Corporate Governance Statement - SAM Malaysia€¦ · · 2017-07-27SAM Malaysia is committed to meeting sound standards of corporate governance and it is our ... the actual or potential

32 SAM ENGINEERING & EQUIPMENT (M) BERHAD CROSSOVER . ANNUAL REPORT 2017

SAM Malaysia is committed to meeting sound standards of corporate governance and it is our steadfast belief that such standards are essential to uphold business integrity and performance of the Company and its subsidiaries (“Group”). The Board of Directors (“Board”) and each individual Director is directly accountable to the shareholders and stakeholders for ensuring that good governance is practiced at every level of the Group’s operations, in compliance with Malaysian Code on Corporate Governance 2012 (“Code”). The main focus is to adopt the substance behind good corporate governance practices with the ultimate aim to ensure effectiveness and efficacy towards enhancing shareholder value.

The Group’s corporate governance practices are also guided by its Core Values which balance commercial and financial success with the interests of all stakeholders. The set of core values guides the Board, management and employees at all levels in the conduct and management of the business and affairs of the Group.

The Board is pleased to provide the following statement, which outlines the main corporate governance practices that were in place throughout the financial year and are currently still in place, unless otherwise stated.

Principle 1: Establish Clear Goals and Responsibilities

1.1 Clear Functions of the Board and Management

The Group acknowledges the pivotal role played by the Board in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value.

In addition, the Board has established clear functions reserved for the Board and those delegated to the Chairman, Board Committees, the Executive Director and management as part of initiative to enhance accountability. The Board has a formal schedule of matters reserved for its decisions to ensure that direction and control are within purview of the Board. Principal matters reserved for the Board include approving acquisition and divestiture, major capital expenditure, projects and budgets, quarterly and annual financial statements as well as monitoring of financial and operating performance of the Group.

The Board Committees refer to the Audit Committee (“AC”), Risk Management Committee (“RMC”), Investment & Divestment Committee (“IDC”) and the Nominating & Remuneration Committee (“NRC”). These Committees operate within specific terms of reference that were drawn up in accordance with best practices in the Code and function principally to assist the Board in the execution of its duties and responsibilities.

The authority and terms of reference of the Board Committees are reviewed from time to time with the aim to ensure its relevance and enhance its efficacy.

The clear demarcation of roles established in the Board Charter is the reference point for Board activities and reinforces the supervisory role of the Board going forward. The Board Charter provides reference for Directors in relation to the Directors’ and the Board’s role, powers, duties and functions.

Notwithstanding the delegation of specific powers, the Board retains full responsibility for the direction and control of the Company and the Group. The ultimate responsibility for decision-making on all matters lies with the Board.

The Chairman performs a leadership role in the conduct of the Board and its relations with the shareholders and other stakeholders. The Chairman is primarily responsible for the following, among others:

(a) leading the Board in the oversight of management;(b) representing the Board to shareholders and chairing general meeting of shareholders;(c) ensuring the adequacy and integrity of the governance process and issues;(d) maintaining regular dialogue with the Group Chief Executive Officer (“CEO”) over all operational matters and consulting

with the remainder of the Board promptly over any matters that gives him/her cause for major concern to optimise the effectiveness of the Board and its Committees;

(e) functioning as a facilitator at meetings of the Board to ensure that no member, whether executive or non-executive, dominates discussion, that appropriate discussions takes place and that relevant opinions among members is forthcoming. The Chairman will ensure that discussions result in logical and understandable outcomes;

(f) ensuring that all Directors are enabled and encouraged to participate in its activities. This includes ensuring that all relevant issues are on the agenda and that all Directors receive timely, relevant information tailored to their needs and that they are properly briefed on issues arising at Board meetings;

(g) ensuring that the Executive Director/CEO looks beyond his executive function and accepts his full share of responsibilities for governance and provides regular updates on all issues pertinent to the welfare and future of the Group to the Board; and

(h) guiding and mediating Board actions with respect to organisational priorities and governance concerns.

Corporate Governance Statement

33SAM ENGINEERING & EQUIPMENT (M) BERHAD CROSSOVER . ANNUAL REPORT 2017

Corporate Governance Statement (Cont’d)

Principle 1: Establish Clear Goals and Responsibilities (Cont’d)

1.1 Clear Functions of the Board and Management (Cont’d)

The CEO is responsible for the day-to-day supervision of management and operations and leads the senior management team to ensure high level of work efficiency and optimum production activity.

Other key roles assumed by the CEO include the following:

(a) leads executive management of the Group’s business covering, inter alia, the development of a strategic plan; an annual operating plan and budget; performance benchmarks to gauge management performance against and the analysis of management reports;

(b) develops long-term strategic and short-term profit plans, designed to ensure that the Group’s requirements for growth, profitability and return on capital are achieved;

(c) effectively oversees the human resources of the Group with respect to key positions in the Group’s hierarchy, makes recommendations to the Board for recruitment of senior management staff, determination of remuneration as well as terms and conditions of employment for senior management and issues pertaining to discipline;

(d) assures the Group’s corporate identity, products and services are of high standards and are reflective of the market environment;

(e) acts as the official spokesman for the Company and takes responsibility for regulatory, governmental and business relationships;

(f) maintains and facilitates a positive working environment and good employee relations;(g) assists in the selection and evaluation of Board members through the NRC; and(h) assists the Chairman in organising information necessary for the Board to deal with the agenda and for providing this

information to Directors on a timely basis.

On the other hand, management is responsible for the execution of activities to meet corporate plans as well instituting various measures to ensure due compliance with various governing legislations.

1.2 Clear Roles and Responsibilities

The Board is responsible for the effective control of the Group. To that end, the Board has assumed and established the following responsibilities aimed at effective discharge of its functions:

(a) Review and formalisation of strategic direction for business sustainability

The management has established an annual strategy planning process aimed at developing business strategies and plans. These recommendations are then presented to the Board for deliberation and approval.

The Board also reviews and approves annual budgets including major capital commitment and expenditure. Generally, the annual budget and strategies are presented to the Board before the start of the new financial year.

(b) Identify principal risks and ensuring implementation of systems to manage risks

There is in place a dynamic risk management and internal control framework which is applied consistently throughout the year to identify, assess and manage significant risks faced by the Group. Details of the framework are more particularly spelt out in the Statement on Risk Management and Internal Control.

(c) Succession planning

The Board acknowledges that succession planning is a key responsibility and believes that a properly implemented succession plan will support operations and provide continuity following a change in CEO, senior management talent or key business leaders. The Board oversees the identification and development of key senior management talent through mentoring, training and job rotation. Separately, the NRC and the Human Resource division assist the Board to oversee Board succession planning by identifying suitable candidates for Board seats.

(d) Developing and managing investor relations program

The Group has set-up an Investor Relation (IR) structure and is in the process of developing its IR program and strategy. The CEO together with the Chief Operating Officer and Chief Financial Officer (“CFO”) are the main persons leading the communication with all stakeholders and respond to all queries in relation to Group activities, business and operations, financial results and prospects.



1.2 Clear Roles and Responsibilities (Cont’d)

(d) Developing and managing investor relations program (Cont’d)

The IR employed key channels of communication such as the general meeting, electronic bulletin as provided by Bursa Malaysia Securities Berhad (“Bursa Securities”), press releases, Company website and analyst briefings as means to reach its audiences.

(e) Review adequacy and integrity of the Group’s internal control and management information systems

The Group has an in-house Internal Audit (“IA”) function which reports directly to the AC and assists the AC in the discharge of its duties and responsibilities.

The IA function’s key role is to review the integrity, effectiveness and adequacy of the Group’s system of risk management and internal controls.

Field audits are carried out by the IA service providers regularly in identified areas of concern. These reports are issued quarterly and the in-house IA function will scrutinise and coordinate management response before forwarding to the AC for review.

The AC conducts annual review of the IA function focusing on its resources and scope of work, among others. The AC reports to the Board, on quarterly basis, is part of scheduled matters which enabled the Board to be updated and maintains effective supervisory control in the Group.

(f) Establishing goals for management and monitoring the achievement of these goals

Management goals are defined in the strategies and annual budgets approved by the Board. Progress reports comparing actual to budget are presented to the Board quarterly for their understanding and decision-making as needed.

1.3 Formalise Ethical Standards Through a Code of Ethics

There is in place a Standard Code of Conduct, Business Ethics, Conflicts of Interest (collectively referred to as “Code of Ethics”) and Whistle Blowing Policy (“WBP”) within the Group. The Code of Ethics spells out the standards of ethics and conduct expected from both the Board and employees. The implementation of both the Code of Ethics and WBP reflects the Board’s commitment and sets the tone for proper ethical behaviour expected from all. The Board will take the necessary measures to ensure compliance by all with the Code of Ethics.

The WBP outlines when, how and to whom a concern could be properly raised about the actual or potential corporate fraud and or breach of ethics involving employees, Management or Director(s) of the Group.

All concerns reported by the whistle blower(s) are directed to the Chairman of the AC in accordance with the conditions prescribed under the WBP. The contact email address is: [email protected]. The WBP has been published on the Company website.

1.4 Strategies Promoting Sustainability

The Board is mindful of the need for business sustainability over the long term within the environmental, governance and social context.

Strategic development and operational progress are reviewed on a quarterly basis taking into consideration changing business environment and risk factors such as competition, consumer demand, raw material pricing, fluctuations in foreign exchange and changes to governmental policies.

With due recognition towards business sustainability, the Board has in place a Sustainability Policy which embeds elements of environment, social and governance in the Group’s corporate strategies. The Sustainability Report is disclosed in this Annual Report.





1.5 Access to Information and Advice

The Board recognises that the decision-making process is highly contingent on the quality of information furnished. Following from this, all Directors have unrestricted access to any information pertaining to the Company and the Group.

The Board receives documents on matters requiring its consideration prior to and in advance of each meeting (including Board Committee meetings) and vide circular resolutions. The Board papers and papers accompanying circular resolutions are comprehensive and encompass both quantitative and qualitative factors so that informed decisions are made.

The Chairman ensures that all Directors have full and timely access to information with Board papers distributed at least 7 days in advance of meetings or a shorter time period when unavoidable. This allows the Directors to have sufficient time to appreciate issues to be deliberated at the meetings and expedites the decision making process.

Verbal explanations are provided by the Executive Director, management personnel and or external consultants, as applicable, to further the Directors’ understanding of operational management and or other matters tabled for Board’s deliberation.

The Board has unhindered access to the advice and services of the Company Secretaries who are responsible for ensuring that all Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretaries also act as the Secretaries for the Board Committees. The Directors may seek the advice of Management on matters under discussion or request further information on the Group’s business activities.

The Board will review, consider and authorise the release of all major corporate announcements to Bursa Securities.

The Directors, whether as full Board or in their individual capacity, may upon approval from Chairman, seek independent professional advice if required, in furtherance of their duty, at the Group’s expense.

1.6 Qualified and Competent Company Secretaries

The current Company Secretaries are competent, qualified and capable of providing the needful support to the Board in discharging its fiduciary duties. They have attended regular trainings and seminars to keep abreast of relevant statutory and regulatory requirements under the Main Market Listing Requirements (“MMLR”) of Bursa Securities, the Companies Act 1965, the Companies Act 2016, Capital Market Services Act 2012 and the Code.

In the event that the Company Secretaries fail to fulfil their functions effectively, the terms of appointment permit their removal and appointment of a successor only by the Board as a whole.

In discharging their duties and responsibilities, the Company Secretaries are present at all meetings to record the deliberations and decisions taken.

The duties of the Company Secretaries include, among others, the followings:

(a) preparing agendas and coordinating the preparation of the Board papers;(b) ensuring that Board procedures and applicable rules are observed; (c) maintaining records of the Board and ensure effective management of the Group’s records;(d) preparing comprehensive minutes to document Board proceedings and ensuring conclusions are accurately recorded;

and(e) timely dissemination of information relevant to Directors’ roles and functions and keeping them updated on new or

evolving regulatory requirements.

1.7 Board Charter

The Board Charter, approved in late 2014, took into account various recommendations of the Code and the changes to the MMLR of Bursa Securities. The Board Charter will be reviewed from time to time. The Board Charter is available on the Company website.



Principle 2: Strengthen Composition

As at the date of this statement, the Board comprises nine (9) members as set out below:

Directors Designation

Tan Kai Hoe Non-Independent Non-Executive Chairman

Goh Wee Keng, Jeffrey Executive Director & CEO

Shum Sze Keong Non Independent Non-Executive Director

Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Director

Dato’ Seo Eng Lin, Robin Independent Non-Executive Director

Dato’ Wong Siew Hai Independent Non-Executive Director

Dato’ Sri Lee Tuck Fook Independent Non-Executive Director

Lee Hock Chye Independent Non-Executive Director

Datuk Dr Wong Lai Sum Independent Non-Executive Director

On 1 October 2016, the Group announced the appointment of Datuk Dr Wong Lai Sum to the Board as Independent Non-Executive Director.

A brief profile of each Director is presented in the corresponding section of this Annual Report.

The Directors, with their different background and specialisation, collectively bring with them a wide range of experience and expertise in areas such as finance, engineering, corporate affairs, legal, marketing and operations.

The Independent Non-Executive Directors bring objective and independent judgment to the decision making of the Board and provide a capable check and balance to the Executive Director and management. They contribute significantly in areas such as policy and strategy development, performance monitoring, allocation of resources as well as improving governance and controls.

Together with the Executive Director who has intimate knowledge of the business, the Board is constituted of individuals who are committed to business integrity and professionalism in all its activities and have proper understanding of and competence to deal with the current and emerging business issues.

2.1 Nominating & Remuneration Committee

The NRC, which comprises solely of Non-Executive Directors with a majority being Independent. Members of the NRC and their meeting attendance during financial year under review are as set out below.

Designation Directors Attendance

Chairman Dato’ Wong Siew Hai 2/2

Members Mr. Tan Kai Hoe 2/2

Dato’ Seo Eng Lin, Robin 2/2

Mr. Lee Hock Chye 2/2

The NRC was established with specific terms of reference to recommend to the Board, candidates for Directorships, oversee

assessment of Directors, appoint Board Committee members as well as review Board succession planning and training programs.

The Board is satisfied that the current Board size and composition has the right mix of skills, core competencies and balance for the Board to discharge its duties effectively.



Principle 2: Strengthen Composition (Cont’d)

2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors

The NRC conducts an annual Board evaluation, through a questionnaire, for Directors to assess the effectiveness of the Board as a whole, the Board Committees and individual Director self-assessment, required mix of skills and experiences to enhance Board efficacy. The assessment and comments from the Directors are collated, distilled, summarised and reported to the Board by the NRC Chairman with an aim towards continuous improvement of the Board, Directors and Board Committees.

The NRC will look into the development of a set of criteria for use in the recruitment process.

The current criteria for annual assessment of Directors are as set out in the assessment form.

The effectiveness of the Board is assessed in the areas of board size, mix or composition, conduct of Board meetings and Directors’ skills set matrix. The Board Committees are assessed based on their roles and scope of work, frequency and length of meetings, supply of sufficient and timely information to the Board and also overall effectiveness and efficiency in discharging their duties.

In the case of individual Directors, the assessment involved a self-review where Directors assessed their own performance on their contribution and competencies such as ability to give constructive suggestions, demonstrate objectivity and a high level of professionalism and integrity in decision-making process and provide realistic advice to the Board and Board Committees.

The suitability of candidates will be considered and evaluated by the NRC based on, among others, experience, commitment (including time commitment), competency, contribution and integrity of candidates including, where appropriate, criteria for assessing the independence for any appointment as Independent Non-Executive Directors. The NRC will then recommend the candidates to be approved and appointed by the Board. The Company Secretaries will ensure that all appointments are properly made, and that legal and regulatory obligations are met.

During the year, the NRC carried out the following activities:

(a) Reviewed and assessed the mix of skills, expertise, composition, size and experience of the Board, contribution of each Director, the effectiveness of the Board as a whole, Board Committees and the re-election of Directors who retire by rotation.

(b) Reviewed and adopted Board Evaluation Report for financial year ended 31 March 2017.(c) Discussed the character, experience, integrity and competency of the Directors and the CFO and ensured all of them

have the time to discharge their roles.(d) Reviewed the Directors’ retirement by rotation and recommended to the Board, Directors who are due for retirement at

the Annual General Meeting (“AGM”).(e) Reviewed and recommended the retention of Independent Non-Executive Directors who have served a cumulative term

of more than nine (9) years to the Board for endorsement and to seek shareholders’ approval at the AGM.(f) Reviewed and recommended the Directors’ Fees for the Non-Executive Directors.(g) Reviewed the NRC’s Report for inclusion in the Annual Report.(h) Evaluated the suitability of potential female director candidates based on human capital perspective and individual

character and recommended to the Board.(i) Reviewed the candidacy of Datuk Dr Wong Lai Sum as Independent Non-Executive Director. In assessing her

candidacy, the NRC considered her academic background, past professional experience, skill sets and current role as Independent Non-Executive Director of other public listed companies in Malaysia where she could share her experience and knowledge with the Board.

The Articles of Association provide that all Directors shall retire from office once at least in each three years, but shall be eligible for re-election. An election of Director(s) shall take place each year. A retiring Director shall retain office until the close of the annual general meeting at which he retires.

In any case of a Director appointed during the year, he shall hold office only until the next AGM and shall be eligible for re-election. This provides an opportunity for shareholders to grant or renew mandates for the Directors.

The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meeting attendance and the shareholdings in the Company of each Director standing for election are disclosed in various sections of this Annual Report.



2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors (Cont’d)

Following any appointment of Directors, the Board will ensure that a formal induction process be conducted to allow them to have a good understanding of the Group’s operations and business, present issues (if any), corporate strategies and direction and structure and management of the Group.

In its Board Diversity Policy, the Board encourages diversity and there is no discrimination on any basis, including but not limited to, race, age, ethnicity and gender. The Board is of the opinion that the evaluation of suitability of candidates should be based on their performance and merit, in the context of skills, time commitment and experience to bring value and expertise to the Board.

In this regard, the Board, through the NRC following evaluation of suitable women candidates as part of its Board recruitment exercise, appointed its first lady Director, Datuk Dr Wong Lai Sum, after SAM Singapore took over.

Remuneration Policy

The NRC also makes recommendations to the Board on the remuneration of the Executive Director and Non-Executive Directors of the Company. The aim is to provide remuneration package sufficient to attract, retain and motivate Directors of calibre to oversee the affairs of the Group and ensuring compliance with the requirements of relevant authorities and best practices to meet the interests of both the shareholders and Group.

