FIBON FIBON BERHAD ANNUAL REPORT

Transcription

1 FIBON FIBON BERHAD ANNUAL REPORT

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3 CONTENTS Corporate Information Profile of Directors Chairman s Statement Group Structure Financial Highlights Audit Committee Report Statement on Corporate Governance Statement on Internal Control Statement on Directors Responsibilities Additional Compliance Information Financial Statements Analysis of Shareholdings List of Property Notice of Annual General Meeting Enclosed : Proxy Form

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5 ANNUAL REPORT 2013 Corporate Information BOARD OF DIRECTORS Pang Chee Khiong Executive Chairman Pang Fok Seng Managing Director Lim Wai Kiew Executive Director Pang Nyuk Yin Executive Director Datuk Mohamad Saleh Bin Mohd Ghazali Independent Non-Executive Director Chong Peng Khang Independent Non-Executive Director Koh Chun Kiat Independent Non-Executive Director Appointed on 14 November 2012 Dr.Chen Chaw Min Independent Non-Executive Director Resigned on 14 November 2012 SHARE REGISTRAR Symphony Share Registrars Sdn Bhd ( D) Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, Petaling Jaya, Selangor. Tel: (603) Fax: (603) PRINCIPAL BANKERS OCBC Bank (M) Berhad AmBank (M) Berhad United Overseas Bank (M) Berhad REGISTERED OFFICE 31-04, Level 31, Menara Landmark, No. 12, Jln Ngee Heng, Johor Bahru, Johor Darul Takzim. Tel: (607) Fax: (607) HEAD OFFICE COMPANY SECRETARY Noriah Binti Md Yusof (LS No ) AUDITORS AND REPORTING ACCOUNTANTS Crowe Horwath (AF 1018) 52, Jalan Kota Laksamana 2/15, Taman Kota Laksamana, Seksyen 2, Melaka. Tel: (606) Fax: (606) A, Jalan 20, Taman Sri Kluang, Kluang, Johor Darul Takzim Tel: (607) Fax: (607) Website: STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name: Fibon Stock Code:

6 ADVANCE COMPOSITES Profile of Directors Pang Chee Khiong Executive Chairman, Non-Independent Mr Pang Chee Khiong, a Malaysian aged 49 is a Non-Independent Executive Chairman since 25 March He has attended all four Board meetings held during the financial year under review. He has more than 25 years of experience in the industries such as plumbing, timber logging, construction and housing development. He is the brother to Pang Fok Seng and Pang Nyuk Yin. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any and he has no conflict of interest with the group. Pang Fok Seng Managing Director, Non-Independent Mr Pang Fok Seng, a Malaysian aged 47 is a Non-Independent Managing Director since 25 March He has attended all four Board meetings held during the financial year under review. He has more than 19 years of experience in the advanced polymer matrix fibre composite industry. He is the brother to Pang Chee Khiong and Pang Nyuk Yin. He is the husband to Lim Wai Kiew. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any and he has no conflict of interest with the group. Pang Nyuk Yin Executive Director, Non-Independent Ms Pang Nyuk Yin, a Malaysian aged 53 is a Non-Independent Executive Director since 9 April She has attended all four Board meetings held during the financial year under review. She was in charge of production processes, sales, purchases and general administration from 1990 to 2003 in a private company. She is sister to Pang Fok Seng and Pang Chee Khiong. She maintains a clean record with regard to convictions for offences, other than traffic offences, if any and she has no conflict of interest with the group. 2

7 ANNUAL REPORT 2013 Profile of Directors cont d Lim Wai Kiew Executive Director, Non-Independent Ms Lim Wai Kiew, a Malaysian aged 47, is a Non-Independent Executive Director since 9 April She has attended three out of four Board meetings held during the financial year under review. She was a quantity surveyor in Singapore from 1990 to She was in charge of office management and administration in a private company from 1992 to She is wife to Pang Fok Seng She maintains a clean record with regard to convictions for offences, other than traffic offences, if any and she has no conflict of interest with the group. Datuk Mohamad Saleh Bin Mohd Ghazali Independent Non-Executive Datuk Mohamad Saleh Bin Mohd Ghazali, a Malaysian aged 69 is an Independent Non-Executive Director and Chairman of Audit, Remuneration and Nomination Committee. He is appointed as Director on 20 October 2008 and has attended three out of four Board meetings held during the financial year under review. He graduated from the University of Hawaii, United States with a Bachelor of Business Administration and went on to obtain his Masters of Business Administration from Ohio University in Athens, United States in Datuk Mohamad Saleh began his career by serving the Fishery Development Authority of Malaysia as an economist in 1972 and went on to lecture in Universiti Institut Teknologi Mara in Prior to retiring in November 1999 he was the Executive Director/ Chief Executive Officer of Bank Industri Malaysia Berhad (presently known as Bank Perusahaan Kecil & Sederhana Malaysia Berhad ) for eighteen years. His other working experiences encompasses being a marketing executive in Tourist Development Corporation of Malaysia, an assistant director in the Urban Development Authority, Malaysia and an assistant general manager in the Armed Forces Provident Fund in its investment department. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any. 3

