, the administrative offices as well as the factories had been replaced by LED lights.
In addition, during the financial year under review, the Group continues its ongoing support for charitable organisations and sponsorship for the less fortunate.
Conservation of the environment remains as the main focus of the Group’s business responsibilities. We incorporated good manufacturing processes within our production processes at all times. All of the Group’s manufacturing facilities practice active waste reduction methods that comply with national environmental policy requirements. We also maintain good relationship with professional waste disposal organisations to properly manage our excess chemical waste.
OUTLOOK
Based on the Ministry of Finance’s (‘MoF’) Economic Outlook 2021 report, the Malaysian economy is predicted to grow between 6.5% to 7.5% in 2021 after contracting 4.5% in 2020.T he construction industry is expected to recover, as major infrastructure and affordable housing projects are revived and even accelerated to meet deadlines. Most of the growth is expected to be driven by domestic investments.
This situation bodes well for the Group’s prospects going forward.
Towards this, the Group remains focused on augmenting its competitiveness through strategic improvements in its internal processes and the delivery of quality products. These efforts has enabled the Group to weather through the challenging business arena and continue to achieve positive results.
As the saying goes ‘In every crisis, there is an opportunity’. We will be focusing on our strengths in our manufacturing capability and market understanding to capitalise on these opportunities.
We are confident that despite the soft market conditions that resulted in a minor setback in the Group’s performance during FY2020, the next financial year is poised to deliver better results.
TAN SRI DATO’ WIRA LEE YOON WAH CEO/Group Managing Director
Annual Report 2020 13 Statement on Risk Management and Internal Control
Introduction
Pursuant to Paragraph 15.26(b) of the Main Market ListingR equirements of Bursa Malaysia Securities Berhad and the Principles and Guidance provisions provided in the Malaysian Code on Corporate Governance, the Board of Directors (“Board”) is pleased to present its Statement on Risk Management and Internal Control, which has also been prepared in accordance with the “Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers”. The Malaysian Code on Corporate Governance requires the Board to establish a sound risk management framework and internal control system to safeguard shareholders’ investment and the Group’s assets.
Board of Directors’ Responsibilities
The Board recognises the importance of maintaining a sound framework of risk management and internal controls to help the Group to achieve its performance and profitability targets.T he Board also acknowledges its responsibility for the Group’s risk management and system of internal controls which covers not only financial controls but also operational and compliance controls. The risk management process and system of internal controls, by their nature, is designed to manage rather than eliminate the risk of failure to achieve business objectives and strategies. Shareholders should be aware that there are inherent limitations in any risk management process and system of internal controls. Accordingly, it can only provide reasonable assurance but not absolute assurance against material misstatement of management and financial information or against financial losses or irregularities.
Towards this end, the Audit and Risk Management Committee assists the Board in reviewing the adequacy and effectiveness of the risk management framework and internal control system, however, the Board as a whole remains responsible for all the actions of the Audit and Risk Management Committee with regards to the execution of this delegated role.
The Board also took cognizance on the key changes in the Malaysian Anti-Corruption Commission (Amendment) Act 2018, particularly on the new Corporate Liability provision under Section 17A which had been effective on 1st June 2020.T he Group has in place procedures designed to prevent associated persons from undertaking corrupt practices by adopted an Anti-Bribery and Corruption Policy which shall be reviewed annually to ensure it continues to remain relevant, appropriate and effective. The Group also has a Whistle Blowing Policy which provides an avenue for its employees and other stakeholders to report genuine concerns on acts committed by employees and/or directors arising from unethical behaviour, malpractices, illegal acts or failure to comply with regulatory requirements without fear of reprisal provided they act in good faith when reporting such concerns. Details of the Whistle Blowing Policy and Anti-Bribery and Corruption Policy are available on the Group’s website at www.uli.com.my.
Risk Management Framework
Effective and transparent risk management activities are embedded in the Company’s business practices throughout the Group. The management of risk in the Group is aimed at achieving an appropriate balance between realising opportunities for gains while minimising risks. The Group will manage its obligations and pursue opportunities that involve an acceptable degree of risks so as to achieve its operating objectives and meet the expectations of its stakeholders.
Based on the guidelines in ISO 31000 Risk Management, the core elements in the Group’s Risk Management Framework involve:
Identification of Evaluation of the business risks identified business risks
Control and management of risks in Monitoring and line with Group’s communicating of risks policies and strategies
The Audit and Risk Management Committee (“ARMC”), comprising of wholly Independent Directors, takes responsibility:
(i) to review the adequacy of and to provide reasonable assurance to the Board of the effectiveness of risk management functions of the Group; and
(ii) To ensure that the principal and requirements of managing risk are consistently adopted throughout the Group. 14 United U-Li Corporation Berhad STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
(Cont’d)
Risk Management Framework (Cont’d)
Together with ARMC, the Group’s Internal Risk Management Working Group (“IRMWG”) comprising of the Group Managing Director/Chief Executive Officer, two Executive Directors and appointed Senior Management personnel are responsible for implementing the processes for identifying, evaluating, monitoring and reporting of risks and internal control, taking appropriate and timely corrective actions as required. Whilst, the Managers from different subsidiaries and departments within the Group will, within their area of expertise and operational responsibilities, identify and evaluate critical risks faced by their departments/divisions.
The risks identified are broadly categorised under the following:
Strategic Risk Operational Risk Financial Risk Compliance Risk
• risks that affects • risks that affects • risks that affects the • risks that affects the Department the effectiveness financial position of the Department’s or Company from & efficiency of the Department or or Company’s meeting its overall the operational Company processes and vision, mission and conditions in the effort in ensuring all strategic objectives Department or applicable regulatory Company to meet its requirements are objectives complied with
During the financial year ended 31st December 2020, the following are matters which have been presented to the Audit and Risk Management Committee for deliberation:
• the critical risks such as economic environment and market conditions, failure to meet customers expectation; • status of mitigating action plans to address the critical risks identified; and • changes to the risk rating.
In 2020, the COVID-19 pandemic have severely impacted many sectors when the Movement Control Order (MCO) was imposed by the Government to prevent the spread of the pandemic. There were many closure of businesses and our Group was significantly affected as business activities were not allowed to run duringO MC .
The Board recognize the severity of this pandemic and the priority to protect the health and safety of our employees to prevent the spread of COVID-19 in the Group. In line with this priority, the Company has implemented strict safety measure as requested by the Government of Malaysia. The safety measure includes:
• conducting stringent temperature checks for all employees and visitors; • assigning employees to undertake the COVID-19 RT-PCR screening; • putting sanitizer dispensers in prominent places around the workplace; and • displaying posters promoting wearing mask and hand washing.
Internal Control
The Board places emphasis on a sound system of internal control to facilitate the effective and efficient operation of the Group’s businesses by enabling the Board and Management to respond appropriately to any significant business, operational, compliance and other risks in achieving the Group’s objectives.
Nevertheless, the Board also recognises that the system of internal control can only reduce, but cannot eliminate, the possibility of poor judgement in decision-making, human error, control processes being deliberately circumvented by employees and others, management overriding controls and the occurrence of unforeseeable circumstances. As such, the Board reiterates that the system of internal control, by its nature, can only provide reasonable but not absolute assurance against material loss or against the Group failing to achieve its objectives.
Annual Report 2020 15 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
(Cont’d)
Internal Control (Cont’d)
Key Elements of the Group’s Internal Control System
Key elements of the Group’s internal control system, which have been in place throughout the financial year under review, are as follows:
Control Environment
(i) Within the Group, there are organisational structures in place for each operating unit with clearly defined levels of authority. In addition, Management of each operating unit has clear responsibility for identifying risks affecting their unit and the overall Group’s business as a whole. They are also charged with instituting adequate procedures and internal controls to mitigate and monitor such risks on an ongoing basis.
(ii) Standard operating policies and procedures that document how transactions are captured and where internal controls are applied exist for all operating units of the Group.
(iii) Annual budgets are prepared for the coming year and these budgets are subjected to evaluation and scrutiny by the Audit and Risk Management Committee before they are recommended to the Board for approval.
(iv) the Group’s assets are adequately covered by insurance policies to ensure that the Group is insured against financial losses in the event of untoward incidences.
(v) All directors and employees of the Group are governed by a Code of Ethics upon commencement of employment or upon appointment.
Monitoring
(i) As part of the performance monitoring process, management information in the form of forecasts and quarterly management accounts and reports are provided to the Board for review and approval.
(ii) on the other hand, the Group has also put in a lot of effort in Human Resource Management in order to ensure the Group’s ability to operate in an effective and efficient manner by employing and retaining adequate competent employees possessing necessary expertise to carry out their duties and responsibilities. Performance evaluations are being practised at all levels of staff to identify performance gaps, for training needs identification and talent development.
(iii) Internal audit conducts regular reviews of operations to assess the adequacy and effectiveness of the system of internal control. Significant risk exposures and non-compliance to the policies and procedures of the Group are highlighted for management’s attention, and recommendations for improvement are given to management for consideration.T he findings of the review, along with management’s responses are deliberated by the Audit and Risk Management Committee on a quarterly basis and reported to the Board.
(iv) In addition to the internal audits, significant control issues highlighted by the external auditors as part of their statutory audits and the monitoring of compliance with ISO certification carried out by ISO auditors as well as surveillance audit by various independent consultants engaged by the Group also serve as an integral part of the Group’s internal control process.
16 United U-Li Corporation Berhad STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
(Cont’d)
Internal Control (Cont’d)
Information and Communication
(i) regular information is provided by the Management to the Board and its Committees, covering financial performance and cash flow positions.
(ii) Management information system is operational to provide management with timely and accurate information on the Group’s performance, and to assist management make effective decisions.
(iii) A Whistleblowing Policy has been established to provide an avenue for whistleblowers to communicate their concerns on matters of integrity in a confidential manner.
Internal Audit Function
The Group outsourced its internal audit function to an independent firm of consultants, who, through the Audit and Risk Management Committee, provides the Board with the assurance it requires in respect of the adequacy and effectiveness of the Group’s systems of the risk management and internal controls.
An internal audit plan in respect of financial year ended 31st December 2020 and 2021 was reviewed and approved by the Audit and Risk Management Committee prior to execution after taking into consideration existing key business risks identified by the Executive Directors and Senior Management team and the previous internal audits performed.
The internal audit function reports to the Audit andR isk Management Committee directly.T he engagement director is a Certified Internal Auditor accredited by the Institute of Internal Auditors Inc. and a Chartered Member of the Institute of Internal Auditors Malaysia. Furthermore, the entire internal audit team is totally independent. It has no involvement in the operations of the Group and is not involved in providing any form of advisory to the management of the Group.
The internal control review procedures performed by the internal audit team are guided by International Professional Practices Framework issued by The Institute of Internal Auditors Inc. and designed to understand and evaluate risks, and related controls to determine the adequacy and effectiveness of the risk and control structures and processes and also to provide recommendations for further improvement. The internal audit procedures used consist of process evaluations through interviews with relevant personnel involved, review of process flows provided and observations. Thereafter, samples are being selected and analysed during the testing of controls for the respective audit areas.
During the financial year ended 31st December 2020 and the shorter operational duration arising from the implementation of MCO, the internal audit function has conducted the following:
• a review of the risk profile of the Group; and • a follow up review on order fulfilment for the Nilai factory.
Upon the completion of the internal audit field work, internal audit reports were presented to the Audit andR isk Management Committee during its scheduled meetings. Internal audit findings and recommendations as well as management response and action plans are presented and deliberated during those meetings.
The internal audit fee incurred for the financial year ended 31st December 2020 is RM10,000.
Annual Report 2020 17 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
(Cont’d)
Conclusion
In addition to the above, the Board has received assurance from the Group Managing Director/ChiefE xecutiveO fficer,E xecutive Directors, Group Financial Controller as well as other Managers and Departmental Heads of the subsidiaries that the Group’s risk management and internal controls system are operating adequately and effectively in all material aspects. Based on this assurance, the Board is of the view that the risk management and internal control system are adequate to meet the needs of the Group in addressing financial, operational and compliance risks and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report.
Furthermore, the Board and senior management remains committed to continuously strengthen the Group’s internal controls system by taking into consideration better practices and the fast changing business environment.
Review of the Statement by External Auditors
The External Auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in the Audit and Assurance Practice Guide (“AAPG”) 3 (previously theR ecommended Practice Guide 5 (Revised 2015), Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the AnnualR eport of the Group for the financial year ended 31st December 2020, and reported to the Board that nothing has come to their attention that cause them to believe that the statement intended to be included in the Annual Report of the Group, in all material respects:
(a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Controls: Guidelines for Directors of Listed Issuers; or
(b) is factually inaccurate.
AAPG 3 does not require the External Auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Directors and management thereon.
18 United U-Li Corporation Berhad Sustainability Report
SUSTAINABILITY REPORT SCOPE OF THIS REPORT Sustainable development issues remain material to the business operations The coverage of this Report includes all of United U-LI Corporation Berhad (“ULICORP”) and we always continue to domestic operations ofU LICORP, consisting of review our sustainability approach to explore various ways in which we can its subsidiaries, of which ULICORP has direct improve our sustainability practices and performances. control and holds a majority stake. There is no operation that has been excluded in this This Sustainability Report (the “Report”) serves as a channel to communicate reporting. our initiatives in managing sustainability matters connected to the economic, environmental and social aspects of our operations.T he context In addition, there is no change in the reporting on Governance is disclosed in the Corporate Governance Overview section scope since the last reporting period. of this Annual Report and a separate Corporate Governance Report that adheres to the Malaysian Code on Corporate Governance. In this Report, The contents of this report are defined based we use the terms “sustainability” and “sustainability development” on feedback from our stakeholders and our interchangeably. assessment of various developments.
The 2020 Sustainability Report (“Report”) covering material economic, REPORTING PERIOD environmental and social (“EES”) topic supplements the sustainability disclosure in the 2020 Annual Report of ULICORP and provides a In line with the reporting period of annual comprehensive overview of the Group’s EES performance indicators. report, the reporting period covered for this report is from 1st January 2020 to 31st The Report has been prepared in reference to the Sustainability Reporting December 2020 and where applicable, Guide and Toolkits issued by Bursa Malaysia. comparative data from previous years has been included. While we seek to maintain our compliance to laws and regulations, we are becoming increasingly aware that more can be done to reduce the harmful REPORTING CYCLE impacts of our business activities. Annually This Report encompasses the following key topics: EXTERNAL ASSURANCE • Sustainability Governance; • Stakeholder Engagement; We did not seek external assurance for this • Materiality; sustainability report. We have relied on • economic Value Creation; internal verification to ensure the accuracy • environmental Value Creation; and of data. • Social Value Creation. CONTACT US We value your feedback and regard your suggestion(s) as an opportunity to learn and improve ourselves. If you have any comments and/ or suggestions on our Sustainability Report, please do not hesitate to send them to En. Mohd Haniff Hashim at [email protected].
Annual Report 2020 19 Sustainability Report
(Cont’d)
Sustainability Governance
In ULICORP, the Board of Directors (the “Board”) is the main driver in setting the sustainability strategy and ensuring that our sustainability initiatives are aligned with the Group’s vision and mission. During the financial year under review, various business units and teams have been involved in the various aspects of sustainability management. The Board is supported by the Audit and Risk Management Committee, which is responsible to monitor the progress of implementation of sustainability initiatives, based on the directions set by the Board.
The governance structure we are working towards is as listed below:
CEO/Group Managing Oversees overall sustainability management that includes strategies, progress updates Director and performance as well as to highlight relevant key issues to the Board of Directors.
Executive Committee Reviews and approves all key sustainability related matters.
Risk Management Reviews and advises on-going business and reputational risks and opportunities within United U-LI Corporation Berhad and its group of companies.
Corporate Affairs Develops community outreach and stakeholder engagement programmes.
Business Units Implement sustainable measures in their respective business and operational areas.
Human Resource Manages all aspects of the Group’s people management.
20 United U-Li Corporation Berhad Sustainability Report
(Cont’d)
Stakeholder Engagement
We see sustainability as intrinsic to what we do and acknowledged that the sustainability of our business depends on staying attuned to our stakeholders’ expectations in the context of managing the impact of our business operations across the economic, environment and social (“EES”) aspects.
Emphasis is placed on regular interactions and communications with a wide range of stakeholder groups, formally and informally. The information gathered from our stakeholder groups enable us to sketch out a more accurate picture of our impact to them, improving the way we address their expectations.
The table below shows a summary of our stakeholders and the various engagement channels we have adopted during the financial year to address their concern and expectations:
Material Sustainability Stakeholder Group Engagement Channels Matters
Board of Directors • Quarterly board meetings • revenue growth • on-going multiple engagement channels (e.g. • Philanthropic endeavours emails, meetings)
Employees • employee performance appraisals • Safety and health • on-going multiple internal engagement • Diversity and equal opportunity channels (e.g. emails, trainings, meetings) • employee welfare • Whistleblowing policy
Customers • Company website • Customer satisfaction • Customer satisfaction feedback • on-going multiple engagement channels (e.g. emails, meetings)
Suppliers • Supplier evaluation • Sustainable procurement • on-going multiple engagement channels (e.g. practice emails, meetings)
Shareholders/Investors • Company website • revenue growth • Annual general meeting • Briefings • Factory visits
Local Communities • Donations and other philanthropic contributions • Philanthropic endeavours • Waste management • energy management
Annual Report 2020 21 Sustainability Report
(Cont’d)
Materiality
As guided by Bursa Malaysia’s Sustainability Reporting Guide and Toolkits, we adopted a structured approach to identify and prioritise sustainability matters that are important to both business and stakeholders.T he outcome of materiality assessment forms the basis for developing the content of our sustainability disclosures.
In identifying sustainability matters, we have considered our operating environment and emerging global risks associated with the steel cable support systems, cable management systems, integrated ceiling systems, building materials, fluorescent light fittings and LED products.
During the financial year, a materiality discussion was convened with the key management to identify material issues that are important to ULICORP and the process has been further supported by taking into consideration changes to the risk register, feedback from stakeholders during the general meetings, internal documents, survey forms sent to the customers and publicly available documents such as press releases.
The outcome of this exercise confirmed that the material topics that formed the 10 key material sustainability matters remained valid in year 2020 as follows:
ULICORP’s STRATEGIC OBJECTIVES
To deliver long-term profitability To strengthen our capacity and To promote good business ethics and sustainable growth by productivity so as to cement and corporate governance maintaining strong emphasis our position in the regional and in sustaining the Company’s on responsible practices toward domestic markets that have competitive edge and at the the economic, environmental been built and sustained over same time, attracting, retaining and social aspects the years and replenishing talent while ensuring diversity and inclusion in the workplace
• Waste Management • Sustainable Procurement • Whistleblowing Policy • Energy Management Practice • Diversity and Equal • Safety and Health • Revenue Growth Opportunity • Philanthropic Endeavours • Customer Satisfaction • Employee Welfare
ULICORP recognise that the operations of the Company may impact upon the communities and the environment in which ULICORP operates. Hence, we are therefore pleased to communicate our initiatives in managing sustainability matters connected to the economic, environmental and social aspects of our operations.
22 United U-Li Corporation Berhad Sustainability Report
(Cont’d)
Economic Value Creation
• Sustainable Procurement Practice
We practise a transparent procurement process that is fair for all parties and committed to boosting the local economy. Therefore, we continuously prioritise working with local suppliers in our procurement decisions. In-line with this practice, ULICORP have maintained majority purchasing spent from the local market in 2020 and recorded a 6.55% increase in buying from local suppliers.
100.00%
80.00%
% 60.00% 77.35 83.90%
40.00%
20.00% % 22.65 16.10% 0.00% 2019 2020
■ Overseas ■ Local
• Revenue Growth
We believe that expanding our product offering will ultimately support our mission to deliver long-term profitability and sustainable growth to cement our position in the regional and domestic markets that have been built and sustained over the years. We constantly explore new business opportunities and technology to further meet our customers’ needs.
2020 is another challenging year for the Company with the overall Malaysian economy affected by the COVID-19 pandemic which have led to global slowdown and financial market volatility. ULICORP recorded a -17.73% decline of revenue in 2020 as illustrated below due to operation stoppages from 18th March to 24th April 2020 as a result of the Movement Control Order (MCO) implemented by the Government:
Performance 2019 2020 -5.00% -17.73%
• Customer Satisfaction
ensuring the success of our customers as well as attracting new business partners is essential to our business.T o achieve this objective, we keep track of the satisfaction levels of customers by continuously engaging with them and conducting customer satisfaction surveys to ensure we are kept abreast of our customers’ needs and wants.
The level of customer satisfaction achieved by the Company are as below:
Performance 2019 2020 89% 88%
the slight declined of customer satisfaction level by 1% in year 2020 was mainly attributed to certain late delivery instances which was caused by production disruption due to machinery relocation between factories.
Annual Report 2020 23 Sustainability Report
(Cont’d)
Economic Value Creation (Cont’d)
• Whistleblowing Policy
uLICORP is committed to developing a culture of openness and honesty in which a person who is aware of potential malpractice or misconduct is encouraged to report such matters, in good faith and without fear of reprisal and/or retaliation.
the Group’s confidential whistleblowing channel allows anyone to report misconduct byU LICORP employees, including members of our senior management and Board of Directors. Details of how to make a report are available on our corporate website at www.uli.com.my/about-u-li/governance.
uLICORP assures that all reports will be promptly investigated and treated with the highest level of confidentiality. We shall also protect the whistleblower to the extent reasonably practicable, and address any alleged or attempted acts of interference, reprisal, retaliation, threats, coercion or intimidation against any whistleblower(s).
In 2020, there was no case reported using the whistleblowing channel.
Environmental Value Creation
• Waste Management
uLICORP acknowledges the need to manage and mitigate the environmental impact of our ongoing business. As such, data has been collected to better monitor our impact on the environment as well as put in place necessary systems and procedures with the aim of reducing our carbon footprint. Currently, the waste in the manufacturing process are mainly generated from the galvanising process as a result of the chemical bath used. The waste produced by the Company includes paint, rag, coolant, acid and zinc.
The quantity of waste collected by the authorised waste collector is illustrated as below:
Year 2019 Year 2020 Waste Component Metric Tonnes (MT) Metric Tonnes (MT) Waste Acid 18.67 58.7 Paint 0.57 0.00 Zinc 22 20.1
In year 2020, ULICORP recorded a significant increase in waste acid generated due to additional requirement to process rusted semi-finished components caused by weather exposure in consequence to the production stoppages from 18th March to 24th April 2020 due to the government’s Movement Control Order (MCO). These components need to be adequately de-rusted prior to galvanising. In addition, approximately 20 % of the acid waste was also generated from maintenance works carried out in the powder spray line.
