SAM ENGINEERING & EQUIPMENT (M) BERHAD CROSSOVER · 2020. 9. 3. · • Chairman, Agrobank Bhd (formerly known as Bank Pertanian Malaysia) • Managing Director, JB Securities Sdn

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SAM ENGINEERING & EQUIPMENT (M) BERHAD (199401012509 (298188-A))(199401012509 (298188-A))

Plot 17, Hilir Sungai Keluang Tiga, Plot 17, Hilir Sungai Keluang Tiga, Bayan Lepas Free Industrial Zone, Phase IV, 11900 Penang, Malaysia.Bayan Lepas Free Industrial Zone, Phase IV, 11900 Penang, Malaysia.Tel: 604-643 6789 Fax: 604-644 7017Tel: 604-643 6789 Fax: 604-644 7017

ANNUAL REPORT 2020ANNUAL REPORT 2020

Good FruitsGood FruitsAlways bearsAlways bears

FLY WITH FREEDOM

TO ACHIEVE NEW HEIGHT

THE RIVER IS OUR ENDLESS

SOURCE OF NOURISHMENT

ABOVE THE STORMSoarSoar

2 SAM Engineering & Equipment (M) Berhad Annual Report 2020

We embrace a continuous improvement culture and formulate solutions through collective efforts to achieve extraordinary results.

This demands that we are not only fulfilled and enriched by what we do but also that others benefit from it.

SERVING OTHERS

We will go the extra mile to achieve our objectives and strive for higher standards in our endeavours.

COMMITMENT

VALUE CREATION

Our pillar of long-term success that encompasses honesty, dedication and responsibility.

INTEGRITY

OUR

PILLARSSevenSeven

3SAM Engineering & Equipment (M) Berhad Annual Report 2020

We will accept change to take up challenges and seize opportunities that may arise.

COURAGE

We care for others and offer support in times of difficulty in the community.

COMPASSION

Righteousness is characterised by accepted standards of morality, justice, virtue or uprightness. Our every action will be consistent with these standards.

RIGHTEOUSNESS

BELIEVEWHAT YOUTO RECEIVE,


Bearing FruitsBearing Fruits

WE ARE LIKE TREES PLANTED ALONG THE RIVERBANK,

EACH SEASON AND OUR LEAVES DO NOT WITHER.


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL 64

FINANCIAL STATEMENTS 70ANALYSIS OF SHAREHOLDINGS 167

STATEMENT ACCOMPANYING NOTICE OF AGM 176

PROXY FORM ENCLOSED

NOTIFICATION TO SHAREHOLDERS 177ADMINISTRATIVE GUIDE 178

OTHER INFORMATION 68

NOTICE OF ANNUAL GENERAL MEETING 170

7WISDOM FORSTEWARDSHIP

6CORPORATE INFORMATION

OUR BOARD OF DIRECTORS 10GROUP STRUCTURE AND ACTIVITIES 15

8OUR MANAGEMENT TEAM

CORPORATE GOVERNANCE OVERVIEW STATEMENT 45

PARTICULARS OF PROPERTIES 44

19MANAGEMENT DISCUSSION AND ANALYSIS

AUDIT COMMITTEE REPORT 60

SUSTAINABILITY STATEMENT 24

GROUP FINANCIAL HIGHLIGHTS 16

CO N NTET S


CORPORATE INFORMATION

AUDIT COMMITTEE

ChairmanDato’ Mohamed Salleh Bin Bajuri

Members

Dato’ Seri Wong Siew Hai

Mr. Shum Sze Keong

RISK & SUSTAINABILITY COMMITTEE

Chairman


Members

Mr. Tan Kai Hoe

Mr. Lee Hock Chye

Datuk Dr. Wong Lai Sum

NOMINATING & REMUNERATION COMMITTEE

Plantation Agencies Sdn. Bhd. (195501000033 (2603-D))3rd Floor, 2 Lebuh Pantai,10300 George Town,Penang.Tel: 604 - 262 5333Fax: 604 - 262 2018

REGISTRARS

Citibank BerhadAmBank (M) BerhadHong Leong Bank BerhadUnited Overseas Bank (Malaysia) Bhd

PRINCIPAL BANKERS

KPMG PLT (LLP0010081 - LCA & AF 0758) Level 18, Hunza Tower,163E, Jalan Kelawai, 10250 Penang.Tel: 604 - 238 2288Fax: 604 - 238 2222

AUDITORS

www.sam-malaysia.comwww.sam-malaysia.com

COMPANY WEBSITE

RM 212,730,621

(As at 31 March 2020)

ISSUED AND PAID-UP CAPITAL

Ms. Thum Sook Fun (SSM PC No. 201908000139, MIA 24701)

Ms. Chew Peck Kheng (SSM PC No. 202008001118, LS0009559)

COMPANY SECRETARIES

Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar,10200 George Town,Penang.Tel: 604 - 263 1966Fax: 604 - 262 8544

REGISTERED OFFICE

Plot 17, Hilir Sungai Keluang Tiga,Bayan Lepas Free Industrial Zone, Phase IV, 11900 Penang.Tel: 604 - 643 6789Fax: 604 - 644 7017

PRINCIPAL PLACE OF BUSINESS

Non-Independent Non-Executive ChairmanNon-Independent Non-Executive Chairman

Mr. Tan Kai HoeExecutive Director and Chief Executive OfficerExecutive Director and Chief Executive Officer

Mr. Goh Wee Keng, Jeffrey Non-Independent Non-Executive DirectorNon-Independent Non-Executive Director

Mr. Shum Sze Keong

Independent Non-Executive DirectorsIndependent Non-Executive Directors

Dato’ Mohamed Salleh Bin BajuriDato’ Seri Wong Siew HaiDato’ Sri Lee Tuck Fook Mr. Lee Hock ChyeDatuk Dr. Wong Lai SumYM Tunku Afwida Binti Dato’ Tunku Abdul MalekMr. Suresh Natarajan

BOARD OF DIRECTORS

ChairmanDatuk Dr. Wong Lai Sum

Members

Mr. Shum Sze Keong

Mr Lee Hock Chye

Dato’ Mohamed Salleh Bin Bajuri

Dato’ Sri Lee Tuck Fook

YM Tunku Afwida Binti Dato’

Tunku Abdul Malek


Wisdom ForWisdom For


OUR MANAGEMENT TEAM

LIM HEE SENGPETERVice President Vice President – Aerospace, – Aerospace, SAM Singapore GroupSAM Singapore Group

TEO SIEW GEOKHELENChief Financial Officer, SAMEE Group

TAN GUAN THONG Chief Operating Officer, Chief Operating Officer, SAM Singapore GroupSAM Singapore Group

GOH WEE KENGJEFFREYCEO & Executive Director

NG BOON KEATChief Operating Officer, Chief Operating Officer, SAMEE GroupSAMEE Group

TEH MUN LING Vice President – Finance, Vice President – Finance, SAMEE GroupSAMEE Group

DECISIVENESS, STRENGTH, CONSISTENCY & MATURITY


OUR MANAGEMENT TEAM

* Save as disclosed, the management team has no family relationship with any Director and/or major shareholder of SAM Engineering & Equipment (M) Berhad (“SAMEE”), has no conflict of interest with SAMEE, has not been convicted for any offences within the past five years and has no public sanction or penalty imposed by the relevant regulatory bodies during the financial year ended 31 March 2020.

GOH WEE KENGJEFFREYCEO & Executive Director

Details are disclosed in the profile of Directors on page 10.

TAN GUAN THONG Chief Operating Officer, SAM Singapore Group

Age

Gender

Nationality

Date Joined

59

Male

Singaporean 15 August 2011

Academic / ProfessionalQualification(s)

• Bachelor of Engineering, Nanyang Technology University of Singapore, Singapore.

Working Experience

• Joined SAMEE on 15 August 2011

Present Directorship(s) and/or Appointment(s)

• Listed entity: Nil• Other public company(ies): Nil

LIM HEE SENGPETERVice President – Aerospace, SAM Singapore Group

Age

Gender

Nationality

Date Joined

58

Male

Singaporean

1 January 2017

Academic / Professional Qualification(s)

• Bachelor of Mechanical Engineering (First Class Honours), The Queens’ University of Belfast, UK.

• Masters of Business Administration, University of Leicester, UK.

Working Experience

• Joined SAMEE on 1 January 2017



TEH MUN LING Vice President – Finance, SAMEE Group

Age

Gender

Nationality

Date Joined

49

Female

Malaysian

21 August 2017


• Bachelor of Accountancy (Honours), Northern University of Malaysia, Malaysia

• Chartered Accountant, Malaysia Institute of Accountants

Working Experience




NG BOON KEATChief Operating Officer, SAMEE Group

Age

Gender

Nationality

Date Joined

52

Male

Malaysian 17 April 2006


• Masters of Science (Mechatronics Engineering), De Montfort

University of Leicester, UK.

Working Experience

• Joined SAMEE on 17 April 2006



TEO SIEW GEOKHELENChief Financial Officer, SAMEE Group

Age

Gender

Nationality

Date Joined

61

Female

Singaporean

15 August 2011


• Bachelor of Accounting, National University of Singapore, Singapore.

Working Experience





OUR BOARD OF DIRECTORS

Non-Independent Non-Executive Chairman

TANKAI HOE

Executive Director Executive Director & Chief Executive & Chief Executive OfficerOfficer

GOH WEE KENG, JEFFREY

Age Gender Nationality Date of Appointment

61 Male Singaporean 4 March 2008

• President & Chief Executive Officer/Director of Singapore • President & Chief Executive Officer/Director of Singapore Aerospace Manufacturing Pte. Ltd.Aerospace Manufacturing Pte. Ltd.

• Chairman & Director, SAM (Suzhou) Co., Ltd.• Chairman & Director, SAM (Suzhou) Co., Ltd.• Chairman & Director, Aviatron (M) Sdn. Bhd.• Chairman & Director, Aviatron (M) Sdn. Bhd.• Director, J W Kane Precision Engineering Limited• Director, J W Kane Precision Engineering Limited


• Bachelor of Science (First Class Honours) in Aeronautical • Bachelor of Science (First Class Honours) in Aeronautical Engineering Science, Salford University, UK Engineering Science, Salford University, UK• Masters of Science (Turbine Technology), Cranfield University, UK • Masters of Science (Turbine Technology), Cranfield University, UK


Present Directorship(s) and/or Appointment(s)• Deputy Chairman & Director, Singapore Aerospace

Manufacturing Pte. Ltd.• Member, Board of Governors, Temasek Polytechnic• President & Chief Executive Officer/Director, Accuron Technologies Limited• Vice Chairman, Singapore Red Cross Council• Deputy Chairman, Singapore Accreditation Council• Director, WAAM3D Limited

• Chairman, SPRING SEEDS Capital Pte. Ltd.• Director, Employment and Employability Institute• Director, Growth Enterprise Fund Pte. Ltd.• Chief Executive, SPRING Singapore

Past Directorship(s) and/or Appointment(s)

Academic / Professional Qualification(s)• Bachelor of Arts (Physics) University of Cambridge, UK• Master of Science (Management) Stanford University, USA

• Nominating and Remuneration CommitteeBoard Committee Membership(s)


54 Male Singaporean 26 August 2015

FROM WISDOM COMESKNOWLEDGE AND UNDERSTANDING




58 Male Singaporean 4 March 2008

Non-Independent Non-Executive Director

SHUM SZE KEONG

• General Manager, Shum Enterprises Pte. Ltd.• General Manager, Shum Enterprises Pte. Ltd.• Director, Singapore Aerospace Manufacturing Pte. Ltd.• Director, Singapore Aerospace Manufacturing Pte. Ltd.


• Head Aerospace, Industry Development Division, Singapore • Head Aerospace, Industry Development Division, Singapore Economic Development BoardEconomic Development Board

• Executive Director, Grande Holdings Ltd.• Executive Director, Grande Holdings Ltd.• Consultant, Grande Group Limited• Consultant, Grande Group Limited• Independent Non-Executive Director, Lafe Corporation Limited• Independent Non-Executive Director, Lafe Corporation Limited


• Bachelor of Science in Aeronautical Engineering, Embry Riddle • Bachelor of Science in Aeronautical Engineering, Embry Riddle Aeronautical University, USAAeronautical University, USA


• Audit Committee• Audit Committee• Risk & Sustainability Committee• Risk & Sustainability Committee

Board Committee Membership(s)

DSPN, DMPN, DSPN, DMPN, DGPN Independent DGPN Independent Non-Executive Non-Executive DirectorDirector

DATO’ SERIWONG SIEW HAI


69 Male Malaysian 4 June 2007

• Director, Greatech Technology Berhad• Director, Malaysia Venture Capital Management Berhad• Director, Penang Tech Centre Bhd.• Director, Penang Science Cluster• Chairman, Malaysian American Electronics Industry (MAEI),

AMCHAM • Member, PEMUDAH• Chairman, E&E Productivity Nexus Council


• Vice President, Technology and Manufacturing Group (TMG), Intel• General Manager, Assembly and Test Manufacturing (ATM), Intel• Vice President and Managing Director, Asia Pacific Customer

Center, Dell• Director, Malaysia External Trade Development Corporation (MATRADE), Ministry of International Trade and Industry (MITI)• Director, Nation Gate Group Bhd.• Member, National Productivity Council


Academic / Professional Qualification(s)• Bachelor of Science in Mechanical Engineering, University of

Leeds, UK• Masters of Science in Management Science, Imperial College of

Science & Technology, University of London, UK

• Nominating & Remuneration Committee (Chairman)• Risk & Sustainability Committee




SSAP, DIMP, Independent Non-Executive Director

DATO’ SRI LEE TUCK FOOK


66 Male Malaysian 8 July 2008

• Independent Non-Executive Chairman, Pesona Metro Holdings Berhad

• Managing Director, WCT Holdings Berhad• Executive Director, Pavilion Reit Management Sdn. Bhd.• Director for several private limited companies


• Vice President of Samling Group in Sarawak• Managing Director, Renong Overseas Corporation Sdn. Bhd.• Chairman, Executive Committee on the Board of Peremba-Kentz