8 ADVANCE COMPOSITES Profile of Directors cont d Chong Peng Khang Independent Non-Executive Mr Chong Peng Khang, a Malaysian aged 33, is an Independent Non-Executive Director and member of the Audit and Remuneration Committee for the Group. He is appointed as Director on 20 October 2008 and has attended all four Board meetings held during the financial year under review. He holds a first class honours Bachelor of Accounting degree from Multimedia University, Malaysia. He is a Chartered Accountant by profession as well as a fellow of the Association of Chartered Certified Accountants (FCCA, United Kingdom) and also member of the Malaysian Institute of Accountants (MIA). He began his career as an auditor with Deloitte Kassim Chan and subsequently Ernst & Young, involving in audit and business advisory of companies from various industries. His experience covers audit and assurance engagements, corporate reporting and compliance, taxation and wide-ranging overseas exposures. He has previously headed the accounting and finance division of a public listed company listed on the Main Market of Bursa Malaysia Securities Berhad and responsible for the corporate finance, accounting, tax and cash flow functions of the company and its subsidiaries. He is currently an Audit Manager of a chartered accounting firm. He is also an independent non-executive director of another company listed on the Main Market of Bursa Malaysia Securities Berhad. He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any. Koh Chun Kiat Independent Non-Executive Koh Chun Kiat, a Malaysian aged 29, is an Independent Non-Executive Director and member of the Audit and Nomination Committee. He is appointed as Director on 14 November 2012 and has attended two out of four Board meetings held during the financial year under review. He graduated with a Bachelor of Business majoring in Accounting and Financial Management from La Trobe University in Australia. He is a Chartered Accountant by profession as well as a member of the Malaysian Institute of Accountants, CPA Australia and Chartered Tax Institute of Malaysia. He started his career as senior associate with PricewaterhouseCoopers (PwC) from 2006 to He joined Sam Hoe Plantations Sdn Bhd in 2008 as an accountant and was promoted to senior accountant. His principal role was to supervise the financial accounting section of the department and liaise with auditors and tax agents. Presently, he is a partner of an audit firm. He is the Approved Company Auditor under Companies Act, 1965 and also Licensed Tax Agent under Income Tax Act He has no conflict of interest with the Group and has no family relationship with any director and/or major shareholder of the Group. He maintains a clean record with regard to convictions for offences, other than traffic offences, if any. 4

9 ANNUAL REPORT 2013 Chairman s Statement On behalf of the Board of Directors of FIBON Berhad, I am pleased to present the Annual Report and Audited Financial Statements of the Group and of the Company for the financial year ended 31 May FINANCIAL PERFORMANCE For the financial year under review, the Group registered revenue of approximately RM 16.7 million, a decrease of 1.34% compared to the preceding year. Profit after tax increase from RM 4.5 million to RM 4.9 million. The increase is mainly due to increase in sales of manufacturing goods. The Group continues maintaining a set of healthy and financially sound balance sheet with cash and cash equivalents of approximately RM 20 million. INDUSTRY OUTLOOK AND PROSPECTS The global economic outlook is expected to remain uncertain for the next twelve months due to the impact of the Eurozone debt crisis, sovereign credit rating and natural disasters and any recovery in global condition is envisaged to be gradual. Despite the global uncertainties, we remain focused on our strategy of sales expansion of its existing products to new markets and continue to invest in research and development for new products. The Directors expect the Group s operating environment to remain challenging for the financial year ending 31 May We remain cautiously optimistic and believe we will be able to maintain a favourable performance and bringing the Group to a higher platform of growth in year CORPORATE GOVERNANCE The Group acknowledges the Malaysian Code on Corporate Governance which set out the principles, best practices and guidelines that may be applied in the operations of a company, so as to enhance the transparency and accountability of public listed companies in Malaysia. These high standards have enabled the Group to function and perform in the best interests of shareholders. The Board will ensure that the requirements of Bursa Malaysia Securities Berhad are applied and adhered to by the Company. APPRECIATION On behalf of the Board of Directors, I would like to convey our most sincere thanks and appreciation to every member of the Fibon family for their continued efforts, commitment, dedication and hard work in every level of the organization. I would also like to take this opportunity to extend our deepest gratitude to all our valued customers, suppliers, business associates, investors, bankers and authorities for their continued support and confidence in the Group. Last but not least, I wish to extend a personal thank you to my fellow Directors for their invaluable guidance, advice and support. I am confident that with your continuing support and devotion, together we can bring Fibon to a higher level of achievement in the years to come. DIVIDENDS The Board is pleased to recommend a proposed single tier final dividend of 1.25 cents per ordinary share for FYE 31 May The proposed dividend is subject to Shareholders approval at the forthcoming Annual General Meeting. Pang Chee Khiong Chairman The total dividends payable for the FYE 31 May 2013 would be approximately amounting to RM1.225 million, being a dividend payout ratio of approximately 25.0% of PAT of RM million. 5