As for the waste paint, the Company has increased its efforts to recycle thereby reducing waste output. For the year 2020, the Company has yet to dispose its waste paint to the authorised waste collector.
Similarly, the slight decline in zinc waste produced compared to last year was attributed to the lower output from galvanising operations due to production stoppages from 18th March to 24th April 2020 during the OMC implemented by the Government.
Furthermore, ULICORP has implemented several initiatives to reduce waste generation such as follows:
Paper Packaging Boxes
Recycled papers are used in the Materials used by our supplier in Administrative Office to minimise manufacturing the packaging boxes for overall wastage ULICORP are made from recycled paper
24 United U-Li Corporation Berhad Sustainability Report
(Cont’d)
Environmental Value Creation (Cont’d)
• Energy Management
In ULICORP, we implemented several energy-saving measures to reduce both the energy consumption and electricity expenditure. For example, the offices throughout the Group practices energy-saving where all lights and air-conditioning have to be switched off when not in use.
In addition, we have also introduced the utilisation of piped liquid natural gas for our factory at Nilai. This not only contributed significantly towards energy conservation but is also a cost-saving initiative that reduces our carbon footprint and the impact on the immediate environment.
Electricity Consumption
Indicator for per unit production Unit 2019 2020
Group kWh/pc 1.18 0.83
Natural Gas Consumption
Indicator for per unit production Unit 2019 2020
Group mmBtu/pc 0.0065 0.0047
uLICORP recorded a slight decrease of electricity and natural gas consumption per unit due to the lower output quantity produced in year 2020 as a result of the temporary production stoppages due to MCO.
Social Value Creation
• Diversity and Equal Opportunity
We believe that creating an inclusive workplace environment that accepts and values each person’s abilities and differences presents opportunities for all employees to achieve their full potential. At ULICORP, we embrace diversity by bringing together professionals from diverse ethnic, religious, cultural backgrounds and experiences, including gender, so we may complement each other’s strengths and overcome our challenges together.
In 2020, no incident of discrimination was reported for investigation.U LICORP hope to continue maintaining a workplace of mutual respect and inclusivity as we develop in our path towards sustainability. 2019 2020 Workforce breakdown by gender Workforce breakdown by gender 81.45% 18.55% 79.80% 20.20%
■ Male ■ Female ■ Male ■ Female
2019 2020 Workforce breakdown by ethnicity Workforce breakdown by ethnicity 61.12% 20.60% 14.32% 3.96% 59.59% 20.20% 16.13% 4.07%
■ Malay ■ Chinese ■ Indian ■ Others ■ Malay ■ Chinese ■ Indian ■ Others Annual Report 2020 25 Sustainability Report
(Cont’d)
Social Value Creation (Cont’d)
• Employee Welfare
We understand that our employees need meaningful career development and skills improvement as well as competitive compensation and benefits to support their families and cope with the rising cost of living. To do so, our management regularly reviews compensation and benefits packages, ensures equal opportunities in the workplace, develops skills and retains the best talents.
uLICORP complies with the local statutory requirements on wages and benefits such as minimum wages order, employees provident fund, employees social security and leaves provision. In relation to training our employees to build the skills necessary to perform their work safely, ethically and efficiently, each employee received an average of 4 training hours in 2020. The training takes the form of on-the-job training and classroom training. The decline in the training hours provided to the employees was due to limitations and restrictions imposed during the OMC .
20
15
10 16 5 4 0 2019 2020
■ Average training hours per employee
• Safety and Health
At ULICORP, safety and health is one of our significant material issues due to the nature of our business. We are dedicated to protecting our people from harm and as a result, ULICORP have implemented a Safety and Health Policy.
This Policy aim to set out that:
Ø uLICORP is responsible for the administration of safety and health program to improve the safety of workplace. Suitable and continuous training programs will be arranged for all employees so that they will develop a safe working culture as well as understand the importance of having a safe and healthy working environment;
Ø it is the responsibility of every employee to give his/her full commitment towards achieving a safe and healthy working environment; and
Ø full cooperation and commitment from the management and employees will lead to a safe and healthy working environment and achieve the target towards zero accident.
Type of Incident 2019 2020 Fatality 0 0
Major Injury 0 0
Minor Injury 23 18
As a result of our strict compliance to safety standards and requirements, we are pleased to report that ULICORP have managed to maintain zero fatalities and major injury. For year 2020,U LICORP recorded a slight decrease of minor injury cases as the Company continued its efforts to promote workplace safety and health and ensuring that workers complied with the Company’s safety policies and procedures. Safety briefings have been carried out to continuously educate the workers on workplace safety and health matters.
26 United U-Li Corporation Berhad Sustainability Report
(Cont’d)
Social Value Creation (Cont’d)
• Safety and Health (Cont’d)
Besides the above, ULICORP have also put in place the following safety measures to prevent the spread of COVID-19 at the work place:
o conducting stringent temperature checks for all employees and visitors; o assigning employees to undertake the COVID-19 RT-PCR screening; o putting sanitizer dispensers in prominent places around the workplace; and o displaying posters promoting wearing of masks and hand washing.
• Philanthropic Endeavours
uLICORP strives to engage with the community, not only in efforts to build our reputation and business relationships, but also to give back to the society, especially in improving the livelihoods of women, children and families.
We make charitable contributions to support their causes and the table below displays a summary of contribution make by the Company:
Organisation Mission of the organisation 2019 2020
The Budimas Provide guidance and funding in support of RM10,000 – Charitable Foundation the welfare and well-being of the orphans and underprivileged children in Malaysia.
Persatuan Bencana Assists victims of natural disasters in Kedah. RM14,800 – Alam Negeri Kedah
Mykasih Foundation Provides food aid, health awareness and financial RM3,000 – literacy programmes, children’s education, and skills training programmes to less fortunate Malaysians.
Kriyalakshmi Mandir Service activities carried out includes dana feeding, RM13,000 RM10,000 Shree Sai Gurukul educational supports to the needy, monthly (KMSSG) Charitable provision supplies to underprivileged families, dana Society projects in rural areas (Grama Seva), hospital and home visits and feeding and providing free tuition classes.
Kelab Kiwanis Bandar Cater to the educational and personal development RM3,000 – Sunway needs of children and youth who are disadvantaged or face special challenges.
Persatuan Belia Non-governmental organization that coordinates RM3,000 – Xiang Lian the youth and students’ associations in the country. Malaysia Cawangan Negeri Selangor
Kelab Polis Shah Alam To promote, support and participate in community RM10,000 RM10,000 and/or police crime prevention and public safety projects and other activities of common interest.
Dr Jessie Chung Cancer Fund To help cancer patients. – RM1,000
Continuous effort is the key to improving our economic, environmental and social risks and opportunities to strengthen our sustainability efforts. We will continue to build on our efforts and are confident that our perseverance will help us realise our vision for sustainability.
This Sustainability Report was approved by the Board on 8th April 2021.
Annual Report 2020 27 Corporate Governance Statement
The Board of Directors (“Board”) of United U-LI Corporation Berhad (“ULICORP” or “the Company”) is committed to ensure that good corporate governance is practiced throughout the Group as a fundamental part of discharging its responsibilities and for the purpose of safeguarding the interest of its shareholders and stakeholders as well as the assets of the Company and its subsidiaries (“the Group”).
The Board recognises the growing level of expectation by regulators and stakeholders for increased corporate governance and, accordingly has taken necessary steps to ensure strong governance practices are adopted throughout the Group.
The ensuing paragraphs in this Corporate Governance Overview Statement (“Overview Statement”) describe the extent of how the Group has applied and complied with the Principles and Practices of the Code for the financial year ended 31st December 2020 (“FY2020”) and up to the date of this Overview Statement. This Overview Statement is made pursuant to paragraph 15.25(1) of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) with guidance drawn from the Malaysian Code on Corporate Governance Guide (“MCCG”) issued by Securities Commission of Malaysia.
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS
PART I: BOARD RESPONSIBILITIES
1. Leadership
1.1 Strategic Aims, Values and Standards
the Board leads and controls the Group. As a collective body, the Board assumes the overall responsibility for the Group: determining strategic direction, overseeing the proper conduct of the Group’s business, identifying principal risks and ensuring the implementation of systems to manage risks, succession planning, developing investor relations program, reviewing the adequacy and integrity of the Group’s internal control systems and management information systems.
As part of the initiative to ensure effective discharge of its leadership role, specific powers are delegated by the Board to the Board Committees, the ChiefE xecutiveO fficer (“CEO”) and the Management as outlined in the Board Charter.
the Board Committees refer to the Audit and Risk Management Committee (“ARMC”) and Nomination and Remuneration Committee (“NRC”). These Committees are entrusted with the responsibility to oversee specific aspects of the Company’s affairs in accordance with their respectiveT erms of Reference (“TOR”) as approved by the Board, with the aim of improving operational and general management efficiencies.T he decision on whether to act on recommendations by the Board Committees lies with the Board.T he TOR of the Board Committees are published on the corporate website at www.uli.com.my.
notwithstanding the delegation of specific powers, the Board retains full responsibility for the direction and control of the Company and the Group. The ultimate responsibility for decision-making on all matters lies with the Board. The roles and responsibilities of the Board are clearly set out in the Board Charter and is available on the Company’s website at www.uli.com.my.
1.2 Chairman of the Board
the Chairman, who holds an independent position, provides leadership and governance on the Board. He also creates a conducive environment geared towards building and growing Directors’ oversight and effectiveness and ensure that appropriate issues are discussed by the Board accordingly.
28 United U-Li Corporation Berhad CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont’d)
PART I: BOARD RESPONSIBILITIES (cont’d)
1. Leadership (Cont’d)
1.2 Chairman of the Board (Cont’d)
the Chairman is responsible for leadership of the Board in ensuring the effectiveness of all aspects of its role.T he Chairman is responsible for:
i. leading the Board in setting the values and standards of the Company; ii. maintaining a relationship of trust with and between the Executive and Non-Executive Directors; iii. ensuring the provision of accurate, timely and clear information to members of the Board; iv. ensuring effective communication with shareholders and relevant stakeholders; v. arranging regular evaluation of the performance of the Board, its Committees and individual Directors; vi. facilitating the effective contributions ofNon-Executive Directors and ensuring constructive relations be maintained between Executive and Non-Executive Directors; and vii. facilitating the ongoing development of all Directors.
The Chairman also ensures that no member dominates the discussion and that appropriate discussions take place and that relevant opinions among Board members are forthcoming. Other roles of the Chairman include maintaining regular and close dialogue with the CEO over operational matters and seeking opinion of fellow Board members over any matters that give cause for major concerns.
1.3 Separation of the Position of Chairman and the Chief Executive Officer (CEO)
the position of Chairman and CEO are held by different individuals. There is a clear and separate division of responsibility in the roles and duties of the Chairman and CEO.
Tan Sri Dato’ Wira Lee Yoon Wah is the Group CEO while Tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar held the Chairmanship in 2020. The CEO leads the management and is responsible for the day-to-day business and operational management of the Group. The CEO has overall responsibilities over the daily conduct of operating units, human resource management with respect to key positions in the Group’s hierarchy, financial management and business affairs as well as organisational effectiveness and implementation of Board policies and strategies.
the CEO also ensures that the Group’s corporate identity, products and services are of high standard and reflective of market environment as well as to ensure that business practices are in compliance with governmental regulations. At each scheduled Board meeting, the CEO will brief on the performance and activities of the Group and specific proposals for capital expenditure, acquisition and disposals, if any.
1.4 Qualified and Competent Company Secretaries
the Board is supported by Company Secretaries who are competent, qualified and capable of providing needful support to the Board in discharging its fiduciary duties.
the Company Secretaries, or their assistant, are present at all meetings to record deliberation, issues discussed and conclusions in discharging their duties and responsibilities and also provide advice in relation to relevant guides and legislations. Other roles of the Company Secretaries include coordinating the preparation of Board papers with management, ensure Board procedures and applicable rules are observed and maintaining records of the Board as well as provide timely dissemination of information relevant to the Directors’ roles and functions and keeping them updated on evolving regulatory requirements.
Annual Report 2020 29 CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont’d)
PART I: BOARD RESPONSIBILITIES (cont’d)
1. Leadership (Cont’d)
1.5 Access to Information and Advice
The Board has unhindered access to the advice and services of the Company Secretaries who are responsible for ensuring that all Board procedures are followed and that applicable rules and regulations are complied with.T he Company Secretaries also act as the Secretaries for most of the Board Committees.
All Directors also have access to material information within the Group and may seek the advice of management on matters under discussion or request further information on the Group’s business activities.
the Board of Directors is satisfied that it is supplied on a timely basis. The information is supplied in a form and of a quality sufficient to enable the Board to discharge its duties.T he said information includes, amongst others, the performance report of the Group and major operational, financial and corporate issues.T he meeting agenda and board papers for consideration are distributed in advance before each meeting to ensure that Directors have sufficient time to study them, be properly prepared for discussion and decision-making and/or solicit further explanation and information, where necessary so that deliberation at Board meetings are focused and constructive.
2. Demarcation of Responsibilities
2.1 Board Charter
the Board Charter provides a reference for Directors in relation to the Board’s role, powers, duties and functions. The TORs have been reviewed and where necessary, revised to enhance governance practices in line with the Code and the Listing Requirements. Other policies will be reviewed from time to time to ensure its relevance. The Board Charter has been reviewed and affirmed on 19th November 2020.
3. Good Business Conduct and Corporate Culture
3.1 Code of Ethics and Conduct
there is a Conduct and Ethics Policy (“the Policy”) in place to guide the desired standard of behavior from all staff. The Policy covers, among others, general employment terms and conditions, commitment to business partners and shareholders, community involvement and environmental commitment. The policy was formalized on 10 April 2019, and a copy of the policy is available for viewing on the corporate website.
3.2 Whistleblowing Policy
there is a Whistleblowing Policy in place. All malpractices or wrongdoings reported by the whistleblower are to be directed to the ARMC Chairman. The Whistleblowing Policy is published on the corporate website.
4. Board Objectivity
4.1 Board Composition
the Board presently comprised six (6) members consisting of three (3)E xecutive Directors and three (3) Independent Non-Executive Directors.
the composition and size of the Board is well-balanced with an effective mix Eof xecutive Directors and Independent Non-Executive Directors with the right mix of skills and experience. This balance enables the Board to provide clear and effective leadership to the Group and facilitate the Board in making informed and critical decisions on many aspects of the Group’s strategies and performances. The Board structure also ensures that no individual or group of individuals dominates the Board’s decision making process.
30 United U-Li Corporation Berhad CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont’d)
PART I: BOARD RESPONSIBILITIES (cont’d)
4. Board Objectivity (Cont’d)
4.1 Board Composition (Cont’d)
the Executive Directors who have good knowledge of the business are responsible for implementing corporate strategies and policies as well as charged with the management of the day-to-day operations of the business. The Independent Non-Executive Directors play a pivotal role in corporate accountability. The Independent Non-Executive Directors are independent of management and free from any business relationship which could materially interfere with the exercise of their judgement or the ability to act in the best interests of the Group and of the minority shareholders. The presence of the Independent Non-Executive Directors are essential in providing the Group with a wider general experience of strategy formulation, unbiased and independent opinion, advice, judgement and objective view of the performance of management as well as professionalism to ensure that adequate systems are used to safeguard the interest of the Group, minority shareholders and stakeholders of the Group.
the Board has identified Shariff bin Mohd Shah as the Senior Independent Non-Executive Director to whom concerns may be conveyed where it could be inappropriate for the concerns to be dealt with by the Chairman and Group Managing Director. The Senior Independent Non-Executive Director may be contacted at Tel: +603-5569 5999.
the composition and size of the Board are reviewed from time to time to ensure its appropriateness.T he Board is satisfied with its current composition which comprises a balanced mix of skills, knowledge and experience in the business and management fields that are relevant to enable the Board to carry out its responsibilities in an effective and efficient manner.
4.2 Tenure of Independent Director
The Board is mindful of concerns related to the long tenure of Independent Directors and has implemented a nine (9) years limit policy for Independent Directors. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to obtaining shareholders’ approval at the Company’s Annual General Meeting (“AGM”) to continue serving.
4.3 Policy on Tenure of Independent Director
The TOR of the NRC provides that the tenure of its Independent Directors shall be nine (9) years. In the event the Board intends to retain a Director as an Independent Directors after the latter has served a cumulative or consecutive term of nine (9) years, the Board will justify the decision and seek shareholders’ approval at the Company’s AGM.
4.4 Diverse Board and Senior Management Team
the Board is supportive of diversity on the Board and in its Senior Management team. Appointment of members of the Board and Senior Management team is based on objective criteria, merit and also due regard for diversity in experience, skills set, age and cultural background.
the Directors and Senior Management, with their diverse background and professional specialisation, collectively, bring with them a wealth of experience and expertise in all areas of management and commercial acumen.
4.5 Gender Diversity
the Board is supportive of gender diversity in the Board and Senior Management team. However, the Board collectively opine that there was no necessity to adopt a formal gender diversity policy as the Group is committed to provide fair and equal opportunities and promoting diversity internally.
4.6 Diverse Sources for New Candidate(s) for Board Appointment
When sourcing for new Board appointments, the Board has utilised a varied approach and sources for potential candidates. Annual Report 2020 31 CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont’d)
PART I: BOARD RESPONSIBILITIES (cont’d)
5. Overall Effectiveness of the Board and Individual Directors
5.1 Objective Annual Evaluation
the Constitution of the Company provides that an election of Directors shall take place each year and, at the AGM, one-third of the Directors for the time being or, if their number is not three (3) or a multiple of three (3), then the number nearest to one-third shall retire from office and be eligible for re-election.
All the Directors shall retire from office once in at least three (3) years but shall be eligible for re-election. The Directors to retire in each year shall be those who have been longest in office since their last election, but as between persons who became Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot. A retiring Director is eligible for re-election. This provides an opportunity for shareholders to renew their mandates. The re-election of each Director is voted on separately.
the Director who is subject to re-election and/or re-appointment at next AGM is assessed by the NRC before recommendation is made to the Board and shareholders for re-election and/or re-appointment. Appropriate assessment and recommendation by the NRC is based on the annual assessment conducted.
the Company Secretaries will ensure that all appointments are properly effected with the necessary legal and regulatory obligations duly met.
5.2 Board Meetings
to ensure effective management of the Group, Board meetings are regularly convened during the year, at quarterly intervals or as and when necessary. During the financial year, six (6) Board meetings took place as follows :
Date of Meeting
1/2020 – 27th February 2020 2/2020 – 3rd June 2020 3/2020 – 24th June 2020 4/2020 – 27th August 2020 5/2020 – 19th November 2020 6/2020 – 17th December 2020
Name of Director No. of Meetings Attended Tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar 6/6 Tan Sri Dato’ Wira Lee Yoon Wah 6/6 Dato’ Lee Yoon Kong 6/6 Teow Lai Seng 6/6 Shariff bin Mohd Shah 6/6 Chim Wai Khuan 6/6
Management personnel and external consultants are also invited to attend the Board meetings as and when required in order to present and advise the members with information and clarification on certain meeting agenda item(s) to facilitate informed decision-making.
the Board is satisfied with the time commitment given by the Directors at all meetings convened. All of the Directors do not hold more than five (5) directorships as required under paragraph 15.06 of the Listing Requirements of Bursa Securities.
32 United U-Li Corporation Berhad CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont’d)
PART I: BOARD RESPONSIBILITIES (cont’d)
5. Overall Effectiveness of the Board and Individual Directors (Cont’d)
5.3 Director’s Training
the Board is cognisant of the need to ensure that its members undergo continuous training to enhance their knowledge, expertise and professionalism in discharging their duties.T he Directors have attended the Mandatory Accreditation Programme (“MAP”) and from time to time the ContinuingE ducation Program (“CEP”) prescribed by Bursa Securities.
the Directors have attended the MAP and from time to time theE C P prescribed by the Bursa Securities.
Particulars of the programme attended by Board members during the financial year ended 31st December 2020 is as follows:-
Date Topic of Seminar / Talk Name of Director Attended 10-12-2020 Key Updates 2020 : Directives • tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar & Amendments to Listing • tan Sri Dato’ Wira Lee Yoon Wah Requirements • Dato’ Lee Yoon Kong • teow Lai Seng • Shariff bin Mohd Shah • Chim Wai Khuan 22-12-2020 MIA Webinar Series: • Chim Wai Khuan Mastering the Principles of Deferred Taxation – From Fundamental to Complex Transactions and Events 24-12-2020 MIA Webinar Series: • Chim Wai Khuan COVID-19: Impact on Financial Instruments
the Directors will continue to attend seminars and other relevant training programmes to ensure that they are kept abreast with developments on a continuous basis in compliance with the Listing Requirements of Bursa Securities.
PART II: REMUNERATION
6. Level and Composition of Remuneration
6.1 Remuneration Policy
the objective of the Group’sR emuneration Policy is to attract and retain the Directors required to lead and control the Group effectively. In the case of theE xecutive Board members, the components of the remuneration package are linked to individual and corporate performance. As for Non-Executive Directors, the level of remuneration is reflective of their experience and level of responsibilities and the onerous challenges in discharging their fiduciary duties.
During the year, the Remuneration Committee considered the remuneration package for the executive Board members as well as Directors’ fees and benefits payable for all Directors. The Directors’ fees reflect the broad based roles and responsibilities as well as time commitment to the Group that go with Board membership.
the Directors’ fees and benefits payable to the Directors are reviewed annually. The executive Board members played no part in deciding their own remuneration and the respective Board members abstained from all discussions and decisions pertaining to their remuneration.
Annual Report 2020 33 CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont’d)
PART II: REMUNERATION (cont’d)
6. Level and Composition of Remuneration (Cont’d)
6.2 Nomination and Remuneration Committee (“NRC”)
In FY2020, the members of the NRC are as follows:
1. tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar – Independent Non-Executive Chairman [Chairman] 2. Chim Wai Khuan – Independent Non-Executive Director 3. Shariff bin Mohd Shah – Senior Independent Non-Executive Director
There were two (2) meetings held in FY2020 and all committee members were present in each meeting.
The TOR of the NRC are available on the corporate website at www.uli.com.my.
the main activities carried out by the Nomination Committee during the financial year ended 31st December 2020 are set out below:
1) considered and reviewed suitable candidates to the Board of the Group, including committees of the Board; 2) considered and reviewed the mix of skills, experience and other qualities, including core competencies of Non-Executive Directors, on an annual basis; 3) assessed the Directors on an on-going basis and the effectiveness of the Board as a whole, the committees of the Board and the contribution of each individual Director, including IndependentN on-Executive Directors as well as Chief Executive Officer; and 4) considered and reviewed the retirement of Directors, the Directors who are eligible for re-election and the retention of Directors who have served beyond nine (9) years as Independent Directors, and to assess their eligibility for re-election or retention prior to recommending to the Board the candidates for re-election or retention.