Ltd.• Managing Director, Cement Industries of Malaysia Berhad• Managing Director, Paracorp Berhad• Managing Director, Malton Berhad• Director, Landmarks Berhad


• Member, Malaysian Institute of Accountants (MIA) • Member, Malaysian Institute of Certified Public Accountants• Masters in Business Administration


• Audit Committee Board Committee Membership(s)

Independent Independent Non-Executive Non-Executive DirectorDirector

LEE HOCK CHYE


60 Male Malaysian 8 July 2008

Academic / Professional Qualification(s)• Bachelor of Laws (Hons), National University of Singapore, • Bachelor of Laws (Hons), National University of Singapore, Singapore Singapore

• Audit Committee • Audit Committee • Nominating & Remuneration Committee• Nominating & Remuneration Committee



Independent Independent Non-Executive Non-Executive DirectorDirector

DATUK DR. WONG LAI SUM


65 Female Malaysian 1 October 2016


DATO’ MOHAMED SALLEH BIN BAJURIDPTJ, Independent Non-Executive Director


69 Male Malaysian 15 March 2004

• Group Deputy Chairman, CRSC Holdings Berhad• Group Deputy Chairman, CRSC Holdings Berhad• Senior Independent Non-Executive Director, Eden Inc. Berhad• Senior Independent Non-Executive Director, Eden Inc. Berhad• Independent Non-Executive Director, Asian Pac Holdings Berhad• Independent Non-Executive Director, Asian Pac Holdings Berhad• Independent Non-Executive Director, Inch Kenneth Kajang • Independent Non-Executive Director, Inch Kenneth Kajang

Rubber Public Ltd. Co.Rubber Public Ltd. Co.• Vice President for Tan Sri Muhyiddin Charity Golf• Vice President for Tan Sri Muhyiddin Charity Golf• Trustee and Treasurer for Tan Sri Muhyiddin Charity Golf • Trustee and Treasurer for Tan Sri Muhyiddin Charity Golf

FoundationFoundation• Director for several private limited companies• Director for several private limited companies


• Chairman, Agrobank Bhd (formerly known as Bank Pertanian • Chairman, Agrobank Bhd (formerly known as Bank Pertanian Malaysia)Malaysia)

• Managing Director, JB Securities Sdn. Bhd.• Managing Director, JB Securities Sdn. Bhd.• General Manager, Malayan Banking Berhad• General Manager, Malayan Banking Berhad• Trustee, Tabung Melayu Pontian Berhad and Yayasan Kebajikan • Trustee, Tabung Melayu Pontian Berhad and Yayasan Kebajikan

SDARASDARA• Independent Non-Executive Chairman, Habour Link Group • Independent Non-Executive Chairman, Habour Link Group

BerhadBerhad• Independent Non-Executive Director, Milux • Independent Non-Executive Director, Milux Corporation Berhad Corporation Berhad


Academic / Professional Qualification(s)• Chartered Accountant, Ireland• Chartered Accountant, Ireland• Member, Malaysian Institute of Accountants (MIA)• Member, Malaysian Institute of Accountants (MIA)

• Audit Committee• Audit Committee• Risk & Sustainability Committee (Chairman)• Risk & Sustainability Committee (Chairman)


• Chief Executive Officer of Malaysia External Trade Development Corporation (MATRADE)

• Director, Malaysia Petroleum Resources Council (MPRC)• Director & Trustee, Malaysia Furniture Promotion Council (MFPC)• Director, MyCEB (Tourism)• Co-Chairman, Professional Services Development Council,

Malaysia (PSDC)• Adviser, National Export Council (MATRADE)• Director, Port Klang Authority• Economic Adviser, Minister of Transport, Ministry of Transport Malaysia• Conjoint Professor (Practice), Faculty of Business, University of

Newcastle, Australia• Associate Professor, Faculty of Business, TAR University College• Singapore Business Advisory Group, University of Newcastle• Research Fellow, TAR University College• Director, PRG Holdings Berhad


Academic / Professional Qualification(s)• PhD Business, University Malaya• Masters in Public Administration (MPA), University Malaya• Bachelor of Science (Hons) Biochemistry, University Malaya

• Director, Tasco Berhad• Director, Milux Corporation Berhad• Adviser, Faculty of Business and Accountancy, University Malaya


• Audit Committee (Chairman)• Nominating & Remuneration Committee





59 Male Singaporean 1 July 2020

* “Save as disclosed, the above Directors have no family relationship with any Director and/or major shareholder of SAM Engineering & Equipment (M) Berhad (“SAMEE”), have no conflict of interest with SAMEE, have not been convicted for any offences within the past five years and have no public sanction or penalty imposed by the relevant regulatory bodies during the financial year ended 31 March 2020.

Details of the Directors’ attendance at Board Meetings for the financial year ended 31 March 2020 are set out in the Corporate Governance Overview Statement on page 47 of this Annual Report.”

YM TUNKU AFWIDA BINTI DATO’ TUNKU ABDUL MALEKIndependent Non-Executive Director


55 Female Malaysian 1 January 2020

Academic / Professional Qualification(s)• Bachelor of Science (Honours) in Economics and Accountancy, City University London, UK• Member, Institute of Chartered Accountants, England and Wales• Member, Malaysian Institute of Accountants (MIA)• Qualified Chartered Accountants, ICAEW

• Independent Non-Executive Director, Telekom Malaysia Berhad • Independent Non-Executive Director, Gamuda Berhad


• Audit CommitteeBoard Committee Membership(s)

Independent Non-Executive Director

SURESH NATARAJAN

Academic / Professional Qualification(s)• Bachelor’s Degree in Electrical, Electronics and Communications • Bachelor’s Degree in Electrical, Electronics and Communications

from University of Illinois at Urbana-Champaignfrom University of Illinois at Urbana-Champaign• Master’s Degree in in Electrical, Electronics and Communications • Master’s Degree in in Electrical, Electronics and Communications

from University of Illinois at Urbana-Champaignfrom University of Illinois at Urbana-Champaign• Business Administration and Management, General from • Business Administration and Management, General from

University of Michigan – Stephen M. Ross School of Business University of Michigan – Stephen M. Ross School of Business • Business Administration and Management, General from • Business Administration and Management, General from

Nanyang Technological University/University of California at Nanyang Technological University/University of California at BerkeleyBerkeley

• Principal for the Central Campus, Institute of Technical Education • Principal for the Central Campus, Institute of Technical Education (ITE), Singapore(ITE), Singapore


• Deputy Principal, Institute of Technical Education (ITE), Singapore• Deputy Principal, Institute of Technical Education (ITE), Singapore• Strategy Officer, Applied Materials Worldwide Operations, • Strategy Officer, Applied Materials Worldwide Operations,

SingaporeSingapore• Deputy Director, Singapore Economic Development Board• Deputy Director, Singapore Economic Development Board



GROUP STRUCTURE AND ACTIVITIES

SAM ENGINEERING & EQUIPMENT (M) BERHAD

(199401012509 (298188-A))

SAM PRECISION (M) SDN. BHD. (197801006200 (43230-K))

Fabrication of precision tools and machinery parts and manufacture of aircraft and other equipment parts, spares, components and precision engineering parts.

Active

MEERKAT TECHNOLOGY PTE. LTD. (200008724 Z)

Design, manufacture and service support for semiconductor, electronic, disk drive, medical, solar, L.E.D. and other industrial equipments.

Dormant

SAM TOOLING TECHNOLOGY SDN. BHD.(199301011085 (265822-D))

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

Active

SAM PRECISION (THAILAND) LIMITED(0145543000048)

Manufacture of die, jigs and parts and cutting tools for disc drives, electronics, semi-conductor and other industries.

Active

SAM TECHNOLOGIES (M) SDN. BHD.(201201023397 (1007889-D))

Design and manufacturing of engineering equipment and automation solutions ranging from process test handlers, material handling systems, vision inspection systems and factory automation.

Dormant

MEERKAT INTEGRATOR SDN. BHD.(199901005092 (479992-T))

Designing, manufacturing and assembly of metal and non-metal ergonomic workstations and electronic product.

Dormant

LKT INTEGRATION SDN. BHD. (199701039756 (455256-X))

Development and production of computer process control system for printed circuit board handling system and component assembly line.

Dormant

LKT TECHNOLOGY SDN. BHD. (199701002612 (418108-T))

Design and manufacture of precision tools and machinery parts. (temporary ceased operation)

Dormant

AVITRON PRIVATE LIMITED (201116715M)

Manufacture of aircraft components and precision engineering parts.

Active

MEERKAT PRECISION SDN. BHD. (199301010852 (265589-V))

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

Active

LKT AUTOMATION SDN. BHD. (198101009607 (75724-W))

Designing and assembly of automation equipment complete with equipment control software. (temporary ceased operation) Dormant

SAM MEERKAT (M) SDN. BHD. (199501035687 (364889-X))

Design and assembly of modular or complete machine and equipment.

Active


0

10,000

30,000

50,000

20,000

40,000

60,000

70,000

80,000

90,000

(RM’ 000)

2018 2019 202020172016

79,823(RM’ 000)PROFIT AFTER TAX

0

10

30

50

20

40

60

70

80

90

(Sen)

2018 2019 202020172016

59.06(Sen)EARNINGS PER SHARE

GROUP FINANCIAL HIGHLIGHTSfor the financial year ended 31 March 2020

0

100,000

300,000

500,000

200,000

400,000

600,000

700,000

800,000

900,000

1,000,000

(RM’ 000)

2018 2019 202020172016

938,667(RM’ 000)REVENUE 99,651(RM’ 000)

PROFIT BEFORE TAX

(RM’ 000)

2018 2019 202020172016

10,000

30,000

50,000

20,000

40,000

60,000

100,000

110,000

90,000

80,000

70,000

0

Financial Year Ended

2016 2017 2018 2019 2020

REVENUE (RM’ 000) 620,054 537,397 618,959 754,966 938,667

PROFIT BEFORE TAX (RM’ 000) 68,672 55,354 72,550 94,797 99,651

PROFIT AFTER TAX (RM’ 000) 63,094 43,607 62,916 78,513 79,823

EARNINGS PER SHARE (Sen) 73.55 36.33 48.09 58.09 59.06

DILUTED EARNINGS PER SHARE (Sen) 47.07 32.31 48.09 58.09 59.06


GROUP FINANCIAL HIGHLIGHTSfor the financial year ended 31 March 2020

0

10

30

20

40

50

(Sen)

2018 2019 202020172016

14.76(Sen)DIVIDEND

0

2

4

1

3

5

6

(RM)

2018 2019 202020172016

4.51(RM)NET ASSETS PER SHARE

0

8

12

6

4

2

10

14

16

(%)

2018 2019 202020172016

13.10(%)RETURN ON EQUITY

14,792(RM’ 000)

CASH AND CASH EQUIVALENTS

(RM’ 000)

2018 2019 202020172016

50,000

100,000

200,000

150,000

0

Financial Year Ended

2016 2017 2018 2019 2020

DIVIDEND (Sen) 40.31 17.23 23.36 29.05 14.76

CASH AND CASH EQUIVALENTS (RM’ 000) 173,644 99,001 21,556 23,992 14,792

NET ASSETS PER SHARE (RM) 5.08 3.61 3.49 3.96 4.51

RETURN ON EQUITY (%) 14.4 9.6 13.3 14.6 13.10


EXCELLENCE IS THE GRADUAL RESULT OF ALWAYS STRIVING

TO DO BETTER


Aerospace Equipment Total

REVENUE(RM’ m)

0

100.0

300.0

500.0

200.0

400.0

600.0

700.0

800.0

900.0

1000.0

FY2019

459.6

295.4

755.0

FY2020

449.6489.1

938.7

PROFIT BEFORE TAX (PBT)(RM’ m)

Aerospace Equipment Total

0

40.0

80.0

20.0

60.0

100.0

120.0

FY2019

45.6 49.2

94.8

FY2020

37.3

62.3

99.6

The Group recorded a total revenue of RM938.7m and Profit Before Tax (PBT) of RM99.6m in FY2020.

Aerospace

Revenue from the Aerospace business decreased by 2.2% from the last financial year, to RM449.6m. The decrease was due to lower deliveries of engine casing products for older aircraft programs such as the CFM56 (for A320ceo and B737NG) and GE90 (for B777). With the lower revenue and higher impairment of receivables and contract assets due to potentially higher forward default rate arising from the COVID-19 situation, PBT decreased 18.2% to RM37.3m compared to previous year.

Equipment

The Equipment business achieved 65.6% higher revenue than the last financial year, to RM489.1m. The increase was mainly due to stronger demand in the semiconductor and data storage device industries. PBT for the Equipment business increased by 26.6% to RM62.3m compared to previous year. Included in the previous year PBT was a net gain from the disposal of land and buildings of RM7.3m. Without this one-time gain in the previous year, the PBT for the Equipment business would have increased by 48.7%. The higher PBT was due to higher sales.

Group

The Group’s total revenue of RM938.7m is 24.3% higher than the previous year. PBT grew 5.1% year-on-year to RM99.6m while Profit After Tax (PAT) grew by 1.7% to RM 79.8m. Excluding the one-off gain from the disposal of land and buildings in the previous year, PBT and PAT increased by 13.8% and 12.1% respectively.

The Group invested RM61.8m in capital expenditure during FY2020, of which RM55.4m was for capacity expansion in the Aerospace business.

MANAGEMENT DISCUSSION AND ANALYSIS


FINANCIAL POSITION

TOTAL ASSETS EMPLOYED

As at 31 March 2020, the Group’s total assets increased 15.7% to RM914.6m. Of the 15.7% increase, 9% was mainly to support the increase in the on-going operations in the areas of property, plant & equipment, trade & other receivables, inventories and contract assets, and the remaining 6.7% increase was due to the recognition of the Right-of-use assets under the new accounting standard, MFRS 16 on Leases.