All Directors are to be paid Directors’ Fees of RM50,000 each for serving as members of the Board. In recognition of their commitment and additional time contributed, the Directors also will receive annual Committee Fees of RM5,000 for each of their participations on various Board Committees, inclusive of those formed on ad-hoc basis. The Directors’ fees are appropriate to their contribution, taking into consideration effort, commitment and time spent as well as the responsibilities of the Directors.

The Board would seek shareholders’ approval at the forthcoming annual general meeting for the payment of these fees.

All Directors are also paid meeting allowance of RM2,000 for each meeting attended.

The aggregate remuneration, with categorisation into appropriate components and distinguishing between Executive and Non-Executive Directors, paid or payable to all Directors of the Company from the Company and the Group for the financial year ended 31 March 2017 was as follows:

From the Company/Group FeesSalaries

BonusesBenefits

in kind Allowance TotalDirectorship RM

Executive 50,000 - - - 50,000

Non-Executive 450,000 - - 142,000 592,000Total 500,000 142,000 642,000

Note: The Directors’ fees for, Tan Kai Hoe and Goh Wee Keng, Jeffrey shall be paid to Accuron and SAM Singapore respectively

where they are employed as at 31 March, 2017.

The number of Directors whose total remuneration paid or payable falls within the following bands of RM50,000 is tabulated below.

Number of DirectorsRemuneration band Executive Non-Executive

Below RM 50,000 1 *1

RM 50,001 to RM 100,000 - 7

Note: *Datuk Dr Wong Lai Sum was appointed to the Board on 1 October 2016.





2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors (Cont’d)

Remuneration Policy (Cont’d)

The Board chose to disclose the remuneration bands pursuant to the MMLR of Bursa Securities and is of the opinion that detailed disclosure of individual Directors’ remuneration will not add significantly to the understanding and evaluation of the Group’s governance.

Principle 3: Reinforce Independence

The Board also complies with paragraph 15.02 of the Listing Requirements, which requires that at least two Directors or one-third of the Board of Directors of the Company, whichever is the higher, are Independent Directors. The six Independent Non-Executive Directors form the majority on this Board.

3.1 Annual assessment of Independent Non-Executive Directors

The NRC assesses the independence of Independent Non-Executive Directors annually, taking into account the individual Director’s ability to exercise independent judgment at all times and to contribute to the effective functioning of the Board.

3.2 Tenure of Independent Non-Executive Directors

The concept of independence adopted by the Board conforms with the definition of an Independent Director under paragraph 1.01 and Practice Note 13/2002 of the MMLR of Bursa Securities. An Independent Director is not a member of management and is free from any business or other relationship which could interfere with the exercise of independent judgment or the ability to act in the best interests of the Company.

Recommendation 3.2 of the Code states that the tenure of an Independent Director should not exceed a cumulative term of nine years. Recommendation 3.3 of the Code further states that the Board must justify and seek shareholders’ approval in the event it retains as an Independent Director, a person who has served in that capacity for more than nine years.

These Recommendations are intended to ensure the independence of Directors for the protection of the minority shareholders. The Securities Commission accepts that compliance with Code is voluntary as there can be no “one size fits all” rules for all companies.

The controlling shareholders of the Company changed on 26 September 2007 when Singapore Precision Engineering Limited and Singapore Aerospace Manufacturing Pte Ltd, collectively, acquired 44.787% of the entire issued share capital of the Company.

Thus, for the purposes of Recommendations 3.2 and 3.3 respectively, the NRC and the Board had determined that the nine years shall commence from 26 September 2007 or the date of appointment of each Independent Director, whichever shall be the later.

Having so determined, the NRC and the Board will be vigilant to ensure that each of the Directors, including Independent Directors, shall continue to carry out their duties and discharge their obligations to the Company as required by law.

3.3 Shareholders’ Approval for retaining Independent Non-Executive Directors

In the event that the Board intends to retain the Independent Non-Executive Director as such after he has served a cumulative term of more than nine (9) years, the Board shall justify the decision and seek shareholders’ approval at the annual general meeting.

The NRC and the Board recognised that independence should not be determined only by tenure of service. In fact, continued tenure brings stability to the Board as the Group benefits from their mix of skills, professional and commercial experience, technical expertise in their relevant fields and competencies for informed and balanced decision-making by the Board.


Principle 3: Reinforce Independence (Cont’d)

3.3 Shareholders’ Approval for Retaining Independent Non-Executive Directors (Cont’d)

Dato’ Mohamed Salleh Bin Bajuri, Dato’ Wong Siew Hai and Dato’ Seo Eng Lin, Robin, Dato’ Sri Lee Tuck Fook and Mr Lee Hock Chye have all served the Company as Independent Non-Executive Directors for a cumulative term of more than 9 years from 2007.

The Board, through the NRC, had conducted annual performance evaluation and assessment on these Independent Non-Executive Directors and is of the opinion that they remain independent premised upon the following rationale:

(a) They fulfilled the criteria for independence as stated in the MMLR of Bursa Securities.(b) Their long tenure of service has allowed them to be thoroughly acquainted with the business operations of the Group

which in turn has enabled them to participate actively and contribute positively to deliberation at Board Committees and Board meetings.

(c) Their wide-ranging professional, corporate and commercial experience provide the Board with diverse set of expertise, skills and competencies.

(d) They are objective and impartial in expressing their views and opinions during meetings, have always exercised due care and carried out their duties in the best interest of the Company and shareholders.

(e) They had contributed time and efforts for an informed and balanced deliberation at Board and Board Committees meetings and their attendance record at these meetings reflect their commitment to the Group.

The Board will be seeking shareholders’ approval at the forthcoming AGM for the retention of Dato’ Mohamed Salleh Bin Bajuri, Dato’ Wong Siew Hai, Dato’ Seo Eng Lin, Robin and Dato’ Sri Lee Tuck Fook and Mr Lee Hock Chye to continue as Independent Non-Executive Directors of the Company.

3.4 Separation of Position of Chairman and CEO

There is a clear division of responsibilities at the Board level to ensure a balance of authority and power so that no one individual has unfettered powers over decision-making.

The Board is led by the Non-Independent Non-Executive Chairman while the executive management is helmed by the Executive Director & CEO.

The roles and responsibilities of both the Chairman and the sole Executive Director & CEO are more particularly stated under section 1.1 above.

Such delineation of roles sets out the practices and processes in the discharge of responsibilities, the matters that are reserved for consideration and decision making, the authority that has been delegated to the Executive Director & CEO and provides guidance on the division of responsibilities.

3.5 Composition of the Board

The present Board composition reflects compliance with Recommendation 3.5 of the Code in that the Independent Directors form a majority when the Chairman is not an Independent Non-Executive Director. The high proportion of Independent Non-Executive Directors (two third of the Board composition) provides effective check and balance in the functioning of the Board.

Principle 4: Fostering Commitment

4.1 Time Commitment

The Board ordinarily meets at least four (4) times a year with additional meetings convened when urgent and important decisions needed to be taken between the scheduled meetings. During the financial year ended 31 March 2017, the Board met on four (4) occasions where it deliberated upon and considered various matters.



Principle 4: Fostering Commitment (Cont’d) 4.1 Time Commitment (Cont’d) Details of each Director’s attendance at Board meetings held during the financial year are as follows:

Directors Attendance

Tan Kai Hoe 4/4

Goh Wee Keng, Jeffrey 4/4

Shum Sze Keong 4/4

Dato’ Mohamed Salleh Bin Bajuri 4/4


Dato’ Wong Siew Hai 4/4

Dato’ Sri Lee Tuck Fook 4/4

Lee Hock Chye 4/4

Datuk Dr Wong Lai Sum* 2/2

* Datuk Dr Wong Lai Sum’s attendance is counted with effect from her appointment to the Board on 1 October 2016.

All deliberations and decisions reached at Board Committees are recorded and Chairman of the respective Committees will report to the Board on the outcome of the Committees’ meetings. Minutes of the AC meetings are circulated to the Board whilst minutes for the other Board Committees, namely, the IDC, NRC and RMC, are circulated upon request by the Directors.

It is a policy for Directors to devote sufficient time and efforts to carry out their responsibilities. This commitment is given to the Board at the time of appointment as Directors.

In addition, Board policy dictates that Directors are to notify the Chairman before accepting any new directorships notwithstanding that the MMLR allows a Director to sit on the Board of not more than five (5) listed companies. This notification is expected to include an indication of time to be spent on the new appointment.

Risk Management Committee (“RMC”)

The RMC, which comprises wholly of Independent Non-Executive Directors, was established on 12 August 2013. Members of the RMC and their attendance at the RMC meetings held during financial year under review are as tabulated below.


Chairman Dato’ Wong Siew Hai 2/2

Members Dato’ Mohamed Salleh Bin Bajuri 2/2


Dato’ Mohamed Salleh Bin Bajuri is the representative of the AC to the RMC and serves to keep the AC apprised of any risk management issues of a financial nature that would require the attention of the AC. During the year under review, there was no major financial related issue which required reporting to and deliberation by the AC.

In addition, the AC has included, as part of its regular meeting agenda, for the identification of risk areas which should be brought to the attention of the RMC.



Principle 4: Fostering Commitment (Cont’d) 4.1 Time Commitment (Cont’d)

The formation of the RMC arose from the Board’s decision to have a dedicated committee focused on the identification, monitoring and prioritisation of risks that affect the Group followed by coordinated efforts and resources to minimise their potential impacts to the Group’s operations whilst maximising realisation of opportunities. The risk management function was previously under the purview of the Audit & Risk Management Committee.

Established on 12 August 2013 with specific terms of reference, the RMC is tasked to review the Group’s risk management framework and policy; and to provide assurance to the Board that a sound risk management and internal control system is in place and in accordance with the requirements of regulatory bodies.

During the year under review, the RMC carried out the following activities:

(a) Reviewed and endorsed the Statement on Risk Management and Internal Control. (b) Identified and monitored the top 5 Group Risks by business segments and on Group-wide basis.(c) Reviewed the Key Risks Indicators (“KRI”) and worked with management to minimise its impact to the Group.(d) Received update on Business Continuity Plan from management and monitor its development.

Investment & Divestment Committee (“IDC”)

The IDC, which comprises of wholly of Independent Non-Executive Directors and, was established on 12 August 2013. Members of the Committee and their attendance at the sole IDC meeting held during financial year under review are as tabulated below.


Chairman Dato’ Mohamed Salleh Bin Bajuri 1/1

Members Dato’ Sri Lee Tuck Fook 1/1

Lee Hock Chye 1/1

The IDC focuses on the identification and evaluation of investments of a capital nature.

During the year, the IDC considered and recommended an additional capital investment totalling about USD8.03 million for A320 NEO Beam project.

On 18 May 2017, the Board dissolved the IDC and would re-establish the IDC on needs basis to focus on mergers and acquisitions, divestment of companies and strategic business acquisition.

4.2 Directors’ Training

The Directors are fully aware of the importance of keeping abreast with the latest changes and developments in the industries in which the Group operates as well as the economic, financial and governance issues in order to enhance the effectiveness in discharging their responsibilities as Directors.

All Directors have attended and completed the Mandatory Accreditation Programme (“MAP”). During the year under review, the Directors attended various briefings, seminars, conferences, trade shows, plant visits, and speaking engagements covering areas including corporate governance, relevant industrial developments, financial, risk managements, leadership and global business developments.




Principle 4: Fostering Commitment (Cont’d)

4.2 Directors’ Training (Cont’d)

Some of the training programmes attended by the Directors during the financial year under review included the following:

Directors Trainings

Tan Kai Hoe • Amendments to Listing Requirements on Disclosure & Corporate Governance (in-house training)

• The AGM - A Practical Insight & Managing Shareholder’s Expectation (in-house training)• Cyber Security (in-house training)

Goh Wee Keng • Amendments to Listing Requirements on Disclosure & Corporate Governance (in-house training)


Shum Sze Keong • Board Management Interaction• Amendments to Listing Requirements on Disclosure & Corporate Governance (in-house

training)• The AGM - A Practical Insight & Managing Shareholder’s Expectation (in-house training)• Cyber Security (in-house training)• Bursa Malaysia Sustainability Forum 2017

Dato’ Mohamed Salleh Bin Bajuri

• Nominating Committee Programme Part 2: Effective Board Evaluations• Amendments to Listing Requirements on Disclosure & Corporate Governance (in-house

training)• Sustainability Reporting (Management Discussion & Analysis and Internal Control)• Corporate Governance Breakfast Series with Directors - “Anti-Corruption & Integrity -

Foundation of Corporate Sustainability”• Cyber Security (in-house training)• Governance & Integrity• Sustainability Engagement Series for Directors/Chief Executive Officers

Dato’ Seo Eng Lin • Amendments to Listing Requirements on Disclosure & Corporate Governance (in-house training)


Dato’ Wong Siew Hai • Amendments to Listing Requirements on Disclosure & Corporate Governance (in-house training)

• The C-Suite Sustainability Breakfast Talk - Sustainability Strategy & Reporting• The AGM - A Practical Insight & Managing Shareholder’s Expectation (in-house training)• Cyber Security (in-house training)• TPPA Forum• SEMICOM SEA• CGP (Coach & Grow Programme) Awards 2015/2016, CG Season 3 2015/2016

Dato’ Sri Lee Tuck Fook • Invest Malaysia Conference 2016• Cyber Security (in-house training)

Lee Hock Chye • Amendments to Listing Requirements on Disclosure & Corporate Governance (in-house training)


Datuk Dr Wong Lai Sum • Mandatory Accreditation Programme for Directors of Public Listed Companies• Best Practices for Sustainability Reporting - What a company director needs to know


Principle 4: Fostering Commitment (Cont’d)

4.2 Directors’ Training (Cont’d)

The Board continues to encourage participation of Directors in various training programmes and ensures that the Directors’ training needs are met. The NRC, through management, has circulated appropriate trainings, briefings, seminars and conferences, covering topics on governance, risk management, accounting, general management and investor relations, for consideration by Board members to keep themselves updated on changes to the legislations and regulations affecting the Group.

In addition, the Directors are regularly updated by the Company Secretaries on any changes to the statutory, corporate and regulatory requirements relating to Directors’ duties and responsibilities or the discharge of their duties as Directors. The external auditors also have briefed the Board on changes to the Malaysian Financial Reporting Standards that affect the Group’s financial statements.

Principle 5: Uphold Integrity in Financial Reporting

5.1 Compliance with Applicable Financial Reporting Standards

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements and quarterly announcements of results to shareholders as well as the Management Discussion & Analysis and Sustainability Reporting in the Annual Report.

The Board is assisted by the AC to oversee the Group’s financial reporting processes and the quality of its financial reporting. Composition of the AC together with its roles and responsibilities are outlined under the Audit Committee Report.

5.2 Assessment of Suitability and Independence of External Auditors by the Audit Committee

The External Auditors of the Company fulfil an essential role on behalf of Company in giving an assurance to the shareholders and others, of the reliability of the financial statements of the Company.

The External Auditors have an obligation to bring to the attention of the Board, the AC and the Company management any significant defects in the Company’s systems of reporting, internal control and compliance with approved accounting standards as well as legal and regulatory requirements. The External Auditors of the Company are invited to attend at least two meetings of the AC a year without the presence of the Executive Directors and management.

During the year, the fees incurred by the Group for services rendered by the External Auditors of the Company and its affiliated firms were approximately RM235,000 inclusive of RM20,000 for non-audit services.

The Internal Audit function of the Company is coordinated with the findings of the External Auditors to ensure as complete an audit coverage of Group activities as possible. Thus, the Company has established a transparent arrangement to meet the professional requirements of the External Auditors.

The key features underlying the relationship of the AC with the External Auditors are included in the AC’s terms of reference as detailed in this Annual Report. A summary of the activities of the AC during the financial year is set out under the Audit Committee Report in this Annual Report.

The Board, via the AC, assessed and affirmed the independence and suitability of the External Auditors to continue in office. The AC evaluated the External Auditors based on review of performance and assurances from the External Auditors as well as discussion with management and reported to the Board on the independence of the External Auditors.

In compliance with Malaysian Institute of Accountants by-laws, the Audit Partners are rotated every five (5) years to ensure objectivity, independence and integrity of the audit opinions. Such assurance was also given by the External Auditors in the Audit Planning Memorandum and Audit Finding Report presented to the AC.

The Board has approved and adopted, recently, a policy on assessment of the independence and suitability of External Auditors as well as to govern circumstances under which contracts for provision of non-audit services could be entered into between the Group and the External Auditors.




Principle 6: Recognise and Manage Risks

6.1 Sound Framework to Manage Risks

The Board undertakes overall responsibility for risk oversight and risk management. In view of this, the Board has, in place, a structured enterprise risk management framework for the Group which is to identify, monitor, control and report on principal risks faced by the Group on regular basis.

Details of the Group’s enterprise-wide risk management framework are outlined in the Statement on Risk Management and Internal Control in this Annual Report.

6.2 Internal Audit Function

The key features and state of internal control and risk management of the Group are furnished in the Statement on Risk Management and Internal Control in this Annual Report.

An independent Internal Audit function, which reports directly to the AC, was established in line with the Code and the MMLR of Bursa Securities. Detailed information on the internal audit function is outlined in the Audit Committee Report.

Principle 7: Ensure Timely and High Quality Disclosure

7.1 Corporate Disclosure Policy

The Board has formalised policies and procedures on corporate disclosure and communication with shareholders and stakeholders to facilitate effective communications with the intention of providing a clear and complete overview of the Group’s performance and operations.

These policies and procedures comply with disclosure requirements as set out in the MMLR of Bursa Securities and also define the key personnel authorised to approve and disclose material information with regard to the Group. The Board is also guided by best practices and policies in use in the market.

The Board is further mindful that information deemed material must be announced immediately.

7.2 Leverage on Information Technology for Effective Dissemination of Information

As part of its efforts to be transparent and accountable to the investing community, the Board has an active and constructive disclosure and communication policy that enables the Board and management to have effective communications with the shareholders, investing community and the public.

The Company website, www.sam-malaysia.com, provides a comprehensive avenue for information dissemination, such as dedicated sections on corporate information including financial information, announcements to Bursa Securities, press releases and company news.

Shareholders are able to submit questions to the Board through the Company website or via e-mail to [email protected].