The NRC upon its annual assessment carried out for FY2020 was satisfied that:
• the size and composition of the Company is optimum with an appropriate mix of knowledge, skills, attributes and core competencies;
• the Board has been able to discharge its duties professionally and effectively in consideration of the scale and breadth of the operations;
• All the Directors continue to uphold the highest governance standards in their conduct and that of the Board;
• All the Members of the Board are well qualified to hold their positions as Directors of the Company in view of their respective academic and professional qualifications, depth of knowledge, skills and experience as well as their personal qualities;
• the Independent Directors comply with the definition of Independent Directors as stated in the Main Market ListingR equirements of Bursa Malaysia Securities Berhad and therefore would be able to function as a check and balance as well as bring an element of objectivity to the Board of Directors; and
• the Independent Non-Executive Directors who have served as IndependentN on-Executive Directors of the Company for a cumulative term of more than nine (9) years respectively do not in any way interfere with their exercise of objective judgement or their ability to act in the best interest of the Company.
34 United U-Li Corporation Berhad CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont’d) PART II: REMUNERATION (cont’d)
7. Remuneration of Directors and Senior Management
7.1 Details of Directors’ Remuneration
the fees and benefits payable for the Directors are endorsed by the Board for approval by the shareholders at the AGM prior to payment.
the number of Directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:
Number of Directors 2020 2019 Executive Directors RM1,000,000 and below 1 1 RM1,000,001- RM2,000,000 2 – RM2,000,001- RM3,000,000 – 2 RM3,000,001- RM4,000,000 – –
Non-Executive Directors: RM50,000 and below 1 1 RM50,001- rm100,000 2 2 RM100,001- RM150,000 – –
Given the confidential and commercial sensitivities associated with remuneration matters and the highly competitive human resource environment and the importance of ensuring stability and continuity of business operations with a competent and experienced Management team in place, the Board takes the view that there is no necessity for the Group to disclose the remuneration of the Company’s Senior Management personnel who are not Directors or the CEO.
PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT PART I: AUDIT AND RISK MANAGEMENT COMMITTEE (“ARMC”)
8. Effective and Independent Audit and Risk Management Committee
8.1 Chairman of the Audit and Risk Management Committee
Chim Wai Khuan, an Independent Non-Executive Director, is the Chairman of the ARMC. Details on the composition and activities of the ARMC are outlined under the ARMC Report in this Annual Report.
8.2 Policy requiring former key audit partner to observe 2-years cooling off period
None of the members of the Board was former key audit partners. No former key audit partner was appointed to the ARMC. As such, there was no need to establish such policy presently. The policy will be established when the need arises in future.
8.3 Policy and procedures to assess the suitability, objectivity and independence of the External Auditor
The ARMC undertakes an annual assessment of the suitability and independence of the external auditors and is satisfied with the technical competency, quality of audit engagement and independence of the external auditors. At least once a year and whenever necessary, the ARMC meets with the external auditors without the presence of executive Board members or management personnel, to allow the Committee and the external auditors to exchange independent views on matters which require the ARMC’s attention. During the year, the ARMC met up twice with the external auditors.
The non-audit service provided by the external auditors during FY2020 was only to review the Statement on Risk Management and Internal Control. The external auditors have confirmed to the ARMC that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the professional and regulatory requirements.
Annual Report 2020 35 CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D) PART I: AUDIT AND RISK MANAGEMENT COMMITTEE (“ARMC”) (CONT’D)
8. Effective and Independent Audit and Risk Management Committee (Cont’d)
8.4 Composition of the ARMC
Members of the ARMC consist of:
1. Chim Wai Khuan – Independent Non-Executive Director [Chairman] 2. tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar – Independent Non-Executive Director 3. Shariff bin Mohd Shah – Senior Independent Non-Executive Director
The ARMC comprised solely of Independent Non-Executive Directors.
8.5 Diversity in the skills of the ARMC
the ARMC currently comprises members with professional experience in financial, business and economic environment. All members are financially literate and are able to read, interpret and understand the financial statements. The diversity in skills set coupled with their financial literacy gave the ARMC the ability to effectively discharge their roles and responsibilities.
PART II: RISK MANAGEMENT & INTERNAL CONTROL FRAMEWORK
9. Effective Risk Management and Internal Control
9.1 Risk management and internal control framework
The Board acknowledges its overall responsibility of maintaining a sound system of risk management and internal control, and of reviewing its adequacy and effectiveness.T he Board has delegated the responsibility of reviewing the adequacy and effectiveness of the risk management and internal control systems to the ARMC.
The Statement on Risk Management and Internal Control in this Annual Report provides an overview of internal controls and risk management within the Group. Continuous reviews are carried out by the internal audit function, management and the Internal Risk Management Working Group (“IRMWG”) to identify, evaluate, monitor and manage significant risks affecting the business and ensure that adequate and effective controls are in place.T he findings of the internal audit function are reported to the ARMC regularly.
9.2 Features and adequacy of risk management and internal control framework
The Statement on Risk Management and Internal Control in this Annual Report provides an overview of internal controls and risk management within the Group.
9.3 Establishment of a Risk Management Committee
A management level committee, called the InternalR isk Management Working Group (“IRMWG”) was established. This IRMWG reports on a quarterly basis to the ARMC and the Board.
36 United U-Li Corporation Berhad CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)
PART II: RISK MANAGEMENT & INTERNAL CONTROL FRAMEWORK (CONT’D)
10. Effective Governance, Risk Management and Internal Control
10.1 Effectiveness of the internal audit function
The ARMC is satisfied that the Company has an effective and function independent internal audit function.
10.2 Disclosure on the internal audit function
the internal audit function is independent of the operations of the Group and is outsourced to a competent consulting firm, GovernAce Advisory Sdn. Bhd., which is sufficiently resourced and is a member of the Institute of the Internal Auditors Malaysia to provide the services that meet with the Group’s required service level. The service provider has been able to provide reasonable assurance that the Group’s system of internal control and risk management is satisfactory and is operating effectively.
The internal auditors adopt a risk-based approach towards the planning and conduct of their audits, and this is consistent with the Group’s approach in designing, implementing and monitoring its internal control system.
the activities of the internal auditors during the financial period are set out in the Statement Ron isk Management and Internal Control in this Annual Report.
PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS
PART I: COMMUNICATION WITH STAKEHOLDERS
11. Continuous Communication between Company and Stakeholders
11.1 Effective, transparent and regular communication with stakeholders
the Group recognises the value of transparent, consistent and coherent communications with the investment community consistent with commercial confidentiality and regulatory considerations. The Group aims to build long-term relationships with shareholders and potential investors through appropriate channels for disclosure of information.
The annual reports, press releases, quarterly results and any announcements on material corporate exercises are the primary modes of disseminating information on the Group’s business activities and financial performance. Investors are provided with sufficient business, operational and financial information on the Group to enable them to make informed investment decisions. All announcements are reviewed and endorsed by the Board prior to release to the public through Bursa Securities. In addition, all financial related announcements are pre-approved by the CEO before submitting to the ARMC and Board for approval.
the CEO is the designated spokesperson for all matters related to the Group and dedicated personnel are tasked to prepare and verify material information for timely disclosure upon approval by the Board.
the Group maintains a website at www.uli.com.my for shareholders and the public to access information on, amongst others, the Group’s background and products, financial performance and updates on its awards and recognitions and promotions. Stakeholders can, at any time seek clarification or raise queries through the corporate website. Primary contact details are set out on the Group’s website.
11.2 Integrated Reporting
Integrated reporting is not applicable to the Group presently as the Company does not fall within the definition of “Large Companies”.
Annual Report 2020 37 CORPORATE GOVERNANCE STATEMENT
(Cont’d)
PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS (CONT’D)
PART II: CONDUCT OF GENERAL MEETINGS
12. Shareholder Participation at General Meetings
12.1 Notice for Annual General Meeting (‘‘AGM’’)
the Board encourages shareholders’ participation and as such, the AGM is an important event as the Board is given the opportunity to have a dialogue with the shareholders following presentation of annual audited financial results and to address any questions that may arise.T he Directors, Company Secretaries and the Group’s external auditors are available to respond to the queries raised. In the event that an answer cannot be readily given at the meeting, the Chairman will undertake to provide a written reply to the shareholder.
the notice of the 20th AGM held in 2020 was sent more than twenty-eight (28) days before the meeting date to shareholders and was published in a major local newspaper. Items of special business included in the Notice of AGM was accompanied by an explanation of the proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting.
All suggestions and comments put forth by shareholders were noted by the Board for consideration.T he Directors attended the AGM to answer any questions that may arise as shareholders may seek more information than what is available in the Annual Report and/or circulars.
All the resolutions set out in theN otice for the 20th AGM were put to vote by poll with the outcome announced to Bursa Securities on the same day.T he Board is satisfied with the current program at AGM and there have been no major contentious issues noted with shareholders/investors.
the notice for the upcoming 21st AGM in 2021 has been sent to all shareholders and announced to Bursa Securities on 30th April 2021 to enable shareholders to make adequate preparation.
12.2 Directors attendance at General Meetings
All Directors attended the 20th AGM held on 27th August 2020.
12.3 Leveraging on technology for voting in absentia and remote shareholders’ participation
Poll voting was implemented at the last AGM held on 27th August 2020.
As of now, the Company encourages the participation of shareholders through the issuance of proxies when there is an indication that shareholders are unable to attend and vote in person at general meetings and maintain the same location for the AGM for the past years.
Statement on Compliance
The Board will continue to strive for sound standards of corporate governance throughout the Group. Presently, the Board is of the view that the Company has in all material aspects satisfactorily complied with the principles and practices set out in the Code, except for the departures set out in the CG Report.
38 United U-Li Corporation Berhad Audit and Risk Management Committee Report
MEMBERS
Chim Wai Khuan (Independent Non-Executive Director) – Chairman Tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar (Independent Non-Executive Director) Shariff bin Mohd Shah (Senior Independent Non-Executive Director)
TERMS OF REFERENCE
Introduction / Key Objective
This Terms of Reference of Audit and Risk Management Committee (“the Committee”) is established pursuant to the Listing Requirements and approved by the Board
The purpose of the Committee is to assist the Board in ensuring the effective governance over the appropriateness of the financial reporting of United U-LI Corporation Berhad and its subsidiary companies (“the Group”), including the adequacy of related disclosures, the performance of both the internal audit function and the external auditor, and the oversight over the Group’s systems of internal and external controls, business risks and related compliance activities.
Membership
1) the Committee shall be appointed by the Board of Directors amongst the Directors and shall consist of not less than three (3) members, all of whom must be Non-Executive Directors, with majority of them being independent.
2) the Chairman who shall be elected by the Committee must be an Independent Non-Executive Director.
3) the Chairman of the Committee is not the Chairman of the Board to enable the Committee Chairman provide full commitment and devote adequate time to matters under the responsibilities of the Committee and to exercise independent judgement.
4) no alternate Director shall be appointed as a member of the Committee.
5) the Board shall at all times ensure that at least one (1) member of the Committee: I. must be a member of the Malaysian Institute of Accountants (“MIA”); or II. if he is not a member of MIA, he must have at least three (3) years working experience and: he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or III. fulfils such other requirements as prescribed or approved by Bursa Securities.
6) the company secretary shall act as secretary of the Committee.
7) Any former key audit partner of the Group shall observe a cooling-off period of at least two (2) years before being appointed as a member of the Committee.
8) In the event a member of the Committee resigns, dies of for any other reason ceases to be a member, resulting in the above-mentioned Committee membership condition not being fulfilled, the Board shall within three (3) months of that event appoint such member of new members as may be necessary to fulfill the requirements.
Meetings and Reporting Procedures
1) the Committee shall convene meeting at least four (4) times a year, or more frequently as the Committee considers necessary. The Chairman of the Committee, or the secretary on the requisition of any members, the head of internal audit or the external auditors, shall at any time summon a meeting by giving reasonable notice.
2) A quorum shall be two (2) members present and majority of which must be Independent Directors.
Annual Report 2020 39 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
(Cont’d)
TERMS OF REFERENCE (CONT’D)
Meetings And Reporting Procedures (Cont’d)
3) the Chief Financial Officer and the company secretary, the head of internal audit and a representative of the external auditors shall normally be invited to attend the meetings but may be requested to leave a meeting as and when deemed necessary by the Committee. Other Board members and senior management staff may attend meetings upon the invitation of the Committee. However, the Committee shall meet the external auditors without anyE xecutive Directors and employees present at least once a year.
4) the secretary shall draw up an agenda for each meeting, in consultation with the Chairman of the Committee. The agenda shall be distributed to all members of the Committee and head of internal audit as well as external auditors before the meeting together with supporting papers. The minutes of the meeting of the Committee shall be signed by the Chairman and circulated to all members of the Board. The Chairman of the Committee shall report on each meeting to the Board and all recommendations of the Committee shall be submitted to the Board for approval.
5) the Committee may also deal with matters by way of circular resolutions.
Authority
The Committee is authorised by the Board and at the cost of the Company to:-
Investigate any activity within its Terms of Reference; Have the internal audit function report directly to the Committee; Have the resources required to perform its duties; Have full and unrestricted access to any information pertaining to the Company or the Group for the purpose of discharging its functions and responsibilities; have direct communication channels with the external and internal auditors; obtain external legal or other independent advice as necessary; and to convene meeting with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary.
Responsibilities and Duties
The responsibilities and duties of the Committee shall include the following:
1) Corporate Financial Reporting
i) to review and recommend acceptance or otherwise of accounting policies, principles and practices; ii) to review the quarterly and annual financial statements of the Group and the Company for recommendation to the Board of Directors for approval, focusing particularly on: any changes in or implementation of new accounting policies and practices; major judgemental areas, significant and unusual events; significant adjustments arising from the audit; the going concern assumptions; and compliance with the applicable approved accounting standards in Malaysia, Listing Requirements of the Bursa Securities and other legal and statutory requirements. iii) to review with the management and the external auditors the results of the audit, including any difficulties encountered.
2) Corporate Risk Management
i) to review the adequacy of and to provide reasonable assurance to the Board of the effectiveness of risk management functions of the Group; ii) to ensure that the principal and requirements of managing risk are consistently adopted throughout the Group.
40 United U-Li Corporation Berhad AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
(Cont’d)
TERMS OF REFERENCE (CONT’D)
Responsibilities and Duties (Cont’d)
3) Internal Control
i) to assess the quality and effectiveness of the systems of the internal control and the efficiency of the Group’s operations; ii) to review the findings on the internal control in the Group by internal and external auditors; and iii) to review and approve the Statement on Internal Control for the Annual Report as required under Listing Requirements of Bursa Securities.
4) Internal Audit
i) to approve the corporate audit charters of internal audit functions in the Group; ii) to ensure that the internal audit functions have appropriate standing in the Group and have the necessary authority and resources to carry out their work. This includes a review of the organizational structure, resources, budgets and qualifications of the internal audit personnel; iii) to review internal audit reports and management’s response and actions taken in respect of these and report to the Board accordingly; iv) to review the adequacy of the scope, functions and resources of the internal auditors and whether it has the necessary authority to carry out its work; v) to be informed of resignations and transfer of senior internal audit staff and providing resigning/transfer staff an opportunity in expressing their view; and vi) to direct any special investigation to be carried out by internal audit.
5) External Audit
i) to consider the appointment, resignation and dismissal of external and their audit fee; ii) to review the external audit reports, major findings and management’s responses and actions taken thereto. Where actions are not taken within an adequate time frame by the management, the Committee will report the matter to the Board; iii) to review the nature and scope of the audit by external auditors before commencement.
6) Corporate Governance
i) to review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow up (including disciplinary action) any instances of non-compliance; ii) to review the findings of any examinations by regulatory authorities; iii) to consider any related party transaction and conflict of interest that may arise within the Group including any transaction, procedure or course of conduct that raises questions of integrity; iv) to review and approve the Statement of Corporate Governance for the Annual Report as required under the Listing Requirements of Bursa Securities; v) to examine instances and matters that may have compromised the principles of Corporate Governance and report back to the Board; vi) to review the investor relations programme and shareholder communication policy for the Company; vii) to develop and regularly review the Group’s code of Corporate Governance and business ethics; viii) where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved, resulting in a breach of the Listing Requirements of Bursa Securities, the Committee must promptly report such matters to Bursa Securities; and ix) any such other functions as may be agreed by the Committee and the Board.
Disclosure
The Committee shall assist the Board in making the required disclosure concerning the activities of the Committee for inclusion in the Annual Report.
Annual Report 2020 41 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
(Cont’d)
TERMS OF REFERENCE (CONT’D)
Review of Terms of Reference
This Terms of Reference will be reviewed annually to ensure that it continues to reflect the requirements of the Company to meet its commitments towards good corporate governance practices and each of its members to determine whether the Committee and its members carried out their duties in accordance to the Terms of Reference.
All amendment to the Terms of Reference of the Committee must be approved by the Board of the Company.
MEETING AND MINUTES
During the financial year ended 31st December 2020, five (5) Audit and Risk Management Committee Meetings were held. Details of attendance of each Committee members are as follows:
Name of Committee Member No. of Meetings Attended Chim Wai Khuan 5/5 Tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar 5/5 Shariff bin Mohd Shah 5/5
The Company Secretary was in attendance for all the Committee Meetings.T he senior management personnel, the representative of the internal auditors and the representative of the external auditors were in attendance as and when required.
SUMMARY OF ACTIVITIES
The Audit and Risk Management Committee carried out its duties in accordance with itsT erms of Reference during the financial year ended 31st December 2020. The main activities undertaken by the Audit andR isk Management Committee included the following:
i) reviewed the interim financial reports relating to the quarterly reporting of the Group to ensure adequacy of disclosure of information essential to a fair and full presentation of the financial affairs of the Group for recommendation to the Board for approval for the release of the said quarterly reporting;
ii) reviewed the audited financial statements before submitting them to the Board, ensuring that the financial statements were prepared in accordance with the applicable approved accounting standards and the Companies Act, 2016 in Malaysia. Any significant issues resulting from the audit of the financial statements by the external auditors were deliberated;
iii) evaluated the performance of the external auditors, reviewed the external auditors scope of work, audit plan and their audit fees and recommending the appointment of external auditors at the AGM;
iv) reviewed with external auditors the result of the audit and the management letter (if any), including management’s response;
v) discussed the internal audit plan, programmes and resources requirement and skill levels of the internal auditors for the year and assessed the performance of the internal audit function;
vi) reviewed the internal auditor’s report, which highlighted the audit issues, recommendations and management’s response. Discussed with management, actions taken to improve the system of internal control based on improvement opportunities identified in the internal audit reports;
vii) received and reviewed reports from the management on key strategic and operational risks to ensure these were being managed effectively; and
viii) reviewed and discussed Related Party Transactions (“RPT”) and Recurrent Related Party Transactions (“RRPT”) to ascertain if the transactions are conducted at arm’s length and on normal commercial terms, and that the internal control procedures with regards to such transactions are sufficient.
42 United U-Li Corporation Berhad Additional Compliance Information
The following information is provided in compliance with the ListingR equirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the financial year ended 31 December 2020:
Material Contracts Involving Directors and Substantial Shareholders
Save as otherwise disclosed in Significant Related Party Transactions in the financial statements, there are no material contracts including contracts relating to any loan entered into by the Company and its subsidiaries involving Directors and major shareholders’ interests.
Audit and Non-Audit Fees
During the financial year ended 31st December 2020, audit fees paid to external auditors by the Company and the Group amounted to RM45,000 and RM149,000 respectively.N on-audit fees amounted to RM15,000 was paid to the external auditors by the Company during the financial year ended 31st December 2020.
Utilisation of Proceeds Raised from Corporate Proposals
There were no proceeds raised from corporate proposals during the financial year ended 31st December 2020.
Annual Report 2020 43 Financial Statements
045 | Directors’ Report
049 | Statements of Financial Position
050 | Statements of Comprehensive Income
051 | Statements of Changes in Equity
052 | Statements of Cash Flows
055 | Notes to the Financial Statements Directors’ Report
The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2020.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding.T he principal activities of its subsidiaries are disclosed inN ote 8 to the financial statements.
There have been no significant changes in the nature of these principal activities during the financial year.
RESULTS
Group Company RM RM
Profit for the financial year, net of tax 3,509,477 2,270,355
Attributable to: Owners of the Company 3,509,477 2,270,355 Non-controlling interests – –
3,509,477 2,270,355
DIVIDENDS
The amount of dividend declared and paid by the Company since the end of the previous financial year were as follows:
RM
Single tier interim dividend of 1 sen per ordinary share for the financial year ended 31 December 2020, paid on 4 February 2021 2,178,000
The directors do not recommend the payment of any final dividends in respect of the financial year ended 31 December 2020.
RESERVES OR PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
BAD AND DOUBTFUL DEBTS
Before the financial statements of the Group and of the Company were prepared, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and have satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts.
At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.
Annual Report 2020 45 Directors’ Report
(Cont’d)
CURRENT ASSETS
Before the financial statements of the Group and of the Company were prepared, the directors took reasonable steps to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company had been written down to an amount which they might be expected so to realise.
At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; and
(ii) any contingent liabilities in respect of the Group or of the Company which has arisen since the end of the financial year.
In the opinion of the directors, no contingent or other liability of the Group or of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
ITEMS OF MATERIAL AND UNUSUAL NATURE
In the opinion of the directors,
(i) the results of the operations of the Group and of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.
ISSUE OF SHARES AND DEBENTURES
During the financial year, no new issue of shares or debentures were made by the Company.
46 United U-Li Corporation Berhad Directors’ Report
(Cont’d)
DIRECTORS
The directors in office during the financial year and during the period from the end of the financial year to the date of this report are:
Tan Sri Dato’ Wira Lee Yoon Wah * Dato’ Lee Yoon Kong * Teow Lai Seng * Chim Wai Khuan Shariff Bin Mohd Shah Tan Sri Dato’ Seri Utama Haji Ismail Bin Haji Omar
* Directors of the Company and certain subsidiaries
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings required to be kept by the Company under Section 59 of the Companies Act 2016 in Malaysia, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:
Interest in the Company
Number of ordinary shares At At 1 January 31 December 2020 Bought Sold 2020
The Company Direct Interest Tan Sri Dato’ Wira Lee Yoon Wah 6,492,772 – – 6,492,772 Dato’ Lee Yoon Kong 5,800,869 – – 5,800,869 Teow Lai Seng 13,500 – – 13,500 Chim Wai Khuan 600,000 100,000 – 700,000 Shariff Bin Mohd Shah 658,692 – – 658,692
Deemed Interest Tan Sri Dato’ Wira Lee Yoon Wah * 81,000,000 – – 81,000,000 Dato’ Lee Yoon Kong * 81,000,000 – – 81,000,000
* Deemed interest by virtue of their interest in Pearl Deal (M) Sdn. Bhd.