10 ADVANCE COMPOSITES Group Structure FIBON BERHAD 100 % HEXA ANALISA SDN BHD 100 % FIBON AUSTRALIA PTY LTD 100 % FIBON UK LIMITED 100 % FIBON ELECTRIC (M) SDN BHD FIBON CAPITAL SDN BHD FIBON BERHAD, incorporated on 25 March 2008, Malaysia HEXA ANALISA SDN BHD, acquired on 20 October 2008, Malaysia FIBON UK LIMITED, acquired on 16 April 2009, United Kingdom FIBON AUSTRALIA PTY LTD, incorporated on 14 July 2009, Australia FIBON ELECTRIC (M) SDN BHD, acquired on 9 November 2010, Malaysia. FIBON CAPITAL SDN BHD, acquired on 31 July 2013, Malaysia. (Previously known as Opes Management Sdn. Bhd.) 6

11 ANNUAL REPORT 2013 Financial Highlights Financial year ended 31 May RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 16,474 12,891 14,498 16,901 16,674 Profit before taxation ( PBT ) 8,693 5,010 5,945 6,226 6,666 Profit after taxation ( PAT ) 8,304 4,014 4,389 4,499 4,905 EARNINGS PER SHARE ( EPS ) Gross EPS (sen)* Net EPS (sen)* * FYE 2009: Computed based on the PBT and PAT for the relevant financial years under review and divided by the weighted average number of shares in issue of 48,666,000 during the respective financial year. * FYE : Computed based on the PBT and PAT for the relevant financial years under review and divided by the issued and paid up share capital of 98,000,000 Shares for the financial year. [The rest of this page intentionally left blank] 7

12 ADVANCE COMPOSITES Financial Highlights cont d REVENUE AND PROFIT FROM ORDINARY ACTIVITY AFTER TAXATION (RM 000) NET EPS (SEN) 8

13 ANNUAL REPORT 2013 Audit Committee Report for the financial year ended 31 May 2013 THE AUDIT COMMITTEE The present Audit Committee consists entirely of Non-Executive Directors. The Company has complied with the Listing Requirements of Bursa Malaysia Securities Berhad, which require all of Audit Committee members to be non-executive, with a majority of them being independent directors. In addition, two of the members of the Audit Committee are also the member of Malaysian Institute of Accountants ( MIA ) and the Chairman of the Audit Committee is an Independent Director. COMPOSITION AND MEETINGS The composition of the Audit Committee and their attendance at the 4 meetings held during the year are as follows: Name of Director Datuk Mohamad Saleh Bin Mohd Ghazali Chong Peng Khang Koh Chun Kiat Independent Non-Executive Director Independent Non-Executive Director; Member of the MIA Independent Non-Executive Director; Member of the MIA TERMS OF REFERENCE Objectives Designation Attendance Chairman 3/4 Member 4/4 Member 2/4 The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the Group. In addition, the Committee shall: 1. Ensure the timely and accurate preparation and publication of financial statements of our Group; 2. Review the adequacy of provisions against contingencies and bad and/or doubtful debts; 3. Review internal control process and procedures, scope, internal audit findings and recommend actions to the Board; 4. Recommend and appoint external auditors and deal with any issues arising from their audit findings; 5. Review related party transactions that may arise within our Group; 6. Approve fees relating to external auditors; and 7. Address any accountability issues that may arise from time to time within our Group. Composition 1. The Audit Committee shall be appointed by the Board of Directors from amongst their members and comprising not less than three (3) members, of whom the majority shall be the Independent Non-Executive directors. 2. At least one of the members of the Audit Committee must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years of working experience or either must have passed the examinations specified in Part I of the schedule of Accountants Act 1967, or must be a member of one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountant Act, The members of the Audit Committee shall elect a chairman amongst themselves who shall be an Independent Non-Executive director. No alternate director shall be appointed as a member of the Audit Committee. 9

14 ADVANCE COMPOSITES Audit Committee Report TERMS OF REFERENCE (Cont d) 4. If a result that the number of members is reduced below three (3), the Board of Directors shall, within three (3) months of the events, appoints such number of new members as may be required to make the minimum number of three (3) members. Authority 1. The Audit Committee is authorised by the Board of Directors and have the authority to investigate any matter within its items of reference and shall have unlimited access to both the internal and external auditors, as well as the employees of the Group. All employees are directed to co-operate with any request made by the Committee. 2. The Committee shall have unlimited access to all information and documents relevant to its activities, to the internal and external auditors, and to senior management of the Group. 3. The Committee shall have the authority to obtain independent legal or other professional advices as it considers necessary. 4. The Committee shall be able to convene meetings with the external auditors, excluding the attendance of the executive members of the Committee, whenever deemed necessary. 5. The Audit Committee shall have the power to establish Sub-Audit Committee(s) to carry out certain investigation on behalf of the Committee in such manner, as the Committee deem fit and necessary. Meetings The Committee is at liberty to determine the frequency of the meetings at least four times annually. The quorum shall consist of two (2) members, where the majority of members present must be independent directors. Attendance of the Meetings 1. The external auditors may be invited to attend to meetings. The Committee may invite any person to be in attendance to assist in its deliberations. The other directors and employees attend any particular audit committee meeting only at the audit committee s invitation, specific to the relevant meeting. 2. The Company Secretary shall be the Secretary of the Committee and shall be responsible for drawing up the agenda with concurrence of the chairperson and circulating it, supporting by explanatory documentation to committee members prior to each meeting. Duties The duties of the Audit Committee include the followings: 1. To consider the appointment or reappointment of external auditors, the audit fee and matter relating to the resignation or dismissal of auditors, if any; 2. To review with the external auditors the audit plan, their evaluation of the system of internal accounting controls, their letter to management and the management s response; 3. To review the quarterly and annual financial statements before submission to the Board of Directors for approval, focusing particularly on: Changes in accounting policies and practices; Significant and unusual events; Significant adjustments resulting from the audit; The going concern assumption; and Compliance with accounting standard and other legal requirements 10