Principle 8: Strengthen Relationship between Company and Shareholders

8.1 Shareholder’s Participation at General Meetings

The key element of the Company’s dialogue with its shareholders is the opportunity to gather views of, and answer questions from, individuals and institutional shareholders, on all issues relevant to the Group through the annual general meetings or the extraordinary general meetings, when applicable.


Principle 8: Strengthen Relationship between Company and Shareholders (Cont’d)

8.1 Shareholder’s Participation at General Meetings (Cont’d)

At these general meetings, shareholders are provided time to seek clarifications or provide feedback both about the resolutions being proposed or about the Group’s operations/prospects in general. The Board will respond to all queries and take note of all suggestions put forth by shareholders. Where it is not possible to provide immediate answers, the Chairman will undertake to furnish the shareholder with a written answer after the meeting.

Every notice convening general meeting specifying the place, the day and the hour of the meeting are given to all members at least 14 days before the meeting or at least 21 days before the meeting where any special resolution is to be proposed or where it is an annual general meeting.

The Board will contemplate adopting electronic voting to facilitate greater shareholders’ participation at general meetings, if deemed warranted.

8.2 Poll-Voting

The Board conducts poll voting for all resolutions set out in the notice of a general meeting and post a summary of key matters discussed at the AGM on the Company website.

8.3 Effective Communication and Proactive Engagement

The Company also holds briefings for fund managers, institutional investors and investment analysts.

While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, it is mindful of the legal and regulatory framework governing the release of material and price-sensitive information. Such material and price-sensitive information are not released unless it has been duly announced or made public through the proper channels.

The Board recognises that the Independent Directors are vital towards protecting the interests of shareholders. Shareholders and stakeholders could communicate their concern to the Independent Directors through mail to the Company’s registered address or via e-mail on the Company website to [email protected].

The Corporate Governance Statement is issued in accordance with a resolution of the Board of Directors dated 30 June 2017.



The Audit Committee (“AC”) is an independent Board Committee which assists the Board in the discharge of its responsibilities for corporate governance, internal controls and financial reporting.

Objectives

The key function of the AC is to assist the Board in fulfilling the following oversight objectives on the Group’s activities:

(a) Oversee financial reporting; (b) Review reports from internal and external auditors to validate and evaluate existing policies, establish audit quality and ensure

compliance with Group’s policies;(c) Ensure that proper processes and procedures are in place to comply with all laws, rules and regulations, directives and

guidelines established by the relevant regulatory bodies; (d) Oversee the implementation of the Whistle Blowing Policy and Procedures for the Group, and ensuring effective administration

thereof by the Internal Audit Manager;(e) Investigate any concerns received on possible improprieties within the Group; and(f) Evaluate the internal and external audit processes.

Composition

The AC is comprised solely of Non-Executive Directors with a majority being Independent and their attendance at the 4 Committee meetings held during the financial year under review is tabulated below.


Chairman Lee Hock Chye 4/4

Members Dato’ Mohamed Salleh Bin BajuriDato’ Sri Lee Tuck FookShum Sze Keong

4/44/44/4

Summary of Activities During the Financial Year

In line with the terms of reference, the AC held four (4) meetings during the financial year and carried out the following activities:

Financial Results

(a) Reviewed the quarterly interim unaudited financial statements and the annual audited financial statements of the Group prior to submission to the Board for its consideration and approval focusing particularly on changes in or implementation of major accounting policies, significant and unusual events and compliance with applicable accounting standards approved by the Malaysian Accounting Standards Board (“MASB”).

External Auditors

(b) Reviewed the external auditors’ scope of work, proposed audit fee and audit plan for the year under review.(c) Approved and adopted policies and procedures to assess the suitability and independence of external auditors.(d) Reviewed with the external auditors, in the absence of management, the adequacy and effectiveness of the system of internal

control and any other areas of concern arising from their interim and final audit.(e) Reviewed and assessed the performance of the existing external auditors for the Group.(f) Reviewed with external auditors any significant findings in relation to audit.(g) Reviewed and evaluated factors relating to the independence of the external auditors and recommended the re-appointment

of the Group’s external auditors.

Audit Committee Report


Summary of Activities During the Financial Year (Cont’d)

In line with the terms of reference, the AC held four (4) meetings during the financial year and carried out the following activities (Cont’d):

Internal Auditors

(h) Reviewed the adequacy and relevance of the scope, function, competency and resources of internal audit function and that it has the necessary authority to carry out its work.

(i) Reviewed the internal audit plan adopted by the internal audit function.(j) Reviewed the internal audit reports, audit recommendations made and Management’s responses to these recommendations and

actions taken to improve the system of internal control and procedures. Where appropriate, the AC has directed Management to rectify and improve control procedures and workflow processes based on the internal auditors’ recommendations and suggestions for improvement.

(k) Reviewed the implementation of these recommendations through follow up audit reports from the internal auditors.(l) Reported to the Board on its activities and significant findings and results.(m) Reviewed any appraisal or assessment of the performance of the Internal Audit Manager and outsourced service providers.(n) Reviewed the circular to shareholders on recurrent related party transactions (“RRPT”) of a revenue nature and trading nature.(o) Reviewed related party transactions entered into by the Group.(p) Reviewed the RRPT and ensured that these RRPT comply with approved procedures and policies and the mandate from the

shareholders.(q) Reviewed the Statement on Risk Management and Internal Control which provides an overview of the state of internal controls

and risk management within the Group prior to the Board’s approval for inclusion in the Annual Report.(r) Carried out two (2) discussion sessions with External Auditors without the presence of the Executive members of the Board and

employees.

Internal Audit Function

The Group’s Internal Audit function reports directly to the AC and assists it to discharge its duties and responsibilities.

The Internal Audit plan is approved by the AC covering three main areas namely internal control, risk management and governance process. Based on the audit plan proposed by the Internal Audit Manager and approved by the AC, audit work is conducted by outsourced internal audit service providers.

As part of the audit work, the Internal Audit function would review the adequacy and effectiveness of the internal control system, compliance with rules, regulations, policies and procedures and also evaluates efficiency of key business processes.

During the financial year, internal audit was conducted in the following areas:

(a) Inventory Management. (b) Job Costing.(c) Sales and Collection.

The AC is pleased to confirm that the results of each of the audit were satisfactory.

The Risk Management Committee (“RMC”) invites the Internal Audit Manager to attend its meetings. If the Internal Audit Manager is of the opinion that an audit should be conducted on any area, the Internal Audit Manager will, and if requested by the RMC, shall propose to AC that an audit be conducted on the relevant area.

During the financial year, the estimated total costs incurred for the Internal Audit Function was RM241,775.

Audit Committee Report (Cont’d)


Terms of Reference

Composition of AC

1. The AC shall be appointed by the Board from amongst its members and shall consist of not less than three (3) members of whom a majority are independent and the members shall not:(a) be Executive Directors of the Company or any related corporations;(b) comprise a spouse, parent, brother, sister, son or adopted son, daughter and adopted daughter of an Executive Director

of the Company or any related corporations; or(c) comprise persons having a relationship which in the opinion of the Board would interfere with the exercise of independent

judgment in carrying out the functions of the AC.2. At least one (1) member of the Committee:

(a) must be a member of the Malaysian Institute of Accountants; or(b) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience;

and(i) he must have passed the examinations specified in Part 1 of the First Schedule of the Accountants Act 1967; or(ii) he must be a member of one (1) of the associations of accountants specified in Part II of the First Schedule of the

Accountants Act 1967; and(c) fulfill such other requirements prescribed or approved by the Exchange.

3. The AC shall elect a Chairman from among its members who is an Independent Director. All the members should be financially literate.

4. No alternate director should be appointed as a member of the AC.5. All members of AC, including the Chairman, will hold office only so long as they serve as Directors of the Company and have

not been removed from the AC by the Board.6. In the event that a member of the AC resigns, dies or for any reason ceases to be a member with the result that the number

is reduced below three (3) or resulting in the non-compliance of the Listing Requirements of the Exchange pertaining to composition of AC, the Board shall, within three (3) months of that event, fill the vacancy.

7. The terms of office and performance of the AC and each of its members must be reviewed by the Board of Directors at least once every three (3) years to determine whether the AC and its members have carried out their duties in accordance with their terms of reference.

Secretary to AC

The Company Secretary shall be the secretary of the AC or in her absence, another person authorised by the Chairman of the AC. The Secretary of the AC shall be responsible for drawing up the agenda in consultation with the Chairman of the AC. The agenda together with relevant explanatory papers and documents shall be circulated to the AC members prior to each meeting. The Secretary shall be responsible for keeping the minutes of the meeting of the AC, circulating them to all members of the Board.

Meetings

1. The AC shall meet at least four (4) times a year. The Chairman of the AC will highlight any major issues and any items requiring resolution by the Board.

2. In addition, the Chairman shall convene a meeting of the AC if requested to do so by any member of the AC, or the internal or external auditors to consider any matters within the scope and responsibilities of the AC.

3. The Chairman of the AC should engage on a continuous basis with senior management, such as the Chairman of the Board, Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), the Internal Audit Manager and the External Auditors in order to be kept informed of matters affecting the Company.

Meeting Procedure

The AC shall regulate its own procedures, in particular:

(a) the calling of meetings;(b) the notice to be given of such meetings;(c) the voting and proceedings of such meetings;(d) the keeping of minutes; and(e) the custody, production and inspection of such minutes.

Quorum

A quorum shall consist of 2 AC members made up of a majority of independent Directors.



Terms of Reference (Cont’d)

Attendance by Invitation

The CEO and CFO, the Internal Audit Manager and the representative of the External Auditors should normally be invited to attend meetings.

The AC may invite any person to be in attendance to assist in its deliberations in any particular meeting. However, the AC should meet with the External Auditors without the presence of Executive Board members and management at least twice a year.

Rights of the External Auditors

The External Auditors have the right to appear and be heard at any meeting of the AC and their representative shall appear before the AC when required to do so by the AC.

Authority of the AC

The AC should:

(a) Have authority to investigate any activity within its terms of reference; (b) Have the resources which are required to perform its duties;(c) Have full and unrestricted access to all information, documents and officers of the Company and the Group for the purpose of

discharging its functions and responsibilities;(d) Have direct communications channels with the External Auditors and person(s) carrying out the internal audit function or

activity;(e) Be able to obtain outside legal or other independent professional advice as it considers necessary at the expense of the

Company; and(f) Be able to convene meetings with the External Auditors, Internal Auditors or both, without the presence of Executive Directors

and employees of the Group, whenever deemed necessary.

Duties and Responsibilities

The duties and responsibilities of the AC shall be:

(a) To review the Company’s and the Group’s quarterly results and annual financial statement before submission to the Board, focusing on:(i) Any changes in or implementation of accounting policies and practices;(ii) Major judgment areas;(iii) Significant adjustments proposed by the External Auditors;(iv) Going concern assumption;(v) Compliance with accounting standards;(vi) Compliance with stock exchange and legal requirements; and(vii) Significant and unusual events.

(b) To review with the External Auditors their audit plan, scope and nature of audit for the Company and the Group, their evaluation of the system of internal control, their audit report, and the assistance given by the Company’s employees to the external auditors;

(c) To assess the adequacy and effectiveness of the system of internal control and accounting control procedures of the Company and the Group;

(d) To discuss problems and reservations arising from the interim and final audits, and any matters the external auditors may wish to discuss (in the absence of management where necessary);

(e) To perform the following, in relation to the Internal Audit function:(i) Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has

the necessary authority to carry out its work;(ii) Review the internal audit programme and results of the internal audit programme, processes or investigation undertaken

and, where necessary, ensure that appropriate actions are taken on the recommendations of Internal Audit function;(iii) Review the internal audit plan, consider the major findings of the internal audits, internal or fraud investigations and

actions and steps taken by management in response to audit findings;(iv) Review any appraisal or assessment of the performance of the Internal Audit Manager;(v) Approve any appointment or termination of senior staff members of the Internal Audit function; and(vi) Take cognisance of resignations/transfer of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning.




Terms of Reference (Cont’d)

Duties and Responsibilities (Cont’d)

(f) To review any related party transactions and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises questions of management integrity;

(g) To consider the appointment of the external auditors and to review whether there is reason (supported by grounds) to believe that the external auditors are not suitable for re-appointment, to consider the nomination of a person or persons as external auditors and the audit fees, the terms of reference of their appointment, and any question of resignation or dismissal;

(h) To verify the allocation of options granted pursuant to Employee Share Option Scheme; (i) To report to the Board its activities, significant results and findings; (j) To promptly report such matter to the Bursa Securities if the AC is of the view that the matter reported by it to the Board of

Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements;(k) To discuss the contracts for the provision of non-audit services which can be entered into and procedures that must be

followed by the external auditors. The contracts which cannot be entered into should include management consulting, strategic decision, internal audit and standard operating policies and procedures documentation; and

(l) To undertake any such responsibilities as may be agreed by the AC and the Board.

Review

The terms of reference shall be reviewed by the AC as and when required. All amendments to the Terms of Reference must be approved by the Board.

Accountability and Audit

Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects, primarily through the annual financial statements and quarterly announcements of results to shareholders as well as the Chairman’s Statement and CEO’s Statement in the Annual Report. The Board is assisted by the AC to oversee the Group’s financial reporting processes and the quality of its financial reporting. Composition of the AC together with its roles and responsibilities are outlined under the AC sub-heading in this statement.

Internal Control & Risk Management

The Board undertakes overall responsibility for risk oversight and risk management. In view of this, the Board has in place a structured enterprise risk management framework for the Group which is to identify, monitor, control and report on principal risks faced by the Group on a regular basis.

The RMC was established on 12 August 2013 to review and recommend risk management policies and strategies for the Group as well as assist the Board to discharge its risk management and statutory responsibilities in managing the overall risk exposure of the Group.

The key features and state of internal control and risk management of the Group is furnished in the Statement on Risk Management and Internal Control in this Annual Report.

An independent internal audit function, which reports directly to the AC, has been established in line with the MCCG 2017 and the Listing Requirements of Bursa. Detailed information on the internal audit function is outlined in the Statement on Risk Management and Internal Control.

Relationship with External Auditors

The External Auditors of the Company fulfill an essential role on behalf of Company in giving an assurance to the shareholders and others, of the reliability of the financial statements of the Company. The External Auditors have an obligation to bring to the attention of the Board of Directors, the AC and Company management any significant defects in the Company’s systems of reporting, deficiencies in internal control and failure to comply with approved accounting standards and legal and regulatory requirements.

The External Auditors of the Company are invited to attend at least two meetings of the AC a year without the presence of the Executive Directors and management.


Accountability and Audit (Cont’d)

Relationship with External Auditors (Cont’d)

During the year, the fees incurred by the Group for services rendered by the External Auditors of the Company and its affiliated firms were approximately RM235,000 inclusive of RM20,000 for non-audit services.

The internal audit function of the Company works with the External Auditors to ensure as complete an audit coverage of Company activities as possible. Thus, the Company has established a seamless arrangement to meet the professional requirements of the External Auditors.

The key features underlying the relationship of the AC with the External Auditors are included in the AC’s terms of reference as detailed in this Annual Report. A summary of the activities of the AC during the financial year, are set out in the AC sub-heading in this statement.

Recently, the Board, through the AC, has assessed and affirmed the independence and suitability of the External Auditors to continue in office. The scope of the assessment covered caliber of the audit firm, team, fees, scope and planning as well as quality of processes and performance, independence and objectivity and client communication. The Board has formalised a set of criteria on assessment on the independence and suitability of external auditors as well as to govern circumstances under which contracts for provision of non-audit services could be entered into by the external auditors.

Directors’ Responsibility Statement in Respect of the Preparation of the Audited Financial Statements

The Board is responsible for ensuring that the financial statements give 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 profit or loss and cash flows for the year then ended. In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 2016 have been applied.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates.

The Directors also have a general responsibility for taking steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Audit Committee Report is issued in accordance with a resolution of the Board of Directors dated 30 June 2017.



and Internal Control

Board Responsibility

The Board affirms its overall responsibility for the Group’s system of internal control and risk management and for reviewing the adequacy and integrity of the system. The system of internal control covers governance, risk management, financial strategy and organisational, operational, regulatory and compliance control. However, the Board recognises that this system is designed to manage, rather than eliminate, the risk of not adhering to the Group’s policies and achieving goals and objectives. Therefore, the system provides reasonable, but not absolute, assurance against the occurrence of any material misstatement, loss or fraud.

The adequacy and effectiveness of risk management and internal controls are reviewed by the Audit Committee (“AC”) through internal audits conducted. The internal audits are mainly outsourced to external service providers. Audit issues as well as actions taken by Management to address these issues are tabled by the Internal Audit Manager and outsourced service providers for deliberation during the AC meetings.

Each business unit or functional group has implemented its own control processes under the leadership of the Chief Executive Officer (“CEO”), who is responsible for business and regulatory governance.

Risk Management

The Group has in place an Enterprise Risk Management Framework in accordance with the principles and guidelines outlined under the Committee of Sponsoring Organisation of the Treadway Commission’s Enterprise Risk Management Integrated Framework (COSO) and is embedded in the Group’s management systems. In order to manage risk in our activities and ensure they are aligned with the Group’s strategic objectives and regulatory requirements, we implemented a risk management framework to identify, measure, assess and manage risks faced by the Group.

The Board has delegated authority to the Risk Management Committee (“RMC”) to undertake the review of the existing risk management framework and risks dashboards, which detail the likelihood and impact of the significant risks and their corresponding action plans.

The functioning of the RMC is supported by the Chief Risk Officer, key management staff and the risk management section of the business units or functional groups led by the head of each such unit or group.

Risk Management Framework

Group’s overall risk management framework is as illustrated in the diagram below:

Internal Environment

• Management sets a philosophy regarding risk and establishes risk appetite.• Management sets organisational tone at the top for risk management.

Objective Setting

• Management sets objectives that support and align with the entity’s mission consistent with its risk appetite.• Management identifies the risk appetite and parameters.

Event Identification

• Process to identify potential events from internal/external sources affecting achievement of objectives.• Potential industry risks.• Identification of preliminary risks.

Risk Assessment, Response and Control Activities

• Risks are associated with objectives that may be affected and are assessed on both an inherent and a residual basis considering both likelihood and impact.