By virtue of their interests in the ordinary shares of the Company and pursuant to Section 8 of the Companies Act 2016 in Malaysia, Tan Sri Dato’ Wira Lee Yoon Wah and Dato’ Lee Yoon Kong are deemed to have an interest in the ordinary shares of the subsidiaries to the extent that the Company has an interest.
Other than as stated above, none of the other directors in office at the end of the financial year had any interest in ordinary shares or debentures of the Company and its related corporations during the financial year.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable, by the directors as disclosed in Note 24(c) to the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest other than any deemed benefits which may arise from transactions as disclosed inN ote 24 to the financial statements.
Annual Report 2020 47 Directors’ Report
(Cont’d)
DIRECTORS’ BENEFITS (CONT’D)
Neither during, nor at the end of the financial year, was the Company a party to any arrangements where the object is to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of the Company or any other body corporate.
SUBSIDIARIES
The details of the Company’s subsidiaries are disclosed in Note 8 to the financial statements.
The auditors’ reports on the financial statements of the subsidiaries did not contain any qualification.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
Details of significant event during the financial year is disclosed in Note 28 to the financial statements.
AUDITORS’ REMUNERATION
The details of the auditors’ remuneration are disclosed in Note 20 to the financial statements.
INDEMNITY TO AUDITORS
The Company has agreed to indemnify the auditors of the Company as permitted under Section 289 of the Companies Act 2016 in Malaysia.
AUDITORS
The auditors, Messrs Baker Tilly Monteiro Heng PLT, have expressed their willingness to continue in office.
This report was approved and signed on behalf of the Board of Directors in accordance with a resolution of the directors:
...... TAN SRI DATO’ WIRA LEE YOON WAH Director
...... DATO’ LEE YOON KONG Director
Date: 8 April 2021
48 United U-Li Corporation Berhad Statements Of Financial Position As At 31 December 2020
Group Company 2020 2019 2020 2019 Note RM RM RM RM
ASSETS Non–current assets Property, plant and equipment 5 116,956,297 124,408,167 – – Investment properties 6 676,853 366,860 – – Intangible asset 7 1 1 – – Investment in subsidiaries 8 – – 49,678,694 40,433,094
Total non–current assets 117,633,151 124,775,028 49,678,694 40,433,094
Current assets Inventories 9 58,064,899 79,114,196 – – Current tax assets 4,775,782 9,641,129 67,495 – Trade and other receivables 10 73,058,778 80,118,812 62,958,487 70,566,841 Prepayments 2,005,288 343,272 – – Short term investments 11 3,419,617 3,347,706 – – Fixed deposits placed with licensed banks 12 18,316,348 15,725,103 – – Cash and bank balances 66,089,379 50,200,433 2,346,366 1,882,315
Total current assets 225,730,091 238,490,651 65,372,348 72,449,156
TOTAL ASSETS 343,363,242 363,265,679 115,051,042 112,882,250
EQUITY AND LIABILITIES Equity attributable to owners of the Company Share capital 13 112,200,000 112,200,000 112,200,000 112,200,000 Retained earnings 175,007,188 173,675,711 238,315 145,960
TOTAL EQUITY 287,207,188 285,875,711 112,438,315 112,345,960
Non–current liabilities Loan and borrowings 14 6,159,051 7,656,886 – – Deferred tax liabilities 15 2,778,906 4,074,482 – –
Total non–current liabilities 8,937,957 11,731,368 – –
Current liabilities Loan and borrowings 14 27,013,978 42,476,067 – – Current tax liabilities 10,356 175,221 – 153,436 Trade and other payables 16 20,193,763 23,007,312 2,612,727 382,854
Total current liabilities 47,218,097 65,658,600 2,612,727 536,290
TOTAL LIABILITIES 56,156,054 77,389,968 2,612,727 536,290
TOTAL EQUITY AND LIABILITIES 343,363,242 363,265,679 115,051,042 112,882,250
The accompanying notes form an integral part of these financial statements. Annual Report 2020 49 Statements Of Comprehensive Income For The Financial Year Ended 31 December 2020
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Revenue 17 159,163,266 193,461,654 2,778,000 800,000 Cost of sales 18 (115,411,481) (146,928,042) – –
Gross profit 43,751,785 46,533,612 2,778,000 800,000 Other income 1,762,496 2,038,284 69 118 Administrative expenses (26,823,101) (34,197,235) (697,808) (737,939) Net impairment losses on financial instruments (1,552,844) (418,227) – – Other expenses (10,959,193) (11,108,846) – –
Operating profit 6,179,143 2,847,588 2,080,261 62,179 Finance income 604,889 612,567 – – Finance costs 19 (1,101,196) (2,059,407) – –
Profit before tax 20 5,682,836 1,400,748 2,080,261 62,179 Income tax (expense)/benefit 21 (2,173,359) (2,928,090) 190,094 –
Profit/(Loss) for the financial year 3,509,477 (1,527,342) 2,270,355 62,179 Other comprehensive income, net of tax – – – –
Total comprehensive income/ (loss),for the financial year 3,509,477 (1,527,342) 2,270,355 62,179
Total comprehensive income/ (loss), attributable to: Owners of the Company 3,509,477 (1,527,342) 2,270,355 62,179 Non–controlling interests – – – –
3,509,477 (1,527,342) 2,270,355 62,179
Basic earnings/(loss) per share (sen): 22 - Basic 1.61 (0.70) - Diluted 1.61 (0.70)
The accompanying notes form an integral part of these financial statements. 50 United U-Li Corporation Berhad Statements Of Changes In Equity For The Financial Year Ended 31 December 2020
<--- Attributable to owners of the Company ---> Share Retained Total Note capital earnings equity RM RM RM
Group At 1 January 2019 112,200,000 175,203,053 287,403,053
Total comprehensive loss for the financial year – (1,527,342) (1,527,342)
At 31 December 2019 112,200,000 173,675,711 285,875,711
Total comprehensive income for the financial year – 3,509,477 3,509,477
Transaction with owners Dividends 23 – (2,178,000) (2,178,000)
At 31 December 2020 112,200,000 175,007,188 287,207,188
Company At 1 January 2019 112,200,000 83,781 112,283,781
Total comprehensive income for the financial year – 62,179 62,179
At 31 December 2019 112,200,000 145,960 112,345,960
Total comprehensive income for the financial year – 2,270,355 2,270,355
Transaction with owners Dividends 23 – (2,178,000) (2,178,000)
At 31 December 2020 112,200,000 238,315 112,438,315
The accompanying notes form an integral part of these financial statements. Annual Report 2020 51 Statements Of Cash Flows For The Financial Year Ended 31 December 2020
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Cash flows from operating activities Profit before tax 5,682,836 1,400,748 2,080,261 62,179
Adjustments for: Impairment loss on trade receivables 1,570,101 454,571 – – Reversal of impairment loss on trade receivables (17,257) (36,344) – – Bad debts written off 78,729 – – – Depreciation of: - property, plant and equipment 10,963,058 11,123,418 – – - nvestment properties 10,007 8,940 – – Dividend income – – (2,778,000) (800,000) Interest income of financial assets assets that are carried at fair value through profit or loss (71,911) (108,025) – – Net gain on disposal of property, plant and equipment (177,842) (44,142) – – Finance income (604,889) (612,567) – – Finance expense 1,101,196 2,059,407 – – Net loss on unrealised foreign exchange 75,869 2,160 – – Inventories written down 1,042,078 – – – Deposit written off 70,896 – – – Property, plant and equipment written off 1,210 – – – Gain on termination of lease (1,056) – – –
Operating profit/(loss) before changes in working capital 19,723,025 14,248,166 (697,739) (737,821)
Changes in working capital: Inventories 20,007,219 3,980,447 – – Receivables 3,572,546 (4,914,421) – – Payables (2,766,415) 6,897,313 51,873 14,252
Net cash generated from/(used in) operations 40,536,375 20,211,505 (645,866) (723,569)
Interest paid (687,342) (1,624,312) – – Interest received 599,339 605,912 – – Tax paid (3,400,782) (4,653,800) (30,837) (40,000) Tax refunded 4,632,329 1,345,244 – 119,996
Net cash generated from/(used in) operating activities 41,679,919 15,884,549 (676,703) (643,573)
52 United U-Li Corporation Berhad Statements Of Cash Flows For The Financial Year Ended 31 December 2020
(Cont’d)
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Cash flows from investing activities Placement of fixed deposits (5,550) (6,665) – – Interest income from money market funds 71,911 108,025 – – Interest income from fixed deposits 5,550 6,665 – – Proceeds from disposal of property, plant and equipment 323,707 272,100 – – Purchase of property, plant and equipment (a) (2,032,955) (2,133,258) – – (Advances to)/Repayment from subsidiaries – – (1,637,246) 114,730 Addition to investment property (320,000) – – – Dividends received – – 2,778,000 800,000
Net cash (used in)/generated from investing activities (1,957,337) (1,753,133) 1,140,754 914,730
Cash flows from financing activities (b) Dividend paid (2,178,000) – – – Interest paid (413,854) (435,095) – – Drawdown of bankers acceptances 43,020,000 73,259,000 – – Repayment of bankers acceptances (58,876,000) (62,749,000) – – Net repayment of finance lease liabilities (1,888,176) (1,600,312) – – Net repayment of term loan (840,000) (840,000) – –
Net cash (used in)/generated from financing activities (21,176,030) 7,634,593 – –
Net increase in cash and cash equivalents 18,546,552 21,766,009 464,051 271,157
Cash and cash equivalents at the beginning of the financial year 69,055,690 47,289,681 1,882,315 1,611,158
Cash and cash equivalents at the end of the financial year 87,602,242 69,055,690 2,346,366 1,882,315
Annual Report 2020 53 Statements Of Cash Flows For The Financial Year Ended 31 December 2020
(Cont’d)
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Analysis of cash and cash equivalents Short term investments 3,419,617 3,347,706 – – Fixed deposits placed with licensed banks 18,316,348 15,725,103 – – Cash and bank balances 66,089,379 50,200,433 2,346,366 1,882,315
87,825,344 69,273,242 2,346,366 1,882,315
Less: Fixed deposits placed with licensed banks more than 3 months (223,102) (217,552) – –
87,602,242 69,055,690 2,346,366 1,882,315
(a) Purchase of property, plant and equipment: Group 2020 2019 RM RM
Purchase of property, plant and equipment 3,480,177 8,591,771 Financed by way of lease arrangements (1,447,222) (6,458,513)
Cash payments on purchase of property, plant and equipment 2,032,955 2,133,258
(b) reconciliation of liabilities arising from financing activities:
Non-cash 1 January Cash flows Acquisition 31 December RM RM RM RM
Group 2020 Term loan 5,108,182 (840,000) – 4,268,182 Lease liabilities 4,946,771 (1,888,176) 1,624,252 4,682,847 Bankers acceptances 40,078,000 (15,856,000) – 24,222,000
50,132,953 (18,584,176) 1,624,252 33,173,029
2019 Term loan 5,948,182 (840,000) – 5,108,182 Lease liabilities 88,570 (1,600,312) 6,458,513 4,946,771 Bankers acceptances 29,568,000 10,510,000 – 40,078,000
35,604,752 8,069,688 6,458,513 50,132,953
(c) total cash outflows for leases
During the financial year, the Group had total cash outflows for leases of RM7,022,735.
The accompanying notes form an integral part of these financial statements. 54 United U-Li Corporation Berhad Notes To The Financial Statements
1. CORPORATE INFORMATION
united U-LI Corporation Berhad (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.
the registered office of the Company is located at 62C, Jalan SS21/62, DamansaraU tama, 47400 Petaling Jaya, Selangor Darul Ehsan.
The principal place of business of the Company is located at 33, Jalan Kartunis U1/47, Temasya Industrial Park, Seksyen U1, 40150 Shah Alam, Selangor Darul Ehsan.
the principal activity of the Company is investment holding whilst the principal activities of its subsidiaries are disclosed in Note 8 to the financial statements.
there have been no significant changes in the nature of these principal activities during the financial year.
the financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 8 April 2021.
2. BASIS OF PREPARATION
2.1 Statement of compliance
the financial statements of the Group and of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards (“MFRSs”), the International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
2.2 Adoption of amendments/improvements to MFRSs
The Group and the Company have adopted the following amendments/improvements to MFRSs for the current financial year:
Amendments/Improvements to MFRSs MFRS 3 Business Combinations MFRS 7 Financial Instruments: Disclosures MFRS 9 Financial Instruments MFRS 16 Leases * MFRS 101 Presentation of Financial Statements MFRS 108 Accounting Policies, Changes in Accounting Estimates and Error MFRS 139 Financial Instruments: Recognition and Measurement
* Early adopted the amendment to MFRS 16 Leases issued by the Malaysian Accounting Standards Board (“MASB”) on 5 June 2020 or/and 6 April 2021.
the adoption of the above amendments/improvements to MFRSs did not have any significant effect on the financial statements of the Group and of the Company and did not result in significant changes to the Group’s and the Company’s existing accounting policies.
Annual Report 2020 55 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
2. BASIS OF PREPARATION (CONT’D)
2.3 New MFRS and amendments/improvements to MFRSs that have been issued, but yet to be effective
(a) The Group and the Company have not adopted the following new MFRS and amendments/improvements to MFRSs that have been issued, but yet to be effective:
Effective for financial periods beginning on or after
New MFRS MFRS 17 Insurance Contracts 1 January 2023
Amendments/Improvements to MFRSs MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards 1 January 2022^/ 1 January 2023# MFRS 3 Business Combinations 1 January 2022/ 1 January 2023# MFRS 4 Insurance Contracts 1 January 2021/ 1 January 2023 MFRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 January 2023# MFRS 7 Financial Instruments: Disclosures 1 January 2021/ 1 January 2023# MFRS 9 Financial Instruments 1 January 2021/ 1 January 2022^/ 1 January 2023# MFRS 10 Consolidated Financial Statements Deferred MFRS 15 Revenue from Contracts with Customers 1 January 2023# MFRS 16 Leases 1 January 2021/ 1 January 2022^ MFRS 17 Insurance Contracts 1 January 2023 MFRS 101 Presentation of Financial Statements 1 January 2023/ 1 January 2023# MFRS 107 Statements of Cash Flows 1 January 2023# MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2023 MFRS 116 Property, Plant and Equipment 1 January 2022/ 1 January 2023# MFRS 119 employee Benefits 1 January 2023# MFRS 128 Investments in Associates and Joint Ventures Deferred/ 1 January 2023# MFRS 132 Financial instruments: Presentation 1 January 2023# MFRS 136 Impairment of Assets 1 January 2023# MFRS 137 Provisions, Contingent Liabilities and Contingent Assets 1 January 2022/ 1 January 2023# MFRS 138 Intangible Assets 1 January 2023# MFRS 139 Financial Instruments: Recognition and Measurement 1 January 2021 MFRS 140 Investment Property 1 January 2023# MFRS 141 Agriculture 1 January 2022^
^ the Annual Improvements to MFRS Standards 2018-2020 # Amendments as to the consequence of effective of MFRS 17 Insurance Contracts
56 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
2. BASIS OF PREPARATION (CONT’D)
2.3 New MFRS and amendments/improvements to MFRSs that have been issued, but yet to be effective (Cont’d)
(b) The Group and the Company plan to adopt the above applicable new MFRS and amendments/ improvements to MFRSs when they become effective. A brief discussion on the above significant new MFRS and amendments/improvements to MFRSs that may be applicable to the Group and the Company are summarised below.
Annual Improvements to MFRS Standards 2018–2020
Annual Improvements to MFRS Standards 2018–2020 covers amendments to: • MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards – simplifies the application of MFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences. • MFRS 9 Financial Instruments – clarifies the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. • Illustrative Examples accompanying MFRS 16 Leases – deletes from Illustrative Example 13 the reimbursement relating to leasehold improvements in order to remove any potential confusion regarding the treatment of lease incentives. • MFRS 141 Agriculture – removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in MFRS 141 with those in other MFRS Standards.
Amendments to MFRS 3 Business Combinations
The amendments update MFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version which was issued by MASB in April 2018.
Amendments to MFRS 10 Consolidated Financial Statements and MFRS 128 Investments in Associates and Joint Ventures
These amendments address an acknowledged inconsistency between the requirements in MFRS 10 and those in MFRS 128, in dealing with the sale or contribution of assets between an investor and its associate or joint venture.
the main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business, as defined in MFRS 3. A partial gain or loss is recognised when a transaction involves assets that do not constitute a business.
Amendments to MFRS 9 Financial Instruments, MFRS 139 Financial Instruments: Recognition and Measurement, MFRS 7 Financial Instruments: Disclosures, MFRS 4 Insurance Contracts, and MFRS 16 Leases
the Interest Rate Benchmark Reform—Phase 2 amends some specific requirements in MFRS 9, MFRS 139, MFRS 7, MFRS 4 and MFRS 16, with respect to issues that affect financial reporting during the reform of an interest rate benchmark.
the amendments provide a practical expedient whereby an entity would not derecognise or adjust the carrying amount of financial instruments for modifications required by interest rate benchmark reform, but would instead update the effective interest rate to reflect the change in the interest rate benchmark. On hedging relationship, entities would be required to amend the formal designation of a hedging relationship to reflect the modifications and/or changes made to the hedged item and/or hedging instruments as a result of the reform. However, the modification does not constitute discontinuation of the hedging relationship nor the designation of a new hedging relationship.
Annual Report 2020 57 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
2. BASIS OF PREPARATION (CONT’D)
2.3 New MFRS and amendments/improvements to MFRSs that have been issued, but yet to be effective (Cont’d)
(b) The Group and the Company plan to adopt the above applicable new MFRS and amendments/ improvements to MFRSs when they become effective. A brief discussion on the above significant new MFRS and amendments/improvements to MFRSs that may be applicable to the Group and the Company are summarised below (Cont’d).
Amendments to MFRS 101 Presentation of Financial Statements
the amendments include specifying that an entity’s right to defer settlement of a liability for at least twelve months after the reporting period must have substance and must exist at the end of the reporting period; clarifying that classification of liability is unaffected by the likelihood of the entity to exercise its right to defer settlement of the liability for at least twelve months after the reporting period; clarifying how lending conditions affect classification of a liability; and clarifying requirements for classifying liabilities an entity will or may settle by issuing its own equity instruments.
the amendments require an entity to disclose its material accounting policy information rather than significant accounting policies.T he amendments, amongst others, also include examples of circumstances in which an entity is likely to consider an accounting policy information to be material to its financial statements. To support this amendments, MFRS Practice Statement 2 was also amended to provide guidance on how to apply the concept of materiality to accounting policy information disclosures.T he guidance and examples provided in the MFRS Practice Statement 2 highlight the need to focus on entity-specific information and demonstrate how the four-step materiality process can address standardised (or boilerplate) information and duplication of requirements of MFRSs in the accounting policy information disclosures.
Amendments to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors
the amendments revise the definition of accounting estimates to clarify how an entity should distinguish changes in accounting policies from changes in accounting estimates.T he distinction is important because the changes in accounting estimates are applied prospectively to transactions, other events, or conditions from the date of that change, but changes in accounting policies are generally also applied retrospectively to past transactions and other past events.
Amendments to MFRS 116 Property, Plant and Equipment
the amendments prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the entity is preparing the asset for its intended use. Instead, an entity shall recognise such sales proceeds and related cost in profit or loss.
Amendments to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets
the amendments specify which costs an entity includes in determining the cost of fulfilling a contract for the purpose of assessing whether the contract is onerous.
2.4 Functional and presentation currency
the individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which they operate (“the functional currency”).T he consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.
2.5 Basis of measurement
the financial statements of the Group and of the Company have been prepared on the historical cost basis, except as otherwise disclosed in Note 3 to the financial statements.
58 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES
unless otherwise stated, the following accounting policies have been applied consistently to all the financial years presented in the financial statements of the Group and of the Company.
3.1 Basis of consolidation
the consolidated financial statements comprise the financial statements of the Company and its subsidiaries. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared or the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
(a) Subsidiaries and business combination
Subsidiaries are entities (including structured entities) over which the Group is exposed, or has rights, to variable returns from its involvement with the acquirees and has the ability to affect those returns through its power over the acquirees.
the financial statements of subsidiaries are included in the consolidated financial statements from the date the Group obtains control of the acquirees until the date the Group loses control of the acquirees.
the Group applies the acquisition method to account for business combinations from the acquisition date.
For a new acquisition, goodwill is initially measured at cost, being the excess of the following:
• the fair value of the consideration transferred, calculated as the sum of the acquisition-date fair value of assets transferred (including contingent consideration), the liabilities incurred to former owners of the acquiree and the equity instruments issued by the Group. Any amounts that relate to pre-existing relationships or other arrangements before or during the negotiations for the business combination, that are not part of the exchange for the acquiree, will be excluded from the business combination accounting and be accounted for separately; plus • the recognised amount of any non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date (the choice of measurement basis is made on an acquisition-by-acquisition basis); plus • if the business combination is achieved in stages, the acquisition-date fair value of the previously held equity interest in the acquiree; less • the net fair value of the identifiable assets acquired and the liabilities assumed at the acquisition date.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss at the acquisition date.
transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
If the business combination is achieved in stages, the Group remeasures the previously held equity interest in the acquiree to its acquisition-date fair value, and recognises the resulting gain or loss, if any, in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have been previously been recognised in other comprehensive income are reclassified to profit or loss or transferred to retained earnings where such treatment would be appropriate if that interest were disposed of directly.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, the Group uses provisional fair value amounts for the items for which the accounting is incomplete. The provisional amounts are adjusted to reflect new information obtained about facts and circumstances that existed as of the acquisition date, including additional assets or liabilities identified in the measurement period. The measurement period for completion of the initial accounting ends as soon as the Group receives the information it was seeking about facts and circumstances or learns that more information is not obtainable, subject to the measurement period not exceeding one year from the acquisition date. Annual Report 2020 59 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (Cont’d)
(a) Subsidiaries and business combination (Cont’d)
upon the loss of control of subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statements of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an associate, joint venture or a financial asset.
(b) Subsidiaries and business combination
Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The difference between the Group’s share of net assets before and after the change, and the fair value of the consideration received or paid, is recognised directly in equity.