AVERAGE CAPITAL EMPLOYED(RM’m)

0 100 200 300 400 500 600

FY2020

FY2019 213

213

240

283

51

77

27

52

Share Capital Retained Earnings Reserves Non current liabilities

CAPITAL EMPLOYED

The average capital employed for FY2020 was RM624.6m, an increase of RM94m from RM530.6m in FY2019.The increase came mainly from the increase in retained earnings from current year profit, increase in translation reserve resulting from weakening of the Malaysian Ringgit against the United States Dollar and also increase in the non-current liabilities arising from recognition of lease liabilities under the new accounting standard, MFRS 16.

CAPITAL EXPENDITURE

The Group continued to invest for its long-term growth, with capital expenditure of RM61.8m for FY2020.

BANKING FACILITIES

As at 31 March 2020, RM86.2 million or 23.5% of facilities had been utilised.

DEBT RATIO

Interest Cover and Net Debt/Equity Ratios

The Group has a net debt/equity ratio of 0.11 and an interest cover ratio of 23 times as at 31 March 2020. If the interest on lease liabilities resulting from the new accounting standard MFRS 16 were to be excluded, the interest cover ratio would have been 31 times.

The Group’s total borrowings reduced to RM82.2m as at 31 March 2020, from RM99.8m a year ago. The reduction in borrowings was due to positive net cash generated from operating activities.

TOTAL ASSETS EMPLOYED

0 200 400 600 800 1000

(RM’m)

FY2019 790.7

FY2020 914.6

Right-of-use assetsContract Assets

Inventories

Other Current Assets

Intangibles & Other Non-Current Assets

Trade Receivables & Other Receivables

Property, Plant and Equipment


FINANCIAL POSITION (Cont’d)

CASH FLOWS

Operating Activities

The Group generated net cash from operating activities of RM98.1m as compared to RM32.6m in the previous year. The increase in net cash from operating activities was due to lower working capital requirements for the Group’s on-going operations, higher PBT and higher non-cash items such as depreciation, interest expense and provision for warranty.

Operating Activities (RM’m)FY2019

(RM’m)FY2020

Operating Activities before changes in Working Capital 125.3 163.5

Changes in Working Capital -82.7 -48.0

Income Tax -10.0 -17.4

Net Cash from Operating Activities 32.6 98.1

Investing Activities

Net cash used in investing activities of RM61.7m was due primarily to the investment in plant and equipment for the Aerospace business.

Financing Activities

Net outflow from financing activities of RM68.2m was mainly attributed to repayment of foreign currency revolving credits and term-loans totalling RM17.6m and payment of FY2019 interim dividends of RM39.3m.

The Group ended the year with cash and cash equivalents of RM14.8m, a reduction of RM9.2m from FY2019.

FY2020

FY2019

CASH FLOWS

Investing Activities

Financing Activities

Net Cash from OperatingActivities

0-20-40-60-80-100 20 40 60 80 100


DIVIDEND PER SHARE(Sen)

0

15.00

5.00

25.00

35.00

20.00

10.00

30.00

40.00

45.00

FY2019 FY2020FY2018FY2017FY2016

29.05

14.76

23.36

17.23

40.31

DIVIDEND

An interim single-tier dividend of 14.76 sen per ordinary share was declared in June 2020, representing 25% of the group’s net profit. Based on the average share price for the month of June 2020 of RM6.40, the dividend per share of 14.76 sen translates to a dividend yield of 2.31%.


HIGHLIGHTS

CUSTOMERS AND PROGRAMS

Aerospace

Demand for aerospace products was relatively strong in FY2020, except for products being used on the Boeing 737Max aircraft. This aircraft family was grounded by the Federal Aviation Administration in March 2019 following two air crashes in October 2018 and March 2019.

As Boeing continued to produce the 737Max aircraft until January 2020 when production was halted, there was no impact to the deliveries of 737Max products for the first 9 months of the FY2020. Impact in the last quarter was mitigated in part by the increased demand from other aircraft makes.

Equipment

Our Equipment business benefited from new products that we have secured from our semiconductor and data storage device customers in the past two years. Due to the demand growth of several new products in FY2020, we have achieved higher sales than previous financial year.

We continued to secure contracts to manufacture several new products and we expect the new products will contribute to the equipment sales in the coming years.

OPERATION INITIATIVES

Aerospace

Our digitalisation journey began in our Singapore facilities in 2018 and we have started to leverage it for our facilities in Penang. Digitalisation allows us to transform the physical manufacturing operations into digital data for analysis and optimisation. Such data are made available in dashboard visuals for all employees to track performance. E-documentation approvals, retrievals of engineering and manufacturing information for use in the shop-floor are also part of our digitalisation strategy. Today, touch-screens on every equipment in our Singapore facility allow our production workers to retrieve documents and refer to the latest detailed drawings to manufacture our products. This has greatly improved product quality assurance and shop-floor efficiency.

Equipment

We are enhancing our Enterprise Resource Planning (ERP) system to include management of key suppliers for better operational efficiency.

In tandem with our Equipment business growth, we have invested in new equipment and automation systems. In addition, we have also commenced the expansion of our production space (including cleanrooms) in several facilities to meet the demands of the new projects. These infrastructure expansion are expected to be completed by the end of 2020. Together, these investments will enable us to increase production capacity to meet our customers’ requirements.



OUTLOOK

Aerospace

In March 2020, the coronavirus disease 2019 (“COVID-19”) was declared a pandemic by the World Health Organization. The pandemic has resulted in significant travel restrictions which negatively affected the aviation/ aerospace industry. IATA1 (June 2020) expects the revenue of the aviation industry in 2020 to be half that in 2019. On a positive note, many countries have taken measures to control the pandemic and have begun to resume some domestic air travel, following months of mandated lock-downs. Countries are also collaborating to establish a framework for safe international travel. For instance, most European countries have begun reopening borders to each other for business and tourism.

In the near term, Airbus and Boeing have adjusted their aircraft production rates to cope with the reduced demand and deferred aircraft deliveries. However, the combined order backlog of Airbus and Boeing commercial aircraft remained healthy at approximately 12,920 units as of May 2020. This translates to a backlog of 9.5 years for Airbus and 6.6 years for Boeing at pre-pandemic 20182 production rates. The overall impact of the pandemic remains uncertain, as the period of recovery for air travel, the impact on aerospace supply chain and the impact on future demand are all still unknown.

Apart from the pandemic, the other uncertainty in the industry is the grounding of Boeing 737max in March 2019 by the Federal Aviation Administration. Boeing has halted production of the 737max in January 2020 but resumed production at a low rate in May 2020. The impact of the grounding remains uncertain, as the period of grounding, the costs of recovery action and the impact to future demand are all still unknown.

1IATA (International Air Transport Association) represents some 290 airlines comprising 82% of global air traffic.

2As delivery rates of 737max in 2019 were affected by the 737max grounding, 2018 production rates were used for the comparison. If 2019 production rates are used, it will translate to backlog of 8.8 years for Airbus and 14 years for Boeing.

Equipment

According to Semiconductor Equipment and Material International (SEMI, June 2020), semiconductor equipment manufacturers worldwide logged sales of $59.8 billion in 2019, a 7 percent drop from the all-time high of $64.5 billion in 2018. Taking into account of the impact of COVID-19, 2020 spending on equipment is expected to dip by 4% compared to 2019. However, SEMI expects 2021 to be a record year with a growth of 24% or US$ 67.7B beating the last record year in 2018, largely driven by investments for leading-edge Memory, Foundry and leading edge logic.

In the storage media segment, the Solid-State Drive (SSD) is expected to replace the Hard Disk Drive (HDD) for many current storage applications. Nevertheless, the HDD is still more cost-effective for large capacity storage applications, such as in data centres. The company’s strategy is to stay balanced and supply equipment for both HDD and SSD applications. This would allow the company to ride the change as the industry shifts from one media type to the other.


Our Group’s businesses are anchored on both the Aerospace and the Equipment industries. Both businesses are dependent on the state of global economy, which currently remains uncertain amidst COVID-19 and the trade tensions between US and China. Nevertheless, the long-term prospect of both industries remain intact. Against this backdrop, we will adopt a prudent and nimble approach to the Group’s business. With the Group’s good financial strength, core competences, and flexible business structure, the management is confident that we will be able to soar above the storms of uncertainty and emerge stronger in the future.


SUSTAINABILITY STATEMENT

Sustainability Committee/Working Group

Human Resources

Business Units

Information Technology

Investor Relations

Facilities

Health & Safety

Finance

Board of Directors

Risk & SustainabilityCommittee

ABOUT THIS STATEMENT

We are pleased to present the third edition of our Sustainability Statement (“Statement” or “Report”) for Financial Year ended 31 March 2020 (“FY2020”). This Statement demonstrates our continued commitment towards responsible and ethical business practices in meeting the expectations of our stakeholders. It outlines key sustainability opportunities and challenges we face, and the many ways we are responding to them. It details our social, safety and environmental performance in FY2020. This Statement should be read along with our Annual Report 2020 in order to obtain a comprehensive view of the Group’s holistic performance.

OUR SUSTAINABILITY APPROACH

Sustainability, in all its dimensions, has become an irrepressible movement in a world where climate change and the depletion of resources have become increasingly unrestrained. Underpinning our approach to sustainability is our understanding of the urgent need to act and to run our business sustainably. It is with this acknowledgement, that we are now in the third year of our sustainability reporting journey. We have come to recognise that our success thus far has been from both our financial and non-financial performance; and our next step forward is to further embed sustainability into our business and all activities associated with it.

Our sustainability approach ensures we comply with all relevant regulations and legislation while sustainability issues are considered as part of our decision-making process. Our employees are now more aware of, and are committed to, implementing and measuring sustainability activities as part of the Group’s strategy.

This year we have placed a greater emphasis on incorporating environment, social and governance (“ESG”) factors into our daily operations. We have also continued to align our initiatives to the United Nations Sustainable Development Goals (“SDGs”). This report outlines the ways in which our initiatives contribute to the achievement of the SDGs.

REPORTING SCOPE

This Statement discloses our progress on our sustainability initiatives, performance and achievements for the financial year ended 31 March 2020. Similar to the reporting scope for the previous financial year, this year’s scope encompasses the business operations of SAM Engineering & Equipment (M) Berhad (“SAMEE”) and its group of companies in Malaysia and Singapore (“Group”), specifically:

TABLE 1: SAMEE’S BUSINESS OPERATIONS

Operating Location Business Units

Malaysia SAM Meerkat (M) Sdn. Bhd.

SAM Tooling Technology Sdn. Bhd.

SAM Precision (M) Sdn. Bhd.

Meerkat Precision Sdn. Bhd.

Singapore Avitron Private Limited

SUSTAINABILITY GOVERNANCE STRUCTURE

As seen in the diagram, our Board of Directors (“the Board”), which is placed at the top of the governance structure, has the ultimate responsibility of setting the strategic sustainability direction of our organisation. It is accountable for setting up sustainability strategies by taking into consideration the ESG matters arising from business operations and activities.

The Risk and Sustainability Committee (“RSC”) is tasked with assisting the Board in its execution of the Board’s duties and responsibilities in relation to Sustainability.Responsiblities by the RSC include:

a) reviewing the effectiveness of the Group’s strategies, policies, principles and practices in view of the Sustainability Policy;

b) advising on the Group’s sustainability reporting; and c) making recommendations on emerging sustainability issues to the Board.

During the year, some of the key activities undertaken by the RSC in relation to the Group’s sustainability management include:

• review and endorsement of Analysis and Action Plans related to Voluntary Employee Turnover presented to the Management in relation to the Human Capital Risk of the Group;

• review and endorsement of activities initiated by Management to instil the Company’s Values amongst employees;

• review of the Sustainability Statement for disclosure in the Group’s Annual Report for FY2020;

Our Sustainability Committee/Working Group is responsible to implement and monitor day-to-day sustainability initiatives and performance. During the financial year, the Committee took further steps to enhance our sustainability disclosures and practices by ensuring that all heads of departments receive sustainability training. As a result of the training, our leadership and all our divisions now have a better collective vision of sustainability at SAMEE in the short, medium and long-term.

FIGURE 1: SUSTAINABILITY GOVERNANCE STRUCTURE OF SAMEE


STAKEHOLDER ENGAGEMENT

We understand the deep connection between the success of our business and the relationship we have with our stakeholders. Therefore as part of daily operations, our dedicated teams engage a broad set of key stakeholder groups through on-going channels and platforms. These ensure that we recognise the needs and expectations of our stakeholders on our business.

These engagement methods are complemented by the insights from the stakeholder prioritisation exercise and sustainability engagement survey carried out in FY2018. Below, we illustrate our stakeholder engagement approach:


Stakeholder Group Engagement Channels

Employees • Workshop discussions• Induction training• Learning and development programmes• Corporate volunteering programmes• Employee performance appraisal• Corporate memos & letters• Employee meetings• Activities organised by the Sports and Recreation Committee• Employee Engagement Surveys• SAMEE eHub App on Smartphones• Value Creation Program• Employee Quarterly Communication Session• Computer screensaver

Management • Annual Management Retreat/Conference• Quarterly management meeting• Monthly operation meeting • Weekly coordinating meeting• Ongoing meetings and interactions

Customers • Customer Satisfaction Form• Ongoing meeting and interactions• Quarterly Business Review (QBR) and Monthly Operation

Review (MOR)

Vendors and Suppliers

• Interviews• Feedback survey• Face-to-face interaction• Vendor audits• Supplier Performance Review

Investors and Shareholders

• Annual General Meeting• Investor presentations and meetings• Financial statements and Bursa Malaysia Announcements• Company Annual Report

Directors • Board and Board Committee meetings• Ongoing meetings and interactions• Site visits

Community • Initiatives & partnerships with NGOs• Institution/University internship program • Corporate volunteering programmes

We have placed measures and processes to respond to the legitimate concerns and expectations of our stakeholders. It is our view that the opinions and expectations of our stakeholders contribute to the way our business is carried out. It gives us new perspectives and helps us build partnerships for solutions that we could not achieve on our own.

Though each stakeholder group has different priorities, we learn to become increasingly equipped to create value for all our stakeholders each year as our engagement continues year-on-year. This Report outlines the way in which we respond to the expectations of our stakeholders and create value for all.