• Evaluate possible responses including avoid, accept, reduce and sharing risk.• Align response with risk tolerances and appetite.• Policies and procedures are established and executed to help enable risk response.• Discussions to scrutinise and validate preliminary risks identified as well as new potential risks.

Statement on Risk Management


Risk Management (Cont’d)Risk Management Framework (Cont’d)

Information and Communication

• Relevant information for decision-making is captured and timely communicated to help enable people to execute within their respective roles and responsibilities.

• Overall risks discussion with senior management.

Monitoring and Reporting

• Enterprise Risk Management capabilities are continuously monitored and enhanced as necessary to align with dynamic environment.

• Baseline risk profiles for all risk identified and shortlisted principal risks will be presented to Management.• Report and tracking the outcome of Enterprise Risk Management through risk register dashboard to Management and Risk

Management Committee.

The framework is reviewed and revised as and when necessary to ensure it remains relevant and adequate to manage SAM Group’s risks, which continue to evolve along with the changing business environment.

Key Internal Control Processes

1. Authority and Responsibility

(a) Responsibilities are delegated to Board Committees through clearly defined Terms of Reference which are reviewed and revised when necessary.

(b) The Group has a clear organisation structure with well-defined lines of reporting and appropriate levels of responsibility.

(c) The Authority Limits Document is reviewed and revised when necessary to reflect the authority and authorisation limits of Management.

2. Planning, Monitoring and Reporting

(a) An annual planning and budgetary exercise is undertaken, deliberated and approved by the Board before implementation.

(b) Updates on the Group’s business and operations are provided to the Board at every meeting together with the financial performance variances.

(c) The Chief Financial Officer (“CFO”) is required to assure the AC that adequate processes and controls are in place for an effective and efficient financial statements close process in the preparation of each quarterly consolidated financial statement.

3. Policies and Procedures

Clear, formalised and documented internal policies, standards and procedures are in place to ensure compliance with internal controls and relevant laws and regulations. Reviews are performed to ensure that documentations remain current and relevant. The policies and procedures are documented in the Corporate Manual and Quality Manual and are reviewed and updated when applicable. Common Group policies are available on intranet for easy access by employees.

4. Audits

The AC assesses compliance with policies and procedures as well as relevant laws and regulations through internal audits performed. The Internal Audit function reports directly to the AC with the main role to assist the AC in discharging their duties and responsibilities.

The details of activities carried out by the AC are reported in the Audit Committee Report of the Annual Report.

and Internal Control (Cont’d)



Key Internal Control Processes (Cont’d)

5. Conduct of Staff

(a) A Standard of Conduct, Business Ethics and Conflicts of Interest is established for all employees and defines the ethical standards and conduct of work required.

(b) A Whistleblower Policy is also established to provide an avenue for staff or any external party to report any breach or suspected breach of any law or regulation in a safe and confidential manner.

(c) A Personnel Data Protection Policy is established for the management, control and protection of confidential information used by the Group to avoid leakage and improper use of such information.

(d) Segregation of duties is practised whereby conflicting tasks are apportioned amongst different employees to reduce the possibility of error and fraud.

Review of this Statement

Audit Committee

While the AC has reviewed this Statement and addressed individual lapses in internal control and risk management via the Internal Audit Manager during the course of internal audits carried throughout the year, it has not identified any circumstances which suggest any fundamental deficiencies in the Group’s internal control system and risk management.

External Auditor

The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in Recommended Practice Guide (“RPG”) 5 (Revised), Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the year ended 31 March 2017, and reported to the Board that nothing has come to their attention that causes them to believe that the statement intended to be included in the annual report of the Group, in all material respects:

a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issues, or

b) is factually inaccurate.

RPG 5 (Revised) does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and management thereon. The auditors are also not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems.

Conclusion

Notwithstanding the fact that the Group’ system of risk management and internal controls do not eliminate the possibility of collusion or deliberate circumvention of procedures by employees or fraud or other unforeseen circumstances, the Board has received assurance from the CEO and CFO that the Group’s risk management and internal control system are operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group.

The Board is of the view that the system of internal control and risk management which are in place for the year under review, and up to the date of approval of this Statement, is sound and sufficient to safeguard shareholders’ investment, the interest of customers, regulators, employees and other stakeholders, and the Group’s assets.

The Statement on Risk Management and Internal Control is issued in accordance with a resolution of the Board of Directors dated 30 June 2017.

and Internal Control (Cont’d)



Other Information

Recurrent Related Party Transactions (RRPT) of Revenue or Trading Nature for the Year Ended 31 March 2017

Details of RRPT made during the financial year ended 31 March 2017 pursuant to the shareholders’ mandate obtained by the Company at the Annual General Meeting held on 17 August 2016 are as follows:

Related Party with whom the Group is transacting

Nature of transactions

Companies within the Group involved in RRPT

Amount in RM’000

Interested Related Party

Relationship

SAM SingaporeGroup

Sales of aerospace parts and other precision tools

SAM Malaysia Group

224,822 Tan Kai HoeGoh Wee KengShum Sze KeongTeo Siew GeokNg Boon KeatHo Pon ChowTemasekAccuronSAM SingaporeSPE

Tan Kai Hoe is the Non-Independent Non-Executive Chairman of SAM Malaysia, Director of SPE (appointed w.e.f. 29 March 2017), Director and Deputy Chairman of SAM Singapore and Director and President & CEO of Accuron.

Goh Wee Keng, Jeffrey is the Executive Director and CEO of SAM Malaysia, the Director/President and CEO of SAM Singapore. He is also a Board member of certain subsidiaries of SAM Malaysia and SAM Singapore, including SPE, Aviatron and SAM (Suzhou) Co. Ltd.

Shum Sze Keong, is a Non- Independent Non-Executive Director of SAM Malaysia and a Director of SAM Singapore.

Teo Siew Geok is a Director of SAM Technologies (M) Sdn Bhd (formerly known as esmo Automation (M) Sdn Bhd), a subsidiary of SAM Malaysia and also a Director of JEP Precision Engineering Pte Ltd.

Ng Boon Keat and Ho Pon Chow are Directors of certain subsidiaries of SAM Malaysia and are also Directors of Aviatron.

Accuron and Temasek are related corporations to SAM Singapore, the immediate holding company of SAM Malaysia.

Sale of modular or complete machine, equipment and spare parts

13

Sales of fabrication/ machining services

(30)

Provision of engineering and administrative services

596

Provision of corporate management services

5

Purchase of fabrication/machining services

(26,360)

Purchase of modular or complete machine, equipment, component and spare parts

(96)

Purchase of engineering and administrative services

(5,875)

Purchase of corporate management services

(2,068)

Sales commission expense

(1)

Rental of office and factory premises

(4,018)


Other Information (Cont’d)

Recurrent Related Party Transactions (RRPT) of Revenue or Trading Nature for the Year Ended 31 March 2017 (Cont’d)

Notes:

SAM Malaysia : SAM Engineering & Equipment (M) Berhad

SAM Malaysia Group : SAM Engineering & Equipment (M) Berhad and its subsidiaries

Aviatron : Aviatron (M) Sdn Bhd, a subsidiary of SAM Singapore

SPE : Singapore Precision Engineering Limited, a subsidiary of SAM Singapore

SAM Singapore : Singapore Aerospace Manufacturing Pte Ltd, the immediate holding company of SAM Malaysia and SPE

SAM Singapore Group : SAM Singapore and its subsidiaries/associates excluding SAM Malaysia Group

Accuron : Accuron Technologies Limited, the immediate holding company of SAM Singapore

Temasek : Temasek Holdings (Private) Limited, the immediate holding company of Accuron

JEP Precision Engineering Pte Ltd

: 15% owned by SAM Singapore

Material Contracts Involving Interests of Directors and Major Shareholders

There were no material contracts of the Company and its subsidiaries involving interests of Directors and major shareholders for the financial year under review.


59. Directors’ Report

63. Statements of Financial Position

65. Statements of Profit or Loss and Other Comprehensive Income

67. Consolidated Statement of Changes in Equity

69. Statement of Changes in Equity

70. Statements of Cash Flows

73. Notes to the Financial Statements

136. Statement by Directors

136. Statutory Declaration

137. Independent Auditors’ Report

Financial Statement

59 63Directors’ Report Statements of

Financial Position


Directors’ Reportfor the year ended 31 March 2017

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2017.

Principal Activities

The principal activities of the Company are investment holding and provision of corporate management services.

The principal activities of its subsidiaries are as stated in Note 5 to the financial statements.

There has been no significant change in the nature of these activities during the financial year.

Ultimate Holding Company

The Company is a subsidiary of Temasek Holdings (Private) Limited, of which is incorporated in the Republic of Singapore and regarded by the Directors as the Company’s ultimate holding company, during the financial year and until the date of this report.

Subsidiaries

The details of the Company’s subsidiaries are disclosed in Note 5 to the financial statements.

Results

Group CompanyRM’000 RM’000

Profit for the year attributable to owners of the Company 43,607 70,077

Reserves and Provisions

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements.

Dividends

Since the end of the previous financial year, the amount of dividends paid by the Company were as follows:

i) In respect of the financial year ended 31 March 2016 as reported in the Directors’ Report of that year:

• a first interim single tier dividend of 14.96 sen per ordinary share totalling RM18,832,401 was declared on 8 June 2016 and paid on 5 August 2016; and

• a special single tier dividend of 25.35 sen per ordinary share totalling RM31,911,856 was declared on 8 June 2016 and paid on 5 August 2016.

ii) In respect of the financial year ended 31 March 2017:

• a first interim single tier dividend of 10.28 sen per ordinary share was declared on 9 June 2017 and to be paid on 15 August 2017; and

• a special single tier dividend of 6.95 sen per ordinary share was declared on 9 June 2017 and to be paid on 15 August 2017.

The Directors did not propose any final dividend to be paid for the current financial year.

59. Directors’ Report

63. Statements of Financial Position

65. Statements of Profit or Loss and Other Comprehensive Income

67. Consolidated Statement of Changes in Equity

69. Statement of Changes in Equity

70. Statements of Cash Flows

73. Notes to the Financial Statements

136. Statement by Directors

136. Statutory Declaration

137. Independent Auditors’ Report


Directors of the Company

Directors who served during the financial year until the date of this report are:

Tan Kai Hoe Goh Wee KengShum Sze KeongDato’ Mohamed Salleh Bin BajuriDato’ Wong Siew HaiDato’ Sri Lee Tuck FookDato’ Seo Eng Lin, RobinLee Hock ChyeDatuk Dr Wong Lai Sum (Appointed on 1 October 2016)

Directors’ Interests in Shares

The interests and deemed interests in the ordinary shares and Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) of the Company and of its related corporations of those who were Directors at financial year end (including the interests of the spouses and/or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares Balance at

1.4.2016Bought/

(Sold)Balance at

31.3.2017

Interest in the Company:

Goh Wee Keng

Direct interest:

- own 1,702,523 - 1,702,523

Dato’ Wong Siew Hai

Indirect interest:

- others* - 11,800 11,800

None of the other Directors holding office at 31 March 2017 had any interest in the ordinary shares and ICULS of the Company and of its related corporations during the financial year.

* Deemed to have interest through the children pursuant to Section 59(11)(c) of the Companies Act, 2016.

Directors’ Benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than those fees and other benefits included in the aggregate amount of remuneration received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate apart from via the ICULS of the Company.

Directors’ Report (Cont’d)for the year ended 31 March 2017



Issue of Shares and Debentures

During the financial year, the Company increased its issued and paid-up share capital from RM86,322,548 comprising 86,322,548 ordinary shares to RM125,890,276 comprising 125,890,276 ordinary shares (before the transfer of share premium in accordance with Section 618(2) of the Companies Act, 2016) as a result of the conversion of 83,092,236 RM1.00 nominal value 5-year 4% ICULS into 39,567,728 ordinary shares on the basis of one RM1.00 nominal value of ICULS for approximately 0.476 ordinary shares. The above conversion which occured before the commencement of Companies Act, 2016, resulted in an increase in the Company’s share premium by RM43,525,000.

There were no other changes in the authorised, issued and paid-up share capital of the Company and no debentures were issued during the financial year.

Options Granted Over Unissued Shares

No options were granted to any person to take up unissued shares of the Company during the financial year.

Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

On 25 September 2012, the Company issued 135,000,000 RM1.00 nominal value of 5-year 4% ICULS at 100% of its nominal value as part of the purchase consideration for the acquisition of the entire equity interest in Avitron Private Limited from Singapore Aerospace Manufacturing Pte. Ltd.

The salient features of the ICULS are disclosed in Note 23 to the financial statements.

At the end of the financial year, the Company has the following outstanding number of ICULS:

Expiry date Number of ICULS outstanding as at

31.3.2017

5-year 4% ICULS 25 September 2017 19,481,184

Indemnity and Insurance Costs

During the financial year, the total cost of insurance effected for Directors of the Company is RM48,051.

Other Statutory Information

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or


Other Statutory Information (Cont’d)

At the date of this report, the Directors are not aware of any circumstances (Cont’d):

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.

At the date of this report, there does not exist:

i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 March 2017 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Auditors

The auditors, KPMG PLT (converted from a conventional partnership, KPMG, on 27 December 2016), have indicated their willingness to accept re-appointment.

The auditors’ remuneration is disclosed in Note 18 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Tan Kai HoeDirector

Goh Wee KengDirector

Date: 23 June 2017



Group CompanyNote 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Assets

Property, plant and equipment 3 148,688 103,518 869 1,016

Intangible assets 4 3,706 1,388 11 17

Investments in subsidiaries 5 - - 227,559 187,559

Deferred tax assets 6 2,883 499 - -

Total non-current assets 155,277 105,405 228,439 188,592

Trade and other receivables 7 182,811 148,818 34,372 28,990

Inventories 8 141,871 124,372 - -

Derivative financial assets 9 480 3,011 - -

Current tax assets 1,489 347 29 -

Cash and cash equivalents 10 99,001 173,644 2,731 15,830

Total current assets 425,652 450,192 37,132 44,820

Total assets 580,929 555,597 265,571 233,412

Equity

Share capital 11 193,250 86,322 193,250 86,322

Reserves 12 261,782 352,262 50,618 132,629

Equity attributable to owners of the Company 455,032 438,584 243,868 218,951

Statements of Financial Positionas at 31 March 2017



RM’000 RM’000 RM’000 RM’000

Liabilities

Loans and borrowings 13 - 1,709 - 1,709

Deferred income 14 778 - - -

Deferred tax liabilities 6 2,791 4,357 84 1,322

Total non-current liabilities 3,569 6,066 84 3,031

Loans and borrowings 13 352 3,797 352 3,797

Deferred income 14 98 - - -

Trade and other payables 15 103,214 91,093 21,267 7,633

Derivative financial liabilities 9 636 33 - -

Provisions 16 8,789 9,282 - -

Current tax liabilities 9,239 6,742 - -

Total current liabilities 122,328 110,947 21,619 11,430

Total liabilities 125,897 117,013 21,703 14,461

Total equity and liabilities 580,929 555,597 265,571 233,412

The notes on pages 73 to 134 are an integral part of these financial statements.

Statements of Financial Position (Cont’d) as at 31 March 2017


Comprehensive Income Statements of Profit or Loss and Other

for the year ended 31 March 2017


RM’000 RM’000 RM’000 RM’000

Revenue 17 537,397 620,054 79,573 27,973

Cost of sales (458,095) (536,527) - -

Gross profit 79,302 83,527 79,573 27,973

Other operating income 8,915 21,384 487 256

Distribution expenses (2,589) (2,350) (8) (23)

Administrative expenses (25,428) (23,677) (8,964) (8,330)

Other operating expenses (5,209) (9,806) (1,101) (589)

Results from operating activities 54,991 69,078 69,987 19,287

Interest income 447 294 - -

Finance costs 19 (84) (700) (84) (700)

Net finance costs 363 (406) (84) (700)

Profit before tax 18 55,354 68,672 69,903 18,587

Tax expense 21 (11,747) (5,578) 174 812

Profit for the year 43,607 63,094 70,077 19,399



RM’000 RM’000 RM’000 RM’000

Other comprehensive (expenses)/income, net of tax

Items that are or may be reclassified subsequently to profit or loss

Cash flow hedge (2,446) 670 - -

Foreign currency translation differences for foreign operations 20,447 25,966 - -

Total other comprehensive income for the year, net of tax 18,001 26,636 - -

Total comprehensive income for the year 61,608 89,730 70,077 19,399

Profit for the year attributable to:

Owners of the Company 43,607 63,094 70,077 19,399

Total comprehensive income for the year attributable to:

Owners of the Company 61,608 89,730 70,077 19,399

Basic earnings per ordinary share (sen) 22 36.33 73.55 - -

Diluted earnings per ordinary share (sen) 22 32.31 47.07 - -


Comprehensive Income (Cont’d)

Statements of Profit or Loss and Other

for the year ended 31 March 2017


Consolidated Statement of Changes in Equity for the year ended 31 March 2017

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Consolidated Statement of Changes in Equity (Cont’d)for the year ended 31 March 2017


Statement of Changes in Equity for the year ended 31 March 2017

Attributable to owners of the Company Non-distributable Distributable

Sharecapital

Share premium

Capital reserve

Retained earnings

Total equity

RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2015 84,291 21,600 85,709 35,303 226,903

Profit for the year representing total comprehensive income for the year - - - 19,399 19,399

Conversion of ICULS (Note 23) 2,031 2,235 (3,422) (416) 428

Dividends to owners of the Company (Note 24) - - - (27,779) (27,779)

Total transactions with owners of the Company 2,031 2,235 (3,422) (28,195) (27,351)

At 31 March 2016 86,322 23,835 82,287 26,507 218,951

Note 11 Note 12

At 1 April 2016 86,322 23,835 82,287 26,507 218,951

Profit for the year representing total comprehensive income for the year - - - 70,077 70,077

Conversion of ICULS (Note 23) 39,568 43,525 (66,659) (10,850) 5,584

Dividends to owners of the Company (Note 24) - - - (50,744) (50,744)

Total transactions with owners of the Company 39,568 43,525 (66,659) (61,594) (45,160)

125,890 67,360 15,628 34,990 243,868

Transfer in accordance with Section 618(2) of the Companies Act, 2016 67,360 (67,360) - - -

At 31 March 2017 193,250 - 15,628 34,990 243,868Note 11 Note 12




RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Profit before tax 55,354 68,672 69,903 18,587

Adjustments for:

Depreciation of property, plant and equipment 3 16,393 15,325 322 391

Amortisation of intangible assets 4 527 438 6 14

Fair value loss/(gain) on derivatives 18 1,181 (2,551) - -

Gain on disposal of plant and equipment 18 (81) (138) - -

Interest income (447) (294) (307) (30)

Plant and equipment written off 18 8 6 - -

Interest expense 19 84 700 84 700

Dividend income 18 - - (70,745) (20,000)

Gain on liquidation of a subsidiary A - - (254) -

Operating profit/(loss) before changes in working capital 73,019 82,158 (991) (338)

Changes in working capital:

Trade and other receivables B (13,387) (9,489) (5,382) 24,746

Inventories (18,442) 15,079 - -

Trade and other payables 11,380 19,157 44,379 23,412

Provisions (1,070) 1,885 - -

Cash generated from operations 51,500 108,790 38,006 47,820

Income tax paid (12,953) (5,246) (22) (3)

Net cash from operating activities 38,547 103,544 37,984 47,817

Cash flows from investing activities

Purchase of plant and equipment C (78,885) (22,857) (175) (528)

Purchase of intangible assets D (3,890) (1,706) - -

Interest received 447 294 307 30

Proceeds from disposal of plant and equipment 134 138 - -

Proceeds from liquidation of a subsidiary A - - 254 -

Net cash (used in)/from investing activities (82,194) (24,131) 386 (498)

Statements of Cash Flows for the year ended 31 March 2017


Statements of Cash Flows (Cont’d)for the year ended 31 March 2017


RM’000 RM’000 RM’000 RM’000

Cash flows from financing activities

Dividends paid (50,744) (27,779) (50,744) (27,779)

Interest paid (725) (4,114) (725) (4,114)

Net cash used in financing activities (51,469) (31,893) (51,469) (31,893)

Net (decrease)/increase in cash and cash equivalents (95,116) 47,520 (13,099) 15,426

Cash and cash equivalents at 1 April 173,644 103,585 15,830 404

Effect of exchange rate fluctuations on cash and cash equivalents 20,473 22,539 - -

Cash and cash equivalents at 31 March 10 99,001 173,644 2,731 15,830

NOTES

A. Liquidation of a subsidiary

During the financial year ended 31 March 2017, the Company had completed the liquidation of SAM Meerkat (Suzhou) Co., Ltd.

