GOODWAY INTEGRATED INDUSTRIES BHD (Incorporated In Malaysia) (Company No. 618972-T)
Annual Report 2015 CONTENTS
CORPORATE INFORMATION …………………………………………………... 1
CORPORATE STRUCTURE ...... 3
GROUP FINANCIAL HIGHLIGHTS …………………………………………..... 4
CHAIRMAN’S STATEMENT ……………………………………………………... 7
PROFILE OF THE BOARD OF DIRECTORS ……………………………...... 9
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT ……...... 14
STATEMENT ON CORPORATE GOVERNANCE ………………………………. 20
CORPORATE SOCIAL RESPONSIBILITY (“CSR”) STATEMENT ...... 38
STATEMENT ON RISK MANAGEMENT ANDINTERNAL CONTROL ..………. 39
FINANCIAL STATEMENTS Directors’ Report ………………………………………………………………… 43 Independent Auditors’ Report ………………………...... 47 Consolidated Statement of Financial Position ...………………………………… 49 Consolidated Statement of Profit or Loss and Other Comprehensive Income ….. 50 Consolidated Statement of Changes in Equity …..……………………………… 51 Consolidated Statement of Cash Flows .………………………………………… 53 Statement of Financial Position ...……………………………………………….. 55 Statement of Profit or Loss and Other Comprehensive Income ………………… 56 Statement of Changes in Equity ………………………………………………… 57 Statement of Cash Flows ………………………………………………………… 58 Notes to the Financial Statements ………………………………………………. 59 Statement by Directors ………………………………………………………….. 152 Statutory Declaration ……………………………………………………………. 153
LIST OF GROUP PROPERTIES ……………………………………………………. 154
ANALYSIS OF SHAREHOLDINGS ……………………………………………….. 157
NOTICE OF ANNUAL GENERAL MEETING ……………………………………. 161
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 165
PROXY FORM ……………………………………………………….………………. Enclosed
1 CORPORATE INFORMATION
BOARD OF DIRECTORS AUDIT AND RISK MANAGEMENT COMMITTEE Mok Yuen Lok (Chairman, Mok Yuen Lok Independent Non-Executive Director) (Chairman) (Retired on 18 June 2015) (Retired on 18 June 2015)
Ismail Bin Mahayudin Ismail Bin Mahayudin (Independent Non-Executive Director) (Retired on 18 June 2015) (Retired on 18 June 2015) Ramlee Bin Mohd Shariff Y.A.M. Tengku Sulaiman Shah Alhaj Ibni (Chairman) Almarhum Sultan Salahuddin Abdul Aziz (Appointed on 1 July 2015) Shah Alhaj (Chairman, Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Independent Non-Executive Director) Almarhum Sultan Salahuddin Abdul Aziz (Appointed on 1 July 2015) Shah Alhaj (Appointed on 1 July 2015) Tai Boon Wee (Chief Executive Officer) Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain Wong Ping Kiong (Chief Operating Officer) JOINT NOMINATION Ramlee Bin Mohd Shariff AND REMUNERATION COMMITTEE (Independent Non-Executive Director) (Appointed on 1 July 2015) Ismail Bin Mahayudin (Chairman) Lt Jen (B) Datuk Hj Adenan Bin Hj (Retired on 18 June 2015) Mohamad Zain
(Non-Independent Non-Executive Director) Mok Yuen Lok (Retired on 18 June 2015) Lim Teck Seng (Independent Non-Executive Director) (Appointed on 1 April 2016) Ramlee Bin Mohd Shariff (Chairman) Tai QiSheng (Appointed on 1 July 2015) (Executive Director) (Appointed on 1 April 2016) Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Tai Qiyao Shah Alhaj (Alternate Director to Tai Boon Wee) (Appointed on 1 July 2015) (Appointed on 1 April 2016) Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain
1 CORPORATE INFORMATION (CONTINUED)
COMPANY SECRETARY REGISTERED OFFICE
Foo Siew Loon Level 33A, Menara 1 MK (MAICSA 7006874) Kompleks 1 Mont’ Kiara No.1, Jalan Kiara Mont’ Kiara AUDITORS 50480 Kuala Lumpur Tel: 603-6201 8080 Kreston John & Gan (AF0113) Fax: 603-6203 2788 160-2-1, Kompleks Maluri Business Centre, Jalan Jejaka 55100 Kuala Lumpur SHARE REGISTRAR Tel: 603-9287 1889 Fax: 603-9283 0889 Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 PRINCIPAL BANKERS Jalan PJU 1A/46 47301 Petaling Jaya AmBank (Malaysia) Berhad Tel: 603-7841 8000 Affin Bank Berhad Fax: 603-7841 8152 CIMB Bank Berhad Maybank Islamic Bank Berhad United Overseas Bank Berhad STOCK EXCHANGE LISTING
Main Market PRINCIPAL PLACE OF Bursa Malaysia Securities Berhad BUSINESS (“Bursa Securities”)
Manufacturing Plant Lot PT 1654 & PT 1657 Nilai Industrial Estate 71800 Nilai Negeri Sembilan Darul Khusus Tel: 606-799 4833 Fax: 606-799 4866
Sales & Marketing / Corporate Office Level 6 A-06-03 Empire Tower 1 Empire Subang Jalan SS16/1 SS16, 47500 Subang Jaya Selangor Tel: 603-5632 9981 Fax: 603-5632 9980 Web: http://www.giibworld.com
2 3 CORPORATE STRUCTURE
RUBBER COMPOUNDING
GOODWAY RUBBER INDUSTRIES SDN BHD
GOODWAY RUBBER COMPANY PTY LTD
GOODWAY SUPERCOOL PTY LTD
GOODWAY EUROPE (SWEDEN) A.B.
PT VULKANISIR GOODWAY INDONESIA
GOODWAY SIMPLEX (HK) PTE LIMITED GOODWAY INTEGRATED JIANGSU GOODWAY RUBBER INDUSTRIES PRODUCTS CO., LTD BERHAD
TYRE RETREADING
BIG WHEEL GREEN TYRES SDN BHD
BIG WHEEL (MALAYSIA) SDN BHD
BIGWHEEL OTR SDN BHD
RETAILING &WHOLESALE OF NATURAL RUBBER
GOODWAY SMR SDN BHD
PROPERTY DEVELOPMENT
GIIB DEVELOPMENT SDN BHD
Note: The above structure does not include dormant/non-operating subsidiaries
2 3 GROUP FINANCIAL HIGHLIGHTS
2015 2014 2013 2012 Description RM'000 RM'000 RM'000 RM'000
Revenue 181,362 207,475 265,771 285,069 (Loss) / Profit before tax (6,874) (15,239) 6,869 8,937 (Loss) / Profit for the year (9,248) (12,810) 6,045 5,415 (Loss) / Profit attributable to shareholders (9,345) (12,403) 5,767 5,294
Share capital 55,259 55,259 55,259 55,259 Reserves 17,365 23,105 35,268 35,471
Net Equity funds 72,624 78,364 90,527 90,730 Non-controlling interests 386 290 1,057 779
TOTAL EQUITY 73,006 78,654 91,584 91,509
Long term liabilities 51,874 56,385 63,254 55,203 Current liabilities 139,779 130,443 116,255 103,603
TOTAL EQUITY AND LIABILITIES 264,663 265,482 271,093 250,315
Property, plant and equipment 89,524 85,578 79,535 102,421 Land held for development 7,411 7,411 7,411 - Goodwill 586 6,648 6,673 6,706 Other non-current assets - - 75 1,225 Current assets 167,142 165,845 177,398 139,963
TOTAL ASSETS 264,663 265,482 271,092 250,315
Net assets per share (RM) 0.66 0.71 0.82 0.82 Net (loss) / earnings per share (sen) (8.46) (11.22) 5.22 4.79
4 5 GROUP FINANCIAL HIGHLIGHTS (CONTINUED) GROUP FINANCIAL HIGHLIGHTS (CONTINUED) GROUP FINANCIAL HIGHLIGHTS (CONTINUED)
RevenueRevenue (RM'000)(RM'000) 300000 Revenue (RM'000) 285,069 285,069 300000 2015 2014 2013265,771 2012 300000 2015 2014 2013265,771 2012 285,069 250000 2015 2014 2013265,771 2012 250000 207,475 250000 207,475 200000 181,362 207,475 200000Revenue181 ,181 362 , 362 207 , 475 265, 771 285, 069 200000 Revenue181,362 181 , 362 207 , 475 265, 771 285, 069 150000Revenue 181 , 362 207 , 475 265, 771 285, 069 150000 150000 100000 100000 100000 50000 50000 50000 0 0 0 2015 2014 2013 2012 2015 2014 2013 2012 2015 2014 2013 2012
ProfitProfit BeforeBefore TaxTax (RM'000)(RM'000) 15000 Profit Before Tax (RM'000) 15000 2015 2014 2013 2012 15000 2015 2014 2013 2012 8,937 10000 2015 2014 20136,869 2012 8,937 10000 8,937 10000 6,869 5000 6,869 5000Profit befo (6,874) (15,239) 6,869 8,937 5000 Profit befo (6,874) (15,239) 6,869 8,937 0 Profit befo (6,874) (15,239) 6,869 8,937 0 0 2015 2014 2013 2012 -5000 2015 2014 2013 2012 -5000 2015 2014 2013 2012 -5000 -10000 (6,874) -10000 (6,874) -10000 (6,874) -15000 -15000 -15000 (15,239) -20000 (15,239) -20000 (15,239) -20000