TABLE 2: SAMEE’S STAKEHOLDER ENGAGEMENT



MATERIALITY MATRIX

As recommended by the Bursa Malaysia Sustainability Reporting Guidelines and Toolkits, we conducted a structured materiality assessment in 2018. This process was conducted to streamline our current sustainability practices and strategies with our risk management approach to identify our specified sustainability risks and opportunities, and to understand the ways to harmonise our business needs with our stakeholder interests.

Our relevant sustainability topics were identified by reviewing our key strategic, operational and business risks, peer and industry trends, as well as benchmarking against sustainability guidelines and frameworks. We then identified our material matters by conducting internal workshops with Management representatives and internal stakeholder surveys. Each year, our Sustainability Committee reviews the material matters for its relevance. These have been endorsed by the Board.

Our top 15 material matters are shown below:

TABLE 3: OUR TOP 15 MATERIAL MATTERS

Our BusinessPerformance

Our EnvironmentalManagement Our People Our Outreach

Product and Service Quality

Technology, Innovation and Development

Economic Performance

Customer Satisfaction and Relationship

Cybersecurity and ITResource Management

Ethics and Compliance

Supply Chain Management

Waste and HazardousMaterial Management

Energy Management

Labour Practices

Diversity and Inclusion

Employee Learning and Development

Employee Well-Being,Health and Safety

Local Communities

Indirect Economic Impact

Global Goals

We remain cognisant of our ability to contribute to the global sustainability agenda. The most notable form is the 2030 Global Goals, encompassed by the United Nations Sustainable Development Goals (“SDGs”). The 17 Goals are to lead governments, corporations and communities into creating a better world for all.

In 2020, we conducted an internal survey of the members of the Sustainability Committee to identify the SDGs that are most important to us. We took into consideration our current material matters, principal risks, business strategy, and stakeholders influence. As a result of the survey, the top three SDGs are shown below:

TABLE 4: SAMEE’S TOP THREE SDGs

SDGs Definition Key Stakeholders Impacted

Ensure healthy lives and promote wellbeing for all at all ages • Employees • Management • Directors• Community

Promote sustainable economic growth, full and productive employment, and decent work for all

• Customers • Investors/Shareholders • Employees • Community • Media

Ensure sustainable consumption and production patterns • Customers• Community• Vendors/Suppliers

Throughout the Statement, we highlight how our efforts contribute to the SDGs identified by mapping our material matters to the SDGs.


OUR BUSINESS PERFORMANCE

The building block of our business is the quality of our products and services and the trust our customers place on us to deliver on our quality promise. Therefore, we strive to meet the highest product quality through innovation, and pay great attention to the relationships with our customers to achieve desired customer satisfaction. We also ensure that we conduct our business with the highest standards of ethics and compliance.


PRODUCT AND SERVICE QUALITY

Our success thus far has been attributed to maintaining the highest standards in the quality of our products and services. To achieve this, we have implemented robust internal controls and procedures. This ensures the reliability and integrity of not only our products and services, but also the systems we have in place.

Our Quality Policy and Manual is the framework of our stringent internal controls and guides all our operations. It is in our interest that all our employees are well acquainted and familiar with our Product Quality Plan (“PQP”) and Work Instruction (“WI”). This is to ensure that all employees perform according to the standards which have been established.

In our Aerospace segment, we have the Master Process Procedures (“MPP”) and Standard Operating Procedures (“SOP”) to guide our operations. For our Equipment segment, the Product Specification Manual (“PSM”), the Product Quality Plan (“PQP”) and our Engineering Design Review direct our work. These documents ensure that there are clear procedures, work instructions and process-controlled plans for relevant employees.

We also conduct a risk and impact analysis called the Process Failure Mode Effect Analysis (“PFMEA”) for all our products which reduces quality defects. We evaluate potential process failure and/or risk based on the severity of effect on the product, occurrence of cause and likelihood of process control detection. Below are some other measures to maintain product quality at our operations:

TABLE 5: SAMEE’S MEASURES TO MAINTAIN PRODUCT QUALITY

Procedures in maintaining product Quality Description

Counterfeit Control The materials and parts we use are only sourced from reputable and designated sources

Hazardous Substance Management

We comply with the European Union Directive 2011/65/EU on the Restriction of the use of certain Hazardous Substances in electrical and electronic equipment (“RoHS”). This is also to ensure that our products are free of the currently listed Substances of Very High Concern (“SVHC”) under Registration, Evaluation, Authorisation and Restriction of Chemicals (“REACH”)

Calibration Our machines and tools are calibrated periodically by external parties to ensure our products meet customer requirements and standards.

Material Integrity The materials we use in production undergo the Certificate of Conformance (“COC”)

Product Testing & Buyoff Check

Our products are verified and tested to ensure that all functions meet the stipulated criteria and specifications before shipment.

Aside from the policies, codes and manuals we abide by, we instil confidence in our customers by ensuring our operations are certified to common industry standards.



TABLE 6: SAMEE’S CERTIFICATIONS

Divisions Certifications

Equipment • ISO 9001:2015 • ISO 13485:2018

Aerospace • AS9100 Rev.D.• NADCAP Certification for Non-Destructive Testing, Chemical Processes, Laboratory, Welding, Heat

Treatment, Coating and specialised machining• Civil Aviation Authority of Singapore (“CAAS”) Singapore Airworthiness Requirements 21 (“SAR21”)

Production Organisation Approval

These documents and certifications are complemented by the various type of training undertaken by our employees throughout the year. It is noteworthy that not only are our operations certified under the ISO 9001:2015, most of our employees have also undergone the ISO9001 training in order to fulfil the ISO requirements. This year, our engineers attended training in Root Cause and Corrective Action (“RCCA”) and Process Failure Mode Effect Analysis (“PFMEA”) to equip themselves with the skill to be able to find solutions to challenges in the process of production. Our engineers also go through the Geometric Dimensioning and Tolerancing (“GD&T”) course.

We use visual dashboards to monitor quality performance at each work station. For the Equipment division, we ensure that all relevant personnel attend a Copy Exact Training – a training by a customer to ensure all their requirements are met. For the Aerospace division, all relevant personnel attend training on Foreign Object Damage, Preventive of Counterfeit Parts and Product Safety.

TECHNOLOGY, INNOVATION AND DEVELOPMENT

In our continued efforts to maintain and improve our position in the market, we strive to become leaders in innovation and technological developments. This is seen in both our Equipment and Aerospace divisions.

Promoting Operational Efficiency Through Techology & Innovation Notable areas of operations where we deploy and invest in technology and innovation, include deployment of the Manufacturing Execution System (“MES”) to digitally track and document the transformation from raw materials to finished goods at a number of our operations. MES provides real-time digital data that we can display on the dashboards located around the factories. They provide visual aids for analysis and optimisation of current manufacturing processes to improve productivity and production yields.

We also leverage on big data analytics to develop predictive models, such as for equipment maintenance. It allows our technicians to anticipate breakdowns and take pre-emptive actions to sustain high up-time for the equipment.

The use of robotics in our manufacturing process has been intensified to reduce the dependency of labour intensive manufacturing operations and ensure the consistent quality of our products. This includes automated polishing equipment and flexible manufacturing systems. We also introduced a new quick setup technique to improve efficiency and productivity. For our precision tooling business, we developed a polishing technique using FFI carbide blade to meet more stringent cutting edge requirements.

This year, we started an initiative to drive us towards greater automation of processes, a reduction in cycle time and cost and an increase in the acquisition of knowledge for both divisions.

FIGURE 1: SAMEE’S ENHANCED AUTOMATION PROCESS

Through this initiative we have automated many of our manufacturing systems and processes and have digitised manufacturing data for real time analysis. Through automation, we have been able to increase productivity, reduce setup-time for our machines, increase OEE and reduce direct labour.

REDUCTION KNOWLEDGEAUTOMATION


Driving Technology & Innovation with Our Stakeholders We see true value in collaborating and partnering with our suppliers and customers to achieve higher efficiency and transparency in the supply chain network. Our employees in the Aerospace division participated in the Concurrent Engineering activity with our customers. This allows close communication between the parties to fine tune product design for ease of manufacturing and attaining an optimum cost. We also worked with our suppliers to develop machine language predictive modelling and quick product transfer methodology.

Our Equipment division has collaborated with new and existing vendors to localise some of the special processes, casting parts and complex machining parts in this region. This localisation encourages us to remain competitive as the demand for a shorter turn-around time has increased dramatically in the semiconductor industry. As with the Aerospace division, the Equipment division also works closely with its customers to provide ODM product development services.

As Artificial Intelligence (“AI”), 5G technology and the Internet of Things (“IOT”) continue to drive the semiconductor market and create new business opportunities, we continue to develop higher accuracy and precision turning and milling capabilities to be able to support new requirements in the front end of semiconductor and communication industries.

ECONOMIC PERFORMANCE

SAMEE’s financial performance was strong in FY2020, with a recorded revenue of RM939 million. Our success in achieving year-on-year growth can be attributed to our business strategy, which is part of our 3-year strategic plan.

Our Aerospace business contracted by RM10 million while our equipment business grew by RM194 million.

Our customer base has shifted between regions. This year, our customer base for North America increased by 8% bringing it to a total of 89% of the total share of our customers. Customers in Europe is now at 7% from 12% last year and finally, in Asia, our customer size is at 4% of our total share of customers.


CUSTOMER SATISFACTION

The success of our business is highly dependent upon our relationship with our customers. Thus, we ensure that we gain the trust and confidence through our products and services. We ensure high product quality and a high degree of customer satisfaction through our Quality Policy and objectives. We not only build and form new relationships but also ensure that we maintain positive relationships with our existing customers.

Each customer has a dedicated programme leader as the focal point on any product or program issue, ensuring that issues are resolved in a prompt manner. It also allows each customer to have a personalised experience. As we believe it is important to improve our engagement with our customers, they are allocated on-site offices. This arrangement gives us the opportunity to build stronger and transparent relationships with our customers. On top of this, we participate in improvement programs and on-site business reviews with our customers.

We engage our customers through our annual customer satisfaction survey form. We also receive score cards from our key customers. This is to measure our customer’s satisfaction with us and to ensure that our customers have a voice in our business. These scorecards are based on our ability to perform in the categories of quality performance, leadtime and commitment participation, responsiveness, cost competitiveness, after sales service and support, etc. Action steps are taken to address our performance in this regard.

To ensure that we remain aware of our product quality and services, we conduct Quarterly Business Reviews with all our key customers to review our performance and understand their evolving needs and requirements. We analyse our strengths and weaknesses and the decline and/or surge in our sales to continuously improve ourselves, to provide better support to our customers. We also regularly conduct conference calls with our customers to ensure that expectations are met throughout the development of the product.

CHART 1: CUSTOMER BASE BY REGION

Asia

Europe

North America89%

4%7%



CYBERSECURITY & IT MANAGEMENT

We work within a highly competitive and digitalised industry, thus it is crucial that we remain ever vigilant to potential cybersecurity risks. Our internal control framework to protect the privacy and security of data, information and intellectual property belonging to our stakeholders, are stipulated in the following policies.

i. Acceptable Use Policyii. IT Cybersecurity and Incident Response Policyiii. Network Security Policyiv. Computing System Usage Policyv. Mobile Device Policyvi. IT Physical Security Policyvii. Data Classification and Protection Policyviii. Identity Access Management Policyix. IT Risk Management Policyx. Personal Data Protection Policy

Our IT team works to ensure the integrity of our IT systems. They protect the system through robust internal controls and engaging external partnerships. Their responsibilities include:

Our Aerospace and Equipment division continues to be the preferred supplier of all our key customers.

FIGURE 2: SAMEE’S INITIATIVES TO MANAGE CUSTOMER SATISFACTION

We maintain an open channel for communications with our customers andproactively work together on improvement initiatives

Marketing (for Aerospace) and Operation teams engage directly with our customers to nurture and foster relationships for long-term commitment

We meet the quality, responsiveness and on-time delivery expectations of our customers

We continue to maintain a cordial relationship through regular dialogue on current and potential opportunities

FIGURE 3: ACTIONS BY THE IT DEPARTMENT

Assessing current IT architecture for vulnerabilities,

weakness and for possible upgrades or improvements.

Developing and implementing effective IT security processes.

Managing and configuring physical security, disaster recovery and data backup

procedures.

Implementing technological upgrades, improvements

and major changes in the information security

environment.

Developing IT security related policies, standards

and procedures, testing and security incident reporting

processes.

Serving as a focal point of contact for IT cybersecurity.

Providing cybersecurity awareness training to SAM

Malaysia’s employees.

Overseeing information security audits, whether performed internally or by third-party providers.


We also put in place internal mitigative measures such as antivirus, endpoint protection and firewall protection and 24-hour real-time monitoring and detection of malicious network traffic. To test the soundness of our IT processes and systems, we conduct regular IT asset management and audits of our systems. During the financial year, we conducted a Cybersecurity Gap Assessment for our factories in both Malaysia and Singapore to help us understand the potential gaps, and risks in our cybersecurity measures.

Cybersecurity training is mandatory for all employees at our operations to raise awareness on potential cybersecurity risks and precautions implemented at the Group. All new hires are also required to be briefed on our IT Policy, procedures and the appropriate use of IT services during their orientation. Cybersecurity news and updates are also shared with all employees via our eHub mobile app.

Data handling by employees are also guided by our Personal Data Protection Policy. This policy and procedure is observed in relation to the collection, use, storage, security and disclosure of personal information, including sensitive personal information in compliance with the Personal Data Protection Act 2010 (‘PDPA’ or ‘the Act’). To prevent data loss, we follow the 3-2-1 Backup Rule – to keep at least 3 copies of data, to have 2 copies on different storage platforms and 1 copy offsite. We also ensure that all our systems require identity access to keep our information secure.

ETHICS AND COMPLIANCE

Integrity, Righteousness, Courage, Commitment, Compassion, Serving Others and Value Creation (collectively, our “Core Values”) form our underlying foundation of building trust and strong relationships with all our stakeholders and this has been done through effective corporate governance and ethical employee conduct as seen from some of our main policies below.