15 ANNUAL REPORT 2013 Audit Committee Report TERMS OF REFERENCE (Cont d) 4. To discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management where necessary); 5. To do the followings where an internal audit function exists; Review the adequacy of the scope, function and resources of the internal audit function and that it has the necessary to carry out its work; Review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function; Review any appraisal or assessment of the performance of members of the internal audit function; Approve any appointment or termination of senior staff members of the internal audit function; Review the resignation of internal audit staff members and provide the staff member the opportunity to submit his reasons for resigning; and To consider major findings of internal investigations and management s response. 6. To consider any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity; and 7. To consider other topics as defined by the Board. Reporting The Audit Committee is authorised to regulate its own procedures and in particular the calling of meetings, the notice to be given of such meetings, the voting and proceeding thereat, the keeping of minutes and the custody, production and inspection of such meetings. The minutes of meetings shall be circulated by the Secretary of the Committee to the Committee members and all the other Board members. ACTIVITIES OF THE AUDIT COMMITTEE There were four (4) Audit Committee Meetings held during the financial year under review. The main activities undertaken by the Audit Committee during the financial year included the followings: Reviewed and commented on the quarterly financial result before recommending the same for Board s approval. Reviewed the audit report and observations made by external auditors on the audited financial statements that require appropriate management action and the management s response thereon and reporting them to the Board. Reviewed the external auditors scope of work and audit plan. Reviewed the internal audit reports, which highlighted the audit issues and management s response. INTERNAL AUDIT FUNCTION The Board engaged an external professional firm to carry out internal audit function for the Group. The internal auditors report directly to the Audit Committee. The primary role of the internal auditors is to interalia, assist the Audit Committee on an ongoing basis to: Review the risk management framework; 11

16 ADVANCE COMPOSITES Audit Committee Report INTERNAL AUDIT FUNCTION (Cont d) Evaluate the state of compliance with the Bursa Securities Listing Requirements, Malaysian Code on Corporate Governance ( the Code ) and other statutory requirements; and Provide such other function as requested by the Audit Committee 12

17 ANNUAL REPORT 2013 Statement on Corporate Governance for the financial year ended 31 May 2013 INTRODUCTION The Board of Directors ( the Board ) of Fibon Berhad ( the Company ) is committed to exercise good corporate governance by supporting and applying the prescriptions of the principles and best practices set out in Malaysian Code on Corporate Governance 2012 ( MCCG 2012 or the Code ). The Board is pleased to provide the following statement on how the Group has applied the principles and recommendations set out in the Code. Unless otherwise stated, the Board has throughout the financial year ended 31 May 2013 complied with the best practices indicated in the Code. The Board acknowledges the importance of achieving best practice in its standards of business integrity and corporate accountability and is committed to subscribe to the recommendations of the Code. The Board The Group recognises the important role played by the Board in the stewardship of the Group s direction and operations, and ultimately, the enhancement of long-term shareholders value. To fulfill this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. In fostering commitment towards MCCG 2012, the Board has established a Board Charter to ensure that all Board members are aware of their fiduciary duties and responsibilities for the proper stewardship of the Group to provide reasonable assurance for the success of the Group on sustainable manner. The Board is tasked with realisation of long term and sustainable shareholder s value and safeguarding the interests of stakeholders. Board Meeting The Board ordinarily meets at least four (4) times a year at quarterly intervals with additional meeting convened when urgent and important decisions need to be taken between the scheduled meetings. During the financial year ended 31 May 2013, the board met on four (4) occasions, where it deliberated upon and considered a variety of matters including the Group s financial results, major investments and strategic decisions and the business plan and direction of the Group. The present Board of Directors headed by the chairman is comprised of: 4 Non-Independent Executive Directors 3 Independent Non-Executive Directors The composition of the Board is basically in compliance with the Bursa Securities Listing Requirements and the Code. The Board composition has been balanced to reflect the interests of the major shareholders, management and minority shareholders. Collectively, the Directors bring a wide range of business and financial experience relevant to the direction of the Group. The Board noted that one of the recommendations of the MCCG 2012 is that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. In case of any Independent Director exceeding cumulative term of nine (9) years, he / she should be re-designated to be Non-Executive Director or shareholders approvals would need to be obtained in order for he / she to remain as Independent Director. Amongst the Board members, all the tenure of three (3) Independent Non-Executive Directors have not exceeded cumulative term of nine (9) years. Another recommendation of the MCCG 2012 states that the positions of Chairman and Chief Executive Officer / Managing Director should be held by different individuals, and the Chairman must be a non-executive member of the Board. Otherwise, the Board should comprise of majority independent directors. Pertaining to this recommendation, the Board is currently exploring and considering various 13