TotalTotal Assets Assets (RM (RM'' 000) 000) 275,000 Total Assets (RM'271,092 000) 275,000 271,092 275,000270,000 2015 2014 2013271,092 2012 270,000 264,663 2015265,482 2014 2013 2012 270,000265,000TOTAL A264,663 264,6632015 265,482 2014265,482 271,092 2013 250,315 2012 265,000TOTAL 264,663 A 264,663 265,482265,482 271,092 250,315 265,000260,000TOTAL A 264,663 265,482 271,092 250,315 260,000 260,000255,000 255,000 250,315 255,000250,000 250,315 250,000 250,315 250245,000,000 245,000 245,000240,000 240,000 240,000235,000 235,000 235,000 2015 2014 2013 2012 2015 2014 2013 2012 2015 2014 2013 2012
4 5 GROUP FINANCIAL HIGHLIGHTS (CONTINUED) GROUP FINANCIAL HIGHLIGHTS (CONTINUED)
Shareholders'2015 2014 Funds 2013 (RM'000) 2012 Shareholders'2015 2014 Funds 2013 (RM'000) 2012 100,000Sharehol d 72,624 78,364 90,527 90,730 Sharehold 72,624 78,364 90,527 90,527 90,730 90,730 100,00090,000 90,527 90,730 78,364 90,000 80,000 72,624 78,364 70,00080,000 72,624 6070,000,000 50,00060,000 40,00050,000 30,00040,000 20,00030,000 10,00020,000 10,000- - 2015 2014 2013 2012 2015 2014 2013 2012
Net Earnings Per Share (sen) Net Earnings Per Share (sen) 8.00 2015 2014 2013 2012 5.22 6.008.00 NetEarning 2015 2014 2013 2012 4.79 (8.46) (11.22) 5.22 5. 22 4.79 4.006.00 NetEarning (8.46) (11.22) 5.22 4.79 4.79 2.004.00 0.002.00 -2.000.00 2015 2014 2013 2012 -4.00-2.00 2015 2014 2013 2012 -6.00-4.00 -6.00-8.00 -10.00-8.00 (8.46) -10.00 (8.46) -12.00 (11.22) -14.00-12.00 (11.22) -14.00
6 7 CHAIRMAN’S STATEMENT
Dear Shareholders,
On behalf of the Board of Directors, I am pleased to present you the Annual Report and Audited Financial Statements of Goodway Integrated Industries Berhad group of companies for the financial year ended 31 December 2015.
BUSINESS OVERVIEW
The global economic growth moderated in 2015, particularly the oceanic region, euro zone and developing nations. The collapsed of the commodities prices had a bad economic impact on the commodities producing countries. As such, the business environment was generally cautious in the year on the consequent impact of sluggish economy in the oceanic region and euro zone and the continued slowdown in certain large developing countries like China. This had resulted in certain negative impact on some local companies exporting their products to those affected countries.
FINANCIAL PERFORMANCE
In the financial year ended 31 December 2015, the Group recorded revenues of RM181.36 million and losses after tax of RM9.2 million as compared to the preceding year’s revenues of RM207.47 million and losses after tax of RM12.81 million. The lower revenue achieved was mainly due to the discontinuation of SMR trading business and lower sales registered as a result of lower commodities prices and softer demand in the countries where the Group is operating in. The Group had narrowed its losses as a result of continuous improvement in production efficiency and better product sales mix during the year despite the Group’s impaired loss on goodwill of RM6 million in the same year.
Within our business segments, the Rubber Compound business recorded revenues of RM105.38 million as compared to the preceding year’s revenues of RM130.35 million. The Retreading Services recorded revenues of RM46.83 million as compared to RM51.83 million achieved in the previous financial year.
The Group’s new venture into property development had contributed to both revenue and bottom line during the year.
DIVIDEND
The Board of Directors do not recommend any dividend payment for the financial year ended 31 December 2015.
6 7 CHAIRMAN’S STATEMENT (CONTINUED)
PROSPECTS FOR THE YEAR AHEAD
Both the global and Malaysian economies are expected to remain on a path of slow and gradual growth or recovery. The sluggish economy will in a way result in the Company’s operating environment to be more challenging as market sentiment is still cautious which may affect customers’ buying interest. Higher operating costs resulted from rising costs in wages and natural gas tariff and market competition are the key concerns of the Company in the current year which may affect sales turnover and profitability.
The Company continues to look into various strategies and opportunities to improve the performance of the business. The property development project is expected to generate favourable cashflow and profits for the Group in 2016.
NOTES OF APPRECIATION
On behalf of the Board, I would like to thank our former Chairman/Independent Non-Executive Director, Mr Mok Yuen Lok and Independent Non-Executive Director, Tuan Hj Ismail Bin Mahayudin who had retired at the last Annual General Meeting, for their valuable contributions to the Company. I also welcome Encik Ramlee Bin Mohd Shariff who was appointed during the financial year, Mr Tai Qisheng and also Mr Tai Qiyao and Mr Lim Teck Seng who were appointed as Directors recently. The Board believes that the Company will benefit from the experience and invaluable expertise of these new directors.
On behalf of the Board of Directors, I would also like to express my gratitude to the management and staff for their commitment and dedication in our united efforts to drive the company forward.
Our gratitude and appreciation is also extended to our valued clients, bankers, business associates and other stakeholders for their continued trust and support.
Y.A.M. TENGKU SULAIMAN SHAH ALHAJ IBNI ALMARHUM SULTAN SALAHUDDIN ABDUL AZIZ SHAH ALHAJ Chairman
8 9 PROFILE OF THE BOARD OF DIRECTORS
Y.A.M. TENGKU SULAIMAN SHAH ALHAJ IBNI ALMARHUM SULTAN SALAHUDDIN ABDUL AZIZ SHAH ALHAJ Chairman, Independent Non-Executive Director Malaysian, aged 65
Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (“Y.A.M. Tengku Sulaiman Shah”) was appointed as an Independent Non-Executive Director on 1 July 2015. He is the Chairman of the Company and also member of Audit and Risk Management Committee and Joint Nomination and Remuneration Committee of the Company.
After completing Wellingborough Primary & Secondary School at Northamptonshire, UK and at Greylands College Bembridge, Isle of Wright, Y.A.M. Tengku Sulaiman Shah started his career with an advertising company called Ogilvy & Mather. Subsequently, Y.A.M. Tengku Sulaiman Shah formed Syarikat Pembinaan Setia Sdn Bhd which is now known as SP Setia Berhad, a public company listed it on the Main Board of Bursa Malaysia Securities Berhad. In 1997, he relinquished his position in SP Setia Berhad.
Y.A.M. Tengku Sulaiman Shah was also appointed as the Chief of Ceremony for the State of Selangor by his late father H.R.H., the Sultan of Selangor in 1978 which carries the title "Y.A.M. Tengku Panglima DiRaja Selangor". He is also a member of The Council of the Royal Court of Selangor (Dewan DiRaja). Y.A.M. Tengku Sulaiman Shah was formerly a director of Malaysian Resources Corporation Berhad, Samanda Holdings Berhad, MCB Holdings Berhad, SIME UEP and Bina Goodyear Berhad. Y.A.M. Tengku Sulaiman Shah is currently a Director of Baneng Holdings Berhad.
TAI BOON WEE Chief Executive Officer Malaysian, aged 56
Mr Tai Boon Wee was appointed Chief Executive Officer and Group Managing Director of the Company on 20 May 2004.