Standards of Conduct, Business Ethics and Conflicts of Interest

Guided by our policies on Standards of Conduct, Business Ethics and Conflicts of Interest (“Code of Conduct”), we are committed to the promotion and maintenance of a healthy corporate culture that reflects our Core Values. Our Code of Conduct encompasses the following policies:

i) Conflicts of Interest v) Insider Trading

ii) Anti-Bribery & Corruption vi) Money Laundering

iii) Gifts and Entertainment vii) Compliance with law and regulations

iv) Confidential Information

Good Corporate Governance

The Board is committed to achieving the objectives of transparency, accountability and effective performance for SAMEE and its subsidiaries. In view of our Mission and Vision, led by our Core Values, the Board provides leadership for the execution of a prudent governance framework and our business strategy of creating shared value. We are also guided by legislative and regulatory requirements, including corporate governance best practices published by the relevant authorities. Our Corporate Governance Overview Statement can be found on page 45-59 of this Annual Report.

Whistle Blowing Policy

A transparent and open channel of communication is provided via our Whistle Blowing Policy, drafted in view of the Whistleblower Protection Act 2010. This policy provides a protected avenue for employees and external parties to report on any activity, breach of business conduct and ethics or omission by an employee of the Group. Our Whistle Blowing Policy can be accessed from our website: http://www.sam-malaysia.com.

Anti-Bribery and Corruption Policy

The tone from the top has always been “No Bribery, Zero Corruption” in all aspects of our business and our policies guide us in our approach on ethical business conduct in our daily work. Our Anti-Bribery and Corruption Policy can be accessed from our website: http://www.sam-malaysia.com.



SUPPLY CHAIN MANAGEMENT

We are undoubtedly committed to ensuring that we comply with all regulations and laws in our operations and we are compelled to extend this commitment to those beyond our direct operations. By purchasing raw materials and services from many different sources, our supply chain is far reaching. Managing our supply chain in a responsible and sustainable manner requires a structured and guided approach. We are guided by the following procedures and documents:

• Quality Procedure• Purchasing Policy • New Vendor Selection and Registration• Vendor Performance Review • Approval Authorisation Policy• Quality Surveillance

Supplier Screening

Prior to the appointment of a supplier, our Procurement Department will ensure that the supplier agrees to our terms and conditions including our Code of Conduct, governing laws stipulated in our Purchase Order (“PO”) forms, and to our material, product and finishing requirements, specifications and regulatory obligations.

Each business segment is required to comply with requirements stipulated by the specific industry, as well as undertake requirements specified by key stakeholders, such as our customers. In our Aerospace divison, suppliers are evaluated by a set of stringent criteria, ranging from quality system, manufacturing process control, relevant system certifications such as AS9100D, equipment suitability and management for the Aerospace industry. We focus primarily on leadership, governance, data protection, product safety, customer privacy and ethics. Our global clientele sets the highest standards of supply chain management, to ensure we meet the customer’s product quality requirements.

Supply chain and other ESG stipulations set by the Responsible Business Alliance (“RBA”) drive supply chain management standards down the electronics supply chain. Therefore, for our direct material suppliers and suppliers with high PO value in the Equipment division, we assess the quality of their products and their compliance with the Code of Conduct by RBA via their Validated Assessment Process (“VAP”) and Self- Assessment Questionnaire (“SAQ”) score. We also screen suppliers based on the availability of ISO management systems and certifications.

Supplier Engagement

The management of our supply chain gives us the opportunity to build collaborative relationships with our vendors and suppliers. Employees at the Aerospace divison present our suppliers with an annual supplier performance score card. This is evaluated against criteria such as On-Time-Delivery and Quality Escape. To keep our suppliers and vendors updated about what is important to us, we send our audit checklist to them annually. We also engage our suppliers to receive and to give feedback on services.

As stipultated by the RBA, the Equipment divison manages on-site supplier audits on our top three raw material suppliers and top 5 spending vendors. We use the VAP checklist and Quality Management Systems checklist to perform our supplier audits annually. Findings from the audit are communicated to the supplier for their next action. Suppliers are then required to communicate their action plans and enact them within 2 weeks if any issues of non-conformance are identified.

Additionally, we practice conflict-free mineral sourcing as we require our material suppliers to submit the Conflict Minerals Reporting Template (“CMRT”), which in turn are made available to our customers. The CMRT states the mineral country of origin and the smelters and refiners being utilised. To date, 100% of our material suppliers declare sourcing from conflict-free nations.

Local Suppliers


This year, 47% of our total purchase are from local industries. They are our contractors and suppliers of direct materials and indirect materials. We acknowledge our ability as a responsible corporate citizen to create business opportunities and give back to our community.

Local Purchase

Foreign PurchaseLocal Purchase

47%

CHART 2: BREAKDOWN OF SUPPLIER ORIGIN


OUR ENVIRONMENTAL MANAGEMENT

SAMEE has always been cognisant of our impact on the environment. We remain active in monitoring and managing the output of our activities to ensure that our operations follow relevant environmental laws and regulations. Formalised in our Environmental Policy, we ensure responsible environmental management and the conservation of resources, as we promote responsible consumption.


WASTE AND HAZARDOUS MATERIAL MANAGEMENT

Waste Management

FY2019 FY2020FY2018

448.40

340.95 353.38

Waste from our manufacturing locations account for a large proportion of our total waste produced. These include hazardous waste such as sludge, spent activated carbon, contaminated rags and containers, and non-hazardous waste such as food waste and office waste. This year, as seen in Chart 3, we disposed a total of 353.38 metric tonnes of hazardous waste. This is a decrease from the previous year because we have improved the cycle time for hard metal parts, thus decreasing coolant consumption.

CHART 3: TOTAL AMOUNT OF SCHEDULED WASTE DISPOSED (MT)

Robust management systems and experienced personnel at our operations effectively monitor and manage hazardous and non-hazardous waste generated. Below we show our key efforts in waste management:

FIGURE 5: MANAGEMENT OF SCHEDULED WASTE

Licensed waste contractors

Appropriate waste storage on-site

Trained and experienced personnel

On-site inspections

Only licensed waste contractors are engaged for collection and disposal of hazardous waste, as authorised by local regulators.

All hazardous waste is stored and appropriately labelled on site to prevent waste contamination and leakage.

Our facility team is experienced and appropriately skilled. In 2019, our Facility officer for Scheduled Waste Management attended the following course: Certified Environmental Professional in Scheduled Waste Management (CePSWaM).

Regular inspections performed by facility personnel on waste storage and other facilities to ensure appropriate handling of scheduled waste.



FY2019 FY2020FY2018

40,180,670

44,504,180 44,723,739

A by-product at our facilities is wastewater effluent. On-site treatment plants ensure wastewater effluent discharged are within the effluent quality parameters required by local regulators. This year, the total amount of effluent increased by 10% partly due to the expansion of our wastewater treatment plant to support increased business activites.

Waste Reduction

We are always seeking ways to practice resource efficiency. Some of the initiatives performed by us are shown below:

TABLE 7: SAMEE’S RESOURCE EFFICIENCY INITIATIVES

Focus Area Initiative

Lowering consumption of coolant used

This year, through machinery and process optimisation, coolant was recycled on time, we successfully lowered our consumption of coolant used, thus lowering the volume of spent coolant. As opposed to 401.29 MT we were able to reduce it to 313.28 MT.

Waste reduction Wastewater generated from our chemical line was fully treated through our waste water treatment plant and minimum waste was generated. We are also in compliance with the local regulator’s requirements.

ENERGY MANAGEMENT

We acknowledge our corporate duty to reduce our carbon footprint. We practice voluntary greenhouse gas (GHG) emissions and energy reduction monitoring to contribute to the reduction of GHG emissions each year.

Energy Consumption

Energy use is a significant expense at our sites due to the high intensity of production.

This year, as shown in Chart 5, our facilities consumed 32,045 MWh of electricity, a 9% increase in consumption from FY2019, primarily due to an increase in production activities. However, we report a decrease in our energy intensity at 34.6 MWh per RM million of net revenue, which is a 11.7 % decrease as compared to last year.

To contribute to the reduction of our energy consumption, we focus on improving energy efficiency in our plants. We also encourage our employees to set all air conditioners at the office to between 22 to 24 degrees Celsius, as per the recommendation by the Malaysian government1.

1Companies Commission of Malaysia, 2015. A Toolkit to Implement Green Business. https://www.ssm.com.my

CHART 4: TOTAL AMOUNT OF EFFLUENT (LITRES)

CHART 6: ENERGY INTENSITY (MWh PER RM MILLION NET REVENUE)

FY2018 39.2

FY2019 39.2

FY2020 34.6

CHART 5: ELECTRICITY CONSUMPTION (MWh)

FY2018 13,550

FY2019 29,283

FY2020 32,045


OUR PEOPLE

It is our people who differentiate us from our competitors, and we invest in them to make them successful. We also believe that engaged employees are more satisfied with their work, are more productive and committed and stay longer with us. It is with this belief that we strive to not only support engagement on many levels but to also provide learning and career development opportunities for all. Here at SAMEE, we also take the health and safety of our employees seriously as we believe our people are our responsibility and we have a duty of care to ensure they return home safely. To be an employer of choice, we are committed to providing and maintaining a safe and healthy workplace and respect the rights of our employees.


LABOUR PRACTICES

Our Commitment to Labour Rights

We uphold the labour rights of all our employees, as we foster an inclusive and diverse work environment. We ensure that all our employees are familiar with the culture and practices that we champion, by briefing all new employees on our Code of Conduct.

Our Code of Conduct and other labour policies protects labour rights and is based on local employment regulations, such as the Malaysian Employment Act 1955, and relevant industry standards, such as the RBA Code of Conduct 6.0. Some of the labour rights upheld at SAMEE include:

In FY2020, we restructured our Human Resource Department and introduced a specific managerial position whose portfolio encompasses human rights and labour rights management, as we seek to strengthen our management of related sustainability issues. Furthermore, we invested in externally-held training that covered relevant labour-related laws and regulations.

Grievance Mechanisms & Whistleblowing In our efforts to ensure that our employees feel safe in their working environment, we have a grievance mechanism in place. An employee’s immediate supervisor is the first line of the grievance mechanism. An employee can also report a breach of conduct to their head of department or further up the chain of command as necessary. We also remind our employees on the availability of our whistleblowing channel, where potentially significant breaches can be reported confidentially without any risk of reprisal.

Migrant Workers Management

We believe that everyone connected to our business should be treated with respect and receive fair and equal treatment. All our foreign workers do not pay recruitment fees, nor do they carry a debt bondage. We ensure that our workers hold their own passport, and we pay their wages directly into their bank account. As we care about the long term careers of employees at our company, all our foreign workers are permanent staff and not on fixed term contracts. This means that foreign workers receive the same benefits as our Malaysian staff.

Independent verification

It is standard practice for our operations to be independently reviewed via third-party verifications on an ad-hoc basis. Independent verifications are conducted by our customers, regulators, and independent auditors and these rigorous audits assess the robustness of our systems to manage potential environmental, social and governance issues, including labour rights and human rights, in accordance to relevant laws and regulations as well as specified best practice. In FY2020, this practice was maintained and no major findings were recorded.

ILLUSTRATION 1: LABOUR RIGHTS UPHELD AT SAMEE

HUMANE TREATMENT

SAFE WORKPLACE

NO CHILD LABOUR

NO DISCRIMINATION

FAIR WAGES

WORKED HOURS

NO FORCED LABOUR



DIVERSITY AND INCLUSION

Our employees

Though aerospace and equipment engineering has traditionally been a male-dominated field, we are seeing a gradual and consistent increase in the percentage of women in our workforce, similar to the growing proportion of women in the Malaysian workforce.

Furthermore, the inclusion of more young people also enables us to be at the forefront of the rapidly changing world of technology and innovation, contributing to our quality and distinct product offerings. Some of the initiatives that were launched in FY2020 that were aligned with the lifestyle of this demographic was the launch of a phone app as a means of communication and the introduction of some flexible work arrangements to allow a office-based employees to incorporate some flexibility in their working hours.

TABLE 8: EMPLOYEE BREAKDOWN BY GENDER

Employee by Gender FY2018 FY2019 FY2020

Male (All levels) 83% 82% 81%

Female (All levels) 17% 18% 19%

Male (Management level) 70% 71% 72%

Female (Management level) 30% 29% 28%

Voluntary Employee Turnover Voluntary employee turnover is defined as turnover due to employee-initiated reasons (e.g. pursuing higher education, leaving to another job in a different company). We are pleased to report that our voluntary turnover rate has been progressively decreasing since FY2018. We attribute this positive change to our efforts to listen, engage and address the concerns of our employees. These efforts include:

CHART 7: % OF EMPLOYEES BY AGE GROUP

FY2018 45% 46% 9%

FY2019 45% 46% 9%

FY2020 45% 46% 9%

Below 30 30-50 Over 50

CHART 8: VOLUNTARY TURNOVER RATE

FY2019 FY2020FY2018

19%

24%

16%

We are proud to announce that we launched our first formal Employee Engagement Survey in FY2020. These surveys will also be repeated in future years in order to begin building historical data using the same questionnaires. This is to identify trends and address problem areas more effectively.

FIGURE 6: SAMEE’S INITIATIVES IN IMPROVING ENGAGEMENT AMONG ITS EMPLOYEES

Conducting surveys to better understand our workforce

Introducing new incentives and reward schemes

Introducing flexible work arrangements

Ensuring our communications are understood by employees from different backgrounds by making it bi-lingual

Increasing the platforms/channels to communicate with our workforce

Improving our benefits offerings as a result of benchmarking

Conducting benchmarking of our compensation and benefits with the market


EMPLOYEE LEARNING AND DEVELOPMENT

To ensure that our employees remain relevant in our ever-evolving business and to push the boundaries of innovation in order to respond to the needs of our customers and shareholders, we invest to ensure they have adequate learning and development opportunities. In this effort we are guided by our Training Policy.