(c) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.
unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
3.2 Separate financial statements
In the Company’s statement of financial position, investment in subsidiaries are measured at cost less any accumulated impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.T he policy for the recognition and measurement of impairment losses shall be applied on the same basis as would be required for impairment of non-financial assets as disclosed in Note 3.8(b) to the financial statements.
3.3 Property, plant and equipment and depreciation
(a) Recognition and measurement
Property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.8(b) to the financial statements.
Cost of assets includes expenditures that are directly attributable to the acquisition of the asset and any other costs that are directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes cost of materials, direct labour, and any other direct attributable costs but excludes internal profits.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
60 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Property, plant and equipment and depreciation (Cont’d)
(b) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the part will flow to the Group or the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss as incurred.
(c) Depreciation
Freehold land has an unlimited useful life and therefore is not depreciated.
All other property, plant and equipment are depreciated on straight-line basis by allocating their depreciable amounts over their remaining useful lives.
Buildings 2% Electrical installation 10% Plant and machinery 15% Motor vehicles 15% Office equipment 10% Furniture and fittings 10% Renovation 10%
the residual values, useful lives and depreciation methods are reviewed at the end of each reporting period and adjusted as appropriate.
(d) Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognised in profit or loss.
3.4 Investment properties
Investment properties are properties held to earn rental income or for capital appreciation or both.
the Group uses the cost model to measure its investment properties after initial recognition. Accordingly, investment properties are stated at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.8(b) to the financial statements.
Depreciation of investment properties are provided on a straight line basis at an annual rate of 2% over their estimated useful lives of the investment properties.
An investment property is derecognised on their disposal or when it is permanently withdrawn from use and no future economic benefits are expected from its disposals. Any gains and losses arising from derecognition of the asset is recognised in the profit or loss.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property carried at fair value to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, any difference arising on the date of change in use between the carrying amount of the item immediately prior to the transfer and its fair value is recognised directly in equity as a revaluation of property, plant and equipment.
Annual Report 2020 61 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.5 Intangible assets
trademark represents the acquisition cost of the rights and license to use the name of “Goodlite” in the manufacturing of electrical lighting and fittings. Trademark is stated at cost less any accumulated amortisation and any accumulated impairment losses in accordance in Note 3.8(b) to the financial statements.
trademark with finite useful lives will be amortised on a straight line basis over its estimated economic useful lives of 10 years and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for trademark are reviewed yearly at the end of each reporting period.
3.6 Inventories
Inventories are measured at the lower of cost and net realisable value.
Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:
• raw materials: purchase costs on a weighted average cost basis. • consumables: purchase cost on a first-in first-out basis. • finished goods and work-in-progress: costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity.T hese costs are assigned on a weighted average cost basis.
net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
3.7 Financial instruments
Financial instruments are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
except for the trade receivables that do not contain a significant financing component or for which the Group and the Company have applied the practical expedient, the financial instruments are recognised initially at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset and financial liability. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.T rade receivables that do not contain a significant financing component or for which the Group and the Company have applied the practical expedient are measured at the transaction price determined under MFRS 15 Revenue from Contracts with Customers.
(a) Subsequent measurement
The Group and the Company categorise the financial instruments as follows:
(i) Financial assets
For the purposes of subsequent measurement, financial assets are classified in two categories:
• Financial assets at amortised cost • Financial assets at fair value through profit or loss
the classification depends on the entity’s business model for managing the financial assets and the contractual cash flows characteristics of the financial assets.
62 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.7 Financial instruments (Cont’d)
(a) Subsequent measurement (Cont’d)
the Group and the Company categorise the financial instruments as follows (Cont’d):
(i) Financial assets (Cont’d)
the Group and the Company reclassify financial assets when and only when their business models for managing those assets change.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s and the Company’s business model for managing the asset and the cash flows characteristics of the asset. There are two measurement categories into which the Group and the Company classify their debt instruments:
• Amortised cost
Financial assets that are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest are measured at amortised cost. Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.8(a) to the financial statements. Gains and losses are recognised in profit or loss when the financial asset is derecognised, modified or impaired.
• Fair value through profit or loss (“FVPL”)
Financial assets at FVPL include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at FVOCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statements of financial position at fair value with net changes in fair value recognised in the profit or loss.
(ii) Financial liabilities
the Group and the Company classify their financial liabilities at amortised cost.
Financial liabilities at amortised cost
Subsequent to initial recognition, financial liabilities are measured at amortised cost using effective interest method. Gains and losses are recognised in profit or loss when the financial liabilities are derecognised and through the amortisation process.
Annual Report 2020 63 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.7 Financial instruments (Cont’d)
(b) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, the liability is measured at the higher of the amount of the loss allowance determined in accordance with Section 5.5 of MFRS 9 and the amount initially recognised, when appropriate, the cumulative amount of income recognised in accordance with the principles of MFRS 15.
(c) Regular way purchase or sale of financial assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.
A regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using trade date accounting (i.e. the date the Group and the Company commit themselves to purchase or sell an asset).
Trade date accounting refers to:
(i) the recognition of an asset to be received and the liability to pay for it on the trade date; and (ii) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.
Generally, interest does not start to accrue on the asset and corresponding liability until the settlement date when title passes.
(d) Derecognition
A financial asset or a part of it is derecognised when, and only when:
(i) the contractual rights to receive cash flows from the financial asset expire, or (ii) the Group and the Company have transferred their rights to receive cash flows from the asset or have assumed an obligation to pay the received cash flows in full without material delay to a third party; and either
- the Group and the Company have transferred substantially all the risks and rewards of the asset; or - the Group and the Company have neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.
The Group and the Company evaluate if, and to what extent, they have retained the risks and rewards of ownership. When they have neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group and the Company continue to recognise the transferred asset to the extent of their continuing involvement. In that case, the Group and the Company also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group and the Company have retained.
64 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
3.7 Financial instruments (Cont’d)
(d) Derecognition (Cont’d)
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group and the Company could be required to repay.
on derecognition of a financial asset, the difference between the carrying amount (measured at the date of derecognition) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
(e) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in the statements of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity shall not offset the transferred asset and the associated liability.
3.8 Impairment of assets
(a) Impairment of financial assets
Financial assets measured at amortised cost and financial guarantee contracts will be subject to the impairment requirement in MFRS 9 which is related to the accounting for expected credit losses on the financial assets.E xpected credit loss is the weighted average of credit losses with the respective risks of a default occurring as the weights.
the Group and the Company measure loss allowance at an amount equal to lifetime expected credit loss, except for the following, which are measured as 12-month expected credit loss:
• debt securities that are determined to have low credit risk at the reporting date; and • other debt securities and bank balances for which credit risk (i.e. risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.
For trade receivables, the Group and the Company apply the simplified approach permitted by MFRS 9 to measure the loss allowance at an amount equal to lifetime expected credit losses.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit loss, the Group and the Company consider reasonable and supportable information that is relevant and available without undue cost or effort.T his includes both quantitative and qualitative information and analysis, based on the Group’s and the Company’s historical experience and informed credit assessment and including forward-looking information.
the Group and the Company assume that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
Annual Report 2020 65 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.8 Impairment of assets (Cont’d)
(a) Impairment of financial assets (Cont’d)
the Group and the Company consider a financial asset to be in default when:
• the borrower is unable to pay its credit obligations to the Group and the Company in full, without taking into account any credit enhancements held by the Group and the Company; or • the contractual payment of the financial asset is more than 90 days past due unless the Group and the Company have reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date.
the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group and the Company are exposed to credit risk.
expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial instrument. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive.
expected credit losses are discounted at the effective interest rate of the financial assets.
At each reporting date, the Group and the Company assess whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events:
• significant financial difficulty of the issuer or the borrower; • a breach of contract, such as a default of past due event; • the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; • it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; • the disappearance of an active market for that financial asset because of financial difficulties; or • the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.
the amount of expected credit losses (or reversal) shall be recognised in profit or loss, as an impairment gain (or loss).
the gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.T his is generally the case when the Group and the Company determine that the debtor does not have assets or source of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s and the Company’s procedure for recovery of amounts due.
66 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.8 Impairment of assets (Cont’d)
(b) Impairment of non-financial assets
the carrying amounts of non-financial assets (except for inventories) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the Group and the Company make an estimate of the asset’s recoverable amount.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of non-financial assets or cash-generating units (“CGUs”).
The recoverable amount of an asset or a CGU is the higher of its fair value less costs of disposal and its value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining the fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
Where the carrying amount of an asset exceed its recoverable amount, the carrying amount of asset is reduced to its recoverable amount.
Impairment losses are recognised in profit or loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. An impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. Reversal of impairment loss is restricted by the asset’s carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.
3.9 Cash and cash equivalents
For the purpose of statements of cash flows, cash and cash equivalents comprise cash in hand, bank balances, demand deposits and other short term, highly liquid investments with a maturity of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
3.10 Share capital
Ordinary shares
Ordinary shares are equity instruments. An equity instrument is a contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
3.11 Foreign currency transactions
Translation of foreign currency transactions
Foreign currency transactions are translated to the respective functional currencies of the Group entities using the exchange rates prevailing at the transaction dates.
At the end of each reporting date, monetary items denominated in foreign currencies are retranslated at the exchange rates prevailing at the reporting date.
Annual Report 2020 67 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.11 Foreign currency transactions (Cont’d)
Translation of foreign currency transactions (Cont’d)
Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated at the rates prevailing at the dates the fair values were determined. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated at the historical rates as at the dates of the initial transactions.
Foreign exchange differences arising on settlement or retranslation of monetary items are recognised in profit or loss. When settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences are recognised in profit or loss in the separate financial statements of the parent company or the individual financial statements of the foreign operation.
the gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively).
3.12 Leases
(a) Definition of lease
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.T o assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
• the contract involves the use of an identified asset; • the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and • the Group has the right to direct the use of the asset.
(b) Lessee accounting
At the lease commencement date, the Group recognises a right-of-use asset and a lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets.
the Group presents right-of-use as part of property, plant and equipment and lease liabilities in Note 5 and Note 14 to the financial statements.
Right-of-use asset
the right-of-use asset is initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
the right-of-use asset is subsequently measured at cost less accumulated depreciation and any accumulated impairment losses, and adjust for any remeasurement of the lease liabilities. The right-of-use asset is depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. If expects to exercise a purchase option, the right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts from the commencement date of the underlying asset. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.8(b) to the financial statements.
68 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.12 Leases (Cont’d)
(b) Lessee accounting (Cont’d)
Lease liability
the lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses their incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise: • fixed lease payments (including in-substance fixed payments), less any lease incentives; • variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; • the amount expected to be payable by the lessee under residual value guarantees; • the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option; and • payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
the lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
• the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. • the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). • a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
variable lease payments that do not depend on an index or a rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line “other expenses” in the statements of comprehensive income.
The Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.
Short-term leases and leases of low value assets
the Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases and leases of low value assets. The Group recognises the lease payments as an operating expense on a straight- line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Annual Report 2020 69 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.13 Employee benefits
(a) Short term employee benefits
Short-term employee benefit obligations in respect of wages, salaries, social security contributions, annual bonuses, paid annual leave, sick leave and non-monetary benefits are recognised as an expense in the financial year where the employees have rendered their services to the Group.
(b) Defined contribution plans
As required by law, the Group contributes to the Employees’ Provident Fund (“EPF”), the national defined contribution plan. Such contributions are recognised as an expense in the profit or loss in the period in which the employees render their services.
3.14 Revenue and other income
The Group and the Company recognise revenue that depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Group and the Company expect to be entitled in exchange for those goods or services.
the Group and the Company measure revenue from sale of goods at its transaction price, being the amount of consideration to which the Group and the Company expect to be entitled in exchange for transferring promised goods to a customer, excluding amounts collected on behalf of third parties such as goods and service tax, significant financing components, non-cash consideration and consideration payable to customer.
For contract with separate performance obligations, the transaction price is allocated to the separate performance obligations on the relative stand-alone selling price basis. If the stand-alone selling price is not directly observable, the Group and the Company estimate it by using the costs plus margin approach.
revenue from contracts with customers is recognised by reference to each distinct performance obligation in the contract with customer, i.e. when or as a performance obligation in the contract with customer is satisfied. A performance obligation is satisfied when or as the customer obtains control of the goods underlying the particular performance obligation, which the performance obligation may be satisfied at a point in time or over time.
(a) Sales of goods - manufacturing
The Group manufactures and sells a range of industrial metal products to local and overseas customers. Revenue from sale of manufactured goods are recognised at a point in time when control of the products has been transferred, being when the customer accepts the delivery of the goods.
Sales are made with a credit term of 30 to 150 days, which is consistent with market practice, therefore, no element of financing is deemed present. A receivable is recognised when the customer accepts the delivery of the goods as the consideration is unconditional other than the passage of time before the payment is due.
Where consideration is collected from customer in advance for sale of manufactured goods, a contract liability is recognised for the customer deposits. Contract liability would be recognised as revenue upon sale of manufactured goods to the customer.
70 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.14 Revenue and other income (Cont’d)
(b) Sales of goods
the Group sells a range of electrical lighting and fittings products to local and overseas customers.R evenue from sale of goods are recognised at a point in time when control of the products has been transferred, being when the customer accepts the delivery of the goods.
Sales are made with a credit term of 30 to 150 days, which is consistent with market practice, therefore, no element of financing is deemed present. A receivable is recognised when the customer accepts the delivery of the goods as the consideration is unconditional other than the passage of time before the payment is due.
Where consideration is collected from customer in advance for sale of goods, a contract liability is recognised for the customer deposits. Contract liability would be recognised as revenue upon sale of goods to the customer.
(c) Interest income
Interest income is recognised using the effective interest method.
(d) Dividend income
Dividend income is recognised when the right to receive payment is established.
3.15 Borrowing costs
Borrowing costs are interests and other costs that the Group incurs in connection with borrowing of funds.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
The Group begins capitalising borrowing costs when the Group has incurred the expenditures for the asset, incurred related borrowing costs and undertaken activities that are necessary to prepare the asset for its intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
3.16 Interest-bearing borrowings
All interest-bearing borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the effective interest method.
Annual Report 2020 71 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.17 Income tax
Income tax expense in profit or loss comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
(a) Current tax
Current tax is the expected taxes payable or receivable on the taxable income or loss for the financial year, using the tax rates that have been enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.
(b) Deferred tax
Deferred tax is recognised using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the statements of financial position. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unutilised tax losses and unused tax credits, to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax is not recognised if the temporary differences arise from the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal timing of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
the carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised.U nrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority on the same taxable entity, or on different tax entities, but they intend to settle their income tax recoverable and income tax payable on a net basis or their tax assets and liabilities will be realised simultaneously.
72 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.17 Income tax (Cont’d)
(c) Sales and services tax
Revenue, expenses and assets are recognised net of the amount of sales and services tax except:
• where the sales and services tax incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the sales and services tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables that are stated with the amount of sales and services tax included.
the net amount of sales and services tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.
3.18 Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.
3.19 Operating segments
operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Chief ExecutiveO fficer of the Group, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief operating decision maker that makes strategic decisions.
3.20 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group and of the Company.
Contingent liability is also referred as a present obligation that arises from past events but is not recognised because:
(a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities and assets are not recognised in the statements of financial position.
Annual Report 2020 73 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.21 Fair value measurements
Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.
For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would be use the asset in its highest and best use.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value is categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:
Level 1: quoted prices (unadjusted) in active markets for the identical assets or liabilities that the Group can access at the measurement date. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset or liability.
The Group and the Company recognise transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
the preparation of financial statements in conformity with RMF Ss requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reporting period. It also requires directors to exercise their judgement in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgement are based on the directors’ best knowledge of current events and actions, actual results may differ.
the areas involving a higher degree of judgement or complexity that have the most significant effect on the Group’s and the Company’s financial statements, or areas where assumptions and estimates that have a significant risk of resulting in a material adjustment to the Group’s and the Company’s financial statements within the next financial year are disclosed as follows:
(a) Net realisable value of inventories
Inventories are stated at the lower of cost and net realisable value. The Group writes down their obsolete or slow- moving inventories based on the assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. Where expectations differ from the original estimates, the differences will impact the carrying amount of inventories.
the economic uncertainties resulting from theOV C ID-19 pandemic have impacted and may continue to impact selling prices and the saleability of inventories. When future events differ from current expectations, the carrying amount of unsold inventories may have to be written down or written back in future financial periods.
the carrying amounts of the Group’s inventories are disclosed in Note 9 to the financial statements.
74 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONT’D)
(b) Impairment of financial assets
the impairment provisions for financial assets are based on assumptions about risk of default and expected loss rate (“ECL”). The Group uses judgement in making these assumptions and selecting inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
The Group individually assessed and also uses a provision matrix to calculate ECL for trade receivables. The individually assessed ECL may be based on indicators such as changes in financial capability of the receivable and default or significant delay in payments.T he provision rates depend on the number of days that a trade receivable is past due. The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
the assessment of the correlation between historical observed default rates, forward-looking estimates andE CL is a significant estimate. The amount of ECL is sensitive to changes in circumstances and of forecast economic conditions over the expected lives of the receivables. The Group’s assessment of the indicators, historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future.
the information about the expected credit losses on the Group’s financial assets are disclosed inN ote 26(b)(i) to the financial statements.
Annual Report 2020 75 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d) Total (69,781) (32,025) 215,842 215,842 3,480,177 3,480,177 77,611,419 77,611,419 (2,114,366) (1,968,501) 94,441,831 94,441,831 10,963,058 (25,794,154) (25,792,944) 124,408,167 124,408,167 116,956,297 116,956,297 218,849,998 218,849,998 194,567,716 – – – – use assets (69,781) (32,025) 215,842 215,842 Right-of- 1,447,222 1,447,222 8,185,313 8,185,313 2,374,570 73,890,391 73,890,391 73,141,129 73,141,129 82,075,704 82,075,704 83,668,987 10,527,858
– – – – – – – 665,758 665,758 857,896 857,896 5,340,032 5,340,032 5,079,869 5,079,869 4,887,731 9,562,005 9,562,005 4,482,136 Renovation 10,227,763 10,227,763 – – – – – – – and fittings 30,885 30,885 86,260 86,260 492,167 492,167 436,792 706,671 706,671 792,931 Furniture 1,198,838 1,198,838 1,229,723 – – – – – – – Office 126,609 126,609 326,058 326,058 2,870,033 2,870,033 4,346,848 4,346,848 4,473,457 1,802,873 1,603,424 2,543,975 2,543,975 equipment – – – – – – Motor vehicles 933,635 933,635 577,994 577,994 7,942,899 7,942,899 5,832,789 1,654,887 6,288,012 6,288,012 4,899,154 (2,110,110) (1,966,852) – – – (4,256) (1,649) 969,921 969,921 Plant and Plant 6,089,141 6,089,141 machinery 65,362,480 65,362,480 49,978,188 49,978,188 90,190,969 90,190,969 20,507,329 15,384,292 69,683,640 69,683,640 (25,794,154) (25,792,944) – – – – – – – 239,782 239,782 392,459 Electrical 3,952,736 3,952,736 4,192,518 2,608,772 2,456,095 1,343,964 1,343,964 1,736,423 installation
– – – – – – – – 258,680 258,680 Buildings 1,466,800 1,466,800 1,208,120 1,208,120 12,933,999 12,933,999 12,933,999 11,725,879 11,467,199 – – – – – – – – – – – land Freehold 6,646,000 6,646,000 6,646,000 6,646,000 6,646,000
20 Note Note RM
emeasurement of lease liabilities emeasurement 2020
R Group Cost 1 January 2020 At 31 December 2020 At depreciation Accumulated 1 January 2020 At 31 December 2020 At Carrying amount 1 January 2020 At 31 December 2020 At PROPERTY, PLANT AND EQUIPMENT PROPERTY, Additions Disposals year financial for the Depreciation Disposals Written off Written off Written Derecognition Derecognition 5.
76 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d) – – – – – – – Total (790,305) 8,591,771 8,591,771 (1,018,263) 84,108,718 84,108,718 11,123,418 11,123,418 84,108,718 84,108,718 94,441,831 94,441,831 211,276,490 211,276,490 211,276,490 211,276,490 218,849,998 127,167,772 124,408,167 – – – – use assets Right-of- (545,780) (100,004) 6,390,793 6,390,793 6,097,230 6,097,230 1,894,524 8,185,313 8,185,313 6,390,793 6,390,793 76,524,254 76,524,254 82,075,704 70,133,461 73,890,391 76,524,254 76,524,254
– – – – – – 551,140 551,140 816,451 3,665,685 3,665,685 9,010,865 9,010,865 9,010,865 9,562,005 3,665,685 4,482,136 5,345,180 5,079,869 Renovation – – – – – – and fittings 12,462 12,462 85,036 621,635 621,635 621,635 621,635 706,671 564,741 492,167 Furniture 1,186,376 1,186,376 1,186,376 1,198,838 – – – – (50) Office (6,000) 295,500 295,500 325,490 325,490 2,218,535 2,218,535 4,057,348 4,057,348 4,057,348 4,346,848 2,543,975 1,838,813 1,802,873 2,218,535 2,218,535 equipment – Motor vehicles (73,787) 983,492 983,492 545,780 545,780 100,004 100,004 (545,780) (790,255) 5,994,771 5,994,771 8,955,162 8,955,162 8,409,382 7,942,899 6,288,012 2,414,611 1,654,887 6,068,558 6,068,558 (1,012,263) – – – – – – Plant and Plant 6,378,346 6,378,346 1,478,190 1,478,190 machinery 63,305,294 63,305,294 88,712,779 88,712,779 88,712,779 90,190,969 69,683,640 25,407,485 20,507,329 63,305,294 63,305,294 – – – – – – 962,565 962,565 381,399 381,399 962,565 962,565 157,249 157,249 Electrical 3,795,487 3,795,487 3,795,487 3,952,736 1,343,964 2,832,922 2,608,772 installation
– – – – – 949,440 949,440 258,680 258,680 Buildings 4,079,678 4,079,678 1,208,120 (3,130,238) 32,354,809 32,354,809 12,933,999 12,933,999 11,984,559 11,725,879 (19,420,810) – – – – – – – – – – – – land Leasehold 3,186,768 3,186,768 (3,186,768) 56,557,664 56,557,664 (56,557,664) – – – – – – – – – – – land Freehold 6,646,000 6,646,000 6,646,000 6,646,000 6,646,000 6,646,000 RM
20 Note Note S 16 S 16
ffect of adoption of MF R of adoption ffect ffect of adoption of MF R of adoption ffect eclassification eclassification
2019 - E Group Cost 1 January 2019 At reported - As previously balance Adjusted 1 January 2019 at 31 December 2019 At depreciation Accumulated 1 January 2019 At reported - As previously balance Adjusted 1 January 2019 at 31 December 2019 At Carrying amount 1 January 2019 (Adjusted) At 31 December 2019 At Disposals for the Depreciation year financial Disposals PROPERTY, PLANT AND EQUIPMENT (CONT’D) PLANT AND EQUIPMENT PROPERTY, - E Additions R R 5.