He joined Goodway Rubber Industries Sdn Bhd in 1989 as the Marketing Manager overseeing the international market. With his visionary leadership and outstanding performance, he was later appointed as the Operations Director in 1991 and subsequently assumed the position of Managing Director in 1994.
He has contributed immensely to the Group’s expansion from 1993 to 2003 by successfully leading a 10 years joint venture project with Gummiwerk Kraiburg Produktions GmbH (“GK”), a German rubber compound entity, involving the transfer of technology know-how for the manufacturing of technical rubber and rubber compounds by GK to the Group. Mr Tai was the chief strategist for the overall market expansion of the Group globally. He was also instrumental in orchestrating the listing of Goodway Integrated Industries Berhad on Bursa Malaysia Securities Berhad in 2004.
He is the father of Mr Tai Qisheng, an Executive Director of the Company and also the father of Mr Tai Qiyao, an Alternate Director to him.
8 9 PROFILE OF THE BOARD OF DIRECTORS (CONTINUED)
WONG PING KIONG Chief Operating Officer Malaysian, aged 53
Madam Wong Ping Kiong was appointed as an Executive Director of the Company on 20 May 2004.
She began her career with the group of companies since 1989. Throughout her employment with the Group, Wong Ping Kiong had demonstrated great leadership and entrepreneurial skill that earned her several senior posts including Managing Director and in early 2008, Chief Operating Officer of the Group.
Her immense contribution to the Group was shown through her dedication and sheer commitment in leading the sales and marketing team to greater heights in 2007.
She graduated from Oklahoma State University, United States of America with a degree in Bachelor of Science in Business Administration majoring in Accounting and minor in Management Information System.
RAMLEE BIN MOHD SHARIFF Independent Non-Executive Director Malaysian, aged 51
Encik Ramlee bin Mohd Shariff was appointed as an Independent Non-Executive Director of the Company on 1 July 2015. He is also the Chairman of the Audit and Risk Management Committee and Joint Nomination and Remuneration Committee of the Company.
He started his career in 1987 with one of the big four accounting firms, where he gained extensive experience handling a wide client portfolio. In 1993, he joined a Malaysian conglomerate as the Group Internal Audit Manager and was promoted to Group Financial Controller in 1995. In 1997, he joined a public listed company as the General Manager - Finance and was responsible for coordinating and directing the financial planning, budgeting and investment activities of the Group. He left the said company in 1998 and was then involved in the restructuring exercise of a public listed company under Section 176 of the Companies Act 1965. He was appointed as a director of a public listed company in 2000 and resigned in 2009. Subsequently, he was involved in several corporate exercises including listing and fund raising.
He is a fellow member of the Association of Chartered Certified Accountants.
10 11 PROFILE OF THE BOARD OF DIRECTORS (CONTINUED)
LT JEN (B) DATUK HJ ADENAN BIN HAJI MOHAMAD ZAIN Non-Independent Non-Executive Director Malaysian, aged 68
Lt Jen (B) Datuk Hj Adenan Bin Haji Mohamad Zain was appointed as a Non-Independent Non- Executive Director of the Company on 28 October 2005.
He received his early education in Penang and graduated from the University of Kent at Canterbury, UK with a Diploma in Politics and International Relations in 1987 and with a Master of Arts Degree in International Relations in 1988. He was awarded a Diploma (PSc) by the Malaysian Armed Forces Staff College (“MAFSC”) and Defence Services Staff College (DSSC) Wellington, India. He was also awarded a Master of Science Degree (MSc) in Defence Studies by University of Madras, India.
Lt Jen (B) Datuk Hj Adenan Bin Haji Mohamad Zain served in the Malaysian Armed Forces for 38 years before retiring on 10 November 2004. During his early service in the Armed Forces, he held many important positions such as Directing Staff at the MAFSC and Chief of Staff of an Infantry Division. In the rank of Brigadier General, he was the Director of Training Management at the Training and Doctrine Command (TRADOC) and later as the Commandant of the Malaysian Armed Forces Academy (ATMA). He spent the last five years of his service at the Ministry of Defence in the rank of Major General and Lt General. He held the appointment of Assistant Chief of Staff Defence Planning for four years and finally as the Chief of Staff at the Malaysian Armed Forces Headquarters. For his services to the King and Country, Lt Jen (B) Datuk Hj Adenan was conferred with several awards and Datukship.
His other positions include:
1. Non-Executive Chairman of Gamat Emas Sendirian Berhad;
2. Vice President of Rotary Club of Kuala Lumpur DiRaja 2014-2015 (R.I District 3300), a Non-Government Organization.
LIM TECK SENG Independent Non-Executive Director Malaysian, aged 46
Mr Lim Teck Seng was appointed as an Independent Non-Executive Director of the Company on 1 April 2016.
He graduated from University of Nebraska, Lincoln, USA with a Degree in Bachelor of Science in Business Administration (Major in Finance). He is presently the Deputy Managing Director of JF Apex Securities Berhad. Some of his previous appointments include Chief Operating Officer of JF Apex Securities Berhad, Vice President (Dealing- Equity Market) of MIDF Amanah Investment Bank Berhad, General Manager / Manager (Dealing and Business Development) of MIDF Sisma Securities Sdn. Bhd., Assistant Corporate Planning Manager of Leverage Management Sdn. Bhd. and Assistant Manager of Pacific Bank Berhad.
He is currently an Independent Non-Executive Director of Asia Poly Holdings Berhad.
10 11 PROFILE OF THE BOARD OF DIRECTORS (CONTINUED)
TAI QISHENG Executive Director Malaysian, aged 29
Mr Tai Qisheng was appointed as an Executive Director of the Company on 1 April 2016.
He graduated from University of Sydney, Australia with a Degree in Bachelor of Commerce (Accounting and Finance). He started his career as Enterprise Risk Management Junior Executive in the Company in year 2008. His main task was to provide assistance in developing, streamlining the processes and SOP of all the departments of the Company. In year 2009, he was appointed to the Sales and Marketing Department of Goodway Rubber Industries Sdn Bhd ("GRISB"), a wholly owned subsidiary of the Company. He was then subsequently promoted to the Head of Sales and Marketing Department of GRISB. During his tenure with GRISB, he managed to secure various contracts for the company, including USA's number one (1) tyre company. In 2014, he was promoted to Group Strategy and Communication Manager and was responsible for structuring the overall organization to build long term strategy for the overall businesses and to improve the profitability of the Company. He brings with him vast experiences in business development. He has also been appointed as an Honorary Member of Malaysia Rubber Products Manufacturer Association (MRPMA) since 2015. He also currently serves as the Deputy President of the Malaysian Association of ASEAN Young Entrepreneur (MAAYE).
TAI QIYAO Alternate Director to Tai Boon Wee Malaysian, aged 28
Mr Tai Qiyao was appointed as an Alternate Director to Mr Tai Boon Wee, the Chief Executive Officer of the Company on 1 April 2016.
He graduated from University of Sydney, Australia with a Degree in Bachelor of Economics. He started his career as Enterprise Risk Management Executive in Goodway Rubber Industries Sdn Bhd ("GRISB") and his responsibility was to raise awareness on Risk Management to GRISB and Big Wheel Green Tyres Sdn Bhd (BWGTSB). During his tenure with GRISB, he had implemented an Enterprise Risk Management for GRISB and BWGTSB. He was then appointed as Head of Franchising of GRISB and established Supercool Franchise Program in Indonesia, UAE, Philippines, Tanzania, Bahrain and Qatar. In year 2014, he was appointed as Corporate Manager of the Company to provide analytics in business health and to establish clear strategies for growth and profitability. He has vast experience in operational and commercial aspects of the business.
12 13 FURTHER INFORMATION ON BOARD OF DIRECTORS
Shareholdings
Details of Directors’ Shareholdings in the Company are disclosed in pages 157 to 160 of this Annual Report.
Conviction of offences
None of the Directors have any convictions of offences within the past 10 years.
Conflict of interest
None of the Directors have conflict of interest within the Company.
None of the Directors have any family relationship with any director and/or major shareholders of the Company save and except for Mr. Tai Qisheng and Mr. Tai Qiyao who are brothers and sons of Mr. Tai Boon Wee.
Mr. Tai Boon Wee (“Mr. Tai”), who is related to Massive Structure Sdn Bhd and Sierra Growth Sdn Bhd, the major shareholders of the Company.
Massive Structure Sdn Bhd is a company incorporated in Malaysia and its directors and shareholders are Madam Goh Gee Thien and Mr. Tai Qisheng. Both Madam Goh Gee Thien and Mr. Tai Qisheng are related to Mr. Tai as wife and son respectively.