Maintaining a Skilled Workforce

To understand the development needs of our employees, we conduct an annual Training Needs Analysis. This allows us to identify the gaps of knowledge within the organisation against external factors, such as industry and regulatory changes, employees’ expectations and the latest innovation and technological advancements.

This year, we accumulated up to 34,421 hours of classroom training which is equivalent to about 28.9 hours of classroom training per employee. This surpasses our target of an average of 25 hours of classroom training per employee. We also place great importance on ‘On-the-Job’ (“OJT”) training as we believe that our workforce will be able to gain more from first-hand technical experiences. Also seen in the chart, we have traditionally offered more hours of OJT than classroom training. Employees are trained by internal subject matter experts or external trainers on the application of new methods and on the new machinery and systems used at our company.

To ensure that our products and services are of the highest quality of, we offer an annual training on Quality Improvement tools to educate and ensure our employees are kept abreast of latest developments in quality management systems. Soft skills training and team building are also arranged to ensure our employees are aware of the latest leadership and management thinking, approaches to stress management, and people management.

Expenditure on training is expected to continue to increase due to inflation and business growth. In FY2020, we spent nearly RM900,000.

TABLE 9: TRAINING OFFERED IN FY2020

Type of training Key areas covered in the training Attendees

Technical training

Statistical Problem-Solving Training

Participants are trained on the statistical tools used, such as Statistical Process Control, (“SPC”), Failure Modes and Effects Analysis (“FMEA”), 8D Problem Solving, 7 QC Tools, Geometric Dimensioning and Tolerancing (“GD&T”), Gauge Repeatability and Reproducibility (“GR&R”), Poka Yoke, Root Cause Analysis, Lean Manufacturing, Overall Equipment Effectiveness (OEE)

Engineers and Technicians

Soft skills training

Management and Development Training

Management level participants are trained to improve their leadership and management skills. Executives or engineers are trained on Time and Stress Management, Project Management, Problem Solving and Decision Making, Creative and Critical Thinking, 6 Thinking Hats, Presentation Skills, Business Communication Skills, English Language Skills, Customer Service, Supply Chain Management, Warehouse Management, Supplier Management, Purchasing and Negotiation

All employees

Quality Management System

Employees are trained on ISO9001:2015 standard, ISO13485 standard, AS9100 standard

All employees

Structured OJT Classroom Training

CHART 9: TRAINING HOURS

FY2019

39,337

33,926

FY2020

42,057

34,42134,324

27,768

FY2018



Type of training Key areas covered in the training Attendees

Safety and Health Training

Safety Management

Employees are trained on topics relating to safety awareness, such as First Aid and CPR, Forklift Driving, Chemical Handling, Hazard Identification, Risk Assessment and Determining Control (HIRADC), Workplace Ergonomics, Human Behaviour Base Safety, Lockout Tagout and Material Handling, Fire Fighting and Prevention Awareness, 5S Training

All employees

IT Training

IT Related Training Employees are trained on the functionality of Microsoft Office, such as Microsoft Excel (Intermediate / Advance), Microsoft Power Point, Pivot Table, Formula and Functions

QA Inspector / Technician

On-Job Training

Machinist Training Employees are trained on machine functionality and handling method Machinist

QA Inspector/ Technician Training

Employees are trained to inspect and calibrate machines safely QA inspector/ technician

Engineer training Employees are trained on programming, systems, machineries, process and procedural knowledge

Engineers

Career Progression Support and Counselling We also support our employees in their self-development for career growth. This year, we supported our employees in completing a 12-month Professional Diploma in Manufacturing Management and Administration. These employees are due to complete the programme in 2020.

Throughout the year, employees meet with their supervisors to evaluate progress on current goals and adjust them as needed to align with any changes in priorities. This is part of the annual performance appraisal process.

We are also happy to note that the percentage of open positions filled by our internal candidates has been steadily increasing each year – from 5.7% in FY2018 to 11.9% in FY2020. This has long been a priority for us because internal candidates already have a strong knowledge of our culture, processes and systems, and have already built relationships throughout the organisation. This creates a friendlier and more cordial working environment.


EMPLOYEE HEALTH AND SAFETY

We are committed to upholding a safe and healthy workplace for all our employees. We rigorously manage the potential risks associated with hazardous activities and processes, such as those with the potential to result in injuries related to fires, explosions, and sudden release of toxic materials. To mitigate these risks, we focus on preventive measures and have a robust safety management system in place. Reviewed annually, our Occupational Safety and Health Policy (“OSH”) guides our operations and applies to all our operations and employees at all levels.

Dedicated Safety Governance

Our Group Environmental Health & Safety (“EHS”) Committee guides and provides direction to all employees on health and safety matters. Each site has a dedicated and qualified EHS Committee which works closely with the Group EHS Committee. On top of assisting in the development of safety and health systems, and reviewing the effectiveness of safety & health programmes, the following are some of the key roles and responsibilities of the EHS Committee:



Instilling Safety Culture We believe that each individual employee has a responsibility in cultivating a culture of ensuring workplace safety in achieving our target of “Zero Accident & Zero Compound”. All new employees are briefed on our safety culture and policy. This safety measure is also extended to our contractors during our annual contractors EHS awareness training. In January 2020, we conducted an environmental, health & safety campaign throughout our Company to raise awareness of the importance for all employees in the company to be champions of safety.

Carry out studies on accident trends, incidents and diseases

Meet bi-monthly to review regulatory and license compliance monitoring

programmes

Safety officers advise and monitor the Group’s compliance with relevant laws and regulations, and review and

update safety & health policies

Perform advisory measures on safety & health measures on ergonomic

issues such as lifting aid for manual handling tasks

Provide medical surveillance for occupational health monitoring

(i.e. lead monitoring, acid and organic solvent monitoring)

Assigned medical services in the vicinity (i.e. 24-hour clinic, specialist

centre & district government hospital)

FIGURE 8: RESPONSIBILITIES OF OUR EHS COMMITTEE


Below is a list of safety training programmes undertaken by our employees:

TABLE 10: SAFETY TRAINING UNDERTAKEN IN FY2020

Training Programs in FY2020

Shaping Human Behaviour through Mindset Alignment in Achieving Safety Goals

Forklift Safety Handling Certification

Chemical Safety Handling (External Training)

Overhead Crane Safety Handling / Operation

Fire-fighting Refresher & Certification Training (BOMBA)

LEAD Awareness

Chemical Spill Training

Annual EHS - Contractors & Sub. Contractors training

LOTO / Material Handling / Accident Prevention / General Occupational Safety & Health Awareness

Hearing Conservation Program

Safe Storage, Handling & Use of Compressed Gases

Hazard Identification, Risk Assessment and Risk Control (“HIRARC”)

SAMEE sites evacuation drill

First Aid & CPR training

We also established an emergency response team (“ERT”) who prepare for and respond to any emergency incidents on site. These individuals attend a compulsory competency certification training to ensure that they are prepared for any incidents. To complement their training, we ensure that they are informed of the procedure to report accident and medical cases.

RESPONSE TO THE COVID-19 PANDEMIC

Our response to the Covid-19 pandemic was far reaching, aligned to the government guidelines of the countries in which we operate and the recommendations of health experts.

On 12 March 2020, the World Health Organisation declared the Covid-19 outbreak a pandemic, as the number of cases was expected to increase further around the world. At SAMEE, we have developed a set of Standard Operating Procedures (SOPs) to address this pandemic and are strictly enforcing them at our facilities. Some of the measures listed in our SOPs include the following:

- Encouraging the practice of good personal hygiene – for example, the practice of washing hands frequently with soap and water.

- Temperature scanning – this was done on entry to our business premises and we ensured that any employee or visitor who has a temperature above a specific threshold are not allowed to enter the premises.

- Availability of hand sanitizers – Hand sanitizers were made available at various locations around our sites, especially at the main entrances. Everyone is encouraged to use them.

- Restrictions during lunch-hour – We disallowed employees to leave our premises during lunch-hour and also prohibited the delivery of food to limit external sources of contagion. We also arranged for pre-packed meal options during lunch for employees who chose to eat at our canteens.

- Social Distancing – This was encouraged in all daily work activities. For example, the number of people in a room for physical meetings was restricted, markers were placed on floors and tables to guide employees while queuing and seating for meals respectively. Partitions were also set up to have an actual physical barrier during meals if face-to-face arrangements were unavoidable. Arrangements were also made for employees to work from home to reduce the space constraints in the office.



- Establishing alternative backup teams – separate teams (who could work independently) were established and they worked at different locations for contingency planning.

- Non-essential overseas travel was restricted.

- Mandatory declaration of direct/indirect contact with confirmed/suspected Covid-19 patients – Employees were mandated to declare this as protocols were established on how we intended to deal with each case, depending on the “degree of separation” between our employee and the confirmed / suspected Covid-19 patient.

- Use of Face Masks – We were guided by the respective country government’s guidelines on the use of face masks. For example, at the end of FY2020, it was mandatory for all employees who were working in our premises in Malaysia to wear a face mask.

- Disinfection and Cleaning – We engaged professionals to disinfect key areas in our offices and canteens and increased the frequency of our cleaning for high touch surfaces like doors and door handles.

- Internal Publicity and Communications – We used the full range of available mediums to engage, update and communicate with our employees on developments and instructions pertaining to the Covid-19 situation. This included e-mails, videos, phone-apps and publicity posters around our sites. We also ensured that our communications were in the relevant languages besides English to increase understanding and compliance with our measures and policies.

EMPLOYEE WELLBEING

Our employee benefits include a range of plans and programs that are intended to attract, retain and motivate the high-performing employees we depend on for growth and success. We are guided by our Human Resource Policies and the laws of the countries in which we operate. Below are descriptions of our efforts.

TABLE 11: TYPES OF EMPLOYEE BENEFITS AT SAMEE

Type of Benefits Description

Life insurance and medical benefits

As we place a great importance on the health of our employees, we ensure that our full-time employees are covered by insurance and medical benefits as follows:a. Outpatient (GP and Specialist) Coverageb. Dental and Health Screening Benefitsc. Hospitalisation and Surgical, Personal Accident and Term Life Insurance coverage which vary by

employee categoryd. Hospitalisation Leave e. Maternity Leave – We are happy to report that all who took maternity leave returned to work.

Health and wellness

a. Our Sports and Recreation Committee periodically organises competitive sports activities (e.g. badminton, futsal and bowling) together with other non-sporting activities like a blood donation drive and a baking competitions.

b. We offer: • flexible work arrangements – we allow employees some flexibility to choose when they start and

end their workday • claims for health screening, lab tests and dental treatments• yearly surveillance tests (for those exposed to chemicals, loud noise, etc.)

Remuneration, rewards and recognition

a. In appreciation of our employees who have achieved the milestone years with SAMEE, we give them Long Service Awards. In FY2020, 79 people received these Awards.

b. To reward our employees for their hard work, we offer:• Annual Increment• Contractual Bonus/Annual Wage Supplement• Performance Bonus• Profit Sharing Bonus• Employee Share Grant Scheme

Other Benefits a. Travelling Allowanceb. Supporting symbolic occasions in our employee’s lives, such as wedding celebrations and birth of

children



OUR COMMUNITIES

As a responsible corporate citizen, we understand the need to support the community around us. Each year, we make contributions and give our employees opportunities to volunteer in the causes we believe in.


LOCAL COMMUNITIES AND INDIRECT ECONOMIC IMPACT

Promoting Employment of Local Youth

We contribute to developing the next generation of STEM graduates and business leaders through our sought-after internship programme. In FY2020, we hired 214 interns, 35 of which were given permanent positions at SAMEE. Over the last three years, an average of 17% from the total number of interns have been hired as permanent employees of the Company.

Hiring interns provides employment opportunities to local youth, increases brand awareness in the market, and ensures that we are able to hire those who are already accustomed with the working culture of our company, increasing the probability that those hires remain committed to us.

We Believe in Education

We believe in the power of education, that it is the most empowering tool anyone can have. With this belief, we contributed via a programme that supports students from low income families in Penang, children of SAMEE Malaysia employees and students in the Penang Skills Development Centre (“PSDC”). As part of Titian Harapan, we contribute towards school necessities like purchasing schoolbooks, uniforms and shoes, including payment of tuition fees. This year, we contributed to the lives of 165 students at an average of over RM1,000 per student.

TABLE 12: TITIAN HARAPAN PROGRAMME

Titian Harapan

FY2018 FY2019 FY2020

No. of students 163 170 165

Total sponsorship amount (RM) 208,120 162,860 165,550

Aside from Titian Harapan, we also provide financial assistance to students through the Malaysian Skills Certification System. Under this system, we sponsor course fees and a monthly allowance to students. Upon graduation, the students are placed on a trainee program with the Company and are then awarded a full employment contract if the necessary hiring criteria are met. This year we sponsored a total of 16 students on this programme.

TABLE 13: MALAYSIAN SKILLS CERTIFICATION SYSTEM

Malaysian Skills Certification System

FY2018 FY2019 FY2020

No. of new students sponsored 14 2 4

Total no. of students still in the programme 18 14 12

No. of students who have become full time employees 6 4 2

Total sponsorship amount (RM) 116,720 65,910 69,550



Our Community Programmes

In addition to our long-running programmes, we are active in community engagement, focusing on specific fundraising events and charities. Some of the programmes undertaken this year are shown below:

FIGURE 9: COMMUNITY ENGAGEMENT PROGRAMMES IN FY2020

BLOODDONATIONDRIVE

MBPP/SCIPEACE RUN

A total of 163 of SAMEE’s employees participated in this noble event, and we were able to support the blood donation campaign organised by the government.

A total of 42 of SAMEE’s employees participated in this charity run. The profits were channelled to SCI and sponsored up to 400 Disable (OKU) participants from various special schools/homes in Penang.


PARTICULARS OF PROPERTIESheld as at 31 March 2020

Location Tenure Area(sq. ft.)

Build-uparea

(sq. ft.)