The liquidation had the following effect on the Group’s and Company’s assets and liabilities on liquidation date.

2017RM’000

Group

Cash and cash equivalents 254

Net assets 254

Consideration received, satisfied in cash (254)

Gain on liquidation -


NOTES (Cont’d)

A. Liquidation of a subsidiary (Cont’d)

2017RM’000

Company

Cost of investment 1,374

Less: Impairment loss (1,374)

-

Proceeds from liquidation (254)

Gain on liquidation (254)

B. During the financial year, amount due from subsidiaries of RM40,000,000 (2016: RM4,000,000) were capitalised into equity by certain subsidiaries via the issuance of ordinary shares to the Company.

C. Purchase of plant and equipment

During the financial year, the Group and the Company acquired plant and equipment with an aggregate amount of RM78,885,000 and RM175,000 respectively (2016: RM22,857,000 and RM528,000) of which RM20,373,000 and RM Nil (2016: RM3,851,000 and RM Nil) was included in prepayment at the end of the reporting period.

D. Purchase of intangible assets

During the financial year, the Group and the Company acquired intangible assets with an aggregate amount of RM3,890,000 and RM Nil respectively (2016: RM1,706,000 and RM Nil) of which RM1,081,000 and RM Nil (2016: RM813,000 and RM Nil) was included in prepayment at the end of the reporting period.


Statements of Cash Flows (Cont’d)for the year ended 31 March 2017


Notes to the Financial Statements

SAM Engineering & Equipment (M) Berhad is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are as follows:

Principal place of business

Plot 17, Hilir Sungai Keluang TigaBayan Lepas Free Industrial ZonePhase 411900 Penang

Registered office

Suite 16-1 (Penthouse Upper)Menara Penang Garden42A, Jalan Sultan Ahmad Shah10050 Penang

The consolidated financial statements of the Company as at and for the financial year ended 31 March 2017 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”). The principal activities of the Company are investment holding and provision of corporate management services. The principal activities of the subsidiaries are stated in Note 5 to the financial statements.

The immediate holding company is Singapore Aerospace Manufacturing Pte. Ltd. while the penultimate holding company is Accuron Technologies Limited. The ultimate holding company is Temasek Holdings (Private) Limited. All the above companies are incorporated in the Republic of Singapore.

These financial statements were authorised for issue by the Board of Directors on 23 June 2017.

1. Basis of Preparation

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2017• Amendments to MFRS 12, Disclosure of Interests in Other Entities (Annual Improvements to MFRS Standards 2014-

2016 Cycle)• Amendments to MFRS 107, Statement of Cash Flows – Disclosure Initiative• Amendments to MFRS 112, Income Taxes – Recognition of Deferred Tax Assets for Unrealised Losses

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018• MFRS 9, Financial Instruments (2014)• MFRS 15, Revenue from Contracts with Customers• Clarifications to MFRS 15, Revenue from Contracts with Customers• IC Interpretation 22, Foreign Currency Transactions and Advance Consideration• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to

MFRS Standards 2014-2016 Cycle)*• Amendments to MFRS 2, Share-based Payment – Classification and Measurement of Share-based Payment Transactions*• Amendments to MFRS 4, Insurance Contracts – Applying MFRS 9 Financial Instruments with MFRS 4 Insurance

Contracts*• Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual Improvements to MFRS Standards

2014-2016 Cycle)*• Amendments to MFRS 140, Investment Property – Transfers of Investment Property*


1. Basis of Preparation (Cont’d)

(a) Statement of compliance (Cont’d)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019• MFRS 16, Leases

MFRSs, Interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint

Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations:

• from the annual period beginning on 1 April 2017 for those amendments that are effective for annual periods beginning on or after 1 January 2017.

• from the annual period beginning on 1 April 2018 for those accounting standards, amendments and interpretation that are effective for annual periods beginning on or after 1 January 2018, except for those indicated with “*” which are not applicable to the Group and the Company.

• from the annual period beginning on 1 April 2019 for those accounting standard that is effective for annual periods beginning on or after 1 January 2019.

The initial application of the abovementioned accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and of the Company except as mentioned below:

(i) MFRS 15, Revenue from Contracts with Customers

MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue - Barter Transactions Involving Advertising Services.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.

(ii) MFRS 9, Financial Instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities, and on hedge accounting.


(iii) MFRS 16, Leases

MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, Determining whether an Arrangement contains a Lease, IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease.


(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in the financial statements.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

Notes to the Financial Statements (Cont’d)



1. Basis of Preparation (Cont’d)

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in Note 6 - Deferred tax assets, Note 8 - Inventories and Note 16 - Provisions.

2. Significant Accounting Policies The accounting policies set out below have been applied consistently to the periods presented in these financial statements

and have been applied consistently by Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.


2. Significant Accounting Policies (Cont’d)

(a) Basis of consolidation (Cont’d)

(iii) Acquisitions of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iv) Acquisitions from entities under common controls

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity and any resulting gain/loss is recognised directly in equity.

(v) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(b) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting date are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity.

(ii) Operations denominated in functional currencies other than Ringgit Malaysia

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions.




(b) Foreign currency (Cont’d)

(ii) Operations denominated in functional currencies other than Ringgit Malaysia (Cont’d)

Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in equity. However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.

(c) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised as fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(a) Financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2(g)(i)).




(c) Financial instruments (Cont’d)

(ii) Financial instrument categories and subsequent measurement (Cont’d)

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

(iv) Hedge accounting

Cash flow hedge

A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss.

Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss in the same period or periods during which the hedged forecast cash flows affect profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed from equity and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive income that will not be recovered in one or more future periods is reclassified from equity into profit or loss.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from equity into profit or loss.




(c) Financial instruments (Cont’d)

(v) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the profit or loss.

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Costs also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other operating income” and “other operating expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.




(d) Property, plant and equipment (Cont’d)

(iii) Depreciation (Cont’d)

The straight-line method is used to write off the cost of the assets over the term of their estimated useful lives at the following principal annual rates:

%

Buildings 3.33

Electrical installation and fittings 2 - 25

Factory equipment 10 - 33.33

Motor vehicles 20

Office equipment, furniture and fittings 5 - 33.33

Plant and machinery 10 - 20

The leasehold land of the Group are amortised over the lease period of 60 years. Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted as appropriate.

(e) Leased assets

Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of the ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

(f) Intangible assets

Intangible assets represent computer software that are acquired separately by the Group which has finite useful lives. Following initial recognition, computer software are measured at cost less any accumulated amortisation and any accumulated impairment losses. Computer software are amortised from the date they are available for use based on the cost of the asset less its residual value. Computer software are amortised and recognised in profit or loss on a straight-line basis over a period of 3 to 6 years. Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period, and adjusted as appropriate.

(g) Impairment

(i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss and investments in subsidiaries) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.





(g) Impairment (Cont’d)

(i) Financial assets (Cont’d)

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories and deferred tax assets) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

(h) Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is calculated using the first-in, first-out method and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and manufactured inventories, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(i) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments.



(j) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

(k) Revenue and other income

(i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(ii) Services

Revenue from services rendered is recognised when the services have been performed or rendered.

(iii) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

(iv) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss.

(v) Government grants

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant; they are then recognised in profit or loss as other income on a systematic basis over the useful life of the asset.

Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised.

(l) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.




(m) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance, being a tax incentive that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

(n) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(o) Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes.




(p) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

(q) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Ordinary shares Ordinary shares are classified as equity.

(r) Compound financial instruments

A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component.

Compound financial instruments issued by the Company comprise Irredeemable Convertible Unsecured Loan Stocks that can be converted to share capital at the option of the holder, when the number of shares to be issued does not vary with changes in their fair value.

The proceeds are first allocated to the liability component, determined based on the fair value of a similar liability that does not have a conversion feature or similar associated equity component. The residual amount is allocated as the equity component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.

Interest and losses and gains relating to the financial liability are recognised in profit or loss. On conversion, the financial liability is reclassified to equity; no gain or loss is recognised on conversion.

(s) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(t) Fair value measurements

Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.




(t) Fair value measurements (Cont’d)

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.



3.

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3.

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3. Property, Plant and Equipment (Cont’d)

At 31 March 2017

At 31 March 2016

At 1 April 2015

RM’000 RM’000 RM’000

Group

Carrying amounts

Leasehold land 14,140 14,246 14,209

Buildings 41,284 42,452 42,286

Electrical installation and fittings 2,834 3,256 2,855

Factory equipment 9,138 8,075 4,444

Motor vehicles 210 368 511

Office equipment, furniture and fittings 3,363 3,383 3,152

Plant and machinery 41,091 31,738 25,208

Capital expenditure-in-progress 36,628 - -

148,688 103,518 92,665

At 1 April Additions Written off At 31 MarchRM’000 RM’000 RM’000 RM’000

Company

Cost

2017

Motor vehicles 523 - - 523Office equipment, furniture and fittings 3,205 175 (1,033) 2,347Electrical installation and fittings 1,002 - - 1,002Factory equipment 13 - - 13

4,743 175 (1,033) 3,885

2016

Motor vehicles 523 - - 523

Office equipment, furniture and fittings 3,128 281 (204) 3,205

Electrical installation and fittings 755 247 - 1,002

Factory equipment 13 - - 13

4,419 528 (204) 4,743





At 1 AprilDepreciation

for the year Written off At 31 MarchRM’000 RM’000 RM’000 RM’000

Company

Depreciation

2017

Motor vehicles 275 69 - 344Office equipment, furniture and fittings 2,764 205 (1,033) 1,936Electrical installation and fittings 677 47 - 724Factory equipment 11 1 - 12

3,727 322 (1,033) 3,016

2016

Motor vehicles 205 70 - 275

Office equipment, furniture and fittings 2,725 243 (204) 2,764

Electrical installation and fittings 599 78 - 677

Factory equipment 11 - - 11

3,540 391 (204) 3,727

At 31 March 2017

At 31 March 2016

At 1 April 2015

RM’000 RM’000 RM’000

Carrying amounts

Motor vehicles 179 248 318

Office equipment, furniture and fittings 411 441 403

Electrical installation and fittings 278 325 156

Factory equipment 1 2 2

869 1,016 879

3.1 Security - Group

Certain leasehold land and buildings with carrying amount of RM12,382,000 (2016: RM12,918,000) are charged to a bank as securities for bank facilities granted to a subsidiary.



3.2 Leasehold land

Included in the carrying amount of leasehold land are:

Group 2017 2016

RM’000 RM’000

Unexpired lease period of more than 50 years 5,440 5,550

Unexpired lease period of less than 50 years 8,700 8,696

14,140 14,246

4. Intangible Assets

2017 2016RM’000 RM’000

Computer software

Group

Cost

At 1 April 6,605 5,393

Additions 2,809 893

Effect of movements in exchange rates 230 319

At 31 March 9,644 6,605

Amortisation

At 1 April 5,217 4,548

Amortisation for the year (Note 18) 527 438


At 31 March 5,938 5,217

Carrying amount

At 31 March 3,706 1,388



4. Intangible Assets (Cont’d)

2017 2016RM’000 RM’000

Company

Cost

At 1 April/31 March 2,559 2,559

Amortisation

At 1 April 2,542 2,528

Amortisation for the year (Note 18) 6 14

At 31 March 2,548 2,542

Carrying amount

At 31 March 11 17

5. Investments In Subsidiaries - Company

2017 2016RM’000 RM’000

Unquoted shares, at cost

At 1 April 216,934 212,934

Additions 40,000 4,000

Written off (1,374) -

At 31 March 255,560 216,934

Accumulated impairment

At 1 April 29,375 29,375

Written off (1,374) -

At 31 March 28,001 29,375

Unquoted shares, net 227,559 187,559

During the financial year, the Company subscribed for additional 40,000,000 (2016: 4,000,000) ordinary shares in certain subsidiaries for RM40,000,000 (2016: RM4,000,000) through the capitalisation of an equivalent amount due from the said subsidiaries.



5. Investments In Subsidiaries - Company (Cont’d)

The Company wrote off its investment in SAM Meerkat (Suzhou) Co., Ltd amounting to RM1,374,000 pursuant to the liquidation of the subsidiary during the financial year.

Details of the subsidiaries are as follows:

Name of entity

Principal place of business/Country

of incorporation

Effective ownership interest and voting interest Principal activities2017 2016

% %

SAM Meerkat (M) Sdn. Bhd. Malaysia 100 100 Design and assembly of modular or complete machine and equipment

SAM Tooling Technology Sdn. Bhd. (“SAMTT”)

Malaysia 100 100 Design, development and manufacture of trim and form dies and suspension tooling for hard disk drive parts

Avitron Private Limited (“Avitron”)*

Republic of Singapore

100 100 Manufacture of aircraft components and precision engineering parts

SAM Technologies (M) Sdn. Bhd. (formerly known as ESMO Automation (M) Sdn. Bhd.)#

Malaysia 100 100 Design, and manufacture of engineering equipment and automation solution ranging from process test handlers, material handling systems, vision inspection systems and factory automation

SAM Precision (M) Sdn. Bhd. (“SAMPM”)

Malaysia 100 100 Manufacture of aircraft structures and other related equipment parts, components, spares and precision engineering parts

Meerkat Integrator Sdn. Bhd.

Malaysia 100 100 Dormant

Meerkat Precision Sdn. Bhd.

Malaysia 100 100 Manufacture of aircraft and other related equipment parts, spares, components and precision engineering parts

LKT Automation Sdn. Bhd. Malaysia 100 100 Dormant

LKT Integration Sdn. Bhd. Malaysia 100 100 Dormant

LKT Technology Sdn. Bhd. Malaysia 100 100 Dormant

SAM Meerkat (Suzhou) Co., Ltd* ^

People’s Republic of China

- 100 Liquidated




5. Investments In Subsidiaries - Company (Cont’d)

Name of entity

Principal place of business/Country

of incorporation

Effective ownership interest and voting interest Principal activities2017 2016

% %

Held by SAMTT

SAM Precision (Thailand) Limited*

Thailand 100 100 Manufacture of die, jig and parts and cutting tools for disk drives, electronics, semi-conductor and other industries

Held by SAMPM

Meerkat Technology Pte. Ltd. *

Republic of Singapore

100 100 Design, manufacture and service support for semiconductor, electronic, disk drive, medical, solar, LED and other industrial equipment

* Not audited by member firms of KPMG International. ^ Liquidated on 12 December 2016. # Changed to the present name on 23 May 2017.



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6. Deferred Tax Assets/(Liabilities) (Cont’d)

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items (stated at gross):

2017 2016RM’000 RM’000

Group

Tax loss carry-forwards 46,859 38,417

Unabsorbed capital allowances 17,481 10,580

Unutilised reinvestment allowance 5,774 5,774

Provisions and others (3,357) (629)

66,757 54,142

Company

Tax loss carry-forwards 2,336 2,103

Unabsorbed capital allowances 1,504 1,364

Provisions and others (74) 215

3,766 3,682

The tax loss carry-forwards, unabsorbed capital allowances and other temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group and the Company can utilise the benefits therefrom.

7. Trade and Other Receivables

Note 2017 2016RM’000 RM’000

Group

Trade

Amount due from:- immediate holding company 7.1 36,802 81,823

- related companies 7.1 1,388 1,690

External parties 95,068 43,370

133,258 126,883



7. Trade and Other Receivables (Cont’d)

Note 2017 2016RM’000 RM’000

Group

Non-trade

Amount due from:

- immediate holding company 7.1 996 214

- related companies 7.1 74 8

Other receivables 3,594 3,071

Deposits 187 1,115

Prepayments 7.2 44,702 17,527

49,553 21,935

182,811 148,818

Company

Non-trade

Amount due from:

- subsidiaries 7.1 33,974 28,642

- related company 7.1 55 -

Other receivables 72 59

Deposits 39 41

Prepayments 232 248

34,372 28,990

7.1 Amounts due from immediate holding company, subsidiaries and related companies

The trade amounts due from immediate holding company and related companies are subject to normal trade terms.

The non-trade amounts due from immediate holding company, subsidiaries and related companies are unsecured, interest-free and repayable on demand.

7.2 Prepayments Included in prepayments of the Group is RM21,454,000 (2016: RM4,664,000) paid for the purchase of plant and machinery

and intangible assets.