Sierra Growth Sdn Bhd is a company incorporated in Malaysia and its directors and shareholders are Mr. Tai and Madam Goh Gee Thien. Madam Goh Gee Thien is related to Mr. Tai as wife.
Attendance at Board Meetings
The numbers of board meetings attended by the Board of Directors of the Company are disclosed in the Corporate Governance Statement in page 30 of the Annual Report.
12 13 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
The Board of Directors of Goodway Integrated Industries Berhad (“the Company”) is pleased to present the Report of the Audit and Risk Management Committee (“ARMC”) of the Company and its subsidiaries (“the Group”) for the financial year ended 31 December 2015.
The ARMC was established on 20 May 2004 as Audit Committee but its name was changed to Audit and Risk Management Committee (“ARMC”) on 25 February 2010. Consistently, the ARMC have varied its Terms of Reference to reflect its wider role and responsibilities. The ARMC comprises the following members:-
Chairman
Mok Yuen Lok (Retired on 18 June 2015) (Independent Non-Executive Director, a member of MIA)
Ramlee Bin Mohd Shariff (Appointed on 1 July 2015) (Independent Non-Executive Director)
Members
Ismail Bin Mahayudin (Retired on 18 June 2015) (Independent Non-Executive Director)
Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (Appointed on 1 July 2015) (Independent Non-Executive Director)
Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain (Non-Independent Non-Executive Director)
1. TERMS OF REFERENCE
1.1 Membership
(a) The ARMC shall be appointed by the Board pursuant to a Board Resolution.
(b) It shall comprise at least three (3) members of whom all must be Non-Executive Directors with a majority of them being independent Directors.
14 15 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED)
(c) At least one member of the ARMC:
i) must be a member of the Malaysian Institute of Accountants (“MIA”); or
ii) if he/she is not a member of the MIA, he/she must have at least three (3) years’ working experience and - x he/she must have passed the examinations specified in Part 1 of the First Schedule of the Accountants Act 1967; or x he/she must be a member of one of the Associations of Accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
iii) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”)
(d) The Chairman of the ARMC shall be an independent Non-Executive Director nominated by the Board and shall be appointed amongst the members.
(e) No alternate Director may be appointed as a member of the ARMC.
1.2 Objectives
(a) To provide the Board with an objective and independent review of the financial performance and the effectiveness of the operational and administrative controls and procedures;
(b) To assist the Board in establishing and maintaining an effective and efficient internal controls system;
(c) To assess the independence of the Company’s external auditors and to ensure that the auditors carry out their work freely and in an objective manner;
(d) To provide a forum for regular, informal and private discussions between the external auditors, the internal auditors or both excluding the attendance of the other Directors and personnel of the Group when deemed necessary;
(e) To reinforce the objectivity of the internal audit function; and
(f) To oversee the Group’s proposed risk programme and ensure that the risk management framework is consistently adopted throughout the Group.
14 15 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED)
1.3 Authority
The Board authorises the ARMC:
(a) To investigate any activity within the ARMC’s term of reference and have unlimited access to both the internal and external auditors, as well as personnel of the Group;
(b) To obtain independent legal or other professional advice as and when it considers necessary; and
(c) To establish Sub-Audit Committee to carry out special investigations on behalf of the ARMC in such a manner as the ARMC deems fit.
1.4 Functions, Duties and Responsibilities
The functions, duties and responsibilities of the ARMC are as follows and it will report its findings to the Board:-
(a) To review the consolidated quarterly and annually financial statements of the Group and thereafter submit the same for the Board’s adoption, focusing particularly on any changes in accounting policies and practices, significant adjustments arising from the audit, where applicable, the going concern assumption and compliance with the accounting standards and other legal requirements;
(b) To assess the internal and external auditors audit plans and reports;
(c) To review the scope of the internal audit programmes and procedures and the results of the internal audit findings;
(d) To evaluate the adequacy of the scope, functions, competency and resources of the internal audit functions and ensure that the internal auditors have the necessary authority to carry out the audit;
(e) To evaluate the adequacy, efficiency and effectiveness of the internal controls and the appropriateness of the accounting policies adopted by the Group;
(f) To delegate risk management authorities to the Internal Audit Function and to review its reports;
(g) To resolve any problems, difficulties or disagreements between the Group’s personnel and the external auditors and consider the external auditors’ evaluation of the internal controls of the Group;
(h) To review any related party transactions within the Group;
16 17 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED)
(i) To oversee any investigations deemed necessary;
(j) To recommend to the Board a firm to be appointed as the Company’s external auditors;
(k) To review any reports and consider recommendations of the Sub-Audit Committee;
(l) To review the basis of allocation of the Group’s ESOS annually, where applicable;
(m) To review and assess the effectiveness of the Group’s plans, assumptions, forecasts, projections, including any contingency plan and strategies implemented associated with proposed new business ventures or issues which may impact the Group’s overall risk profile;
(n) To advise the Board on risk policy matters including but not limited to oversight of compliance with the Group’s risk management policy, review and/or recommend changes to risk policies for Board’s approval;
(o) To review and confirm that the applicable policies, procedures or manuals for individual subsidiaries that set forth the operational processes are aligned with the Group’s policy and risk management policy;
(p) To report to the Board from time to time on the Group’s risk appetite and capacity as well as other criteria, which exceeded or triggered the risk tolerance limit;
(q) To keep abreast with current risk management techniques and theories and any possible or actual changes in the regulatory environment that affects the Group;
(r) To ensure resources including but not limited to budget, training, human resources and professional advice, are adequate and have been allocated to support the Group’s risk management activities;
(s) To carry out such other functions and to consider other matters agreed upon with the Board.
1.5 Meetings
The ARMC Charter stipulates that “the ARMC shall meet at least four (4) times a year” and in compliance with this, the ARMC met five (5) times during the financial year. Details of attendance of each member in respect of the meetings held are as tabulated below:-
16 17 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED)
Name Attendance 1. Mok Yuen Lok (Chairman) 3/5* 2. Ramlee Bin Mohd Shariff (Chairman) 2/5# 3. Ismail Bin Mahayudin 3/5* 4. Y.A.M. Tengku Sulaiman Shah Alhaj Ibni 2/5# Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj 5. Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain 5/5 * Retired on 18 June 2015 # Appointed on 1 July 2015
The Company’s Group Finance Manager was invited to attend all the meetings and representatives of the external auditors were invited twice to consider the final audited financial statements of the Group, review and discuss their audit plans and such other matters determined by the ARMC.
The Company Secretary was the secretary of the Committee for all the meetings.
2. SUMMARY OF ACTIVITIES CARRIED OUT BY THE ARMC DURING THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
The ARMC, in accordance with its Terms of Reference, carried out the following activities during the financial year under review:-
(a) Reviewed the unaudited consolidated quarterly financial results and audited consolidated financial statements and made suitable recommendations thereon to the Board for their adoption prior to their release to Bursa Securities;
(b) Reviewed the external auditor’s audit findings and accounting issues and reported to the Board;
(c) Discussed with the external auditors the impact of new accounting standards issued by the Malaysian Accounting Standards Board on the Group’s financial statements;
(d) Discussed with the external auditors the Group’s audit, the auditors’ responsibilities and scope of audit work in respect of the Group’s financial statements;
(e) Assessed the performance, independence and objectivity of the external auditors, reviewed their audit fees and recommended their re-appointment as the statutory auditors of the Company to the Board for approval;
(f) Reviewed the Directors’ Statement on Internal Controls and recommended to the Board for approval; and
(g) Reviewed the internal audit reports prepared by the ERM Department and addressed the issues arose from the said reports.
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3. INTERNAL AUDIT FUNCTION
The internal audit function of the Group was carried out by the ERM Department, which assisted the ARMC in discharging its duties and responsibilities. During the financial year under review, the ERM Department has reviewed the adequacy and effectiveness of the policy as well as the standard operating procedure within the Group’s local subsidiaries based on the key risk areas selected from the risk profiles.
A summary of other internal audit activities carried out by the ERM Department during the financial year under review are as follows:-
1. Prepared and presented an audit plan to the ARMC and the Board for approval;
2. Carried out investigations and special reviews requested by the Management;
3. Ascertained the level of operational and business compliance with established policies and procedures.
As at 31 December 2015, the ERM department performed its responsibilities with independence and proficiency giving assurance to the Board on the integrity of the internal controls and the reliability of the systems of the Group as a whole.
The cost incurred for the internal audit function in respect of financial year ended 31 December 2015 amounted to approximately RM84,000.