Annual Report 2020 77 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
(a) Assets pledged as security
the carrying amounts of property, plant and equipment have been pledged as securities to secure loan and borrowings of the Group as disclosed in Note 14 to the financial statements are as follows:
Group 2020 2019 RM RM
Buildings 14,485,065 14,814,605 Freehold land 5,500,000 5,500,000 Leasehold land 8,555,523 8,679,068 Motor vehicles 2,835,978 1,931,377 Plant and machinery 2,353,639 2,825,027
33,730,205 33,750,077
(b) Right-of-use assets
The Group leases several assets including leasehold land, leasehold buildings, motor vehicles and plant and machinery.
Information about leases for which the Group is lessee is presented below:
Leasehold Leasehold Motor Plant and Other land buildings vehicles machinery leases Total RM RM RM RM RM RM
Cost At 1 January 2019 – – – – – – - Effect of adoption of MFRS 16 56,557,664 19,420,810 545,780 – – 76,524,254
Adjusted balance at 1 January 2019 56,557,664 19,420,810 545,780 – – 76,524,254 Additions – – 1,951,092 3,142,580 1,003,558 6,097,230 Reclassification – – (545,780) – – (545,780)
At 31 December 2019 56,557,664 19,420,810 1,951,092 3,142,580 1,003,558 82,075,704 Additions – – 1,319,678 – 127,544 1,447,222 Remeasurement of lease liabilities – – – – 215,842 215,842 Derecognition – – – – (69,781) (69,781)
At 31 December 2020 56,557,664 19,420,810 3,270,770 3,142,580 1,277,163 83,668,987
78 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
(b) Right-of-use assets (Cont’d)
Leasehold Leasehold Motor Plant and Other land buildings vehicles machinery leases Total RM RM RM RM RM RM
Accumulated depreciation At 1 January 2019 – – – – – – - Effect of adoption of MFRS 16 3,186,768 3,130,238 73,787 – – 6,390,793
Adjusted balance at 1 January 2019 3,186,768 3,130,238 73,787 – – 6,390,793 Depreciation for the financial year 751,157 418,288 118,857 317,553 288,669 1,894,524 Reclassification – – (100,004) – – (100,004)
At 31 December 2019 3,937,925 3,548,526 92,640 317,553 288,669 8,185,313 Depreciation for the financial year 751,161 391,734 342,151 471,387 418,137 2,374,570 Derecognition – – – – (32,025) (32,025)
At 31 December 2020 4,689,086 3,940,260 434,791 788,940 674,781 10,527,858
Carrying amount At 1 January 2020 52,619,739 15,872,284 1,858,452 2,825,027 714,889 73,890,391
At 31 December 2020 51,868,578 15,480,550 2,835,979 2,353,640 602,382 73,141,129
the Group leases land and buildings for their office space and operation site. The leases for office space and operation site generally have lease term between 30 to 77 years.
The Group also has leased plant and machinery and motor vehicles with lease term of 1 to 5 years.
Other leases related to lease rental of hostels with lease term of 1 to 4 years.
Annual Report 2020 79 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
6. INVESTMENT PROPERTIES
Group 2020 2019 RM RM
At cost At 1 January 447,000 447,000 Addition 320,000 –
At 31 December 767,000 447,000
Accumulated depreciation At 1 January 80,140 71,200 Depreciation for the financial year 10,007 8,940
At 31 December 90,147 80,140
Carrying amount 676,853 366,860
Direct operating expenses recognised in profit or loss in respect of investment properties amounted Rto M12,334 (2019: RM3,243).
Fair value information
Fair value of investment properties are categorised as follows:
Group Level 1 Level 2 Level 3 Total RM RM RM RM
2020 Buildings – 1,130,000 – 1,130,000
2019 Buildings – 716,000 – 716,000
there is no Level 1 and Level 3 investment properties nor transfers between Level 1 and Level 3 during the financial year ended 31 December 2020 and 31 December 2019.
Level 2 fair value
Level 2 fair values of buildings have been derived using the sales comparison approach. Sales prices of comparable buildings in close proximity are adjusted for differences in key attributes such as property size.T he most significant input into this valuation approach is price per square foot of comparable buildings.
Highest and best use
In estimating the fair value of the properties, the highest and best use of the properties is their current use.
80 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
7. INTANGIBLE ASSET
Group 2020 2019 RM RM
Trademark At cost At 1 January/31 December 89,000 89,000
Accumulated amortisation At 1 January/31 December 88,999 88,999
Carrying amount 1 1
8. INVESTMENT IN SUBSIDIARIES
Company 2020 2019 RM RM
At cost Unquoted shares 40,933,094 40,933,094 Less: Accumulated impairment losses (500,000) (500,000)
40,433,094 40,433,094
Quasi loans 9,245,600 –
49,678,694 40,433,094
Quasi loans represent advances and payment made on behalf of which settlement in neither planned nor likely to occur in the foreseeable future. These amounts are, in substance, a part of the Company’s net investment in the subsidiaries.
Details of the subsidiaries are as follows:
Principal place Ownership of business/ Country interest of incorporation 2020 2019 Name of subsidiaries % % Principal activities
United U-LI (M) Sdn. Bhd. Malaysia 100 100 Manufacturing of and dealing in cable support systems, intergrated ceiling systems, steel roof battens and related industrial metal products
United U-LI Steel Service Malaysia 100 100 Provision of slitting and shearing services Centre Sdn. Bhd. and trading of industrial hardware
Cable-Tray Industries Malaysia 100 100 Manufacturing of and dealing in all types (Malaysia) Sdn. Bhd. of cable trunking and related industrial metal products
Annual Report 2020 81 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
8. INVESTMENT IN SUBSIDIARIES (CONT’D)
Details of the subsidiaries are as follows (Cont’d)
Principal place Ownership of business/ Country interest of incorporation 2020 2019 Name of subsidiaries % % Principal activities
Gabung Mekar Sdn. Bhd. Malaysia 100 100 Investment holding
United U-LI Building Malaysia 100 100 Manufacturing of and trading in integrated Materials Sdn. Bhd. ceiling systems, steel roof battens and building materials
United U-LI Goodlite Malaysia 100 100 Manufacturing of and trading in electrical Sdn. Bhd. lighting and fitting products
U-LI Goodlite Marketing Malaysia 100 100 Trading in electrical lighting and fitting Sdn. Bhd. products
9. INVENTORIES
Group 2020 2019 RM RM
At cost Raw materials 28,283,794 37,696,048 Consumables 5,965,934 5,443,453 Work-in-progress 6,667,026 10,493,044 Finished goods 17,148,145 25,481,651
58,064,899 79,114,196
During the financial year, the cost of inventories recognised as expenses in the Group amounted toR M98,814,455 (2019: RM126,282,014).
During the financial year, the Group have written down inventories to their net realisable value amounted toR M1,042,078. The amount written down is included in cost of sales.
82 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
10. TRADE AND OTHER RECEIVABLES
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Current Trade Trade receivables (a) 74,405,561 79,988,269 – – Less: Allowance for impairment losses (1,870,196) (1,568,756) – –
72,535,365 78,419,513 – –
Non-trade Other receivables 34,737 34,506 – – GST refundable 21,086 72,326 – – Amount owing by subsidiaries (b) – – 62,958,487 70,566,841 Deposits (c) 467,590 1,592,467 – –
523,413 1,699,299 62,958,487 70,566,841
Total trade and other receivables 73,058,778 80,118,812 62,958,487 70,566,841
(a) Trade receivables
trade receivables are non-interest bearing and normal credit terms offered by the Group ranging from 30 to 150 days (2019: 30 to 150 days) from the date of invoices. Other credit terms are assessed and approved on a case by case basis.
the foreign currency exposure profile of trade receivables is as follows:
Group 2020 2019 RM RM
Brunei Dollar 6,244 602 Qatari Rial – 582 Singapore Dollar 8,167,379 11,767,940 US Dollar 457,013 568,781
8,630,636 12,337,905
Annual Report 2020 83 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
10. TRADE AND OTHER RECEIVABLES (CONT’D)
(a) Trade receivables (Cont’d)
Receivables that are impaired
the Group’s trade receivables that are impaired at the reporting date is as follow: Group 2020 2019 RM RM
Trade receivables 1,870,196 1,568,756 Less: Allowance for impairment losses (1,870,196) (1,568,756)
– –
the reconciliation of movement in the allowance for impairment losses of trade receivables is as follows:
Group 2020 2019 RM RM
At 1 January 1,568,756 1,150,529 Charge for the financial year - Individually assessed 1,570,101 454,571 Reversal of impairment lossess - Individually assessed (4,485) (36,344) - Collectively assessed (12,772) – Written off (1,251,404) –
At 31 December 1,870,196 1,568,756
trade receivables that are individually determined to be credit impaired at the reporting date relate to receivables that are in significant financial difficulties and have defaulted on payments.
The information about the credit exposures are disclosed in Note 26(b)(i) to the financial statements.
(b) Amount owing by subsidiaries
the amount owing by subsidiaries are unsecured, interest free, repayable on demand and is expected to be settled in cash.
(c) Deposits
Included in deposits of the Group are deposits paid to suppliers for acquisition of machinery amounted to RM191,981 (2019: RM433,127). The balance of the purchase consideration is disclosed as a capital commitment in Note 25 to the financial statements.
84 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
11. SHORT TERM INVESTMENTS
Group 2020 2019 Carrying Market Carrying Market amount value amount value RM RM RM RM
Fair value through profit or loss financial assets - Money market funds 3,419,617 3,419,617 3,347,706 3,347,706
Investment in money market funds are placed with investment fund management company in Malaysia which are subject to an insignificant risk of changes in value, highly liquid and readily convertible to cash.
The money market funds of the Group are carried at fair value. The fair value hierarchy for money market funds are classified as Level 1.
the weighted average effective interest rates for the money market funds of the Group at the reporting date was 2.15% (2019: 3.33%).
There is no maturity period for money market funds as these money are callable on demand.
12. FIXED DEPOSITS PLACED WITH LICENSED BANKS
the fixed deposits of the Group earn effective interest rate range from 1.25% to 2.40% (2019: 2.70% to 3.15%) per annum and have maturity period within 1 to 12 months (2019: 1 to 12 months).
13. SHARE CAPITAL
Group and Company Number of ordinary shares l------Amount------l 2020 2019 2020 2019 Units Units RM RM
Issued and fully paid up: At 1 January/31 December 217,800,000 217,800,000 112,200,000 112,200,000
the new Companies Act 2016, which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital.
the holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.
Annual Report 2020 85 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
14. LOAN AND BORROWINGS
Group 2020 2019 Note RM RM
Non-current Term loan (a) 3,428,182 4,268,182 Lease liabilities (b) 2,730,869 3,388,704
6,159,051 7,656,886
Current Term loan (a) 840,000 840,000 Lease liabilities (b) 1,951,978 1,558,067 Bankers acceptances (c) 24,222,000 40,078,000
27,013,978 42,476,067
Total loan and borrowings 33,173,029 50,132,953
Term loan (a) 4,268,182 5,108,182 Lease liabilities (b) 4,682,847 4,946,771 Bankers acceptances (c) 24,222,000 40,078,000
33,173,029 50,132,953
(a) Term loan
Group 2020 2019 RM RM
Current - not later than one year 840,000 840,000
Non-current - later than one year but not later than two years 840,000 840,000 - later than two years but not later than five years 2,588,182 2,520,000 - later than five years – 908,182
3,428,182 4,268,182
4,268,182 5,108,182
Term loan of the Group amounted to RM4,268,182 (2019: RM5,108,182) bears interest at 3.25% (2019: 4.50%) per annum and is repayable by monthly instalments of RM70,000 over 120 instalments commencing of the following month from the date of full drawdown or upon expiry of the availability period, whichever is the earlier and is secured and supported as follows:
(i) legal charges over a leasehold land and building as disclosed in Note 5(a) to the financial statements; (ii) debenture of fixed and floating charge over the assets of a subsidiary; and (iii) corporate guarantee by the Company.
86 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
14. LOAN AND BORROWINGS (CONT’D)
(b) Lease liabilities
Certain plant and machinery and motor vehicles of the Group as disclosed in Note 5(a) to the financial statements are pledged for finance leases.T he average interest rate implicit in the leases range from 0.77% to 4.50% (2019: 0.77% to 4.50%).
Future minimum lease payments under finance leases together with the present value of net minimum lease payments are as follows:
Group 2020 2019 RM RM
Minimum lease payments: Not later than one year 2,122,041 1,777,385 Later than one year and not later than five years 2,872,501 3,431,220 Later than five years – 226,268
4,994,542 5,434,873 Less: Future finance charges (311,695) (488,102)
Present value of minimum lease payments 4,682,847 4,946,771
Present value of minimum lease payments: Not later than one year 1,951,978 1,558,067 Later than one year and not later than five years 2,730,869 3,189,167 Later than five years – 199,537
4,682,847 4,946,771 Less: Amount due within 12 months (1,951,978) (1,558,067)
Amount due after 12 months 2,730,869 3,388,704
(c) Bankers acceptances
the bankers acceptances of the Group bear effective interest rate range from 1.91% to 4.20% (2019: 3.32% to 5.55%) per annum and are secured by way of:
(i) legal charges over freehold land and buildings as disclosed in Note 5(a) to the financial statements; and (ii) corporate guarantee by the Company.
Annual Report 2020 87 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
15. DEFERRED TAX LIABILITIES
Deferred tax relates to the following:
Group 2020 2019 RM RM
At 1 January 4,074,482 3,953,348 Recognised in the profit or loss (Note 21) (1,295,576) 121,134
At 31 December 2,778,906 4,074,482
Representing tax effects of: Property, plant and equipment 2,778,906 4,074,482
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items (stated at gross):
Group 2020 2019 RM RM
Unabsorbed capital allowance 130,052 – Unused tax losses 5,765,872 4,952,550
5,895,924 4,952,550
the availability of unused tax losses for offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject to requirements under the Income Tax Act, 1967 and guidelines issued by the tax authority.
Pursuant to Section 11 of the Finance Act 2018 (Act 812), special provision relating to Section 43 & 44 of Income Tax Act 1967, a time limit has been imposed on the unutilised business losses, to be carried forward for a maximum of 7 consecutive years of assessment, this section has effect from the year of assessment 2019 and subsequent year of assessment.
Any unutilised business losses brought forward from year of assessment 2018 can be carried forward for another 7 consecutive years of assessment (i.e. from year of assessments 2019 to 2025).
the unutilised tax losses are available indefinitely for offset against future taxable profits of the subsidiaries except for the tax losses which will expire in the following financial years:
Group 2020 RM
Year of assessments 2025 3,520,781 2026 1,431,769 2027 813,322
88 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
16. TRADE AND OTHER PAYABLES
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Current Trade Trade payables (a) 13,006,397 17,876,800 – –
Non-trade Other payables 4,866,937 3,206,943 2,224,577 9,302 Sales and services tax payable 338,936 299,655 – – Deposit payable 67,572 – – – Accruals (b) 1,913,921 1,623,914 388,150 373,552
7,187,366 5,130,512 2,612,727 382,854
Total trade and other payables 20,193,763 23,007,312 2,612,727 382,854
(a) Trade payables
The normal trade payables credit terms granted to the Group range from 30 to 90 days (2019: 30 to 90 days).
The foreign currency exposure profile of trade payables is as follows:
Group 2020 2019 RM RM
Singapore Dollar 118,590 40,620 US Dollar 1,253,576 1,585,383
1,372,166 1,626,003
(b) Accruals
Included in accruals of the Group are staff cost amounted to RM1,206,898 (2019: RM962,183).
Annual Report 2020 89 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
17. REVENUE
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Sale of goods (a) 159,163,266 193,461,654 – – Dividend income (b) – – 2,778,000 800,000
159,163,266 193,461,654 2,778,000 800,000
(a) Sale of goods
revenue from sale of goods is recognised at a point in time when the products have been transferred to customers and coincided with the delivery of products and acceptance by customers.
(b) Dividend income
Dividend income is recognised when the shareholder’s right to receive payment is established.
(c) Disaggregation of revenue
Sale of goods has been presented in the operating segment,N ote 29 to the financial statements.N o revenue was recognised over time.
18. COST OF SALES
Cost of sales represents the direct costs attributable to goods produced and sold by the Group.
19. FINANCE COSTS
Group 2020 2019 RM RM
Interest expense on: - bank overdrafts 1,690 21 - bankers acceptances 685,652 1,624,291 - term loan 177,656 256,037 - lease liabilities 236,198 179,058
1,101,196 2,059,407
90 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
20. PROFIT BEFORE TAX
other than disclosed elsewhere in the financial statements, the following items have been charged/(credited) in arriving at profit before tax:
Group Company 2020 2019 2020 2019 RM RM RM RM
Auditors’ remuneration - current year 174,000 164,000 46,000 43,500 - prior year 10,000 38,500 2,500 11,000 Depreciation of: - property, plant and equipment 10,963,058 11,123,418 – – - investment properties 10,007 8,940 – – Impairment loss on trade receivables 1,570,101 454,571 – – Bad debts written off 78,729 – – – Expense relating to short term lease of premises paid/payable: - directors 8,400 8,400 – – - others 73,018 361,081 – – Expense relating to lease of low value asset - office equipment 76,863 80,772 – – - plant and machinery 600 – – – Deposit written off 70,896 – – – Property, plant and equipment written off 1,210 – – – Inventories written down 1,042,078 – – – Directors’ remuneration 4,777,570 5,120,657 420,400 380,700 Casual wages, bonuses and allowances 9,191,858 15,250,670 – – Staff costs: - salaries, allowances and bonuses 7,764,087 8,738,439 – – - Employees’ Provident Fund 1,703,757 1,817,504 – – - SOCSO 269,946 212,713 – – - other staff related costs 791,843 634,800 – – Reversal of impairment loss on trade receivables (17,257) (36,344) – – Net (gain)/loss on foreign exchange - realised (357,149) 743,986 – – - unrealised 75,869 2,160 – – Net gain on disposal of property, plant and equipment (177,842) (44,142) – – Interest income (604,889) (612,567) – – Interest income of financial assets that are carried at fair value through profit or loss (71,911) (108,025) – – Gain on termination of lease (1,056) – – – Dividend received from subsidiaries – – (2,778,000) (800,000)
Annual Report 2020 91 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
21. INCOME TAX (EXPENSE)/BENEFIT
the major components of income tax expense for the financial years ended 31 December 2020 and 31 December 2019 are as follows:
Group Company 2020 2019 2020 2019 RM RM RM RM
Current income tax: - Current year 3,450,250 2,122,161 – – - Prior years 18,685 684,795 (190,094) –
3,468,935 2,806,956 (190,094) –
Deferred tax: - Current year (20,309) 92,162 – – - Prior years (1,275,267) 28,972 – –
(1,295,576) 121,134 – –
Income tax expense recognised in profit or loss 2,173,359 2,928,090 (190,094) –
Domestic income tax is calculated at the Malaysian statutory rate of 24% (2019: 24%) of the estimated assessable profit for the fiscal year.
the reconciliations from the tax amount at the statutory income tax rate to the Group’s and the Company’s tax expense are as follows:
Group Company 2020 2019 2020 2019 RM RM RM RM
Profit before tax 5,682,836 1,400,748 2,080,261 62,179
Tax at Malaysian statutory income tax rate of 24% (2019: 24%) 1,363,881 336,180 499,263 14,923 Adjustments: - Income not subject to tax (866,915) (133,703) (666,720) (192,000) - Non-deductible expenses 2,706,565 1,410,206 167,457 177,077 - Deferred tax not recognised on tax losses and temporary differences 226,410 601,640 – – - Adjustment in respect of current income tax of prior years 18,685 684,795 (190,094) – - Adjustment in respect of deferred tax of prior years (1,275,267) 28,972 – –
Income tax expense 2,173,359 2,928,090 (190,094) –
92 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
22. EARNINGS/(LOSS) PER SHARE
(a) Basic earnings/(loss) per ordinary share
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) for the financial year attributable to owners of the Company and the weighted average number of ordinary shares outstanding during the financial year, calculated as follows:
Company 2020 2019 RM RM
Profit/(Loss) attributable to owners of the Company 3,509,477 (1,527,342) Weighted average number of ordinary shares for basic earnings per share 217,800,000 217,800,000 Basic earnings/(loss) per share 1.61 (0.70)
(b) Diluted earnings per share
the Company has no potential ordinary shares. As such, there is no dilutive effect on the earnings per share of the Company.
23. DIVIDENDS
Group and Company 2020 2019 RM RM
Recognised during the financial year: Single tier interim dividend of 1 sen per ordinary share in respect of the financial year ended 31 December 2020 2,178,000 –
24. RELATED PARTIES
(a) Identification of related parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operational decisions, or vice versa, or where the Group and the party are subject to common control. Related parties may be individuals or other entities.
Related parties of the Group include:
(i) Subsidiaries; (ii) entities in which directors have substantial financial interests; and (iii) Key management personnel of the Group which comprise persons (including the directors) having the authority and responsibility for planning, directing and controlling the activities directly or indirectly.
Annual Report 2020 93 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
24. RELATED PARTIES (CONT’D)
(b) Significant related party transactions
Significant related party transactions other than disclosed elsewhere in the financial statements are as follows:
Group Company 2020 2019 2020 2019 RM RM RM RM
Dividends received/receivable from subsidiaries - United U-LI (M) Sdn. Bhd. – – 2,778,000 800,000
Rental of premises paid/ payable to directors and a spouse related to a 25,200 25,200 – – director
Salaries and other related expenses paid/payable to persons related to certain directors 139,883 147,924 – –
Significant outstanding balances with related parties at the end of the reporting period are as disclosed in Note 10 to the financial statements.
the Company provides secured corporate guarantees to banks in respect of banking facilities granted to the subsidiaries as disclosed in Note 14 to the financial statements.
(c) Key management personnel remuneration
the remuneration of directors and other members of key management during the financial year are as follows:
Group Company 2020 2019 2020 2019 RM RM RM RM
Short term employee benefits 4,595,518 4,899,100 420,400 380,700 Employees’ Provident Fund 678,363 740,892 – –
5,273,881 5,639,992 420,400 380,700
other members of key management personnel comprise persons other than directors of the Group entities, having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.