18 ADVANCE COMPOSITES Statement on Corporate Governance possible alternatives prior to adoption of the best practise moving forward. Details of Directors attendance at Board Meetings held in the financial year ended 31 May 2013 are as follows: Name of Directors Datuk Mohamad Saleh Bin Mohd Ghazali Dr.Chen Chaw Min Koh Chun Kiat No. of Meetings Attended 3/4 2/4 2/4 Chong Peng Khang 4/4 Pang Chee Khiong 4/4 Pang Fok Seng 4/4 Pang Nyuk Yin 4/4 Lim Wai Kiew 3/4 Appointment of Directors The Nomination Committee task is to assist the Board to evaluate and recommend candidates for appointments to the Board. In accordance with the Company s Articles of Association ( the Articles ), all new Directors who are appointed by the Board during a financial year, will retire at the following Annual General Meeting. The Articles also provide that at least one-third (1/3) of the Directors for the time being, or if their numbers is not in multiple of three (3), then the number nearest to one-third (1/3) shall retire from office provided always that all Directors including the Managing Director/Executive Director shall retire from office at least once every three years but shall be eligible for re-election. At the forthcoming Annual General Meeting, Pang Fok Seng and Chong Peng Khang are due to retire pursuant to Article 121 whereas Koh Chun Kiat, the newly appointed director is to retire pursuant to Article 126 of the Company s Articles of Association respectively. The Board, through the Nomination Committee, appraises the composition of the Board and believes that the current composition brings the required mix of skills and core competencies for the Board to discharge its duties effectively. New appointees will be considered and evaluated by the Nomination Committee. The Nomination Committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensure that all appointments are properly made and that legal and regulatory obligations are met. Directors Remuneration The Directors remuneration is linked to experience, scope of responsibility, seniority, performance and industry information. Details of Directors remuneration for the year ended 31 May 2013 are as follows: Description Executive Directors Non Executive Directors Fees Salaries and Bonus Total 174, , ,224 72,000-72,000 The number of Directors whose remuneration falls within the following bands is: Description Executive Directors Non Executive Less than RM50,000-3 RM50,000 RM100, RM100,000 RM150, RM150,000 RM200, RM200,000 RM300, RM300,000 RM400, Directors Training The Group acknowledges the importance of continuous education and training to the Board members. During the financial year, Mr. Pang Chee Khiong, Mr. Pang Fok Seng, Ms. Pang Nyuk Yin and Ms. Lim Wai Kiew attended Advocacy Sessions on Corporate Disclosure for Directors organised by the Bursa Malaysia Securities Berhad. 14

19 ANNUAL REPORT 2013 Statement on Corporate Governance Mr. Chong Peng Khang had attended the following sessions:- i) Duties of the Audit Committee ii) 2013 Budget Seminar iii) 2013 Budget Seminar Highlights on Tax Changes & Its Implications on Business iv) Dialogue Session on Revised Shari ah Screening Methodology v) Public Practise Programme Mr. Koh Chun Kiat had attended the following sessions:- i) Mandatory Accreditation Programme Training for Directors of PLCs ii) Workshop On Criminal Tax Investigations & Anti-Money Laundering iii) Seminar on XBRL ACCOUNTABILITY AND AUDIT Financial Reporting The Board takes responsibility for ensuring that the financial statements of the Group and of the Company give a true and fair view of the state of affairs of the Group and of the Company as required under Section 169 (15) of the Companies Act, Efforts are made to ensure that the financial statements comply with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia. The Board also ensures the accurate and timely release of the Group s quarterly and annual financial results to Bursa Malaysia. External Audit Function The Company s independent external auditors fill an essential role by enhancing the reliability of the financial statements of the Group and of the Company and giving assurance of that reliability to users of these financial statements. The external auditors, Messrs. Crowe Horwath had reported to the members of the Company on their findings which has been included as part of the Group s and the Company s financial reports with respect to the audit on the statutory financial statements for the year ended 31 May In doing so, the Group and the Company have established a transparent arrangement with the auditors to meet their professional requirements. From time to time, the auditors highlight to the Audit Committee and the Board on matters that require the Board s attention. Internal Control The Board is fully aware of its responsibility to safeguard and enhance the value of shareholders in the Group. Since the listing of the Company, the Board has continuously placed emphasis on the need for maintaining a sound system of the internal control. RELATIONS WITH SHAREHOLDERS AND INVESTORS Annual General Meeting Annual General Meeting ( AGM ) is the principal forum for dialogue with shareholders. At the Company s AGM, shareholders have direct access to the Board and are given opportunities to ask questions. The shareholders are encouraged to participate in the question and answer session. The Chairman of the Board in the AGM often presents to the shareholders, the Company s operations in the financial year and outlines future prospects of the Group. Further, the Group s Company Secretary could provide shareholders and investors with a channel of communication on which they can provide feedback to the Group. Queries regarding the Group may be conveyed to the Company Secretary at the Company s registered address. Investor Relations In line with the Main Market Listing Requirements, shareholders, investors and member of public can access the company s announcements, quarterly financial results, annual reports, circulars to shareholders etc via the company s website. 15