Description Approximateage of

building

Expirydate

Date of revaluation

Net BookValue at

31 Mar 2020(RM’000)

SAM PRECISION (M) SDN. BHD.Plots 31-34 Lengkok Kampung Jawa 2,Bayan Lepas Non-Free Industrial Zone, Phase 3, 11900 Penang, Malaysia.

Leasehold60 years

54,013 33,500 Office &Factory

36 years 22 November

2041

14 August2009

2,570

SAM PRECISION (M) SDN. BHD. / SAM TOOLING TECHNOLOGY SDN. BHD. Plot 77, Lintang Bayan Lepas,Bayan Lepas Industrial Park,Phase IV, Non-Free Industrial Zone,11900 Penang, Malaysia.

Leasehold60 years


20 years 16 June 2057

14 August2009

7,701

MEERKAT PRECISION SDN. BHD. / CORPORATE OFFICE Plot 17, Hilir Sungai Keluang Tiga, Bayan Lepas Free Industrial Zone, Phase IV, 11900 Penang, Malaysia.

Leasehold60 years


24 years 14 May 2051

14 August2009

12,671

SAM MEERKAT (M) SDN. BHD. Plot 103, Hilir Sungai Keluang Lima, Taman Perindustrian Bayan Lepas 4,11900 Penang, Malaysia.

SAM MEERKAT (M) SDN. BHD. Plot 104, Hilir Sungai Keluang Lima, Taman Perindustrian Bayan Lepas 4,11900 Penang, Malaysia.

Leasehold60 years

Leasehold60 years

176,629

148,218

92,500

134,000

Office &Factory

Office &Factory

14 years

13 years

18 December

2074

23 April 2068

17 August2009

17 August2009

10,011

10,498

Note:Note:1. The land area disclosed herein based on the survey conducted by Jabatan Ukur dan Pemetaan Pulau Pinang.1. The land area disclosed herein based on the survey conducted by Jabatan Ukur dan Pemetaan Pulau Pinang.

1

2

3

4

1 SAM PRECISION (M) SDN. BHD.

2 SAM PRECISION (M) SDN. BHD. / SAM TOOLING TECHNOLOGY SDN. BHD.

3 MEERKAT PRECISION SDN. BHD. / CORPORATE OFFICE

4 SAM MEERKAT (M) SDN. BHD.


The Board of Directors of SAM Engineering & Equipment (M) Berhad (“Company” or “SAM Malaysia”) is committed to ensuring that the Company meet the principles and applies the practices of corporate governance as set out in the Malaysian Code on Corporate Governance 2017 (“Code”).

The Board steadfastly believes that such principles and practices of the Code are essential to uphold the business integrity of the Company and its subsidiaries (collectively, the “Group”) and to enhance shareholder value.

The Group in their conduct of business and management are not just guided by the Code but also by their Core Values that balances the commercial and financial success with the interests of all stakeholders. These Core Values are set out on the Company’s website.

This corporate governance overview outlines the corporate governance practices that have been applied by the Board of the Company during the financial year ended 31 March 2020 (“FY2020”), where possible, and applicable laws to be a dynamic framework within which the Group would conduct its business. Please note that the following statement is to be read together with the Corporate Governance Report, which is available on the Company’s website at http://www.sam-malaysia.com.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

PART 1 - BOARD RESPONSIBILITIES

Intended Outcome 1.0

• Every company is headed by a Board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company

1.1 Strategic aims, values and standards

The Board plays a pivotal role in the stewardship of the Group’s direction and operations, and ultimately the enhancement of long-term shareholder value.

The Board is responsible for the leadership, oversight and overall management of the Group. The Board is effective and is made up of a combination of the Executive Director who has intimate knowledge of the business and the Non-Executive Directors who comes from diversified industry/business backgrounds to bring broad business and commercial experience to the Group. The Board has the overall responsibility for corporate governance, establishing goals, strategies and direction, reviewing the Group’s performance and critical business issues and ultimately the enhancement of long term shareholders’ value. It monitors and delegates the implementation of the strategic direction to the Management.

The Board reviews the strategic plan of the Group tabled by Management at its meeting. The review would cover the performance targets and long-term plans of the Group to be met by Management.

If the Board is satisfied with the strategic plan of the Group as presented by the Management, the Management shall implement it. The Board would continue to monitor the plan to ensure its implementation.

The Board’s role is to oversee the performance of the Management to determine whether the business is properly managed. The Board gets updates from Management at the quarterly Board meetings when reviewing the unaudited quarterly results. During such meetings, the Board participates actively in the discussion on the performance of the Group.

The Board also has a formal schedule of matters reserved solely for its decisions such as approving acquisitions and divestitures, major capital expenditures, projects and budgets, quarterly and annual financial statements, as well as, monitoring of financial and operating performance of the Group. The oversight of such matters enshrines the Board’s control over the Group.

As part of its efforts to ensure the effective discharge of its duties, the Board has delegated certain functions and responsibilities to the following respective Board Committees:-

• Audit Committee (“AC”);• Risk & Sustainability Committee (“RSC”); and• Nominating & Remuneration Committee (“NRC”).

The Chairman of each Board Committee will report to the Board on the outcome of the Committee’s meeting that also includes the key issues deliberated at the Committee’s meetings.

CORPORATE GOVERNANCE OVERVIEW STATEMENT

http://www.sam-malaysia.com/


PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (Cont’d)

PART 1 - BOARD RESPONSIBILITIES (Cont’d)

1.1 Strategic aims, values and standards (Cont’d)

Each Committee operates within specific terms of reference that were drawn up with reference to the Code and the Board Committees discharge their duties in accordance to its Terms of Reference.

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

1.2 The Chairman of the Board

The Board has elected a Chairman from amongst the members of the Board who is a Non-Executive Director. Mr. Tan Kai Hoe as the Company’s Non-Independent Non-Executive Chairman provides leadership and guidance to the Board and is responsible for ensuring effectiveness of the Board’s performance. Mr. Tan Kai Hoe works closely with the rest of the Board members in forming policies and strategies to align the business activities driven by the Management.

1.3 SeparationofPositionofChairmanandChiefExecutiveOfficer(“CEO”)

There is clear division of responsibilities of the Chairman and the Executive Director & CEO. The Board is led by the Non-Independent Non-Executive Chairman while the executive management are led by the Executive Director & CEO.

The roles and responsibilities of both the Chairman and the Executive Director & CEO are more particularly set out in the Board Charter that is available at the Company’s Website.

1.4 QualifiedandCompetentCompanySecretaries

In compliance with Practice 1.4 of the Code, the Board is supported by suitably qualified and competent Company Secretaries. The Company Secretaries play an advisory role to the Board in relation to the Company’s Constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidelines and legislations.

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 performing their duties, the Company Secretaries carry out, amongst others, the following tasks:

• Statutory duties as required under the Companies Act 2016, Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”) and Capital Market and Services Act, 2007;

• Facilitating and attending Board Meetings and Board Committee Meetings, respectively;• Facilitating and attending the General Meeting(s);• Ensuring that Board Meetings and Board Committee Meetings, respectively are properly convened and the

proceedings are properly recorded;• Ensuring timely communication of the Board decisions to the Management for further action;• Ensuring that all appointments to the Board and/or Board Committees are properly made in accordance with the

relevant regulations and/or legislations;• Maintaining records for the purpose of meeting statutory obligations of applicable jurisdictions;• Facilitating the provision of information as may be requested by the Directors from time to time in an expeditious

manner and ensuring adherence to Board policies and procedures;• Facilitating the conduct of the assessments to be undertaken by the Board and/or Board Committees as well as to

compile the results of the assessments for the Board and/or Board Committee’s notation; • Assisting the Company on the lodgements of documents with relevant statutory and regulatory bodies;• Assisting the Board with the preparation of announcements for release to Bursa Malaysia Securities Berhad (“Bursa

Securities”) and Securities Commission Malaysia; and• Rendering advice and support to the Board and Management.

The Company Secretaries keep the Board abreast with the latest regulatory updates and also ensure that deliberations at Board and Board Committee meetings are well documented.

The Board shall determine whether it is satisfied with the performance and support rendered by the qualified and experienced Company Secretaries to the Board in discharge of its functions.

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)





1.5 Access to Information and Meeting Materials

The Board recognises that the decision-making process is highly contingent on the quality of information furnished. All members of the Board have full unrestricted access to any information pertaining to the Group’s business and affairs.

The Board is furnished with information and documents at least 7 days in advance of meetings (or a shorter time period when unavoidable) to allow them sufficient time to appreciate the issues being deliberated and to expedite the process of decision making. All information and documents furnished to the Board are comprehensive and encompasses both quantitative and qualitative factors to increase the quality of the Board’s understanding and knowledge of the matter.

Management may be invited to attend Board meetings to provide the Board detailed explanations and clarifications on certain matters that are tabled to the Board. The Board has full unrestricted access to any information pertaining to the Group and its business affairs including verbal explanations from Management on related topics being deliberated, and the services of the Company Secretaries to ensure procedures are complied with. The Board may seek (upon approval of the Chairman) independent advice on any related matter at the expense of the Group.

All deliberations and decisions made at the Board meetings are recorded by the Company Secretaries including whether any Director abstained from voting or deliberating on a particular matter. Minutes of the meeting are circulated to the Board and the Management for review and comments in a timely manner before the minutes of the last Board meeting are confirmed at the next Board meeting.

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 FY2020, the Board met on four (4) occasions where it deliberated upon and considered various matters. The attendance record of the Directors for FY2020 was satisfactory. This is evidenced by the attendance record of the Directors at the Board meetings during their tenure in office as set out in the below table:-

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’ Seri Wong Siew Hai 4/4

Dato’ Sri Lee Tuck Fook 4/4

Lee Hock Chye 4/4

Datuk Dr. Wong Lai Sum 4/4

YM Tunku Afwida Binti Dato’ Tunku Abdul Malek1 1/1

Note: 1. YM Tunku Afwida Binti Dato’ Tunku Abdul Malek was appointed on 1 January 2020

All the Directors have complied with the minimum 50% attendance requirement in respect of Board Meetings as stipulated in the Listing Requirements. During the intervals between Board Meetings, for any matters requiring Board’s decisions, the Board’s approvals are obtained through circular resolutions. The resolutions passed by way of such circular resolutions are then noted at the next Board Meeting.

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

The Board is satisfied with the amount of time committed by the Directors towards fulfilling their roles and responsibilities as Directors of the Company.





• There is demarcation of responsibilities between the board, board committees and management. • There is clarity in the authority of the board, its committees and individual directors.

2.1 Board Charter

The Board Charter, which is available at the Company’s website, establishes the clear and unambiguous functions and roles of the Board and those delegated to the Chairman, Board Committees, the Executive Director & CEO and Management as part of initiative to enhance accountability.

The Board reviews the Board Charter from time to time to ensure its relevance in aiding the Board to discharge its duties and responsibilities in view of current laws and regulations. The Board Charter was last reviewed by the Board on 5 June 2020.


• The Board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness.

• The Board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company.

3.1 Code of Ethics, Whistle Blowing Policy and the Anti-Bribery & Corruption Policy

The Standard Code of Conduct, Business Ethics, Conflicts of Interest (collectively referred to as “Code of Ethics”) and Whistle Blowing Policy (“WBP”) of the Group are available on the Company’s website.

The Code of Ethics sets out such standards of ethics and conduct expected from the Board, Management and employees.

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.

The Board practices a zero-tolerance approach to bribery and corruption and this was enshrined in the Anti-Bribery & Corruption Policy published on Company’s website.

PRINCIPLE A: PART 2 - BOARD COMPOSITION


• Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

4.1 Board Composition

The Board composition as at FY2020, comprises six (6) Independent Non-Executive Directors out of nine (9) Directors in the Board. Therefore, the following prescribed requirements have been fully complied by the Board:-

• Paragraph 3.04(1) of the Listing Requirements which stipulates that at least 2 directors or 1/3 of the board of directors, whichever is the higher, are independent directors; and

• Practice 4.1 of the Code, where at least half of the board comprises Independent Directors.




PRINCIPLE A: PART 2 - BOARD COMPOSITION (Cont’d)

4.1 Board Composition (Cont’d)

The composition of the Board is 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’ Seri 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

YM Tunku Afwida Binti Dato’ Tunku Abdul Malek Independent Non-Executive Director

The profile of each Director is presented in the relevant 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 by 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.

4.2 Tenure of Independent Non-Executive Directors

The concept of independence adopted by the Board conforms to the definition of an Independent Director under paragraph 1.01 and Practice Note 13 of the Listing Requirements. An Independent Director is not a member of Management and is free from any business or other relationship that could interfere with the exercise of independent judgment or the ability to act in the best interests of the Group.

On 26 September 2007, Singapore Precision Engineering Limited and Singapore Aerospace Manufacturing Pte Ltd (“SAM Singapore”), collectively, acquired 44.787% of the entire issued share capital of the Company. Thus making SAM Singapore effectively the controlling shareholder.

In view of the foregoing, the NRC and the Board had determined that the period of nine (9) years shall commence with effect from 26 September 2007 or the date of appointment of each Independent Director, whichever shall be the later.

The Board is mindful of the practice in Code, whereby the tenure of an independent director is subject to a cumulative term limit of nine (9) years. Upon completion of the nine (9) year tenure, an independent director may continue to serve on the board as a non-independent director. If the Board intends to retain an independent director beyond the term limit of nine (9) years, it should justify and seek annual shareholders’ approval. The Board is also mindful of Practice 4.2 of the Code that requires the Board to seek annual shareholders’ approval through a two-tier voting process, if the Board continues to retain an independent director after the twelfth (12th) year.



4.2 Tenure of Independent Non-Executive Directors (Cont’d)

In ascertaining the independent status of the Directors, the Board continues to believe that tenure should not form part of the assessment criteria. It is of the view that the fiduciary duties of Directors are the primary concern of all Directors, regardless of their status. 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.

Dato’ Mohamed Salleh Bin Bajuri, Dato’ Seri Wong Siew Hai, 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 twelve (12) years.