94 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
24. RELATED PARTIES (CONT’D)
(c) Key management personnel remuneration (Cont’d)
the details of remuneration received and receivable by directors of the Group and of the Company during the financial year are as follows:
Group Company 2020 2019 2020 2019 RM RM RM RM
Executive: - salaries 3,751,767 4,074,472 9,000 11,400 - fees 192,000 126,000 192,000 144,000 - other emoluments 623,403 694,885 – –
4,567,170 4,895,357 201,000 155,400 - benefits-in-kind 60,754 63,834 – –
4,627,924 4,959,191 201,000 155,400
Non-executive: - fees 193,000 202,000 202,000 202,000 - allowances 17,400 23,300 17,400 23,300
210,400 225,300 219,400 225,300
Total 4,838,324 5,184,491 420,400 380,700
Total directors’ remuneration 4,777,570 5,120,657 420,400 380,700 Total estimated money value of benefits-in-kind 60,754 63,834 - -
4,838,324 5,184,491 420,400 380,700
25. COMMITMENTS
Capital commitments
The Group has made commitments for the following capital expenditures:
Group 2020 2019 RM RM
Plant and machinery 414,917 746,877
Annual Report 2020 95 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
the following table analyses the financial instruments in the statements of financial position by the classes of financial instruments to which they are assigned:
(i) Fair value through profit or loss (ii) Amortised cost
Fair value Carrying Amortised through amount cost profit or loss RM RM RM
2020 Financial assets Group Trade and other receivables * 73,037,692 73,037,692 – Short term investments 3,419,617 – 3,419,617 Fixed deposits placed with licensed banks 18,316,348 18,316,348 – Cash and bank balances 66,089,379 66,089,379 –
160,863,036 157,443,419 3,419,617
Company Trade and other receivables 62,958,487 62,958,487 – Cash and bank balances 2,346,366 2,346,366 –
65,304,853 65,304,853 –
Financial liabilities Group Trade and other payables ^ 19,854,827 19,854,827 – Loan and borrowings 33,173,029 33,173,029 –
53,027,856 53,027,856 –
Company Trade and other payables 2,612,727 2,612,727 –
96 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS (CONT’D)
(a) Categories of financial instruments (Cont’d)
Fair value Carrying Amortised through amount cost profit or loss RM RM RM
2019 Financial assets Group Trade and other receivables * 80,046,486 80,046,486 – Short term investments 3,347,706 – 3,347,706 Fixed deposits placed with licensed banks 15,725,103 15,725,103 – Cash and bank balances 50,200,433 50,200,433 –
149,319,728 145,972,022 3,347,706
Company Trade and other receivables 70,566,841 70,566,841 – Cash and bank balances 1,882,315 1,882,315 –
72,449,156 72,449,156 –
Financial liabilities Group Trade and other payables ^ 22,707,657 22,707,657 – Loan and borrowings 50,132,953 50,132,953 –
72,840,610 72,840,610 –
Company Trade and other payables 382,854 382,854 –
* Excluded GST refundable ^ Excluded SST payable
(b) Financial risk management
the Group and the Company seek to manage effectively various risks namely credit risk, liquidity risk, foreign currency risk, interest rate risk and market price risk to which the Group and the Company are exposed to in its daily operations.T he Group’s and the Company’s overall financial risk management objective is to optimise value for their shareholders.
The Board of Directors reviews and agrees to policies and procedures for the management of these risks, which are executed by the Group’s senior management. The audit committee provides independent oversight to the effectiveness of the risk management process.
Annual Report 2020 97 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk management (Cont’d)
(i) Credit risk
Credit risk is the risk of financial loss to the Group and the Company that may arise on outstanding financial instruments should a counterparty default on its obligations.
The Group’s exposure to credit risk primarily arises from its trade receivables while the Company’s exposure to credit risk primarily arises from amount due from subsidiaries. The maximum risk associated with recognised financial assets are the carrying amounts as presented in the statements of financial position.
Credit risk of the Group is controlled by the application of credit approvals, limits and monitoring procedures. Credit risk is minimised and monitored strictly by limiting the Group’s association to business partners with high creditworthiness. If necessary, the Group may obtain collaterals from counter-parties as a mean of mitigating losses in the event of default.
Trade receivables
As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables is represented by the carrying amounts in the statements of financial position.
The carrying amount of trade receivables are not secured by any collateral or supported by any other credit enhancements. In determining the recoverability of these receivables, the Group considers any change in the credit quality of the receivables from the date the credit was initially granted up to the reporting date. The Group has adopted a policy of dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.
Credit risk concentration profile
the Group determines concentrations of credit risk by monitoring the country profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the end of reporting period are as follows:
Group 2020 2019 RM % RM %
By country: Malaysia 63,904,729 88% 66,081,608 84% Singapore 8,167,379 11% 11,767,940 15% United States 457,013 1% 568,781 1% Others 6,244 0% 1,184 0%
72,535,365 100% 78,419,513 100%
the Group applies the simplified approach to providing for impairment losses prescribed by MFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables.T o measure the impairment losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The impairment losses also incorporate forward looking information.
98 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk management (Cont’d)
(i) Credit risk (Cont’d)
Trade receivables (Cont’d)
Credit risk concentration profile (Cont’d)
the information about the credit risk exposure on the Group’s trade receivables using provision matrix are as follows:
Trade receivables > 30 days > 60 days > 90 days > 120 days Current past due past due past due past due Total
Group At 31 December 2020 Expexted credit loss rate 0% - 6% 0% - 5% 0% - 9% 0% - 38% 0% - 14% Gross carrying amount at default (RM) 61,837,292 3,887,941 2,047,032 625,142 6,008,154 74,405,561
Impairment losses (RM) - Individually assessed – – – – 1,758,391 1,758,391 - Collectively assessed 13,630 22,074 26,441 45,976 3,684 111,805
At 31 December 2019 Expexted credit loss rate 0% - 6% 0% - 5% 0% - 9% 0% - 38% 0% - 14% Gross carrying amount at default (RM) 65,031,095 3,828,627 2,243,911 634,983 8,249,653 79,988,269
Impairment losses (RM) - Individually assessed – – – – 1,444,179 1,444,179 - Collectively assessed 13,630 22,074 26,441 45,976 16,456 124,577
Other receivables and other financial assets
For other receivables and other financial assets (including short term investments, fixed deposits placed with licensed banks and cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. At the reporting date, the Group’s and the Company’s maximum exposure to credit risk arising from other receivables and other financial assets is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.
the Group and the Company consider the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group and the Company compare the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information.
regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment.
Annual Report 2020 99 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk management (Cont’d)
(i) Credit risk (Cont’d)
Other receivables and other financial assets (Cont’d)
Some intercompany loans between entities within the Group are repayable on demand. For loans that are repayable on demand, impairment losses are assessed based on the assumption that repayment of the loan is demanded at the reporting date. If the borrower does not have sufficient highly liquid resources when the loan is demanded, the Group and the Company will consider the expected manner of recovery and recovery period of the intercompany loan.
refer to Note 3.8(a) to the financial statements for the Group’s and the Company’s accounting policies for impairment of financial assets.
As at the end of the reporting date, the Group and the Company did not recognised any loss allowance for impairment for other receivables and other financial assets.
Financial guarantees contracts
the Company is exposed to credit risk in relation to financial guarantees given to banks in respect of loan and borrowings granted to certain subsidiaries. The Company monitors the results of the subsidiaries and their repayment on an on-going basis. The maximum exposure to credit risks amounts to RM131,626,000 (2019: RM131,626,000) representing the maximum amount the Company could pay if the guarantee is called on as disclosed in Note 26(b)(ii) to the financial statements. As at the reporting date, there was no loss allowance for impairment losses as determined by the Company for the financial guarantee.
the financial guarantees have not been recognised since the fair value on initial recognition was not material.
(ii) Liquidity risk
Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations when they fall due. The Group’s and the Company’s exposure to liquidity risk arise primarily from mismatches of the maturities between financial assets and liabilities.T he Group’s and the Company’s exposure to liquidity risk arise principally from trade and other payables, loan and borrowings.
the Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all financing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements.
100 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk management (Cont’d)
(ii) Liquidity risk (Cont’d)
Maturity analysis
the maturity analysis of the Group’s and the Company’s financial liabilities by their relevant maturity at the reporting date are based on contractual undiscounted repayment obligations are as follows:
l------Contractual cash flows ------l Contractual On demand Carrying undiscounted or within One to Over amount cash flows one year five years five years RM RM RM RM RM
Financial liabilities 2020 Group Trade and other payables * 19,854,827 19,854,827 19,854,827 – – Loan and borrowings 33,173,029 34,164,139 27,524,382 6,639,757 –
53,027,856 54,018,966 47,379,209 6,639,757 –
Company Trade and other payables 2,612,727 2,612,727 2,612,727 – – Financial guarantee contracts – 131,626,000 131,626,000 – –
2,612,727 134,238,727 134,238,727 – –
Financial liabilities 2019 Group Trade and other payables * 22,707,657 22,707,657 22,707,657 – – Loan and borrowings 50,132,953 51,726,219 43,277,023 7,289,625 1,159,571
72,840,610 74,433,876 65,984,680 7,289,625 1,159,571
Company Trade and other payables 382,854 382,854 382,854 – – Financial guarantee contracts – 131,626,000 131,626,000 – –
382,854 132,008,854 132,008,854 – –
* Excluded SST payable
Annual Report 2020 101 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk management (Cont’d)
(iii) Foreign currency risk
Foreign currency risk is the risk of fluctuation in fair value or future cash flows of a financial instrument as a result of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when sales and purchases are denominated in a foreign currency). The Group’s principal foreign currency exposure relates mainly to Brunei Dollar (“BND”), Qatari Rial (“QAR”), Singapore Dollar (“SGD”) and United States Dollar (“USD”).
The Group and the Company ensure that the net exposure to this risk is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. Management does not enter into currency hedging transactions since it considers that the cost of such instruments outweigh the potential risk of exchange rate fluctuations.
the financial assets and financial liabilities of the Group that are not denominated in their functional currencies are disclosed in respective notes to the financial statements.
Sensitivity analysis for foreign currency
the following table demonstrate the sensitivity of the Group’s profit before tax to a reasonably possible change in the exchange rates of BND, QAR, SGD and USD against the functional currency of the Group, with all the other variables held constant.
Group 2020 2019 RM RM Profit for Profit for the year the year
BND/RM - strengthened 3% (2019: 3%) 187 18 - weakened 3% (2019: 3%) (187) (18) QAR/RM - strengthened 3% (2019: 3%) – 17 - weakened 3% (2019: 3%) – (17) SGD/RM - strengthened 3% (2019: 3%) 241,464 351,820 - weakened 3% (2019: 3%) (241,464) (351,820) USD/RM - strengthened 3% (2019: 3%) (23,897) (30,498) - weakened 3% (2019: 3%) 23,897 30,498
(iv) Interest rate risk
Interest rate risk is the risk of fluctuation in fair value or future cash flows of the Group’s financial instruments as a result of changes in market interest rates. The Group’s exposure to interest rate risk arises primarily from loan and borrowings.
Sensitivity analysis for interest rate risk
At the end of the reporting period, if interest rates had been 25 (2019: 25) basis points higher/lower, with all other variables held constant, the Group’s profit before tax would have been RM10,670 (2019: RM12,770) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate of loan and borrowings.
102 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
26. FINANCIAL INSTRUMENTS (CONT’D)
(b) Financial risk management (Cont’d)
(v) Market price risk
Market price risk is the risk of fluctuation in fair value or future cash flows of the Group’s financial instruments as a result of changes in market price (other than interest or exchange rates).
the Group is exposed to commodity price risk which affects the price of raw materials used in the operations.
the Group has in place policies to manage the Group’s exposure to fluctuations in the selling price of the Group’s products and purchase prices of the key raw materials used in the operations.T he directors conduct constant survey of the global market price and trend in order to determine the selling price.
(c) Fair value measurement
The carrying amounts of cash and cash equivalents, short-term receivables and payables and short-term loan and borrowings reasonably approximate to their fair values due to the relatively short-term nature of these financial instruments.
there have been no transfers in either directions during the financial year (2019: no transfers in either directions).
the table below analyses financial instruments carried at fair value for which fair value is disclosed, together with their carrying amounts shown in the statements of financial position.
Fair value of financial instruments Total Carrying carried at fair value fair amount Level 1 Level 2 Level 3 value RM RM RM RM RM
Financial asset 2020 Short term investments 3,419,617 3,419,617 – – 3,419,617
2019 Short term investments 3,347,706 3,347,706 – – 3,347,706
Financial liability 2020 Lease liabilities 4,682,847 – – 4,634,898 4,634,898
2019 Lease liabilities 4,946,771 – – 4,922,500 4,922,500
Annual Report 2020 103 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
27. CAPITAL MANAGEMENT
the primary objective of the Group’s and of the Company’s capital management is to ensure that they maintain a strong credit rating and healthy capitals ratio in order to support their business and maximise shareholder value.
The Group and the Company manage their capital structure and make adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2020 and 31 December 2019.
the Group and the Company monitor capital using a gearing ratio, which is total debts divided by capital and total debts.
the gearing ratio of the Group and of the Company is as follows:
Group Company 2020 2019 2020 2019 Note RM RM RM RM
Trade and other payables 16 20,193,763 23,007,312 2,612,727 382,854 Loan and borrowings 14 33,173,029 50,132,953 – –
Total debts 53,366,792 73,140,265 2,612,727 382,854
Equity attributable to owners of the Company 287,207,188 285,875,711 112,438,315 112,345,960
Capital and total debts 340,573,980 359,015,976 115,051,042 112,728,814
Gearing ratio 15.7% 20.4% 2.3% 0.3%
28. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR END
other than as disclosed elsewhere in the financial statements, significant events during the financial year are as follows:
on 11 March 2020, the World Health Organisation declared the Coronavirus (“COVID-19”) outbreak as a pandemic in recognition of its rapid spread across the globe.O n 16 March 2020, the Malaysian Government imposed the Movement Control Order (“MCO”) starting from 18 March 2020 to curb the spread of the OVC ID-19 outbreak in Malaysia. The COVID-19 outbreak also resulted in travel restriction, lockdown, social distancing, and other precautionary measures imposed in various countries. When the number of daily new infections began to fall, the MCO was lifted on 12 May 2020 and was replaced with less restrictive forms of MCO. The emergence of the COVID-19 outbreak since early 2020 has brought significant economic uncertainties in Malaysia and across the globe.
the Group has assessed and concluded that the COVID-19 outbreak did not have material adverse effect on the Group’s and the Company’s financial statements for the current financial year, other than the adverse impact on revenue of the Group due to disruption to business activities during theO MC period.
Given the fluidity of the situation, the Group and the Company will continue to monitor the impact of the pandemic and take appropriate and timely measures to minimise its impact on the Group’s and the Company’s operations.
104 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
29. SEGMENT INFORMATION
General information
the Group prepared the following segment information in accordance with MFRS 8 Operating Segments based on the internal reports of the Group’s strategic business units which are regularly reviewed by the Group’s Chief Executive Officer (“CEO”) for the purpose of making decisions about resource allocation and performance assessment.
The three reportable operating segments are as follows:
(a) Investment Holding; (b) Cable Support Systems; and (c) electrical Lighting and Fittings.
Except as above, no other operating segment has been aggregated to form the above reportable operating segments.
there are varying levels of integration between Cable Support Systems reportable segments and theE lectrical Lighting and Fittings reportable segments. This integration includes transfer of raw materials and shared distribution services, respectively. Inter-segment pricing is determined on negotiated basis.
Measurement of reportable segments
Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the consolidated financial statements.
Segment profit or loss is profit earned or loss incurred by each segment with allocation of interest income, depreciation, interest expense, tax expense and other non-cash expenses. There are no significant changes from prior financial year in the measurement methods used to determine reported segment statements of comprehensive income.
All the Group’s assets are allocated to reportable segments.
All the Group’s liabilities are allocated to reportable segments other than deferred tax liabilities.
Annual Report 2020 105 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
29. SEGMENT INFORMATION (CONT’D)
Cable Electrical Adjustments Consolidated Investment Support Lighting and and Financial Holding Systems Fittings Elimination Note Statements RM RM RM RM RM
2020 Revenue External customers – 131,911,109 27,252,157 – 159,163,266 Inter-segment 3,097,200 2,167,702 – (5,264,902) (a) –
Total revenue 3,097,200 134,078,811 27,252,157 (5,264,902) 159,163,266
Results Dividend income 2,778,000 – – (2,778,000) – Interest income – 495,992 108,897 – 604,889 Depreciation on investment properties and property, plant and equipment (78,884) (10,945,086) (542,492) 593,397 (b) (10,973,065) Interest expense – (1,040,001) (114,381) 53,186 (1,101,196) Income tax expense 128,248 (2,359,383) 57,776 – (2,173,359) Other non-cash items – (388,904) (2,181,961) (813) (c) (2,571,678) Segment results 2,303,507 9,098,204 (2,959,735) (2,759,140) (d) 5,682,836
Assets Additions to investment properties and property, plant and equipment – 3,326,723 559,757 (86,303) 3,800,177
Segment assets 118,006,465 338,650,557 63,357,005 (176,650,785) (e) 343,363,242
Liabilities Segment liabilities 3,192,353 147,481,647 44,132,731 (141,429,583) (e) 53,377,148
106 United U-Li Corporation Berhad NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
29. SEGMENT INFORMATION (CONT’D)
Cable Electrical Adjustments Consolidated Investment Support Lighting and and Financial Holding Systems Fittings Elimination Note Statements RM RM RM RM RM
2019 Revenue External customers – 156,802,774 36,658,880 – 193,461,654 Inter-segment 1,119,200 3,126,254 – (4,245,454) (a) –
Total revenue 1,119,200 159,929,028 36,658,880 (4,245,454) 193,461,654
Results Dividend income 800,000 – – (800,000) – Interest income – 483,745 128,822 – 612,567 Depreciation on investment properties and property, plant and equipment (39,442) (11,070,817) (466,150) 444,051 (b) (11,132,358) Interest expense – (1,885,679) (217,296) 43,568 (2,059,407) Income tax expense (66,741) (2,823,787) (37,562) – (2,928,090) Other non-cash items – (337,262) (38,983) – (c) (376,245) Segment results 290,523 3,590,196 (7,348,583) 4,868,612 (d) 1,400,748
Assets Additions to property, plant and equipment – 9,189,370 688,174 (1,285,773) (e) 8,591,771
Segment assets 115,674,775 355,943,984 64,671,150 (173,024,230) (e) 363,265,679
Liabilities Segment liabilities 1,118,168 167,517,786 36,893,164 (132,213,632) (e) 73,315,486
Note: Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements
Annual Report 2020 107 NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
29. SEGMENT INFORMATION (CONT’D)
(a) Inter-segment revenues are eliminated on consolidation.
(b) Depreciation charged on the investment properties from a subsidiary company being recognised as property, plant and equipment on consolidation.
(c) other material non-cash (expenses)/income consist of the following items as presented in the respective notes to the financial statements:
Group 2020 2019 Note RM RM
Impairment loss on trade receivables 10(a) (1,570,101) (454,571) Bad debts written off (78,729) – Reversal of impairment loss on trade receivables 10(a) 17,257 36,344 Net gain on disposal of property, plant and equipment 177,842 44,142 Inventories written down (1,042,078) – Net loss on unrealised foreign exchange (75,869) (2,160)
(2,571,678) (376,245)
(d) the following items are deducted from segment profit to arrive at “Profit before tax” presented in the consolidated statement of comprehensive income:
Group 2020 2019 RM RM
Elimination of inter-segment leases 17,942 16,918 Elimination of inter-segment transfer of property, plant and equipment 918 – Impairment loss on amount due from a fellow subsidiary – 5,651,694 Dividend income (2,778,000) (800,000)
(2,759,140) 4,868,612
(e) Inter-segment balances and investment in subsidiaries are eliminated on consolidation.
Geographical segments
the Group’s business segments operate substantially from Malaysia. In determining the geographical segments of the Group, revenues are based on the country in which the customer is located.
Revenue Total assets Capital expenditure 2020 2019 2020 2019 2020 2019 RM RM RM RM RM RM
Malaysia 139,141,817 161,685,256 334,732,606 350,927,774 3,800,177 8,591,771 Overseas 20,021,449 31,776,398 8,630,636 12,337,905 – –
159,163,266 193,461,654 343,363,242 363,265,679 3,800,177 8,591,771
108 United U-Li Corporation Berhad Statement By Directors (Pursuant to Section 251(2) of the Companies Act 2016)
We, TAN SRI DATO’ WIRA LEE YOON WAH and DATO’ LEE YOON KONG, being two of the directors of UNITED U-LI CORPORATION BERHAD, do hereby state that in the opinion of the directors, the accompanying financial statements set out on pages 49 to 108 are drawn up in accordance with Malaysian Financial Reporting Standards, International FinancialR eporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2020 and of their financial performance and cash flows for the financial year then ended.
Signed on behalf of the Board of Directors in accordance with a resolution of the directors:
...... TAN SRI DATO’ WIRA LEE YOON WAH Director
...... DATO’ LEE YOON KONG Director
Petaling Jaya
Date: 8 April 2021
Annual Report 2020 109 Statutory Declaration (Pursuant to Section 251(1) of Companies Act 2016)
I, CHOONG CHEE YEONG, being the officer primarily responsible for the financial management UNof ITED U-LI CORPORATION BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements set out on pages 49 to 108 are correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
...... CHOONG CHEE YEONG MIA Membership No. :18396
Subscribed and solemnly declared by the abovenamed at Subang Jaya in the state of Selangor Darul Ehsan on 8 April 2021.
Before me,
...... Commissioner for Oath
110 United U-Li Corporation Berhad Independent Auditors’ Report To The Members Of United U-Li Corporation Berhad
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of United U-LI Corporation Berhad, which comprise the statements of financial position as at 31 December 2020 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 49 to 108.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2020, and of their financial performance and their cash flows for the financial year then ended in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
Basis for Opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in theAuditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company of the current financial year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
GROUP
Inventories (Note 9 to the financial statements)
We focused on this this area because the determination of inventories’ carrying amount require judgements by the Directors.T he review of these inventories at lower of cost and net realisable value by the Directors are major source of estimation uncertainty.
Our response:
Our audit procedures included, among others:
§ observing year end physical inventory count to observe physical existence and condition of the identified inventories; § checking the unit cost of selected inventories with reference to the Group’s accounting policies; § checking subsequent sales and understanding the Director’s assessment on estimated net realisable value on selected inventories; and § checking on selected samples whether these inventories have been carried at lower of cost and net realisable value.