20 ADVANCE COMPOSITES Statement on Corporate Governance Corporate Disclosure Policy The company has in place a policy stipulating the basic principles and procedures of corporate disclosure in order to communicate and disseminate material information impartially to stakeholders on timely, accurate, clear and complete manner, in accordance with Main Market Listing Requirements and other applicable laws and regulations. The policy forms part of the Company s internal rules and regulations and applies to all Directors, officers and employees of the Group and at the same time clearly expresses its commitment on transparent, quality and timely disclosure of Material Information to all stakeholders. 16

21 ANNUAL REPORT 2013 Statement on Corporate Governance for the financial year ended 31 May 2013 Corporate Social Responsibilities The Company recognises the importance of Corporate Social Responsibilities and is committed to conduct its business activities in a socially, economically and environmentally sustainable manner. The Company has taken a proactive approach wherever possible to provide monetary contributions to nonprofitable and charitable organisations. As a part of the activities, the Company accepts undergraduates from local Universities and Colleges to perform and complete their industrial training. CHE LUAN KHOR DIALYSIS CENTRE, KLUANG. Che Luan Khor Dialysis Centre, Kluang was incorporated in Malaysia in August 1998 to carry out businesses in relation with haemodialysis services. Che Luan Khor Dialysis Centre is equipped with the latest medical equipment for haemodialysis treatment. Furthermore, the centre is managed several professional personnel such as Medical Doctor, Registered Nurses and Experienced Technicians to provide the excellent treatments for 74 haemodialysis patients. The centre can accommodate around 33 patients on daily basis. Fibon had given donation with the hope to ease their medical expenses. 17

22 ADVANCE COMPOSITES Statement on Corporate Governance KIWANIS CLUB OF KLUANG MANDARIN Kiwanis Club of Kluang Mandarin is a centre providing support and assistance to persons with disabilities. Their main aims are providing day care services and simple education for the disabled people. There are around 30 disabled persons with 9 teachers and 1 administration staff. Kiwanis Club has been very active club for the last 9 years with various activities held for the unfortunate with their families. Fibon as part of caring community, paid a visit and donated small token of contribution. 18

23 ANNUAL REPORT 2013 Statement on Corporate Governance HANDICAPPED AND DISABLED ASSOCIATION STATE OF JOHORE, KLUANG Handicapped and Disabled Association State of Johore is a charitable centre where the unfortunate disabled people live. There are 33 inmates comprised of Malay, Indian, Chinese and other races. 18 male and 15 female aged from 14 to 86 years old are living in this home as residential inmates. Handicapped and Disabled Association State of Johore helps the disabled people and provides them with shelter and daily needs. Fibon had a great time together with them and made a small donation to them. 19

24 ADVANCE COMPOSITES Statement on Corporate Governance NG CHAI HOCK ( ) Mr.Ng was diagnosed with stage 4 kidney cancer on April After 1 year battle with cancer, father of 3 passed away in August A small token of contribution was donated by Fibon Berhad to the deceased family. SABIRIN BIN YAHAYA ( ) Mr.Sabirin father of 4 children passed away due heart attack on 7 th June Fibon Berhad had donated a small token of contribution to wife of the deceased, Pn.Hasmah Binti Dollah. 20

25 ANNUAL REPORT 2013 Statement on Corporate Governance DONATIONS We at Fibon believe that it is a continuous journey in charity. We also believe that we might not able to take away the pain however we can wipe their tears and give them support. Below are the list of donations made. 1. PDK YAQEEN DAERAH PALOH, KLUANG 2. PERTUBUHAN KEBAJIKAN ANAK-ANAK YATIM ISLAM KLUANG 3. MIRIAM HOME CANOSSIAN SISTERS, KLUANG 4. PERTUBUHAN KEBAJIKAN ANAK-ANAK YATIM DAMO, KLUANG 5. S.J.K.(CINA) PING MING KLUANG. 6. HANDICAPPED AND DISABLED ASSOCIATION STATE OF JOHORE, KLUANG 7. AGAPE SHELTER KLUANG 8. PUSAT RAWATAN LUKA BIOTERAPI (MDT CENTRE SDN.BHD.), SELANGOR. 9. EAM DIALYSIS CENTRE, SELANGOR 10. CHE LUAN KHOR DIALYSIS CENTRE, KLUANG. 11. KIWANIS CLUB OF KLUANG MANDARIN 12. NG CHAI HOCK S ( ) FAMILY 13. SABIRIN BIN YAHAYA S ( ) FAMILY 21