This Statement is made in accordance with a resolution of the Board dated 20 April 2016.
18 19 STATEMENT ON CORPORATE GOVERNANCE
The Board of Directors (“the Board”) of Goodway Integrated Industries Berhad (“the Company”) is committed in ensuring that high standards of corporate governance are practiced by the Company and its subsidiaries (“the Group”) as the Board recognises that these are vital to the success of the business of the Group and will assist in protecting and enhancing the Company’s shareholders’ value.
This Statement on Corporate Governance is made in compliance with the principles of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) and the extent of compliance of the Group with the best practices throughout the financial year ended 31 December 2015.
PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND RESPONSIBILITIES
1.1 Clear Functions of the Board and Management
The Board recognises its overall responsibility for the Group’s strategic direction and for monitoring the implementation of the Group’s strategies including business plan, budgets and policies and accordingly retained full and effective control of the Group during the financial year under review. In discharging its duties, among others, the Board has established clear functions reserved for the Board and those delegated to the Board Committees and Management.
The following matters require approval from the Board, except where they are expressly delegated by the Board to the Board Committees, the Chairman, the Chief Executive Officer (“CEO”) and/or other nominated Management personnel:-
(a) Approval of corporate, strategic direction or plans, programmes and budgets; (b) Changes to the Management and control structure within the Group, including key policies; (c) Authority levels and any matters in excess of any authority that it may have delegated from time to time to the CEO and/or other Management personnel; (d) Investments in capital projects and material acquisition and disposal of subsidiaries, acquisition and disposition of assets not in the ordinary course of business; (e) Corporate Governance principals and policies; (f) Treasury policies; (g) Risk management policies; (h) Key human resource issues; (i) Conflict of interest issues relating to a substantial shareholder or a Director; (j) Appointment of all other Board members, Board Committee members, CEO and the Company Secretary and calling of meetings of shareholders ; (k) Announcements including approval and releases of financial results and annual reports; and
20 21 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
(l) Other matters and/or transactions that fall within the ambit of the Board pursuant to the Companies Act, 1965, Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), Company’s Articles of Association, Terms of Reference of the respective Board Committees, the Company’s Discretionary Authority Limits Manual or any other applicable rules.
During the financial year under review, the Board was assisted by two (2) Board Committees, namely the Audit and Risk Management Committee (“ARMC”) and the Joint Nomination and Remuneration Committee (“JNRC”), each entrusted with specific tasks and operate within their defined terms of reference. These Committees are empowered to examine and deliberate issues delegated to them and report to the Board with their recommendations and comments. The ultimate responsibility for the final decision on all matters proposed by these Board Committees nonetheless lies with the Board as a whole.
The role of the Management is to support the Executive Directors in particular, in implementing the Group’s Business Plan, policies and other strategies approved by the Board as well as in managing the daily conduct of the Group’s business and affairs and in ensuring the efficiency and effectiveness of the operations of the Group.
1.2 Clear Roles and Responsibilities
The Board has discharged its responsibilities in the best interest of the Group and there are clear roles and responsibilities within the Group during the financial year under review as follows:-
(a) Reviewing and adopting the Company’s strategic plans
The Board has in place a strategy planning process, whereby the CEO presents to the Board his recommended strategy annually, together with the proposed business plan for the ensuing year for the Board’s review and approval. The Board accordingly assessed these strategies and reviewed the documented presented and ensured the best plan was adopted for the Group.
(b) Overseeing and evaluating the conduct of the Group’s businesses
The CEO is responsible for the day-to-day management of the business and operations of the Group in respect of both its regulatory and commercial functions and he is supported by the Chief Operating Officer (“COO”) and other key Management personnel.
The Management’s performance is assessed by the Board through monitoring the success in delivering the approved targets and business plans.
20 21 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
(c) Appointment of Directors and assessment of the nomination, selection, remuneration and succession planning policies
The Board has entrusted the JNRC with the responsibility to review candidates nominated to be on the Board and to determine the remuneration packages for these appointments as well as to evaluate the nomination, selection, remuneration and succession policies of the Group. Details pertaining to work carried out by the JNRC during the financial year under review are set out in Section 2.1 below.
During the financial year, two (2) new Directors were appointed to replace the Directors who had decided not to seek re-election after serving as Independent Directors for more than a cumulative term of nine (9) years. The retired Directors had retained their office until the conclusion of the previous Annual General Meeting (“AGM”).
During the course of the Board’s deliberation in determining the remuneration packages for the Executive Directors, none of the Executive Directors have participated in the aforesaid deliberation. Further, each Director has abstained from participating in the decision-making on their respective remuneration packages. (d) Overseeing the development and implementation of an investors relations programme or shareholders communication policy
The Company strongly believes that effective and timely communication is essential in maintaining good relations with its shareholders, potential investors and analysts and place great importance on this matter.
The Board therefore has ensured high standards of transparency and accountability in its communication with these stakeholders and they can make enquiries about investor related matters with designated management personnel directly responsible for investor relations via a dedicated e-mail address available on the corporate website.
(e) Reviewing the adequacy and integrity of management information and internal controls system of the Group and mitigation measures on the risks identified
The Board recognises its responsibility for the adequacy and integrity of the Group’s internal controls system. The Board consequently has entrusted the ARMC to review and advise the Board on the adequacy of compliance and internal controls within the Group. Details pertaining to the Group’s internal controls system and the reviews of its effectiveness are set out in the Statement on Risk Management and Internal Controls on page 39 to page 41 of this Annual Report.
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(f) Segregation of responsibilities between the Executive and Non-Executive Directors
There is a clear segregation of responsibilities between the Executive and Non- Executive Directors in the Company to ensure a balance of power and authority. Generally, the Executive Directors are responsible for making and implementing operational and corporate decisions whereas the Non-Executive Directors’ pivotal role is to ensure corporate accountability by providing unbiased and independent views as well as sharing their knowledge and experience towards the corporate decision-making process.
In the event that there is a potential conflict of interest, it is mandatory practice for the Director concerned to declare his interest and abstain from any Board decisions.
1.3 Formalised Ethical Standards through Code of Conduct
The Board is aware that a formal Code of Conduct reinforces the Group’s core value on integrity by providing guidance on moral and ethical behaviour. A summary of the Directors’ Code of Conduct and Whistleblowing Policy are available on our corporate website at www.giibworld.com.
1.4 Strategies Promoting Sustainability
The Board recognises the importance of business sustainability and views the commitment to sustainability and environmental, social and governance performance as part of its broader responsibility to shareholders and the community. The Group’s activities on corporate social responsibilities are disclosed in the Corporate Social Responsibility Statement of this Annual Report.
1.5 Access to Information and Advice
All Directors were provided with agenda of meetings and the relevant Board papers, that contain, where appropriate, updates on operational, financial and corporate developments, prior to the respective Board meetings during the financial year under review. The Board papers were also circulated three (3) days in advance to the Directors to facilitate informed decision making.
The Directors were also notified of any corporate announcement released to Bursa Securities.
All Directors whether as a full Board or in their individual capacity, have access to all information within the Group as well as professional advice and services of the Company Secretary. In addition, the Directors may engage external and independent professional advisors, whenever required, at the Company’s expense, in order to discharge their duties and responsibilities more effectively.
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1.6 Qualified and Competent Company Secretary
The Board is assisted by a qualified and competent Company Secretary who ensures that the Board procedures are followed and the applicable rules and regulations are complied with.
Among others, the Company Secretary is responsible for advising the Directors on their obligations and duties to disclose their interest in securities, disclosure of any conflict of interest in a transaction involving the Group, prohibition on dealing in securities and restrictions on disclosure of price-sensitive information.
The Company Secretary also safeguards all statutory books and records of the Company and maintains the statutory registers of the Company. The Company Secretary also ensures that all Board meetings are properly convened, and that accurate and proper records of proceedings and resolutions passed are maintained. In addition, the Company Secretary ensures that any change in the Company’s statutory information is duly completed in the relevant prescribed forms and lodged with the Registrar of Companies within the required time period.
1.7 Board Charter
The Board has adopted a Board Charter to promote high standards of corporate governance and this Board Charter, inter alia, outlines the roles, functions and responsibility of the Board as well as those functions delegated to the Board Committees and the CEO. The Board Charter is made available on our corporate website at www.giibworld.com and was recently reviewed to ensure the Charter remains relevant to the Group’s needs and continues to reinforce the strategic objectives of the Group.