Annual Report 2020 111 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF UNITED U-LI CORPORATION BERHAD
(Cont’d)
Key Audit Matters (Cont’d)
GROUP
Trade receivables (Note 10 to the financial statements)
We focused on this area because the significant judgements to be made by Directors over assumptions about risk of default and expected loss rate. In making these assumptions, the Directors is to select inputs to the impairment calculation, based on the Director’s past history and forward-looking estimates at the end of the reporting period.
Our response:
Our audit procedures included, among others:
§ understanding of any significant credit exposures which were significantly overdue through discussing with the Group of their ageing reports and any other collection reports; § obtaining confirmation of balances from selected receivables; § checking subsequent receipts, customer correspondence, and discussing with the Directors on the level of activity with the customer and explanation from the Directors on recoverability with significantly past due balances; and § checking the calculation of any impairment loss as at end of the reporting period.
COMPANY
We have determined that there are no key audit matters to communicate in our report which arose from the audit of the financial statements of the Company.
Information Other than the Financial Statements and Auditors’ Report Thereon
The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
The directors of the Company are responsible for overseeing the Group’s financial reporting process.
112 United U-Li Corporation Berhad INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF UNITED U-LI CORPORATION BERHAD
(Cont’d)
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
§ identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. § obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control. § evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. § conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern. § evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation. § obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Annual Report 2020 113 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF UNITED U-LI CORPORATION BERHAD
(Cont’d)
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the contents of this report.
Baker Tilly Monteiro Heng PLT Dato’ Lock Peng Kuan 201906000600 (LLP0019411-LCA) & AF 0117 No. 02819/10/2022 J Chartered Accountants Chartered Accountant
Kuala Lumpur
Date: 8 April 2021
114 United U-Li Corporation Berhad Properties of The Group
Age of Net Book Date of Description/ Land Area/ Building Value Revaluation/ Company/ Location Existing use Built-up Area Tenure (years) RM’000 Acquisition
United U-LI (M) Sdn. Bhd.
Lot 5 (PT 17044), Factory/ 43,666 Sq.ft/ 99 years 27 3,047 31.12.2020 Jalan Balakong, Factory used 40,881 Sq.ft expiring on Revalued 43300 Seri Kembangan, 11 October 2091 Selangor Darul Ehsan.
No. 33, Jalan Kartunis U1/47, Semi- 9,601 Sq.ft/ 8,392 Freehold 21 3,540 31.12.2020 Temasya Industrial Park, DetachedFactory/ Sq.ft Revalued Seksyen U1, 40150 Shah Alam, Office used Selangor Darul Ehsan.
No. 29, Jalan Taming 7, TerraceFactory/ 2,000 Sq.ft/ 2,500 Freehold 27 380 31.12.2020 Taman Taming Jaya Industrial Store Sq.ft Revalued Park, 43300 Balakong, Selangor Darul Ehsan.
No. 43, Jalan Kamunting 1, TerraceFactory/ 1,600 Sq.ft/ 1,300 Freehold 21 28 31.12.2020 Bukit Sentosa, 48300 Serendah, Vacant Sq.ft Revalued Selangor Darul Ehsan.
No. 25, Jalan Taming 5, TerraceFactory/ 13,500 Sq.ft/ Freehold 17 1,700 31.12.2020 Taman Taming Jaya, Factory used 13,120 Sq.ft Revalued 43300 Balakong, Selangor Darul Ehsan.
No. 27, Jalan Taming 5, TerraceFactory/ 13,500 Sq.ft/ Freehold 17 1,780 31.12.2020 Taman Taming Jaya, Factory used 14,806 Sq.ft Revalued 43300 Balakong, Selangor Darul Ehsan.
No. 3-21-9, Desa Bistari Apartment/ Vacant 700 Sq.ft Freehold 17 78 31.12.2020 Apartment, Lintang Pantai Revalued Jerjak, Mukim 13, 11700 Glugor, Pulau Pinang.
No. 102, Jalan Perigi Nanas TerraceFactory/ 2,400 Sq.ft/ 3,300 99 years expiring on 16.5 226 31.12.2020 8/10, Section 12 (Phase 1B), Vacant Sq.ft 30 March 2097 Revalued Pulau Indah Industrial Park, West Port, 42920 Port Klang, Selangor Darul Ehsan.
Lot 7, Jalan 6/1, Kawasan Factory/ 185,716 Sq.ft/ 99 years expiring on 15 13,335 31.12.2020 Perindustrian Seri Kembangan, Factory used 181,702 Sq.ft 10 January 2089 Revalued 43300 Seri Kembangan, Selangor Darul Ehsan.
Annual Report 2020 115 Properties of The Group
(Cont’d)
Age of Net Book Date of Description/ Land Area/ Building Value Revaluation/ Company/ Location Existing use Built-up Area Tenure (years) RM’000 Acquisition
United U-LI (M) Sdn. Bhd. (Cont’d)
Unit No. L23-120, Resort Suite, Condominium/ 452 Sq.ft 99 years 11 280 31.12.2020 Pyramid Tower, Persiaran Lagoon, Vacant expiring on Revalued Bandar Sunway, 46150 Petaling 21 February 2102 Jaya, Selangor Darul Ehsan.
Lot No. PT 1481, Jalan Emas 1, Factory/ 355,564 Sq.ft/ 99 years 29 21,521 31.12.2020 Nilai Industrial Estate, 71800 Nilai, Factory used 302,229 Sq.ft expiring on Revalued Negeri Sembilan Darul Khusus. 19 August 2089
Lot 761, Nilai Industrial Estate, Industrial Land/ 469,468 Sq.ft 99 years – 22,143 31.12.2020 71800 Nilai, Negeri Sembilan Vacant expiring on Revalued Darul Khusus. 20 August 2089
Lot 750, Nilai Industrial Estate, Industrial Land/ 376,113 Sq.ft 99 years – 11,709 31.12.2020 71800 Nilai, Negeri Sembilan Vacant expiring on Revalued Darul Khusus. 19 August 2089
Gabung Mekar Sdn. Bhd.
Lot 6 (PT 17045), Factory/ 38,118 Sq.ft/ 99 years 27 2,206 31.12.2020 Jalan Balakong, Factory used 37,428 Sq.ft expiring on Revalued 43300 Seri Kembangan, 11 October 2091 Selangor Darul Ehsan.
United U-LI Goodlite Sdn. Bhd.
No. 44, Jalan Cetak, Factory/ 131,282 Sq.ft/ 99 years 48 3,133 31.12.2020 Tasek Industrial Estate, Factory used 108,571 Sq.ft expiring on Revalued 31400 Ipoh, 20 March 2066 Perak Darul Ridzuan.
D-09-20, Menara D, Condominium/ 810 Sq.ft Freehold 5 319 1.9.2020 Residensi Masai (Parc Regency), Vacant Acquired Jalan Masai Jaya 2, 81100 Johor Bahru, Johor Darul Takzim.
United U-LI Building Materials Sdn. Bhd.
1, Jalan Seroja 54, Workshop/ 9,408 Sq.ft/ Freehold 13.5 1,109 31.12.2020 Taman Johor Jaya, Warehouse 10,204 Sq.ft Revalued 81100 Johor Bahru, Johor Darul Takzim.
116 United U-Li Corporation Berhad Analysis of Shareholdings As at 31 March 2021
Analysis by Size of Shareholdings
No. of % of No. of % of Size of Shareholdings Shareholders Shareholders Shares Held Shareholdings
1 – 99 204 7.03 3,880 0.00 100 – 1,000 484 16.68 200,762 0.09 1,001 – 10,000 1,313 45.26 6,683,340 3.07 10,001 – 100,000 717 24.72 23,256,915 10.68 100,001 – 10,889,998* 182 6.27 106,655,091 48.97 10,889,999 and above** 1 0.04 81,000,000 37.19
TOTAL 2,901 100.00 217,799,988 100.00
* Less than 5% of Issued Holdings ** 5% and above of Issued Holdings
List of Substantial Shareholders
Direct Interest Deemed Interest Names of No. of No. of No. Substantial Shareholders Shares Hold % Shares Held %
1. Pearl Deal (M) Sdn. Bhd. (“PDSB”) 81,000,000 37.19 – – 2. Tan Sri Dato’ Wira Lee Yoon Wah 6,492,772 2.98 81,000,000# 37.19 3. Dato’ Lee Yoon Kong 5,800,869 2.66 81,000,000# 37.19 4. Lim Mee Hwa 775,000 0.36 11,625,000α 5.34 5. Yeo Seng Chong 1,250,000 0.57 11,150,000β 5.12
Directors’ Shareholding
Direct Interest Deemed Interest Names of No. of No. of No. Substantial Shareholders Shares Hold % Shares Held %
1. Tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar – – – – 2. Tan Sri Dato’ Wira Lee Yoon Wah 6,492,772 2.98 81,000,000# 37.19 3. Dato’ Lee Yoon Kong 5,800,869 2.66 81,000,000# 37.19 4. teow Lai Seng 13,500 0.01 – – 5. Chim Wai Khuan 700,000 0.32 – – 6. Shariff bin Mohd Shah 658,692 0.30 – –
# Deemed interest through PDSB α Deemed interest through her husband, Mr Yeo Seng Chong and Yeoman Capital Management Pte Ltd β Deemed interest through his wife, Mdm Lim Mee Hwa and Yeoman Capital Management Pte Ltd
Annual Report 2020 117 ANALYSIS OF SHAREHOLDINGS AS AT 31 MARCH 2021
(Cont’d)
List of Thirty Largest Shareholders
No. of % of No. Names shares Holdings
1. Pearl Deal (M) Sdn. Bhd. 81,000,000 37.19 2. DB (Malaysia) Nominee (Asing) Sdn. Bhd. Deutsche Bank AG Singapore for Yeoman 3-Rights Value Asia Fund (PTSL) 10,000,000 4.59 3. DB (Malaysia) Nominee (Tempatan) Sendirian Berhad Deutsche Trustees Malaysia Berhad for Eastspring Investmentssmall-Cap Fund 8,338,150 3.83 4. Dato’ Lee Yoon Kong 5,787,369 2.66 5. Tan Sri Dato’ Wira Lee Yoon Wah 5,563,872 2.55 6. Citigroup Nominees (Tempatan) Sdn. Bhd. Employees Provident Fund Board (PHEIM) 4,300,000 1.97 7. CIMB Group Nominees (Asing) Sdn. Bhd. Exempt an for DBS Bank Ltd (SFS) 4,259,900 1.96 8. CIMB Group Nominees (Tempatan) Sdn. Bhd. CIMB Commerce Trustee Berhad for Kenanga Growth opportunities Fund (50154 TR01) 2,805,600 1.29 9. CIMB Group Nominees (Tempatan) Sdn. Bhd. CIMB Commerce Trustee Berhad for Kenanga Shariah Growth Opportunities Fund (50156 TR01) 2,773,200 1.27 10. HSBC Nominees (Tempatan) Sdn. Bhd. HSBC (M) Trustee Bhd for RHB Private Fund – Series 3 2,458,500 1.13 11. Maybank Nominees (Tempatan) Sdn. Bhd. Maybank Trustees Berhad for Dana Makmur PHEIM (211901) 2,286,800 1.05 12. Maybank Nominees (Asing) Sdn. Bhd. Pledged Securities Account for Ng Chay Hoe 2,234,000 1.03 13. Maybank Nominees (Tempatan) Sdn. Bhd. Tan Yok Hua 1,470,000 0.67 14. CGS-CIMB Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ng Seng Kuan (USJ9-CL) 1,350,000 0.62 15. Chong Kok Fai 1,314,200 0.60 16. Affin Hwang Nominees (Asing) Sdn. Bhd. DBS Vickers Secs (S) Pte Ltd for Yeo Seng Chong 1,250,000 0.57 17. HSBC Nominees (Tempatan) Sdn. Bhd. Exempt an for Caceis Bank (SW-CSG-MY RES) 1,250,000 0.57 18. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Mak Tian Meng 1,164,150 0.53 19. Citigroup Nominees (Asing) Sdn. Bhd. UBS AG 1,162,100 0.53 20. Citigroup Nominees (Asing) Sdn. Bhd. CEP for PHEIM SICAV-SIF 1,142,100 0.52 21. Andrew Lim Cheong Seng 1,000,000 0.46 22. HLIB Nominees (Asing) Sdn. Bhd. Lim & Tan Securities Pte Ltd for Lam Lai Cheng 1,000,000 0.46 23. Maybank Nominees (Tempatan) Sdn. Bhd. Maybank Trustees Berhad for Kenanga Syariahextra Fund (N14011960240) 989,200 0.45 24. Alliancegroup Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ting Siew Pin (8059095) 968,400 0.44 25. Tan Sri Dato’ Wira Lee Yoon Wah 928,900 0.43 26. Lim Teck Ling 836,000 0.38 27. Affin Hwang Nominees (Asing) Sdn. Bhd. DBS Vickers Secs (S) Pte Ltd for Lim Mee Hwa 775,000 0.36 28. Lim Yoke Eng 750,000 0.34 29. Khaw Seang Chuan 723,550 0.33 30. RHB Capital Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ting Siew Pin (CEB) 718,000 0.33
118 United U-Li Corporation Berhad Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Twenty First (21st) Annual General Meeting (“AGM”) of the Company will be held at Glenmarie Ballroom, Holiday Inn Kuala Lumpur Glenmarie, 1 Jalan Usahawan U1/8, Seksyen U1, 40250 Shah Alam, Selangor Darul Ehsan on Thursday, 10th June 2021 at 10.00 a.m. for the following purposes: -
AGENDA
AS ORDINARY BUSINESS
1. to receive the Audited Financial Statements for the financial year ended31st December (Please refer to item 1 of the 2020 together with the Reports of the Directors and the Auditors thereon. Explanatory Notes)
2. to approve the payment of Directors’ fees of RM394,000 for the financial year ended (Ordinary Resolution 1) 31st December 2020.
3. to approve the Non-Executive Directors’ benefits up to an amount ofR M23,850 from (Ordinary Resolution 2) 1st July 2021 until 30th June 2022.
4. to re-elect the following Directors who retire by rotation in accordance with Clause 165 of the Company’s Constitution: -
(a) Tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar (Ordinary Resolution 3)
(b) en Shariff bin Mohd Shah (Ordinary Resolution 4)
5. To re-appoint Messrs Baker Tilly Monteiro Heng PLT as Auditors of the Company until (Ordinary Resolution 5) the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following Ordinary Resolutions:
6. Retention of Independent Non-Executive Directors
“THAT approval be and is hereby given to retain the following directors who have each served as Independent Directors in accordance with the Malaysian Code on Corporate Governance:’’
(i) Mr. Chim Wai Khuan (Ordinary Resolution 6)
(ii) en Shariff Bin Mohd Shah (Ordinary Resolution 7) (subject to the passing of Resolution 4)
7. Authority for Directors to issue and allot shares in the Company pursuant to Sections (Ordinary Resolution 8) 75 and 76 of the Companies Act, 2016
“THAT pursuant to Section 75 and 76 of the Companies Act, 2016, and subject always to the approval of the relevant authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, from time to time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares on Bursa Malaysia Securities Berhad.”
Annual Report 2020 119 NOTICE OF ANNUAL GENERAL MEETING
(Cont’d)
8. Any Other Business
to transact any other business for which due notice shall have been given in accordance with the Company’s Constitution and the Companies Act, 2016.
By Order of the Board UNITED U-LI CORPORATION BERHAD
KOAY SOO NGOH (MAICSA 0856746) [SSM PC No. 202008000755] FOO LI LING (MAICSA 7019557) [SSM PC No. 201908001737] Chartered Secretaries
Petaling Jaya Date: 30th April 2021
NOTES:
1. A member who is entitled to attend and vote at the Meeting shall be entitled to appoint more than one (1) proxy to attend and vote at the Meeting. Where a member appoints more than one (1) proxy, the member shall specify the proportion of his shareholdings to be represented by each proxy.
2. A proxy may, but need not, be a member of the Company. A member may appoint any person to be his proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak and vote at the Meeting.
3. the Instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal, or the hand of its attorney duly authorised. An instrument appointing a proxy to vote at a Meeting shall be deemed to include the power to demand a poll on behalf of the appointer.
4. Where a Member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), it may appoint one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.
5. Where a Member of the Company is an exempt authorised nominee as defined under SICDA, which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.
6. the instrument appointing a proxy together with the power of attorney (if any) shall be deposited at the Registered Office of the Company at 62C, Jalan SS21/62, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before time appointed for holding the Meeting or any adjournment meeting or in the case of a poll, not less than 24 hours before the time appointed for the taking of the poll; otherwise the instrument of proxy shall not be treated as valid and the person so named shall not be entitled to vote in respect thereof. Copies of the duly executed form of proxy which are faxed and/or e-mailed to us are not acceptable.
7. Pursuant to Paragraph 8.29A(1) of the Main Market ListingR equirements, all the resolutions at theT wenty First Annual General Meeting of the Company shall be put to vote by way of poll.
8. For purpose of determining who shall be entitled to attend this Meeting, the Company shall request Bursa Malaysia Depository Sdn. Bhd. to issue a Record of Depositors as at 3rd June 2021 pursuant to Clause 129 of the Company’s Constitution and paragraph 7.16(2) of Bursa Malaysia Securities Berhad Main Market ListingR equirements. A Depositor whose name appears as such Record of Depositors shall be entitled to attend this Meeting.
9. By submitting the proxy form, the member consents to the Company (and/or its agents/service providers) collecting, using and disclosing the personal data therein in accordance with the Personal Data Protection Act 2010, for the purpose of the Annual General Meeting, including any adjournment thereof.
120 United U-Li Corporation Berhad NOTICE OF ANNUAL GENERAL MEETING
(Cont’d)
EXPLANATORY NOTES TO THE AGENDA
Item 1 of the Agenda
This item is meant for discussion only as the provision of Section 340(1) of the Companies Act, 2016 does not require shareholders’ approval for the Audited Financial Statements. Therefore, this item will not be put forward for voting.
Item 3 of the Agenda – Ordinary Resolution 2 Non-Executive Directors’ Benefits
The Company is seeking shareholders’ approval on the benefits payable to theN on-Executive Directors (“NEDs”) for the period commencing 1st July 2021 until 30th June 2022 as set out below, as and when incurred:
Meeting Allowances for Board and Board Committees Other Allowances Benefit-in-Kind Total Directors (RM) (RM) (RM) (RM) Tan Sri Dato’ Seri Utama Haji Ismail bin Haji Omar 6,700 – 3,750 10,450
Shariff bin Mohd Shah 6,700 – – 6,700
Chim Wai Kuan 6,700 – – 6,700
Item 6 of the Agenda – Ordinary Resolutions 6 and 7 Retention as Independent Non-Executive Directors of the Company pursuant to the Malaysian Code on Corporate Governance
The Nomination Committee has assessed the independence of Mr Chim Wai Khuan and En Shariff bin Mohd Shah, who have served as an Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years, and recommended that they continue to act as Independent Non-Executive Directors of the Company based on the following justifications:-
(i) they fulfilled criteria under the definition of Independent Director as stated in the Main Market ListingR equirements of Bursa Malaysia Securities Berhad and therefore would be able to function as a check and balance and bring an element of the object to the Board of Directors. (ii) they possess vast experience in a diverse range of businesses which enable them to provide a constructive and independent judgement for the interest of the Company. (iii) They have performed their duty diligently and in the best interest of the Company and provides a broader view, independent and balanced assessment of proposals for the management. (iv) they have actively participated in board discussion and provided an independent voice on the Board.
Item 7 of the Agenda – Ordinary Resolution 8 Authority for Directors to issue and allot shares in the Company pursuant to Sections 75 and 76 of the Companies Act, 2016
The Company continues to consider opportunities to broaden the operating base and earnings potential of the Company.T he proposed Resolution 8 if passed, will authorise the directors to issue shares up to 10% of the issued and paid-up capital of the Company for the time being and for such purposes as the directors consider would be in the best interest of the Company.
The purpose for the renewal of a general mandate is to avoid any delay and costs in convening a general meeting and to specifically approve such an issue of shares for any possible fund raising activities (excluding placing of shares) for the purpose of funding future investment projects, additional working capital etc.
This authority unless revoked or varied at a general meeting will expire at the next Annual General Meeting of the Company.
As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last Annual General Meeting of the Company held on 27th August 2020 and which will lapse at the conclusion of the forthcoming Annual General Meeting. Annual Report 2020 121 Statement Accompanying Notice of Annual General Meeting (Pursuant To Paragraph 8.27(2) Of The Bursa Malaysia Securities Berhad Main Market ListingR equirements)
1. Details of individuals who are standing for election as Directors (excluding Directors standing for re-election)
no individual is seeking election as a Director at the 21st AGM of the Company.
2. General mandate for issue of securities in accordance with paragraph 6.03(3) of Bursa Malaysia Securities Berhad Main Market Listing Requirements
Details of the general mandate/authority for Directors to allot and issue shares in the Company pursuant to Sections 75 and 76 of the Companies Act, 2016 are set out in the Explanatory Notes to Special Business of the Notice of 21st AGM.
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If this form is returned without any indication as to Incorporated inMalaysia CORPORATION BERHAD , hereby appoint thefollowing: (FULL ADDRESS) at 10.00a.m. at seal orunderthehandofitsofficer attorney dulyauthorised) (if Shareholder isacorporation, thispartshouldbe executed under Signature(s) ofshareholder(s)/Attorney (Tel No: wenty First AnnualGeneral Meeting oftheCompany shallbeput to vote by way ofpoll. andat any adjournment thereof. CDS Account No. R emuneration from 1 from emuneration R egistered ...... ffice of the Company at 62C, Jalan SS21/62, Damansara SS21/62, Jalan 62C, Company at the of Office - Proportion ofShareholdings (%) st R July 2021 until 2021 July equirements. A Depositor whose name appears as such - R ecord of Depositors as at 3rd June 2021 June 3rdat Depositorsas ecordof T wenty First Annual GeneralwentyFirstAnnual For tama, 47400 Utama, Against ) Fold this flap for sealing
Then fold here
AFFIX STAMP
The Company Secretary UNITED U-LI CORPORATION BERHAD [Company No. 200001008131 (510737-H)] 62C, Jalan SS 21/62, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia.
1st fold here UNITED U-LI CORPORATION BERHAD
UNITED U-LI CORPORATION BERHAD [
Co mp [Company No. 200001008131 (510737-H)] a n y No. 200001008131 ( 510737-H )] A NNU L REP O RT 2020
Corporate Office Contact Website UNITED U-LI CORPORATION BERHAD Tel : (+603) 5569 5999 www.uli.com.my Annual Report [Company No. 200001008131 (510737-H)] Fax : (+603) 5569 1666 No. 33, Jalan Kartunis U1/47 Email : [email protected] 2020 Temasya Industrial Park, Seksyen U1 40150 Selangor Darul Ehsan, Malaysia