8. Inventories - Group

2017 2016RM’000 RM’000

Raw materials 56,017 48,680

Work-in-progress 78,851 70,497

Manufactured inventories 7,003 5,195

141,871 124,372

Recognised in profit or loss:

2017 2016RM’000 RM’000

Inventories recognised as cost of sales 539,296 526,858

(Reversal)/Write-down to net realisable value included in cost of sales (2,198) 1,193

9. Derivative Financial Assets/(Liabilities) - Group

Nominal value Assets Liabilities RM’000 RM’000 RM’000

2017

Derivatives held for trading at fair value through profit or loss

- Forward exchange contracts 71,122 480 (636)

2016

Derivatives held for trading at fair value through profit or loss

- Forward exchange contracts 77,095 3,011 (33)

Forward exchange contracts are used to manage the foreign currency exposures arising from the Group’s receivables and payables denominated in currencies other than the functional currencies of Group entities. Most of the forward exchange contracts have maturities of less than one year after the end of the reporting period. When necessary, the forward contracts are rolled over at maturity.




10. Cash and Cash Equivalents

2017 2016RM’000 RM’000

Group

Short term deposits with licensed banks - 18,312

Cash and bank balances 99,001 155,332

99,001 173,644

Company

Cash and bank balances 2,731 15,830

11. Share Capital - Group/Company

Authorised Issued and paid up

AmountRM’000

Number of shares

(’000)AmountRM’000

Number of shares

(’000)

At 1 April 2015 200,000 200,000 84,291 84,291

Conversion of ICULS to ordinary shares ^ - - 2,031 2,031

At 31 March 2016/1 April 2016 with par value of RM1.00 each 200,000 200,000 86,322 86,322

Conversion of ICULS to ordinary shares ^ - - 39,568 39,568

Transfer from share premium in accordance with Section 618(2) of the Companies Act, 2016 (Note 11.1) - - 67,360 -

At 31 March 2017 with no par value N/A N/A 193,250 125,890Note 11.3 Note 11.3 Note 11.2

^ conversion of 83,092,236 (2016: 4,266,729) RM1.00 nominal value of 5-year 4% Irredeemable Convertible Unsecured

Loans Stocks (“ICULS”) into 39,567,728 (2016: 2,031,758) ordinary shares on the basis of one RM1.00 nominal value of ICULS for approximately 0.476 ordinary shares in the Company.

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

11.1 In accordance with Section 618 of Companies Act, 2016, any amount standing to the credit of the share premium account has become part of the Company’s share capital. The Company has twenty-four months upon the commencement of Companies Act, 2016 on 31 January 2017 to utilise the credit.

11.2 Included in share capital is share premium amounting to RM67,360,000 that is available to be utilised in accordance with Section 618(3) of Companies Act, 2016 on or before 30 January 2019 (twenty-four months from commencement of Section 74).

11.3 The concept of authorised share capital and par value of share capital have been abolised on the commencement of Companies Act, 2016 on 31 January 2017.



12. Reserves

Note 2017 2016RM’000 RM’000

Group

Non-distributable

Capital reserve

- ICULS (equity component) 12.1 15,628 82,287

Hedging reserve 12.2 (1,776) 670

Share premium 12.3 - 23,835

Translation reserve 12.4 80,168 59,721

94,020 166,513

Distributable

Retained earnings 167,762 185,749

261,782 352,262

Company

Non-distributable

Capital reserve

- ICULS (equity component) 12.1 15,628 82,287

Share premium 12.3 - 23,835

15,628 106,122

Distributable

Retained earnings 12.5 34,990 26,507

50,618 132,629

The movements in the reserves are disclosed in the statements of changes in equity.

12.1 Capital reserve

The capital reserve comprises the residual amount of the ICULS after deducting the fair value of the liability component from the fair value of the instrument as a whole (Note 23).

12.2 Hedging reserve

The hedging reserve comprised the effective portion of the cumulative net change in the fair value of cash flow hedges related to hedged transactions that have not yet occurred.



12. Reserves (Cont’d)

12.3 Share premium

Share premium comprised the premium paid on subscription of shares and conversion of ICULS into ordinary shares in the Company over and above the par value of the shares. The amount standing to the credit of the share premium account has become part of the Company’s share capital upon the commencement of Companies Act, 2016 on 31 January 2017.

12.4 Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

12.5 Retained earnings

The entire retained earnings of the Company is eligible to be paid out as dividends under the single-tier company income tax systems in accordance with the Finance Act, 2007.

13. Loans and Borrowings - Group/Company

2017 2016RM’000 RM’000

Current

Unsecured

ICULS (liability component) 352 3,797

Non-current

Unsecured

ICULS (liability component) - 1,709

14. Deferred Income - Group

2017 2016RM’000 RM’000

Non-current

Government grant 778 -

Current

Government grant 98 -

876 -


14. Deferred Income - Group (Cont’d)

Government grant

The Group received a government grant which was conditional upon the Group fulfilling all the terms and conditions as stated in the grant’s letter of offer. The grant is amortised over the useful life of the plant and machinery. During the financial year, RM117,632 (2016: RM Nil) was amortised and recognised as other income in profit or loss.

15. Trade and Other Payables

Note 2017 2016RM’000 RM’000

Group

Trade

Amount due to:

- immediate holding company 15.1 2,575 423

- related companies 15.1 270 694

External parties 29,161 36,965

32,006 38,082

Non-trade

Amounts due to:


- related companies 15.1 2,863 1

Other payables 2,392 692

Accrued expenses 60,305 51,950

71,208 53,011

103,214 91,093

Company

Non-trade

Amounts due to:


- related company 15.1 - 1

- subsidiaries 15.1 17,984 5,537

Other payables 20 42

Accrued expenses 1,548 1,731

21,267 7,633




15. Trade and Other Payables (Cont’d)

15.1 Amounts due to immediate holding company, subsidiaries and related companies

The trade amounts due to immediate holding company and related companies are subject to normal trade terms.

The non-trade amounts due to immediate holding company, related companies and subsidiaries are unsecured, interest-free and payable on demand.

16. Provisions - Group

WarrantiesRM’000

At 1 April 2015 6,679

Provisions made during the year 2,666

Reversed to profit or loss (781)

Effect of movements in exchange rates 718

At 31 March 2016/1 April 2016 9,282

Provisions made during the year 1,007

Reversed to profit or loss (2,077)

Effect of movements in exchange rates 577

At 31 March 2017 8,789 Warranties

Warranties represent estimated liabilities for defects arising from products sold under warranty. The provision is based on management’s estimate made from historical warranty data associated with the products and judgement on the probability of a defect arising from products sold.

17. Revenue

2017 2016RM’000 RM’000

Group

Invoiced value of goods sold less discounts and returns 536,608 619,143

Support services rendered 789 911

537,397 620,054



17. Revenue (Cont’d)

2017 2016RM’000 RM’000

Company

Dividend income from subsidiaries 70,745 20,000

Interest income 307 30

Management fee 8,521 7,943

79,573 27,973

18. Profit Before Tax

Profit before tax is arrived at after charging:


RM’000 RM’000 RM’000 RM’000

Amortisation of intangible assets 4 527 438 6 14

Auditors’ remuneration

Audit fees (statutory audit)

- Auditors of the Company

- current year 215 200 49 41

- prior year 1 - 1 1

- Other auditors

- current year 158 210 - -

- prior year (4) - - -

Non-audit fees

- Auditors of the Company

- current year 20 20 20 20

- Other auditors

- current year 3 26 - -

Depreciation on property, plant and equipment 3 16,393 15,325 322 391

Impairment loss on trade receivables - 137 - -

Inventories written down 8 - 1,193 - -

Loss on foreign exchange

- realised, net 265 - 50 -

- unrealised, net - 7,395 - -

Fair value loss on derivatives 1,181 - - -



18. Profit Before Tax (Cont’d)

Profit before tax is arrived at after charging (Cont’d):


RM’000 RM’000 RM’000 RM’000

Personnel expenses

- Wages, salaries and others (including Directors’ emoluments) 80,133 78,317 5,757 5,309

- Employees’ Provident Fund contributions 8,116 7,734 525 488

Plant and equipment written off 8 6 - -

Provision for warranties 16 1,007 2,666 - -

Rental of:

- floor space and premises 4,435 4,007 - -

- machinery and equipment 138 100 16 13

- motor vehicles 82 53 5 3

and after crediting:

Amortisation of government grant 14 118 - - -

Dividend income from unquoted subsidiaries - - 70,745 20,000

Gain on disposal of plant and equipment 81 138 - -

Gain on foreign exchange

- realised, net - 12,183 - 179

- unrealised, net 841 - 233 77

Gain on liquidation of a subsidiary - - 254 -

Fair value gain on derivatives - 2,551 - -

Reversal of provision for warranties 16 2,077 781 - -

Reversal of inventories written down 8 2,198 - - -

19. Finance Costs - Group/Company

2017 2016RM’000 RM’000

Interest expense on:

ICULS (Note 23) 84 700



20. Key Management Personnel Compensation

Key management personnel compensation are as follows:

Group Company 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Directors of the Company

- Fees 468 400 468 400

- Other emoluments 142 148 142 148

Other Directors

- Remuneration 1,339 1,448 - -

- Employees’ Provident Fund contributions 162 147 - -

2,111 2,143 610 548

21. Tax Expense

Recognised in profit or loss

Group Company 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Tax expense on continuing operations 11,747 5,578 (174) (812)

Major components of tax expense include:

Income tax expense

Malaysian

- current year 8,130 2,084 - 7

- prior year 497 (113) (7) -

8,627 1,971 (7) 7

Overseas

- current year 5,729 5,741 - -

- prior year 244 (966) - -

5,973 4,775 - -

Total income tax recognised in profit or loss 14,600 6,746 (7) 7



21. Tax Expense (Cont’d)

Major components of tax expense include (Cont’d):

Group Company 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Deferred tax expense

- reversal of temporary differences (607) (1,148) (167) (819)

- origination of temporary differences 1,619 - - -

- prior year 2 (20) - -

- recognition of previously unrecognised deferred tax assets (3,867) - - -

(2,853) (1,168) (167) (819)

Total tax expense 11,747 5,578 (174) (812)

Reconciliation of tax expense

Group Company 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Profit for the year 43,607 63,094 70,077 19,399

Total income tax expense 11,747 5,578 (174) (812)

Profit excluding tax 55,354 68,672 69,903 18,587

Income tax calculated using Malaysian tax rate at 24% (2016: 24%) 13,285 16,481 16,777 4,461

Effect of different tax rates in foreign jurisdictions (2,321) (2,904) - -

Non-deductible expenses 1,358 1,223 243 359

Tax exempt income (70) (1,334) (17,207) (5,619)

Effect of tax incentives* (357) (6,834) - -

Effect of deferred tax assets not recognised/(recognised) 3,028 24 20 (13)

Recognition of previously unrecognised deferred tax assets (3,867) - - -

Other items (52) 21 - -

11,004 6,677 (167) (812)

Over provided in prior years 743 (1,099) (7) -

11,747 5,578 (174) (812)

* Certain subsidiaries were granted 100% tax exemption ranging from five to ten years under the Promotion of Investment Act, 1986 (as amended) and Section 127 (3)(b) of the Income Tax Act, 1967. The tax exemption periods for these subsidiaries expired on 31 December 2014 and 31 December 2015 respectively.



22. Earnings Per Ordinary Share - Group

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share is based on the profit attributable to ordinary shareholders of RM43,607,000 (2016: RM63,094,000) and the weighted average number of ordinary shares outstanding, calculated as follows:

Weighted average number of ordinary shares at 31 March

2017 2016

Issued ordinary shares at 1 April 86,322,548 84,290,790

Effect of ordinary shares issued during the year 33,710,088 1,494,362

Weighted average number of ordinary shares at 31 March 120,032,636 85,785,152

Basic earnings per ordinary share (sen) 36.33 73.55

Diluted earnings per ordinary share

The calculation of diluted earnings per ordinary share at 31 March was based on the profit attributable to ordinary shareholders (diluted) and the weighted average number of ordinary shares (diluted) after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

Profit attributable to ordinary shareholders (diluted)

2017 2016RM’000 RM’000

Profit attributable to ordinary shareholders (basic) 43,607 63,094

Interest income on convertible notes, net of tax 64 532

Profit attributable to ordinary shareholders (diluted) 43,671 63,626

Weighted average number of ordinary shares (diluted)

2017 2016

Weighted average number of ordinary shares at 31 March (basic) 120,032,636 85,785,152

Effect of conversion of ICULS 15,134,395 49,381,887

Weighted average number of ordinary shares at 31 March (diluted) 135,167,031 135,167,039

Diluted earnings per ordinary share (sen) 32.31 47.07

23. Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) - Group/Company

On 25 September 2012, the Company issued 135,000,000 RM1.00 nominal value of 5-year 4% ICULS at 100% of its nominal value as part of the purchase consideration for the acquisition of the entire equity interest in Avitron Private Limited from Singapore Aerospace Manufacturing Pte. Ltd. (“SAM Singapore”). Of the total RM135,000,000 ICULS issued, RM101,250,000 ICULS were issued to SAM Singapore while the remaining RM33,750,000 ICULS were issued to other eligible shareholders of the Company.



23. Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) - Group/Company (Cont’d)

At the end of the financial year, the Company has the following outstanding number of ICULS:

Expiry dateNumber of ICULS

outstanding as at 31.3.2017

5-year 4% ICULS 25 September 2017 19,481,184

The main features of the ICULS are as follows:

i) The ICULS were constituted by a Trust Deed dated 25 September 2012 made between the Company and the Trustee for the holders of the ICULS;

ii) The ICULS are convertible into new ordinary shares in the Company at any time from the date of issue of the ICULS until the maturity date on 25 September 2017 on the basis of one RM1.00 nominal value ICULS for approximately 0.476 number of ordinary shares;

iii) The ICULS shall rank pari passu in all respects, without priority amongst the respective holders and with all other present and future unsecured and unsubordinated obligations of the Company from time to time outstanding but shall be subordinated to all other obligations and liabilities of the Company which are preferred solely by the laws of Malaysia; and

iv) The interest on the ICULS at the rate of 4% per annum is payable semi-annually in arrears.

The residual value, after deducting the liability component from the fair value of the instrument as a whole, is attributed to the equity component as follows:

Equity component of

ICULS

Liability component of

ICULS(Note 13) Total

RM’000 RM’000 RM’000

At the date of issuance of ICULS

- nominal value 113,325 21,675 135,000

- deferred tax liabilities (5,419) - (5,419)

107,906 21,675 129,581

At 1 April 2015 85,709 9,265 94,974

Conversion of ICULS into ordinary shares (3,422) (345) (3,767)

Interest expense (Note 19) - 700 700

Interest paid - (4,114) (4,114)

At 31 March 2016 82,287 5,506 87,793

At 1 April 2016 82,287 5,506 87,793

Conversion of ICULS into ordinary shares (66,659) (4,513) (71,172)

Interest expense (Note 19) - 84 84

Interest paid - (725) (725)

At 31 March 2017 15,628 352 15,980



23. Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) - Group/Company (Cont’d)

The liability component at 31 March is further analysed as follows:

2017 2016RM’000 RM’000

Within 1 year 352 3,797

Within 1 to 5 years - 1,709

352 5,506

Interest expense on the ICULS is calculated on the effective yield basis by applying a coupon interest rate of 8.05% which is assumed to be equivalent to the prevailing market interest rate for convertible loan stocks at the date of issue.

24. Dividends - Company

2016

A first interim single tier dividend of 11.94 sen and a special single tier dividend of 20.26 sen per ordinary share totalling RM27,778,594 for the financial year ended 31 March 2015 was declared on 22 June 2015 and paid on 28 August 2015.

2017

A first interim single tier dividend of 14.96 sen and a special single tier dividend of 25.35 sen per ordinary share totalling RM50,744,257 for the financial year ended 31 March 2016 was declared on 8 June 2016 and paid on 5 August 2016.

Subsequent to the end of the financial year, the Company declared a first interim single tier dividend of 10.28 sen and a special single tier dividend of 6.95 sen per ordinary share in respect of the financial year ended 31 March 2017 to be paid on 15 August 2017.

The Directors did not propose any final dividend to be paid for the current financial year.

25. Related Parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

The Group has related party relationship with its holding companies and subsidiaries as disclosed in the financial statements.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group.

Significant related party transactions

Related party transactions have been entered into in the normal course of business under normal trade terms. The significant related party transactions of the Group and the Company are shown below. The balances related to the below transactions are shown in Note 7 and Note 15.



25. Related Parties (Cont’d)

Significant related party transactions (Cont’d)

i) Subsidiaries:

2017 2016RM’000 RM’000

Company

Subscription of shares in a subsidiary 40,000 4,000

Dividend income 70,745 20,000

Management fee income 8,521 7,943

Interest income 160 -

ii) Immediate holding company:

2017 2016RM’000 RM’000

Group

Sales of aerospace parts 221,743 332,021

Dividend paid 17,948 1,606

Provision of engineering services 568 598

Purchase of fabrication/machining services (233) (133)

Purchase of engineering services (5,040) (981)

Corporate management services (1,932) (1,002)

Rental of factory premises (3,833) (3,685)

Company

Corporate management services (1,051) (589)

iii) Related companies:

2017 2016RM’000 RM’000

Group

Sales of fabrication/machining services 33 841

Sales of aerospace parts 3,079 -

Sales of spare parts 13 -

Sales of equipment - 763

Dividends paid 17,637 17,019

Provision of engineering services 33 117

Sales commission expense - (32)



25. Related Parties (Cont’d)

Significant related party transactions (Cont’d)

iii) Related companies (Cont’d):

2017 2016RM’000 RM’000

Purchase of components, spare parts, modular on complete machine and equipment (96) (401)

Purchase of engineering services (934) (621)

Corporate management services (131) (1,433)

Purchases of fabrication/machining services (26,127) (28,343)

Rental of floor space (185) -

Rental of machine (42) -

iv) There were no transactions with key management personnel other than the remuneration package paid to them in accordance with the terms and conditions of their appointment as disclosed in Note 20 to the financial statements.