PRINCIPLE 2 – STRENGTHEN COMPOSITION
2.1 JNRC
The JNRC comprises the following members:-
Name Designation Directorship Ramlee Bin Mohd Shariff # Chairman Independent Non- Executive Director Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Member Independent Non- Almarhum Sultan Salahuddin Abdul Aziz Executive Director Shah Alhaj #
24 25 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
Name Designation Directorship Lt. Jen. (B) Datuk Hj Adenan Bin Hj Member Non-Independent Mohamad Zain Non-Executive Director Mok Yuen Lok * Chairman Independent Non- Executive Director Ismail Bin Mahayudin * Member Independent Non- Executive Director # Appointed on 1 July 2015 * Retired on 18 June 2015 after the conclusion of the previous AGM
During the year under review, the JNRC assessed and recommended to the Board, suitable candidates to act as Directors of the Company. The JNRC also carried out annual evaluations on the Board as a whole including individual contributions to ensure that it has the optimal mix of qualifications, skills, experience and other qualities, including core competencies, which they should possess in order to serve the Board effectively and efficiently.
In respect of remuneration, the JNRC reviewed and recommended to the Board the remuneration framework for Directors as well as the remuneration packages of the Executive Directors, CEO and COO for its approval. This is to ensure that, among others, the remuneration is linked to performance, responsibility levels and are comparable with the industry standards. The JNRC also formulated and reviewed the said remuneration packages with the aim of attracting, retaining and motivating individuals with the relevant skills and experience which are required to manage the business of the Group and uphold shareholders’ interest.
The JNRC’s Terms of Reference stipulates that “the JNRC shall meet at least once a year” and in compliance, the JNRC met once during the financial year under review. The meeting was attended by all the JNRC members except for Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj and Ramlee Bin Mohd Shariff who were appointed to the Board and subsequently the JNRC, after the date of the meeting.
During the financial year, the JNRC met and the activities undertaken were as follows:-
x Reviewed the present size and composition of the Board, ARMC and JNRC; x Reviewed the outcome of the evaluation of performance of the Board, Board Committees, self and peer assessment of individual Directors and/or members of the respective Board Committees; x Reviewed the adequacy of the Board in terms of its mix of skills, experience and other qualities, including core competencies; x Discussed the directors’ retirement by rotation; and x Assessed the independence of Independent Directors based on the guidelines set out in the Listing Requirements of Bursa Securities.
24 25 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
2.2 Review Criteria for Appointment, Re-appointment and Re-election of Directors, Board Diversity and Annual Assessment of Directors
Appointment, Re-appointment and Re-election of Directors
The Company’s Articles of Association states that 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 one-third (1/3) shall retire from office and be eligible for re-election provided that all Directors shall retire from office once at least in each three (3) years, but shall be eligible for re-election. The Directors to retire every year shall be those who have been longest in office since their last election but as between person who become Directors on the same day, those to retire shall be determined by lot (unless they otherwise agree among themselves). Any Director so appointed during the year shall hold office only until the next following AGM and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotation at that meeting.
The election of each Director shall be voted separately unless a motion for the appointment of two (2) or more persons as Directors by a single resolution shall be so made at the general meeting has first been agreed to by the meeting without any vote being given against it. To assist the shareholders in their decision making, sufficient information such as the personal profile, attendance of Board meetings and shareholdings in the Group held by each Director standing for re-election will be furnished in a separate Statement Accompanying the Notice of AGM.
Directors who are over seventy years of age are required to submit themselves for re- appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
The appointment of Directors during the financial year under review were conducted through a formal and transparent process approved and adopted by the Board. The potential candidates were assessed and reviewed by the JNRC, taking into account the required mix of skills, experiences and other relevant qualities, including core competencies which are required to well manage the business with the aim to meet the current and future needs of the Board composition prior to its recommendation to the Board for approvals and appointments. The Company Secretary ensured that all appointments were properly made for the purposes of meeting statutory obligations, as well as obligations arising from the Listing Requirements of Bursa Securities and/or other regulatory requirements.
Board Diversity
The Board acknowledges that its members are qualified individuals with diverse experience, background and perspective required for the successful direction of the Group. It also believed that the diversity in the Board composition assist in promoting good corporate governance practices within the Group.
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The Company currently has only one (1) female Director on its Board. Where boardroom diversity is concerned, the Board does not adopt any formal gender diversity policy in the selection of new Board candidates and does not have a specific policy on setting a target for female candidates. This is particularly so as for the overall benefit of the Group, the evaluation of the suitability of candidates as a new Board member is primarily based on the candidates’ competency, character, time commitment, knowledge and experience in meeting the needs of the Group.
Annual Assessment
The Board recognises the importance of assessing the effectiveness of individual Directors, the Board as a whole and its Board Committees. The Board consequently through the JNRC, conducted annual evaluation on its effectiveness as a whole, each individual Director and the Committees established by the Board. The Board also undertakes an assessment of its Independent Directors annually.
The assessment of the Board was based on specific criteria, covering areas such as the Board structure, Board operations, roles and responsibilities of the Board and the Board Committees. For individual assessment, the assessment criteria include time commitment, inputs during the meetings and the quality of the inputs.
The results of the above assessment also formed the basis of the JNRC’s recommendation to the Board for the re-election of Directors at the next AGM.
2.3 Remuneration Policies
Details of the Directors’ remuneration for the financial year ended 31 December 2015 are as follows:-
a) The aggregate remuneration of the Directors, distinguishing between Executive and Non-Executive Directors is categorised below:- Other Fees Remuneration emoluments Total Category of Directors RM’000 RM’000 *RM’000 RM’000
Executive 46 1,093 247 1,386 Non-Executive 97 - 64 161
* Other emoluments includes E.P.F.
26 27 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
b) The number of Directors remuneration that fall within the following brackets/range are as set out below:-
Bracket / Range (RM) Number of Directors Executive Non-Executive
Below 50,000 - 5* 50,001 – 100,000 - - 100,001 – 300,000 - - 300,001 - 600,000 1 - 600,000 – 1,000,000 1 ------2 5 ======
* Two (2) Independent Non-Executive Directors retired on 18 June 2015 after the conclusion of the previous AGM and two (2) new Independent Non-Executive Directors were appointed on 1 July 2015.
The Company has adopted the principle recommended by MCCG 2012 whereby the level of remuneration is sufficient to attract and retain the Directors needed to run the Group successfully. In essence, the component parts of the remuneration are structured so as to link rewards to corporate and individual performance, in the case of the Executive Directors. For Non-Executive Directors, the level of remuneration reflects the level of responsibilities undertaken by the particular Non-Executive Director concerned. In attaining this, the JNRC had established a remuneration framework for Directors and made recommendations to the Board on all elements of remuneration, terms of employment, reward structure and fringe benefits for Directors.
The Board is of the opinion that non-disclosure of the individual remuneration of each Director will not significantly affect the understanding and evaluation of the Group’s governance.
PRINCIPLE 3 – REINFORCE INDEPENDENCE
3.1 Annual Assessment of Independence
The Board recognises the importance of independence and objectivity in the decision- making process as advocated in MCCG 2012. As such, the Board is committed in ensuring that the Independent Directors will make decisions in the best interest of the Group.
During the financial year ended 31 December 2015, the Board was also satisfied that the Independent Non-Executive Directors had fulfilled the criteria of “Independence” as prescribed by the Listing Requirements of Bursa Securities as none of the Independent Non-Executive Directors had any relationship that could materially interfere with, or be perceived to interfere with their unfettered and independent judgement and ability to act in the best interest of the Group.
28 29 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
3.2 Tenure of Independent Directors
The Board is aware that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years as recommended in the Principle of Reinforce Independence of MCCG 2012. It also recommends that upon completion of nine (9) years, an Independent Director may continue to serve on the Board subject to the Director’s re- designation as a Non-Independent Director. In the event the Board wishes to retain such a Director as an Independent Director, the Board must justify and seek shareholders’ approval.
In line with the above, during the financial year, two Directors who had served as Independent Directors of the Company for more than a cumulative term of nine (9) years decided not to seek for re-election and (2) new Independent Directors were appointed to replace them.
3.3 Separation of Positions between the Chairman and the CEO and the roles of the Executive Directors and the Non-Executive Directors
There was separation of positions between the Chairman and Executive Directors as the Chairman was responsible for leading the Board effectively and ensuring that the Board functions effectively and independently of Management besides chairing the Board meetings and ensuring the efficient organisation and conduct of the meetings while the CEO in essence was accountable to the Board for the achievement of the Group’s mission, goals and objectives.