26 ADVANCE COMPOSITES Statement on Risk Management & Internal Control for the financial year ended 31 May 2013 INTRODUCTION The Malaysian Code of Corporate Governance ( The Code ) prescribes that all listed issuers should have an internal audit function and all risks areas identified. The Principals and Best Practises in the Malaysian Code on Corporate Governance state that the Board should maintain a sound system of internal control to safeguard shareholders investments and the Group s assets. Paragraph 15.26(b) of the Bursa Securities Main Market Listing Requirements also echoed that the Board is ultimately responsible for the Group s system of internal control and for reviewing the effectiveness of the internal control system. Internal control system is primarily designed to cater for the business needs and manage the potential business risks of the Group. There are inherent risks in any systems of internal control, as such systems are designed to mitigate rather than eliminate the likelihood of fraud and error. Accordingly, these systems can provide only reasonable and not absolute assurance against material misstatement or loss. The concept of reasonable assurance also recognises that the cost of control procedures should not exceed the expected benefits. The Board is committed to maintain a sound system of internal control in the Group and is pleased to provide the following Statement on Internal Control ( Statement ) pursuant to paragraph 15.26(b) of the Bursa Securities Main Market Listing. Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the Statement on Internal Control: Guidance for Directors of Public Listed Companies. BOARD RESPONSIBILITIES The Board acknowledges its responsibility for maintaining a sound system of internal control to safeguard shareholders investments and the Group s assets and for reviewing the adequacy and integrity of the system. It should be appreciated that such a system is designed to manage the principle business risks that may impede the Group from achieving business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. The system of internal controls cover financial, organisational, operational and compliance controls to safeguard shareholders investment and the Group s assets. RISK MANAGEMENT The Board understands that risk management plays an important role in identify risk areas which impede the achievement of the Group s corporate objectives. As such the Group strives to identify and manage its risks faced by the Group during the year during their monthly management meetings. KEY ELEMENTS OF THE INTERNAL CONTROL SYSTEM Internal controls are embedded in the Group s operations as follows: Organisation Structure The Group has in place an organisation structure with clearly defined lines of responsibilities and functionality which promotes appropriate levels of accountability for risk management, control procedures and effectiveness of operations. Board and Management Meetings Strategic planning and detailed target setting for each area of business are established. The Board and Management holds monthly meetings to monitor actual results, with significant variances are being investigated and management action taken, where necessary as well as listening to feedback on daily operational issues. 22

27 ANNUAL REPORT 2013 Statement on Risk Management & Internal Control Performance Management Framework Management reports are generated on a monthly and quarterly basis to facilitate the Board and the Group s management to perform review on the business units. The Group s management information system has been upgraded to provide management with better reporting system. The reporting and review encompass financial and nonfinancial matter for compliance and daily operational use. Limits of Authority Defined level of authorities and lines of responsibilities from business divisions up to the Board level is established to ensure accountabilities and responsibilities for risk management and control activities. Operational Policies and Procedures The Group s policies and procedures form an integral part of the internal control system to safeguard the Group s assets against material losses and to ensure a systematic running of the daily operation. Regular reviews are performed to ensure that documentation remains current and relevant. Audit Committee The AC reports to the Board on a quarterly basis the activities of the internal audit function and deliberate on the internal audit reports. The AC also ensures that the adequacy and effectiveness of the internal controls and procedures and that there are continuous efforts by management to address and resolve areas with control weakness. Internal Audit Functions The internal audit function provides assurance of the effectiveness of the system of internal controls within the Group. Internal audit efforts are directed towards areas with significant risks as identified by the AC and the Management. The Group had engaged an external independent internal auditor to assist the AC, and by extension, the Board. The scope covers the audit of business units and operations as agreed with management. From time to time, the scope is reviewed by the AC to ensure its relevancy and effectiveness. The internal audit function advises management on areas for improvement and subsequently reviews the extent to which its recommendations have been implemented, and reports directly to the AC on a quarterly basis. The cost incurred for the external independent internal audit services in respect of the financial year 31 May 2013 was RM19, In Fibon Berhad, the Managing Director is defined as the highest ranking executive in the Group hence, the person responsible for carrying out corporate policies established by the Board and whose main responsibilities include developing and implementing high-level strategies, making major corporate decisions, managing the overall operations and resources of the Group, and acting as the main point of communication between the Board and corporate operations. The Financial Controller is defined as the person primarily responsible for the management of the financial affairs of the company (such as record keeping, financial planning and financial reporting), by whatever name called. On 22 July 2013, based on the letter by both the Managing Director and the Financial Controller provides the assurance to the Group s Board that the Group s risk management and internal control system is operating adequately and effectively. The monitoring, review and reporting arrangements provides reasonable assurance that the structure of controls and its operations are appropriate to the Group s operations and that risks are at an acceptable level throughout the Group s businesses. Such arrangements, however, do not eliminate the possibility of human error, deliberate 23