26. Operating Segment - Group

The Group has three reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Chief Operating Decision Maker (“CODM”) (i.e. the Group’s Chief Executive Officer) reviews internal management reports at least on a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:

Aerospace Provides a dedicated end-to-end manufacturing solutions on critical engine parts and other related equipment parts

Equipment manufacturing Provides an array of equipment engineering and solutions for commercial, semiconductor and other industries

Precision engineering Provides a dedicated end-to-end precision manufacturing solutions on engineering and high precision tooling including large format CNC machining parts

Performance is measured based on segment profit before tax as included in the internal management reports that are reviewed by the CODM. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Segment assets

The total of segment asset is measured on all assets (including goodwill) of a segment, as included in the internal management reports that are reviewed by the CODM. Segment total asset is used to measure the return on assets of each segment.

Segment liabilities

Segment liabilities information is neither included in the internal management reports nor provided regularly to the CODM. Hence, no disclosure is made on segment liabilities.



26.

Ope

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Rev

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26.

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3



26. Operating Segment - Group (Cont’d)

Geographical segments

In presenting information on the basis of geographical segments, segment revenue is based on geographical location of the customers. Segment assets are based on the geographical location of the assets.

RevenueNon-current

assets RM’000 RM’000

Geographical information

2017

Malaysia 41,158 142,120Asia (excluding Malaysia) 328,786 13,157Europe 4,042 -North America 158,344 -Latin America 5,067 -

537,397 155,277

2016

Malaysia 24,471 89,419

Asia (excluding Malaysia) 421,837 15,986

Europe 371 -

North America 173,375 -

620,054 105,405

Major customers

The following are the sales to 2 major customers (one customer per segment) with revenue equal to or more than 10% of the Group’s total revenue:

Revenue 2017 2016

RM’000 RM’000

Segment

Aerospace 302,515 332,029

Equipment manufacturing 60,376 149,916

362,891 481,945



27. Capital and Other Commitments

Group Company 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Property, plant and equipment

Authorised but not contracted for 63,091 - - -

Contracted but not provided for 39,746 43,678 12 89

Intangible assets

Contracted but not provided for 4 - 4 -

28. Financial Instruments

28.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loans and receivables (“L&R”); (b) Fair value through profit or loss (“FVTPL”): - Held for trading (“HFT”); and(c) Financial liabilities measured at amortised cost (“FL”).

Carrying amount L&R FVTPL - HFTRM’000 RM’000 RM’000

Financial assets

2017

Group

Trade and other receivables (excluding prepayments) 138,109 138,109 -Cash and cash equivalents 99,001 99,001 -Derivative financial assets 480 - 480

237,590 237,110 480



28. Financial Instruments (Cont’d)

28.1 Categories of financial instruments (Cont’d)

Carrying amount L&R FVTPL - HFTRM’000 RM’000 RM’000

Financial assets

2017

Company

Trade and other receivables (excluding prepayments) 34,140 34,140 -Cash and cash equivalents 2,731 2,731 -

36,871 36,871 -

2016

Group

Trade and other receivables (excluding prepayments) 131,291 131,291 -

Cash and cash equivalents 173,644 173,644 -

Derivative financial assets 3,011 - 3,011

307,946 304,935 3,011

Company

Trade and other receivables (excluding prepayments) 28,742 28,742 -

Cash and cash equivalents 15,830 15,830 -

44,572 44,572 -




28.1 Categories of financial instruments (Cont’d)

Carrying amount FL

FVTPL- HFT

RM’000 RM’000 RM’000

Financial liabilities

2017

Group

Loans and borrowings 352 352 -Trade and other payables 103,214 103,214 -Derivative financial liabilities 636 - 636

104,202 103,566 636

Company

Loans and borrowings 352 352 -Other payables 21,267 21,267 -

21,619 21,619 -

2016

Group

Loans and borrowings 5,506 5,506 -

Trade and other payables 91,093 91,093 -

Derivative financial liabilities 33 - 33

96,632 96,599 33

Company

Loans and borrowings 5,506 5,506 -

Other payables 7,633 7,633 -

13,139 13,139 -




28.2 Net gains and losses arising from financial instruments

Group Company2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Net gains/(losses) on:

Loans and receivables 1,517 (7,856) 540 107

Fair value through profit or loss

- Held for trading (1,181) 2,551 - -

Financial liabilities measured at amortised cost (313) (82) (84) (700)

23 (5,387) 456 (593)

28.3 Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk• Liquidity risk• Market risk

28.4 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposure to credit risk arises principally from advances to subsidiaries and financial guarantees given to banks for facilities granted to subsidiaries.

Receivables

Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally,

credit evaluations are performed on customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by

the carrying amounts in the statements of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually.




28.4 Credit risk (Cont’d)

Receivables (Cont’d)

Exposure to credit risk, credit quality and collateral (Cont’d)

The exposure of credit risk for trade receivables as at the end of the reporting period by geographic region was:

Group 2017 2016

RM’000 RM’000

Malaysia 8,262 1,262

Asia (excluding Malaysia) 56,641 101,694

North America 67,439 23,808

Others 916 119

133,258 126,883

Impairment losses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as at the end of the reporting period was:

GrossIndividual

impairmentCumulative impairment Net

RM’000 RM’000 RM’000 RM’000

Group

2017

Not past due 109,035 - - 109,035Past due 1 - 30 days 18,211 - - 18,211Past due 31 - 60 days 4,397 - - 4,397Past due 61 - 90 days 528 - - 528Past due 91 - 120 days 281 - - 281Past due more than 120 days 1,135 (329) - 806

133,587 (329) - 133,258

2016

Not past due 114,359 - - 114,359

Past due 1 - 30 days 8,236 - - 8,236

Past due 31 - 60 days 2,589 - - 2,589

Past due 61 - 90 days 540 - - 540

Past due 91 - 120 days 323 - - 323

Past due more than 120 days 1,154 (318) - 836

127,201 (318) - 126,883




28.4 Credit risk (Cont’d)

Receivables (Cont’d)

Impairment losses (Cont’d)

The movements in the allowance for impairment losses of trade receivables during the financial year were:

Group 2017 2016

RM’000 RM’000

At 1 April 318 178

Impairment loss recognised - 137


At 31 March 329 318

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk other than the trade amount from the immediate holding company as disclosed in Note 7 to the financial statements.

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

Inter-company advances

Risk management objectives, policies and processes for managing the risk

The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.

Impairment losses

As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of advances to the subsidiaries. These advances are not considered to be overdue and are repayable on demand.

28.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.



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28.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s financial position or cash flows.

28.6.1 Currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of the Group entities. The currencies giving rise to this risk are primarily U.S. Dollar (“USD”), Singapore Dollar (“SGD”), Euro Dollar (“EURO”) and Ringgit Malaysia (“RM”).

Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:

Denominated inUSD SGD EURO RM

RM’000 RM’000 RM’000 RM’000

Group

2017

Balances recognised in the statement of financial position

Trade and other receivables 36,428 67 - 201Cash and bank balances 17,905 14,268 58 1,708Derivative financial assets/(liabilities) - 196 (535) 183Trade and other payables (24,765) (5,965) (572) (5,056)

Net exposure 29,568 8,566 (1,049) (2,964)

2016

Balances recognised in the statement of financial position

Trade and other receivables 35,870 185 - 16

Cash and bank balances 40,915 9,505 431 1,300

Derivative financial assets - 671 934 1,373

Trade and other payables (19,261) (7,041) (1,174) (4,517)

Net exposure 57,524 3,320 191 (1,828)




28.6 Market risk (Cont’d)

28.6.1 Currency risk (Cont’d)

Currency risk sensitivity analysis

A 5% (2016: 5%) strengthening of the functional currency of Group entities against the following currencies at the end of the reporting period would have increased/(decreased) equity and post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact on forecasted sales and purchases. There is no impact to equity arising from exposure to currency risk.

Profit or lossRM’000

Group

2017

USD (1,124)SGD (326)EURO 40RM 113

2016

USD (2,186)

SGD (126)

EURO (7)

RM 69

A 5% (2016: 5%) weakening of the functional currency of Group entities against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.

28.6.2 Interest rate risk

The Group’s fixed rate deposits and borrowings are exposed to a risk of change in their fair value due to changes in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.

Risk management objectives, policies and processes for managing the risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risks that the value of a financial instrument will fluctuate due to changes in market interest rates. The Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest-earning financial assets are mainly short term in nature and are mostly placed in short term deposits.




28.6 Market risk (Cont’d)

28.6.2 Interest rate risk (Cont’d)

Exposure to interest rate risk

The interest rate profile of the Group’s significant interest-earning and interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:

Group Company 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Fixed rate instruments

Financial asset

- Short term deposits with licensed banks - 18,312 - -

- Cash and bank balances - 14,100 - 14,100

- 32,412 - 14,100

Financial liability

- ICULS (liability component) 352 5,506 352 5,506

(a) Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

28.7 Fair value information

The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings reasonably approximate their fair values due to the relatively short term nature of these financial instruments.

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statements of financial position.



28.

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28.7 Fair value information (Cont’d)

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

There has been no transfer between the levels in fair value during the financial year (2016: no transfer in either direction).

Level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly.

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. In respect of the liability component of convertible notes, the market rate of interest is determined by reference to similar liabilities that do not have a conversion option. The Directors, after having considered the financial position of the Company, are of the view that the rate for such liabilities, approximates the interest paid on the ICULS of Nil (2016: 4%).

29. Capital Management

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business.

There was no change in the Group’s approach to capital management during the financial year.



30. Operating Leases

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

Group Company 2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Less than one year 3,071 3,994 14 14

Between one and five years 1,372 5,910 28 42

4,443 9,904 42 56 The Group and the Company lease a number of floor space, factory and office premises and office equipment under operating

leases. The leases typically run for a period of 1 to 5 years, with an option to renew the lease upon the expiry of the initial lease period.

31. Contingent Liabilities, unsecured - Company

The Company has issued corporate guarantees to a financial institution for borrowings granted to certain subsidiaries for RM4,448,000 (2016: RM4,115,000) of which, Nil (2016: Nil) were utilised at the end of the reporting period.




32. Supplementary financial information on the breakdown of realised and unrealised profits or losses

The breakdown of the retained earnings of the Group and of the Company as at 31 March, into realised and unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:

Group Company2017 2016 2017 2016

RM’000 RM’000 RM’000 RM’000

Total retained earnings of the Company and its subsidiaries:

- realised 176,633 195,267 34,990 26,507

- unrealised (7,958) (8,555) - -

168,675 186,712 34,990 26,507

Less: Consolidation adjustments (913) (963) - -

Total retained earnings at 31 March 167,762 185,749 34,990 26,507

The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.


In the opinion of the Directors, the financial statements set out on pages 63 to 134 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2017 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out in Note 32 on page 135 to the financial statements has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Tan Kai HoeDirector

Goh Wee KengDirector

Date: 23 June 2017

I, Yeoh Lip Keong, the officer primarily responsible for the financial management of SAM Engineering & Equipment (M) Berhad, do solemnly and sincerely declare that the financial statements set out on pages 63 to 134 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the declaration to be true, and by virtue of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Yeoh Lip Keong, at Georgetown in the State of Penang on 23 June 2017. .

Yeoh Lip Keong

Before me:

Goh Suan Bee(No. P125)Commissioner for OathsPenang

Statement by DirectorsPursuant to Section 251(2) of the Companies Act, 2016

Statutory Declaration Pursuant to Section 251(1)(b) of the Companies Act, 2016


Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of SAM Engineering & Equipment (M) Berhad, which comprise the statements of financial position as at 31 March 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 63 to 134.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2017, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of inventories-Group

Refer to the accounting policy in Note 2(h) - Inventories and Note 8 - Inventories to the financial statements.The key audit matter How the matter was addressed in our audit

The Group’s inventories amounted to RM142M as at 31 March 2017 in the statement of financial position which represented 24% of the total assets of the Group.

The inventories are measured at the lower of cost and net realisable value. Identifying and determining the appropriate write down of the inventories to net realisable value required judgement by the Group.

We have identified the valuation of inventories as a key audit matter because judgements made by the Group are affected by external and market considerations which are inherently uncertain.

We have performed the following audit procedures, among others:

• Attended the year end physical inventory counts to identify whether any inventories were damaged;

• Assessed whether items in the system generated inventory ageing reports were classified within the appropriate ageing bracket;

• Checked the inventory impairment calculations prepared by the Group that they appropriately took into account the ageing profile of the inventories;

• Compared the inventory provision made by the Group to the Materials Review Board reports; and

• Tested samples of inventories-in-progress and manufactured inventories to sales subsequent to the year end and checked that they were sold at higher than the carrying amount.

We have determined that there are no key audit matters in the audit of the separate financial statements of the Company to communicate in our auditors’ report.

INDepeNDeNt AuDItOrS’ repOrt tO the MeMberS OF SAM eNGINeerING & equIpMeNt (M) berhAD (Company No. 298188-A)

(Incorporated In Malaysia)


Information Other than the Financial Statements and Auditors’ Report Thereon

The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the annual report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the annual report and, in doing so, consider whether the annual report is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the annual report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Group and of the Company.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

INDepeNDeNt AuDItOrS’ repOrt (Cont’d)tO the MeMberS OF SAM eNGINeerING & equIpMeNt (M) berhAD (Company No. 298188-A)



Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors are disclosed in Note 5 to the financial statements.

Other Reporting Responsibilities

The supplementary information set out in Note 32 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matter

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act, 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG PLT Raymond Chong Chee MonLLP0010081-LCA & AF 0758 Approval Number: 3272/06/18 (J)Chartered Accountants Chartered Accountant

Date: 23 June 2017

Penang

INDepeNDeNt AuDItOrS’ repOrt (Cont’d)tO the MeMberS OF SAM eNGINeerING & equIpMeNt (M) berhAD (Company No. 298188-A)



Analysis of Shareholdings as at 30 June 2017

Analysis of Shareholdings as at 30 June 2017

ISSUED AND FULLY PAID-UP CAPITAL : RM125,902,135 comprising 125,902,135 Ordinary SharesCLASS OF SHARE : Ordinary sharesVOTING RIGHTS : One vote for every ordinary share held

Distribution Schedule of Shareholdings as at 30 June 2017

Size of HoldingsNo. of

Shareholders% of Total

ShareholdersTotal

Holdings% of Total Holdings

less than 100 shares 230 8.07 8,532 0.01100 to 1,000 shares 818 28.69 620,178 0.491,001 to 10,000 shares 1,401 49.14 5,250,087 4.1710,001 to 100,000 shares 345 12.10 10,109,493 8.03100,001 to less than 5% of issued shares 55 1.93 21,636,890 17.195% and above of issued shares 2 0.07 88,276,955 70.11

TOTAL 2,851 100.00 125,902,135 100.00 Substantial Shareholders as at 30 June 2017

Direct Interest Indirect Interest

No. Name No. of shares% of Issued

Capital No. of shares% of Issued

Capital

1. Singapore Precision Engineering Limited 43,752,641 34.75 - -2. Singapore Aerospace Manufacturing Pte Ltd 44,524,314 35.36 43,752,641 (a) 34.753. Accuron Technologies Limited - - 88,276,955 (b) 70.12

4. Temasek Holdings (Private) Limited - - 88,276,955 (c) 70.12

Note: (a) Deemed interested via Singapore Precision Engineering Limited pursuant to Section 8(4) of the Companies Act, 2016(b) Deemed interested via Singapore Aerospace Manufacturing Pte Ltd pursuant to Section 8(4) of the Companies Act,

2016.(c) Deemed interested via Accuron Technologies Limited pursuant to Section 8(4) of the Companies Act, 2016.

Directors’ Shareholdings as at 30 June 2017


No. Name No. of shares% of Issued

Capital No. of shares% of Issued

Capital

1. Tan Kai Hoe - - - -2. Goh Wee Keng 1,702,523 1.35 - -3. Shum Sze Keong - - - -

4. Dato’ Mohamed Salleh bin Bajuri - - - -

5. Dato’ Robin Seo Eng Lin - - - -

6. Dato’ Wong Siew Hai - - 11,800 (a) 0.01

7. Dato’ Sri Lee Tuck Fook - - - -

8. Lee Hock Chye - - - -

9. Datuk Dr Wong Lai Sum - - - -

Note: (a) Deemed interested via children pursuant to Section 59(11)(c) of the Companies Act, 2016.