There was also separation of roles between the Executive Directors and the Non-Executive Directors as the Executive Directors roles were to manage the daily conduct of the Group’s business and affairs and to ensure the efficiency and effectiveness of the operations of the Group as opposed to the Non-Executive Directors’ roles of ensuring corporate accountability by providing unbiased and independent views as well as sharing their knowledge and experience towards the corporate decision-making process.
3.4 Composition of the Board
The Company’s Articles of Association provide that the number of directors shall not be less than two (2) or more than eleven (11). Pursuant to paragraph 15.02 of the MMLR of Bursa Securities, the Company must ensure that at any one time, at least two (2) or one- third (1/3), whichever is higher, of the Board members must be Independent Directors. However, the Board must comprise a majority of independent directors where the Chairman of the Board is not an independent director to ensure balance of power and authority on the Board. If the number of directors of the Company is not three (3) or a multiple of three (3), then the number nearest 1/3 will be used for the purpose of determining the requisite number of independent directors.
The Board of Directors presently comprises eight (8) members, namely, the Chairman who is an Independent Non-Executive Director, the CEO and two (2) Executive Directors, two
28 29 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
(2) Independent Non-Executive Directors, one (1) Non-Independent Non-Executive Director and one (1) Alternate Director to the CEO. This composition of the Board is in compliance with the provisions of Listing Requirements of Bursa Securities to maintain the requisite number of Independent Non-Executive Directors of at least one-third of the Board.
The Board believes that the diverse entrepreneurial and financial expertise among the Board of Directors will enhance their stewardship in spearheading the Group’s direction towards achieving its goals and objectives.
In the event that there was a potential conflict of interest, it was mandatory for the Director concerned to declare his interest and abstain from any board decisions.
A brief profile of each Director is presented in the “Board of Directors’ Profile” section on page 9 to page 12 of this Annual Report.
PRINCIPLE 4 – FOSTER COMMITMENT
4.1 Time Commitment and Number of Directorships
The Board Charter stipulates that “the Board shall meet at least four (4) times a year at quarterly intervals with additional meetings to be convened where necessary to deal with urgent and important matters that require the attention of the Board.”
In accordance with the above, during the financial year under review, five (5) Board meetings were held and the attendance of the Board members are as follows:-
Name Attendance 1. Mok Yuen Lok (Chairman) 3/5* 2. Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan 2/5# Salahuddin Abdul Aziz Shah Alhaj (Chairman) 3. Tai Boon Wee 5/5 4. Wong Ping Kiong 5/5 5. Tai Qisheng 0/5^ 6. Ismail Bin Mahayudin 3/5* 7. Lt. Jen. (B) Datuk Hj Adenan Bin Hj Mohamad Zain 5/5 8. Ramlee Bin Mohd Shariff 2/5# 9. Lim Teck Seng 0/5^ 10. Tai Qiyao 0/5^ * Retired on 18 June 2015 # Appointed on 1 July 2015 ^ Appointed on 1 April 2016
30 31 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
The date scheduled for the above Board meetings as well as the Board Committees meetings and the forthcoming AGM were set in advance based on the availability of the Board members to ensure that both the Group benefitted optimally from their presence and each Board member is able to satisfactorily discharge his/her responsibility.
The Company Secretary attended all the above Board and Board Committees meetings and ensured accurate and proper records of the proceedings of such meetings.
The Listing Requirements of Bursa Securities specifies that the number of directorship for each Director is limited to five in public-listed companies to ensure that the Directors have the time to fulfil their responsibilities effectively. In compliance, none of the Board Directors currently serve on more than five public-listed companies and to ensure adherence to this requirement, the Company Secretary continuously monitors the number of directorships held by each Director and advises the Board on new appointments.
4.2 Directors’ Training
All Directors have attended the Mandatory Accreditation Programme (“MAP”) as required under the Listing Requirements of Bursa Securities except for two (2) of the Directors who were appointed on 1 April 2016 and they are expected to attend the MAP within the stipulated period of time set out in the Listing Requirements of Bursa Securities.
All Directors are mindful that they shall attend suitable training programmes, which may be required from time to time to, inter alia, keep abreast with current developments of the industry as well as new statutory and regulatory requirements.
Save for Mr Tai Qisheng, Mr Lim Teck Seng and Mr Tai Qiyao whom were appointed on 1 April 2016, the details of the training attended by the Directors during the financial year ended 31 December 2015 are as follows:-
No. of Director Training Mode of hours / Training day(s) spent Tai Boon Wee 1. Advocacy Session On Presentation ½ day Management Discussion & Analysis For CEO And CFO Wong Ping Kiong 1. Advocacy Session On Presentation ½ day Management Discussion & Analysis For CEO And CFO Lt Jen (B) Datuk Hj 1. CG Breakfast Series With Presentation ½ day Adenan Bin Haji Directors – “The Board Mohamad Zain Response in Light of Rising Shareholder Engagements”
30 31 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
No. of Director Training Mode of hours / Training day(s) spent Ramlee Bin Mohd 1. CG Breakfast Series With Presentation ½ day Shariff Directors – “The Board Response in Light of Rising Shareholder Engagements” 2. Directors Corporate Presentation ½ day Governance Series : Building Effective Finance Function : From Reporting to Analytics to Strategic Input 3. Risk Management And Workshop 1 day Internal Controls Workshop : Is Our Line Of Defence Adequate And Effective 4. Bursa Malaysia CG Breakfast Presentation ½ day Series With Directors – “How to Maximise Internal Audit” 5. CG Breakfast Series With Presentation ½ day Directors – Future Of Auditor Reporting – The Game Changer For Boardroom Mok Yuen Lok* 1. 2015 CH Annual Strategic Workshop 1 day Meeting * Retired on 18 June 2015
Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (appointed on 1 July 2015) and Ismail Bin Mahayudin (retired on 18 June 2015) did not attend any seminar during the financial year due to work constraints.
The Board assumed the onus of determining and overseeing the training needs of their Directors. Board members were also constantly updated by the Company Secretary during the Board meetings on any regulatory and legal developments.
The Directors will continue to participate in relevant training programmes to enable them to effectively discharge their duties and continuously contribute towards the successful direction of the Group.
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PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING
5.1 Compliance with Applicable Financial Reporting Standard
Financial Reporting
The Board aims to present a balanced and meaningful assessment of the Group’s financial performance and prospects through timely release of quarterly reports to Bursa Securities and Annual Report to shareholders.
The Board recognises the value of an effective ARMC in ensuring the reliability and accuracy of financial statements and therefore has entrusted the ARMC to review the Group’s financial reports to ensure, inter alia, its compliance with acceptable Financial Reporting Standards and the provisions of the Companies Act, 1965 before the Financial Statements were recommended to the Board for approval and release to the public.
The ARMC also assisted the Board in examining and reviewing information for disclosure to ensure accuracy, completeness and quality of reporting prior to official release to regulatory authorities and shareholders.
Statement of Directors’ Responsibility
The Directors are required by the Companies Act, 1965 to prepare financial statements that give a true and fair view of the state of affairs of the Group and of the Company as at the end of each financial year and of the results and cash flows of the Group and of the Company for the financial year then ended. In compliance, the Directors ensured that suitable accounting policies have been adopted and applied consistently, and that reasonable and prudent judgements and estimates have been made, in the preparation of the financial statements for the financial year ended 31 December 2015. The Directors also ensured that applicable approved accounting standards have been adhered to.
The Directors also ensured that proper accounting records, which disclosed with reasonable accuracy the financial position of the Group and of the Company and to enable them to ensure that the financial statements comply with the Companies Act, 1965, are kept.
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5.2 Assessment of Suitability and Independence of External Auditors
The Board established and maintained a professional and transparent relationship with the Group’s External Auditors through the ARMC. During the financial year ended 31 December 2015, the ARMC met the External Auditors once without the presence of Management and during these meetings, among others, the ARMC assessed the suitability and independence of External Auditors as well as reviewed the scope and adequacy of the audit process, the financial statements and their audit findings. The External Auditors have also declared their independence to the Company and their compliance with By-Laws (on professional ethics, conduct and practice) of the Malaysian Institute of Accountants and other regulatory requirements.
In addition, the External Auditors are invited to attend the Company’s AGM or Extraordinary General Meeting(s) and are available to answer any questions from the shareholders on the conduct of the statutory audit and the contents of the Audited Financial Statements as well as any corporate exercise undertaken by the Group where the External Auditors are involved.