28 ADVANCE COMPOSITES Statement on Risk Management & Internal Control circumvention of control procedures by employees and others, or the occurrence of unforeseeable circumstances. The board is of the view that the system of internal control in place for the year under review is sound and sufficient to safeguard shareholders investments, stakeholders interests and the Group s assets. Weakness in Internal Controls There were no material losses incurred during the financial year under review as a result of weaknesses in internal control. The Board remains committed towards improving the system of internal control and risk management to meet its corporate objectives and to support all types of businesses and operations within the Group. The statement is made in accordance with a resolution of the Board dated 06 September

29 ANNUAL REPORT 2013 Statement on Directors Responsibilities In respect of the audited financial statements The Board has the overall responsibility to prepare the financial statements for each financial year as required by the Companies Act, The financial statements should be prepared in accordance with the applicable Malaysian Accounting Standards Board ( MASB ) approved accounting standards in Malaysia, the provisions of the Companies Act, 1965, and the relevant provisions of the Bursa Securities Listing Requirements so as to present a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of their results and cash flows for the year then ended. In preparing the financial statements, the Directors have: Selected suitable accounting policies and applied them consistently Ensured system of internal control exist to safeguard the assets of the Group to prevent and detect fraud and other irregularities Ensured that the financial statements presents a balanced and understandable assessment of the financial position and prospect of the Group and of the Company; and Ensured that the accounting estimates included in the financial statements are reasonable and prudent. 25

30 ADVANCE COMPOSITES Additional Compliance Information UTILISATION OF PROCEEDS The status of utilisation of proceeds from the public offering during the financial year ended 31 May 2013 is as follows: Purposes Proceeds raised RM 000 Actual Utilisation RM 000 Intended Timeframe for Utilisation Extended Timeframe for Utilisation Balance Unutilised RM 000 % Explanation (i) Research & 1,848 1, December 18 December 0 - ^ development activities (ii) Purchase of machineries 1,700 1, December 18 December 0 - ^ (iii) Geographical expansion 1, December 18 December ^ (iv) Working capital 2,409 3, (670) - * (v) Estimated listing expenses 2,000 1, * Total 9,137 8, ^ The initial approved time frame for utilisation is 3 years from the date of listing. The Board of Directors have decided to extend the time frame for all remaining unutilised portions for another twelve (12) months period until 18 December 2013 in accordance with announcement made on 18 January * The underutilisation of the listing expenses will be adjusted to working capital. SHARE BUYBACKS During the financial year under review, there were no share buyback by the Company. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES During the financial year under review, the Company has not issued any options, warrants or convertible securities. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME During the financial year under review, the Company did not sponsor any such programme. 26

31 ANNUAL REPORT 2013 Additional Compliance Information cont d IMPOSITION OF SANCTIONS AND/OR PENALTIES There were no material sanction and/or penalties imposed on the Company and its subsidiary companies, Directors or management by the regulatory bodies. NON-AUDIT FEES Non-audit fees paid to external auditors and affiliated firm amounted to RM14,452. REVALUATION POLICY The Company has not adopted a policy of regular revaluation of assets as permitted under the transition provisions. MATERIAL CONTRACT The Company and its subsidiary do not have any material contract for the financial year. PROFIT ESTIMATE, FORECAST OR PROJECTION The Company and its subsidiary companies did not issue any profit forecast or profit estimate previously or for the financial year ending 31 May 2013 in any public document hence this information is not applicable. PROFIT GUARANTEES There were no profit guarantees given by the Company for the financial year. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE NATURE There were no recurrent related party transactions of a revenue nature entered into during the financial year ended 31 May

32 ADVANCE COMPOSITES Financial Statements Directors Report Statement by Directors Statutory Declaration Independent Auditors Report Statements of Financial Position Statements of Comprehensive Income Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements

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34 ADVANCE COMPOSITES Directors Report The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 May PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding. The principal activities of its subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS The Group RM 000 The Company RM 000 Profit after taxation for the financial year 4,905 1,301 Attributable to:- Owners of the Company 4,905 1,301 DIVIDENDS A first and final single tier dividend of 1.15 sen per ordinary share amounting to RM1,127,000 for the financial year ended 31 May 2012 was approved by the shareholders at the Annual General Meeting held on 14 November 2012 and paid on 28 December At the forthcoming Annual General Meeting, a first and final single tier dividend of 1.25 sen per ordinary share amounting to RM1,225,000 in respect of the financial year ended 31 May 2013 will be proposed for shareholders approval. The financial statement for the current financial year will not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for as a liability in the financial year ending 31 May RESERVES AND PROVISIONS There were no material transfers to or from reserves or provision during the financial year except as disclosed in the financial statements. ISSUES OF SHARES AND DEBENTURES During the financial year, (a) (b) there were no changes in the authorised and issued and paid-up share capital of the Company; and there were no issues of debentures by the Company. 30