Analysis of Shareholdings (Cont’d)

List of Largest Shareholders as at 30 June 2017

No. Name No. shares% of Total

Issued Capital

1 AFFIN HWANG NOMINEES (ASING) SDN. BHD. 44,524,314 35.36

DBS VICKERS SECS (S) PTE LTD FOR SINGAPORE AEROSPACE

MANUFACTURING PTE LTD


DBS VICKERS SECS (S) PTE LTD FOR SINGAPORE PRECISION

ENGINEERING LIMITED

3 AMANAHRAYA TRUSTEES BERHAD 1,997,300 1.59

PB SMALLCAP GROWTH FUND

4 UOBM NOMINEES (ASING) SDN BHD 1,702,523 1.35

UNITED OVERSEAS BANK NOMINEES (PTE) LTD

FOR GOH WEE KENG


PUBLIC STRATEGIC SMALLCAP FUND


PUBLIC SMALLCAP FUND

7 HSBC NOMINEES (TEMPATAN) SDN BHD 1,297,500 1.03

HSBC (M) TRUSTEE BHD FOR MANULIFE INVESTMENT PROGRESS FUND (4082)

8 AFFIN HWANG NOMINEES (ASING) SDN. BHD. 858,857 0.68

DBS VICKERS SECS (S) PTE LTD FOR TAN GUAN THONG


DBS VICKERS SECS (S) PTE LTD FOR TEO SIEW GEOK

10 MAYBANK NOMINEES (TEMPATAN) SDN BHD 733,800 0.58

MAYBANK TRUSTEES BERHAD FOR PUBLIC INDUSTRY GROWTH FUND

(N14011930270)

11 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 700,000 0.56

EMPLOYEES PROVIDENT FUND BOARD (RHBISLAMIC)

12 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 521,400 0.41

KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (MIDF AM IS EQ)

13 AMANAHRAYA TRUSTEES BERHAD 470,100 0.37

PUBLIC SELECT TREASURES EQUITY FUND

14 PUBLIC NOMINEES (TEMPATAN) SDN BHD 425,000 0.34

PLEDGED SECURITIES ACCOUNT FOR TAM SENG @ TAM SENG SEN (E-PTS)

as at 30 June 2017


Analysis of Shareholdings (Cont’d)

List of Largest Shareholders as at 30 June 2017 (Cont’d)

No. Name No. shares% of Total

Issued Capital


MAYBANK TRUSTEES BERHAD FOR PUBLIC BALANCED FUND (N14011950210)

16 PUBLIC NOMINEES (TEMPATAN) SDN BHD 388,800 0.31

PLEDGED SECURITIES ACCOUNT FOR LOW HENG NAM (E-TJJ)


PUBLIC ISLAMIC OPPORTUNITIES FUND


EXEMPT AN FOR DBS VICKERS SECURITIES (SINGAPORE) PTE LTD (CLIENTS)

19 HLB NOMINEES (TEMPATAN) SDN BHD 351,400 0.28

PLEDGED SECURITIES ACCOUNT FOR NG YONG YIN

20 HSBC NOMINEES (TEMPATAN) SDN BHD 337,500 0.27

HSBC (M) TRUSTEE BHD FOR MANULIFE INVESTMENT AL-FAID (4389)

21 NAHOORAMMAH A/P SITHAMPARAM PILLAY 325,000 0.26

22 RICHARD TEH LIP HEONG 323,000 0.26

23 NG BOON KEAT 303,809 0.24


MAYBANK TRUSTEES BERHAD FOR MANULIFE INVESTMENT - ML FLEXI

FUND (250283)


PLEDGED SECURITIES ACCOUNT FOR TAY ONG NGO @ TAY BOON FANG


PLEDGED SECURITIES ACCOUNT FOR YOONG KAH YIN

27 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 265,000 0.21

PLEDGED SECURITIES ACCOUNT FOR SHIN KONG KEW @

CHIN KONG KEW (R25 MARGIN)

28 UNIVERSAL TRUSTEE (MALAYSIA) BERHAD 264,400 0.21

KAF DANA ADIB

29 CITIGROUP NOMINEES (ASING) SDN BHD 247,000 0.20

EXEMPT AN FOR UBS AG SINGAPORE (FOREIGN)


PUBLIC MUTUAL PRS MODERATE FUND

as at 30 June 2017


Analysis of ICULS Holdings as at 30 June 2017

Analysis of ICULS Holdings as at 30 June 2017

NO. OF ICULS ORIGINAL ISSUED : RM135,000,000 nominal value 5-year 4% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

BALANCE OF ICULS REMAINING : RM19,449,380

CONVERSION PRICE OF ICULS : Means the price of RM2.10 of ICULS for every New Ordinary Share and the Conversion Price is subject to adjustments under certain circumstances in accordance with the provisions of the Trust Deed

CONVERSION PERIOD OF ICULS : Means the period during which a Holder shall be at liberty to exercise the Conversion Rights attached to the ICULS which may be on any Market Day commencing from the Issue Date up to the last Market Day prior to the Maturity Date

CONVERSION RIGHTS : Means such right(s) as is exercisable by a Holder at any time during the Conversion Period to convert its ICULS into New Ordinary Shares at the Conversion Price, as provided in Condition 4 of Part II of the First Schedule. Unless previously converted, all outstanding ICULS will be mandatorily converted by the Company into New Ordinary Shares at the Conversion Price on Maturity Date

MATURITY DATE : 25 September 2017

Distribution Schedule of ICULS Holdings as at 30 June 2017

Size of HoldingsNo. of ICULS

Holders% of Total

ICULS HoldersTotal

Holdings% of Total

ICULS Holdings

less than 100 10 7.46 477 #

100 to 1,000 23 17.16 7,914 0.04

1,001 to 10,000 72 53.73 327,475 1.68

10,001 to 100,000 26 19.40 532,514 2.74

100,001 to less than 5% of issued ICULS 2 1.50 356,000 1.83

5% and above of issued ICULS 1 0.75 18,225,000 93.71

TOTAL 134 100.00 19,449,380 100.00

# Negligible

Directors’ ICULS Holdings as at 30 June 2017


No. Name No. of ICULS% of ICULS

holdings No. of ICULS% of ICULS

holdings

1. Tan Kai Hoe - - - -

2. Goh Wee Keng - - - -

3. Shum Sze Keong - - - -

4. Dato’ Mohamed Salleh bin Bajuri - - - -

5. Dato’ Robin Seo Eng Lin - - - -

6. Dato’ Wong Siew Hai - - - -

7. Dato’ Sri Lee Tuck Fook - - - -

8. Lee Hock Chye - - - -

9. Datuk Dr Wong Lai Sum - - - -


Analysis of ICULS Holdings (Cont’d)

List of 30 Largest ICULS Holders as at 30 June 2017

No. Name No. of ICULS% of Total

ICULS


DBS VICKERS SECS (S) PTE LTD FOR SINGAPORE AEROSPACE

MANUFACTURING PTE LTD

2 OOI KOK KEE 239,540 1.23

3 WONG PENG WAH & SONS SDN BERHAD 116,460 0.60

4 CHENG YEAN YUN @ TAY YAN HOON 80,691 0.41

5 OOI KOK KEE 69,099 0.36

6 JUNE SONG HOLDINGS (M) SDN. BHD. 40,285 0.21

7 PAW GEE JOHN 25,880 0.13

8 PAW GEE WAI 25,880 0.13

9 LEE MUI YING 21,900 0.11

10 NG LIP YONG @ NG LIP SAT 19,100 0.10

11 YEOH WENG HOO 17,000 0.09

12 CHIN FOOK WENG 15,528 0.08

13 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 15,251 0.08

PLEDGED SECURITIES ACOOUNT FOR

OOI CHIN CHYE (6000062)

14 YONG SIAU MUAI @ YONG SIYAM MAI 15,251 0.08

15 BEH HENG SEONG SDN.BHD. 14,881 0.08


PLEDGED SECURITIES ACCOUNT FOR YOONG KAH YIN

17 TAN CHAI WAH @ CHAN CHOY WAH 14,000 0.07

18 NAZRILA HAIRIN BINTI NASIR 13,216 0.07

19 SOONG BEE HONG 13,200 0.07

20 TAN HWANG JIN 13,000 0.07

21 TAN LEAN HUA 13,000 0.07

22 FOO TOCK LAN 12,940 0.07

23 SHARIFAH INTAN BINTI S.M.AIDID 12,940 0.07

24 NG AH HAI 12,500 0.06

as at 30 June 2017


Analysis of ICULS Holdings (Cont’d)

No. Name No. of ICULS% of Total

ICULS

25 HLIB NOMINEES (TEMPATAN) SDN BHD 11,000 0.06

PLEDGED SECURITIES ACCOUNT FOR FOO SEE KUANG (CCTS)

26 LEE YEOW HIAN 10,400 0.05

27 LOH ENG KEE @ LOH TENG CHOON 10,352 0.05

28 PAW SING CHIE @ PAW KIU HO 10,352 0.05

29 LOW AH LENG 10,168 0.05

30 CIMSEC NOMINEES (TEMPATAN) SDN BHD 10,000 0.05

CIMB FOR FRANK TAN ENG HUAT (PB)

as at 30 June 2017

List of 30 Largest ICULS Holders as at 30 June 2017 (Cont’d)


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Twenty-Third Annual General Meeting (“AGM”) of SAM Engineering & Equipment (M) Berhad will be held at the First Floor, SAM Meerkat (M) Sdn Bhd, Plot 103, Hilir Sungai Keluang Lima, Taman Perindustrian Bayan Lepas 4, 11900 Penang on Thursday, 17 August 2017 at 11.00 am to transact the following business:

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 March 2017 and the Reports of Directors and Auditors thereon.

2. To re-elect the following Directors who are retiring pursuant to Article 91 of the Company’s Articles of Association and being eligible, offer themselves for re-election:

2.1 Dato’ Mohamed Salleh Bin Bajuri2.2 Mr Shum Sze Keong

Ordinary Resolution 1Ordinary Resolution 2

3. To re-elect Datuk Dr Wong Lai Sum who is retiring pursuant to Article 98 of the Company’s Articles of Association and being eligible, offers herself for re-election.

Ordinary Resolution 3

4. To approve the payment of Directors’ fees amounting to RM500,000 for the financial year ended 31 March 2017.


5. To approve the payment of fees and benefits as tabulated below to each Director, as applicable, for the period from 1 April 2017 until next AGM of the Company payable quarterly in arrear after each month of completed service of the Directors:

Directors’ fees RM50,000 per Director

Committee’ fees RM5,000 per Director per Committee

Meeting allowance RM2,000 per Director per meeting


6. To re-appoint Messrs KPMG PLT as Auditors of the Company, to hold office until the conclusion of the next AGM, at a remuneration to be determined by the Directors.


As Special Business

To consider and if thought fit, to pass the following Ordinary Resolutions with or without modification:

7. Authority to Issue Shares Pursuant to Section 76 of the Companies Act, 2016

THAT pursuant to Section 76 of the Companies Act, 2016 and subject to the approval of the relevant authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total number of issued share capital/total number of voting shares of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting (“AGM”) or the expiration of the period within which the next AGM is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is the earlier.



Notice of Annual General Meeting (Cont’d)

As Special Business (Cont’d)

8. Proposed New and Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions (“RRPT”)

THAT subject to the provisions of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and/or its subsidiaries (“SAM Malaysia Group”) to enter into recurrent related party transactions of a revenue or trading nature as specified in Section 2.5(a) and Section 2.5(b) of the Circular to Shareholders dated 26 July 2017 which transactions are necessary for the day-to-day operations in the ordinary course of business of SAM Malaysia Group on terms not more favourable to the related parties than those generally available to the public or unrelated third parties and are not to the detriment of the minority shareholders of the Company and the shareholders’ mandate is subject to annual renewal and disclosure being made in the Annual Report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year and that such approval shall continue to be in force until:

(i) the conclusion of the next AGM of the Company following the general meeting at which the authorisation is obtained, at which time it shall lapse, unless by ordinary resolution passed at the meeting, the authority is renewed;

(ii) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting;

whichever is the earliest.

AND THAT the Directors of the Company be and are hereby authorised to complete and to do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this resolution.


9. Continuation in office as Independent Non-Executive Directors

THAT the following Directors be retained as Independent Non-Executive Directors of the Company, in accordance with the Malaysian Code on Corporate Governance 2012 until the conclusion of the next AGM:

9.1 Dato’ Mohamed Salleh Bin Bajuri9.2 Dato’ Wong Siew Hai9.3 Dato’ Sri Lee Tuck Fook 9.4 Lee Hock Chye

Ordinary Resolution 9Ordinary Resolution 10Ordinary Resolution 11Ordinary Resolution 12

10. To transact any other business of which due notice shall have been given.

By Order of the Board

Ong Tze-En (MAICSA 7026537)Chin Lee Phing (MAICSA 7057836)Joint Company Secretaries

Penang, 26 July 2017



Notes:

1. A Member may appoint up to two (2) proxies to attend on the same occasion. A proxy may but need not be a Member of the Company. If a Member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

2. Where a Member of the Company is an authorised nominee as defined under the Securities Industry (Central Depository) Act, 1991 (“SICDA”), it may appoint up to two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised.

5. To be valid, the form of proxy must be deposited at the Company’s Registered Office at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Pulau Pinang at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournments thereof.

6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 10 August 2017 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf.

Explanatory Notes on Special Business:

1. The proposed Ordinary Resolution 7 is for the purpose of granting a renewed general mandate (“General Mandate”) empowering the Directors of the Company, pursuant to Section 76 of the Act to issue and allot new shares in the Company from time to time provided that the aggregate number of shares issued pursuant to the General Mandate does not exceed 10% of the total number of issued share capital/total number of voting shares of the Company for the time being. The General Mandate, unless revoked or varied by the Company in general meeting, will expire at the next Annual General Meeting (“AGM”) of the Company.

As at the date of this Notice, no new shares in the Company were issued pursuant to the General Mandate granted to the Directors at the last AGM held on 17 August 2016 and which will lapse at the conclusion of the Twenty-Third AGM.

The General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

2. The proposed Ordinary Resolution 8, if approved by shareholders, will authorise the Proposed New and Renewal of Existing Shareholders’ Mandate for RRPT of a revenue or trading nature and allow the Company and its subsidiaries to enter into RRPT of a revenue or trading nature as set out in Section 2.5 of the Circular to Shareholders dated 26 July 2017, with the related parties in the ordinary course of business which are necessary for the day-to-day operations based on terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company. This approval shall continue to be in force until the conclusion of the next AGM of the Company at which time it will lapse unless the authority is renewed by a resolution passed at the meeting; or the expiration of the period within which the next AGM after the date it is required to be held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or revoked/varied by resolutions passed by the shareholders of the Company in general meeting; whichever is the earlier. Further information on the Proposed New and Renewal of Existing Shareholders’ Mandate is set out in the Circular to Shareholders dated 26 July 2017.

3. The proposed Ordinary Resolutions 9, 10, 11, and 12, if passed, will retain Dato’ Mohamed Salleh Bin Bajuri, Dato’ Wong Siew Hai, Dato’ Sri Lee Tuck Fook and Mr Lee Hock Chye as Independent Non-Executive Directors of the Company to fulfil the requirements of Paragraph 3.04 of Bursa Securities’ Main Market Listing Requirements and in line with the recommendation No. 3.2 of the Malaysian Code on Corporate Governance 2012. The detail of the Board’s justification and recommendation for the retention of the Independent Directors are set out under the Corporate Governance Statement in the 2017 Annual Report.



Personal data privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

Statement AccompanyingNotice of Annual General Meeting(Pursuant to Paragraph 8.27(2) of the Listing Requirements of Bursa Malaysia Securities Berhad)

No individual is standing for election as a Director at the forthcoming Twenty-Third Annual General Meeting of the Company.


Day and Date Thursday, 17 August 2017

Time 11.00 am

Venue First Floor, SAM Meerkat (M) Sdn Bhd, Plot 103, Hilir Sungai Keluang Lima Taman Perindustrian Bayan Lepas 4, 11900 Penang

Registration

1. Registration will commence at 10:00 am and will end at the time as may be determined by the Chairman of the meeting.2. Please present your original Identity Card (IC) or Passport to the registration staff for verification. Please make sure your IC is

returned to you after registration.3. Upon verification, you are required to write your name and sign on the Attendance List.4. An identification tag will be given to you. No one will be allowed to enter the meeting venue without the identification tag. There

will be no replacement should you lose or misplace the identification tag.5. You may proceed to the meeting venue thereafter.6. Registration must be done in person. No person is allowed to register on behalf of another.7. The registration counter will handle verification of identity, registration and revocation of proxy/proxies.

BUSINESS PRESENTATION

8. A business presentation will commence at 10.30 am at the meeting venue and will end at 11.00 am sharp.

PROXY

9. A member entitled to attend and vote in the meeting is allowed to appoint proxy. Please submit your Form of Proxy in accordance with the notes and instructions printed therein.

10. The Form of Proxy is not required if you are attending the meeting. You are not allowed to attend the meeting together with a proxy appointed by you.

11. If you have submitted your Form of Proxy prior to the meeting and subsequently decided to attend the meeting in person, please proceed to the Registration Counter to revoke the appointment of your proxy.

12. Please ensure that the original Form of Proxy is deposited at the Company’s Registered Office at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Pulau Pinang no less than forty-eight (48) hours before the meeting time. No proof of despatch of Form of Proxy will be entertained.

GENERAL MEETING RECORD OF DEPOSITORS

13. For the purpose of determining who shall be entitled to attend this 23rd Annual General Meeting, the Company will be requesting Bursa Malaysia Depository Sdn. Bhd. to issue a General Meeting Record of Depositors as at 10 August 2017 and only a depositor whose name appears on such Record of Depositors shall be entitled to attend the said meeting.

REFRESHMENT

14. Lunch shall be served immediately after the meeting.

ANNUAL REPORT 2017

15. The Company Annual Report 2017 is available on the Company website at www.sam-malaysia.com and Bursa Malaysia Securities Berhad’ website at www.bursamalaysia.com.

AGM ENQUIRY

16. For any enquiry prior to the 23rd AGM, please contact the following during office hours:(a) Boardroom Corporate Services (Penang) Sdn. Bhd. (Tel +604 229 4390)(b) Share Registrar – Plantation Agencies Sdn. Bhd. (Tel +604 262 5333)

Administrative Detailson 23rd Annual General Meeting


Form of proxy

I/We ___________________________________________________________________________________________________________(Full name in Block Letters and NRIC / Company No.)

of _______________________________________________________________________ and _________________________________(Address) (Tel. No.)

being a member/members of Sam Engineering & Equipment (M) Berhad hereby appoint

Full Name (in Block Letters) NRIC/Passport No. No. of Shares % of Shareholding

* and/or (*delete if not applicable)

Full Name (in Block Letters) NRIC/Passport No. No. of Shares % of Shareholding

or failing him/her, the Chairman of the meeting as my/our proxy, to vote for me/us and on my/our behalf at the Twenty-Third Annual General Meeting of the Company to be held at First Floor, SAM Meerkat (M) Sdn Bhd, Plot 103, Hilir Sungai Keluang Lima, Taman Perindustrian Bayan Lepas 4, 11900 Penang, Malaysia on Thursday, 17 August 2017 at 11.00 am and at any adjournments thereof, in respect of my/our shareholding in the manner indicated below:

Decision

ORDINARY RESOLUTIONS

1 2 3 4 5 6 7 8 9 10 11 12

FOR

AGAINST

(Please indicate with an “X” how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his discretion).

Signed this ______ day of _______________ 2017

___________________________________________Signature(s)/Common Seal of Shareholder(s)

Notes:1. A Member may appoint up to two (2) proxies to attend on the same occasion. A proxy may but need not be a Member of the Company.

If a Member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

2. Where a Member of the Company is an authorised nominee as defined under the Securities Industry (Central Depository) Act, 1991 (“SICDA”), it may appoint up to two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised.

5. To be valid, the form of proxy must be deposited at the Company’s Registered Office at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Pulau Pinang at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournments thereof.

6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 10 August 2017 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf.

No. of shares held

CDS account no.

SAM ENGINEERING & EQUIPMENT (M) BERHAD (298188-A)(Incorporated in Malaysia)


To,

The Company SecretariesSAM Engineering & Equipment (M) Berhad (Company No. 298188A)Suite 16-1 (Penthouse Upper), Menara Penang Garden42A, Jalan Sultan Ahmad Shah, 10050 Penang

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Corporate Governance Statement - SAM Malaysia€¦ · · 2017-07-27SAM Malaysia is committed to meeting sound standards of corporate governance and it is our ... the actual or potential