PRINCIPLE 6 – RECOGNISE AND MANAGE RISK
6.1 Sound Framework to Manage Risk
The Board is fully aware of its responsibilities to present a balanced and understandable assessment of the Group’s position and prospect. The Board has accordingly reviewed and is satisfied with the adequacy and effectiveness of internal controls operated by the Group, including financial, operational and compliance controls and risk management, to safeguard shareholders’ investment and the Group’s assets.
6.2 Internal Audit Function
The Board recognises that an internal audit function is essential to ensure the adequacy and integrity of the systems of internal controls and is an integral part of the risk management process. The internal audit function of the Group is a separate department that reports directly to the ARMC.
Details of the Group’s internal controls system and framework is set out in the Statement on Risk Management and Internal Controls on page 39 to page 41 of this Annual Report.
34 35 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE
7.1 Corporate Disclosure Policy
The Board recognises the importance of maintaining effective communications by ensuring timely and accurate disclosure of information to the regulators, shareholders and investors. This is also so as the information ensures that the shareholders and investors are updated on inter alia, the overview of the Group’s performance and operations.
During the financial year under review, such information was disseminated via the Company’s Annual Report, circular to shareholders, quarterly financial results, press releases and various announcements made from time to time, where relevant.
7.2 Leverage on Information Technology for Effective Dissemination of Information
The Company has established a dedicated section for corporate information on the Company’s website at www.giibworld.com which can be accessed by the shareholders or members of the public for updates on the development of the Group. Alternatively, they may obtain the Company’s latest announcements via the website of Bursa Securities at www.bursamalaysia.com.
PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS
8.1 Encourage Shareholders Participation at General Meetings
The Company encourages all shareholders to attend the Company’s AGM as the AGM provides a forum for dialogue with shareholders where they may seek clarification on major business developments and financial performance of the Company and of the Group. Notice of the AGM and the annual reports are distributed to shareholders at least twenty one (21) days before the date of the meeting to enable shareholders to review the Annual Report and papers supporting the resolutions proposed. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf.
8.2 Encourage Poll Voting
At the AGM, shareholders have the right to demand a poll vote for resolutions and detailed results showing the number of votes cast for and against for each resolution will be announced through Bursa Securities. All resolutions put forth for shareholders’ approval at the 12th AGM held last year were voted by a show of hands and duly passed.
34 35 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
8.3 Effective Communication and Proactive Engagements
At the AGM, shareholders have the opportunity to enquire about the Company’s and the Group’s performance and operations and are invited to ask questions during the question and answer session. All members of the Board, as well as the Company’s External Auditors, are available to respond to shareholders’ queries raised at the AGM.
As mentioned earlier, information on the Group is disseminated via the Company website, Company’s Annual Report, circular to shareholders, quarterly financial results, press releases and various announcements made from time to time.
ADDITIONAL COMPLIANCE INFORMATION x Share Buy-Back
There was no share buy-back by the Company during the financial year. x Options, Warrants or Convertible Securities
There was no exercise of options, warrants or convertible securities exercised/issued during the financial year. x American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme.
The Company did not sponsor any ADR or GDR programme during the financial year. x Non-Audit Fee
There was no non-audit fees paid out or payable to Kreston, John & Gan, the Company’s External Auditors, during the financial year. x Profit Guarantee
There was no profit guarantee provided by the Company during the financial year. x Material Contracts
There were no material contracts entered into by the Company and/or its subsidiaries which involved Directors’ and major shareholders’ interests either entered into since the end of the previous financial year or still subsisting at the end of the financial year.
36 37 STATEMENT ON CORPORATE GOVERNANCE (CONTINUED)
x Recurrent Related Party Transactions of A Revenue Or Trading Nature
Details of the recurrent related party transactions of a revenue or trading nature undertaken by the Group during the financial year under review are disclosed in Note 39 of the audited financial statements.
x Variation in Results
There were no significant variances between the actual results for the financial year ended 31 December 2015 and the unaudited results previously announced by the Company.
x Utilisation of Proceeds
There was no issuance of new shares, rights issues, issuance of bonds or any exercise of options to raise any cash proceeds during the financial year.
x Impositions of Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the Company, its subsidiaries, Directors and/or Management by any regulatory bodies during the financial year.
This Statement on Corporate Governance is made in accordance with a resolution of the Board dated 20 April 2016.
36 37 CORPORATE SOCIAL RESPONSIBILITY (“CSR”) STATEMENT
GIIB’s corporate responsibility charter was created to better express its goals and aspirations as a socially responsible corporate entity.
ACTIVITIES PHOTO
CONTRIBUTION TO CHILDREN’S WISH SOCIETY OF MALAYSIA (CWS) – GIIB’s objective of being a considerate and caring corporate citizen. We have been one of the long term participants in CWS’s effort to fulfill wishes of children stricken with life- limiting or terminal illness.
REWARD & RECOGNITION NITE 2015 – As part of GIIB’s initiative to unite and strengthen the bond among the employees, the Human Resource team had organized a Reward & Recognition Nite 2015 to reward employees who had served the Company for 10 years and above.
38 39 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
INTRODUCTION
The Board of Directors (“the Board”) of Goodway Integrated Industries Berhad maintains a sound system of risk management and internal control to safeguard shareholders’ investment and the Group’s assets. In compliance with Paragraph 15.26 (b) of the Main Market Listing Requirements and Practice Note 9 of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Board is pleased to set out below the Statement on Risk Management and Internal Control of the Group for the financial year ended 31 December 2015.
BOARD RESPONSIBILITY
The Board recognises the importance of a sound system of internal control and risk management practices and as such affirms its overall responsibility for the Group’s system of internal control by periodically reviewing and evaluating its adequacy and integrity of the system.
Notwithstanding the above, it should be noted that the system may have inherent limitations as they are designed to manage and control rather than eliminate entirely risks including those that may impede the Group from achieving its business objectives. As such, the system of internal controls and risk management can only provide a reasonable but not an absolute assurance against the occurrence of any material misstatement and/or losses.
Whilst the Board has overall responsibility for the Group’s system of internal controls and risk management, it has delegated implementation of the system to the Management who regularly report on risks identified and the steps taken to mitigate and minimise the risks to the Board.
RISK MANAGEMENT
Risk management is set in the Group’s management system. The Board with the assistance of an internal enterprise risk management executive, have established ongoing processes for identifying, evaluating and managing the significant risks faced by the Group.
This Enterprise Risk Management process includes conducting risk profiling and determining key risk areas and its impact including developing an internal audit plan, updating the system of internal controls when there are changes to business environment or regulatory guidelines.
The Board also relies on the close involvement of the CEO, COO and a few of the top key management staff in the Group’s daily operations. There are periodic reviews of operational and financial performance at Audit and Risk Management Committee Meetings and Board Meetings at least on a quarterly basis.
The Board and Management ensure that appropriate measures are taken to address any significant risks.
38 39 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)
KEY INTERNAL CONTROL PROCESSES
The Group’s system of internal control comprises various policies, procedures and frameworks, amongst which are:
1. Clear and Structured Organisation Structure
The Group has a well-defined structure that sets out clearly the segregation of roles and responsibilities, lines of accountability and levels of authorities to ensure effective control at various levels of the Group.
2. Policies and Procedures
Clear, formalized and documented internal control policies, procedures (including standard operating procedures) are in place to ensure compliance with internal controls and relevant rules and regulations. Regular reviews are carried out to ensure that documentation is current and relevant.
3. Quality Health Safety and Environment
The Company and its subsidiaries have adopted an integrated management system that has been certified by SIRIM and TUV as compliant with ISO 9001:2008 (quality management), ISO 14001:2004 (environmental management), OHSAS 18001:2007 (safety management) and MS224 (quality management). The system is subjected to ongoing internal audit programs, as well as annual audit by SIRIM and TUV.
Managers who oversee quality, health, safety and environmental issues are to achieve “Zero” accident and an incident free environment where progress is monitored against Key Performance Indicators. Monthly reports on progress are provided to the Head of Operating Units.
ASSURANCE
The Board will continue to be vigilant and committed in ensuring that the system of internal controls as well as risk management practices is effective and efficient for the Group’s operations. Therefore, the Board will implement appropriate action plans to rectify any material weaknesses identified or further enhance the system of internal controls as and when necessary.
There has been an affirmation by the Chief Executive Officer, Chief Operating Officer and Group Finance Manager as regard to this Statement.
40 41 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)
REVIEW OF THE STATEMENT
As required under Paragraph 15.23 of the Bursa Securities Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control.
Based on their review, for the financial year under review, the external auditors have reported to the Board that nothing has come to their attention that cause them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal control of the Group.
40 41