The NRC had conducted annual performance evaluation and assessment on these Independent Non-Executive Directors and is of the opinion that the above Independent Directors, remain objective and independent in expressing their views and in participating in deliberation and decision making of the Board and Board Committees. Their length of service on the Board does not in any way interfere with their exercise of independent judgement and ability to act in the best interests of the Company. In addition, they have also confirmed and declared in writing that they are Independent Directors and have satisfied all the criteria of an Independent Director set out in Paragraph 1.01 of the Listing Requirements.

The Board has accepted the foregoing rationale and has agreed to retain the Independent Non-Executive Directors continue to act as Independent Non-Executive Directors of the Company, subject to approval of the shareholders at the forthcoming Annual General Meeting.

4.3 Diversity of Board and Senior Management

In the Company’s 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.

4.4 Gender diversity

As mentioned above, the Board did not set specific targets on gender diversity for the Company and currently, Datuk Dr. Wong Lai Sum and YM Tunku Afwida Binti Dato’ Tunku Abdul Malek are the female Directors on the Board. The Company achieved a 22% in women participation on the Board. Their profile can be found at the relevant section of this Annual report.

4.5 Board appointment

The Board is responsible for the appointment of new Directors, and the NRC is delegated with the role of screening and conducting an initial selection, which includes an external search, before making a recommendation to the Board. The NRC has the authority to obtain the services of professional recruitment firms to source for candidates for directorship or seek independent professional advice whenever necessary.

As part of the role of the NRC, the NRC also evaluates the suitability of potential candidates for appointment to the Board based on, amongst others, experience, commitment (including time commitment), competency, and (if applicable) such relevant regulatory criteria for assessing independence. The NRC will then recommend the successful candidates for approval and appointment by the Board.

During FY2020, the NRC had reviewed and recommended to the Board the appointment of YM Tunku Afwida Binti Dato’ Tunku Abdul Malek as an additional Independent Non-Executive Directors to the Board and as part of succession planning.





4.6 Nominating and Remuneration Committee

The NRC of the Company comprises exclusively of Non-Executive Directors, a majority of whom are Independent Directors.

The Members of the NRC and their meeting attendance during their tenure in office for the financial year under review are set out below.

Designation Directors Attendance

Chairman Dato’ Seri Wong Siew Hai 2/2

Members Mr. Tan Kai HoeMr. Lee Hock ChyeDatuk Dr. Wong Lai Sum

2/22/22/2

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 Committees and Board as a whole.

(b) Reviewed and adopted the revised Board Evaluation Form pursuant to the Code.(c) Reviewed the Board Evaluation Report for FY2020.(d) 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.(e) Reviewed the Directors’ retirement by rotation and recommended to the Board, Directors who are due for retirement

at the Annual General Meeting (“AGM”).(f) Reviewed the independence status of the Independent Non-Executive Directors.(g) 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.(h) Review the term of office and performance of Audit Committee.(i) Reviewed and recommended the Directors’ Fees and benefit payable to the Directors.(j) Reviewed list of trainings attended by the Directors during the financial year.(k) Reviewed and recommended to the Board the appointment of Independent Non-Executive Directors.(l) Reviewed the succession planning of the Directors of the Company.

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.




4.6 Nominating and Remuneration Committee (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 • The Board Chair – The First Among Equals• Cyber Security Awareness

Goh Wee Keng • Cyber Security Awareness

Shum Sze Keong • Sustainability in Business• Cyber Security Awareness• Sustainability Awareness• MIA’s Engagement Session with Audit Committee Members on

Integrated Reporting• Evaluating Effective Internal Audit Function – Audit Committee’s

Guide on how to

Dato’ Mohamed Salleh Bin Bajuri • Cyber Security Awareness

Dato’ Seri Wong Siew Hai • Cyber Security Awareness• FBI 2019 & DDD Workshop

Dato’ Sri Lee Tuck Fook • Cyber Security Awareness

Lee Hock Chye • Sustainability in Business

Datuk Dr. Wong Lai Sum • Cyber Security Awareness• FBI 2019 & DDD Workshop• Financial Language in Board Room• Bursa Thought Leadership Series – The Convergence of Digitalisation

& Sustainability • Bursa Thought Leadership Series – Sustainability Inspired Innovations:

Enablers of the 21st Century• Corporate Liability on Corruption

YM Tunku Afwida Binti Dato’ Tunku Abdul Malek

• Effective Enterprise Risk Management and Best Practices • Mobile World Congress 2019 – Intelligent Connectivity• Pelancaran Pelan Strategic Unit Integrity & Governans SPRM• Global telecoms trends, with a specific focus on 5G and its

implication on industry structure• Briefing on the Corporate Liability Provision under MACC Act

(Amendment) 2018• International Directors Summit 2019 – The Trust Compass: Resetting

the course• Presentation on 5G Technologies by Ericsson, Huawei, Nokia and ZTE• Fin Tech and its impact to Capital Markets• APOS 2019: Powering Asia’s Digital Ecosystem• Internal Audit for Board and Audit Committee• Site Visit to Korea Telecom Seoul, Korea• Site Visit to TM ONE Klang Valley Data Centre• Business Trend & Outlook

Upon review, the Board concluded that the Directors’ Trainings for FY2020 were adequate.





- Stakeholders are able to form an opinion on the overall effectiveness of the board and individual directors.

5.1 Annual assessment of the Directors, Board as a whole and Board Committees

The Board through the NRC conducts an annual evaluation to appraise the effectiveness of the Board as a whole, the effectiveness of the Board Committees and the further required mix of skills and experiences to enhance Board efficacy. The said evaluation on the Board covers 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, supply of sufficient and timely information to the Board and also overall effectiveness and efficiency in discharging their duties.

The results of the evaluation are then collated, distilled, summarised and reported to the Board by the NRC Chairman with an aim towards continuous improvement of the Board and Board Committees.

In addition to the foregoing, the NRC also assesses the independence of each of the 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. All findings by the NRC will be reported to the Board.

During FY2020, the NRC conducted an assessment of the Directors who are subject to retirement at the forthcoming AGM in accordance with the provisions of the Constitution of the Company. In this regard, Dato’ Mohamed Salleh Bin Bajuri who will due for retirement at the forthcoming AGM had indicated that he would not seek re-election and hence will retire from office at the conclusion of the AGM. Hence, the NRC had reviewed and proposed re-election of the relevant directors to the Board for their recommendation to the shareholders for re-election of the relevant directors at the forthcoming AGM.


- The level and composition of remuneration of directors and senior management take into account the company’s desire to attract and retain the right talent in the board and senior management to drive the company’s long-term objectives.

- Remuneration policies and decisions are made through a transparent and independent process.

6.1 Remuneration Policy

Each Director is paid a Director’s fee of RM50,000 per annum for serving as a member of the Board.

The Director serving as the Chairman of the relevant Board Committee receives an additional annual remuneration as set out below:

Board Committee Chairman’s Annual Remuneration

AC RM10,000

NRC RM7,500

RSC RM7,500

The rest of the Directors who serve as ordinary members to the relevant Board Committee receives an additional annual remuneration of RM5,000.

The Directors’ fees and remuneration are appropriate to their contribution, taking into consideration effort, commitment and time spent as well as the responsibilities involved.

All Non-Executive Directors are also paid a meeting allowance of RM2,000 for each meeting attended. The Executive Director & CEO is not entitled to any meeting allowance.



6.1 Remuneration Policy (Cont’d)

The Board collectively determined the remuneration for the Non-Executive Directors to ensure the same is appropriately reflective of experience and the level of responsibilities and contributions including the number of the scheduled meetings for the Board, and Board Committees; and are competitive compared with the prevailing market practices. Each of the Non-Executive Directors abstained from deliberating and voting on his or her own remuneration.

For FY2020, the NRC had performed its duty to assess the remuneration package of its Executive Director.

In addition, the NRC had also deliberated on the Directors’ fees for the financial year ending 31 March 2021 (“FY2021”) which is subject to the shareholders’ approval at the forthcoming AGM. The NRC recommended that the fees and benefits payable to the Directors shall remain the same as FY2020.


- Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance.

7.1 Details of the remuneration of Directors

Pursuant to Section 230 of the Companies Act 2016, the fees of the directors and any benefits payable to the directors of a listed company and its subsidiaries shall be approved by a general meeting. The relevant resolutions in relation to the Directors’ remuneration payable to the Directors for FY2021 shall be presented to the shareholders for approval at the forthcoming AGM.

The remuneration of each director for FY2020 is set out as follows:-

Name

Amount in Ringgit Malaysia (RM)

Directors Fees Meeting Allowance

Salaries, Bonuses, Benefits-in-kindandother emoluments

EXECUTIVE DIRECTOR

Goh Wee Keng, Jeffrey 50,0001 -

NON EXECUTIVE DIRECTORS

Tan Kai Hoe 55,0002 14,000 -

Shum Sze Keong 57,917 20,000 -

Dato’ Mohamed Salleh Bin Bajuri 61,458 22,000 -

Dato’ Seri Wong Siew Hai 62,500 18,000 -

Dato’ Sri Lee Tuck Fook 55,000 16,000 -

Lee Hock Chye 63,333 22,000 -

Datuk Dr. Wong Lai Sum 62,709 20,000 -

YM Tunku Afwida Binti Dato’ Tunku Abdul Malek 12,9163 2,000 -

Notes:1. Paid directly to SAM Singapore where he is employed as at the date of this Report.2. Paid directly to Accuron where he is employed as at the date of this Report.3. The fee was prorated from the date of appointment, i.e. 1 January 2020 up to financial year ended 31 March 2020.





7.2 Remuneration of Senior Management

The Company considers the remuneration of the Senior Management to be sensitive and proprietary in view of the competitive nature of human resource market. Thus, the Company does not intend to adopt the recommendation to disclose the detailed remuneration of each member of Senior Management in bands of RM50,000 on a named basis. Furthermore, this is also to preserve confidentiality, negative impact arising from the disclosure, and the larger need to maintain a stable work environment to meet long-term strategic goals.

The remuneration package of the employees of the Company has been benchmarked with the industry and is in line with industry practices. In addition, their annual increments and bonus payouts are based on performance.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

PART 1 - AUDIT COMMITTEE


- There is an effective and independent Audit Committee.- Theboard isable toobjectively reviewtheAuditCommittee’sfindingsand recommendations.Thecompany’s

financialstatementisareliablesourceofinformation.

8.1 The Chairman of the Audit Committee is not the Chairman of the Board

The Company complied with the Practice 8.1 of the Code which stipulates that the Chairman of the AC is not the Chairman of the Board.

The AC is an independent Board Committee, led by an Independent Non-Executive Director, which assists the Board in the discharge of its responsibilities for corporate governance, internal controls and reporting.

The terms of reference of the AC is available on the Company’s Website.

The members of the AC possess vast experience and skills in understanding and attending to matters falling under the purview of the AC. They are more than qualified to review the accuracy of the Group’s financial statements from various perspectives in view of each member’s skills and qualifications prior to recommendation of the same to the Board.

Further details pertaining to the AC is set out in the AC Report contained in this Annual Report.

8.2 Former key audit partner

Practice 8.2 of the Code requires the AC to have a policy that requires a former key audit partner to observe a cooling-off period of at least two years before being appointed as a member of the AC.

The Terms of Reference of the AC contain such policy.

8.3 Suitability, objectivity and independence of the external auditor

In accordance with the Terms of Reference of the AC, the AC, on an annual basis should review and monitor the suitability and independence of the external auditors.

The External Auditors have an obligation to bring to the attention of the Board, the AC and the Management any significant defects in the Group’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 Management.

The AC annually assesses the External Auditors against a set of assessment criteria that has been approved by the Board. The scope of assessment which is described in the AC Report in this Annual Report includes, amongst others, an assessment on the suitability, objectivity and independence of the External Auditors. All findings from the AC are then reported to the Board for further action, if any.

The Board, through the AC, has assessed and affirmed the independence, objectivity and suitability of the External Auditors to continue in office.



PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (Cont’d)

PART 1 - AUDIT COMMITTEE (Cont’d)

8.3 Suitability, objectivity and independence of the external auditor (Cont’d)

In compliance with the by-laws of the Malaysian Institute of Accountants (“MIA”), the Audit Partners are rotated every seven (7) 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 AC is satisfied with the competence and independence of the External Auditors and had recommended the re-appointment of the External Auditors for shareholders’ consideration at the AGM.

The Internal Audit function of the Company works with the External Auditors to ensure as complete an audit coverage of the Group’s activities as possible. In view of this, the Company has established a seamless arrangement to meet the professional requirements of the External Auditors.

Details on the audit fees payable to External Auditors; the key features of the relationship between the AC and the External Auditors; and a summary of the activities of the AC during the financial year are set out in the AC Report in this Annual Report.

8.4 QualificationoftheAuditCommittee

All AC members are financially literate and three of the AC members are members of the MIA thus fulfilling the requirement under paragraph 15.09(1)(c)(i) of the Listing Requirements which requires at least one (1) of the AC members to be a member of the MIA.

AC members acknowledge the need for continuous education and trainings. For the year under review, the Company’s Auditors briefed the AC members on the developments in accounting and auditing standards, practices and rules.

8.5 Composition of the Audit Committee

The AC comprises six (6) Non-Executive Directors, of whom five (5) are Independent Directors.

This is in compliance with Paragraph 15.09(1)(c) of the Listing Requirements, which stipulates “all the audit committee members must be non-executive directors, with a majority of them being independent directors”.

In terms of the Step-Up Practice 8.4 of the Code that recommends that the AC should comprise solely of Independent Directors, the Company does not intend to adopt such step-up practice for the time being.

PRINCIPLE B: PART 2 - RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK


- Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.

- The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed.

9.1 Establishment of risk management and internal control framework

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 that is to identify, monitor, control and report on principal risks faced by the Group on regular basis.

9.2 Features of its risk management and internal control framework

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.



PRINCIPLE B: PART 2 - RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (Cont’d)

9.3 Risk&SustainabilityCommittee(“RSC”)

The members of RSC, comprises of Independent and Non-Independent Non-Executive Directors. The Members of the RSC and their meeting attendance during their tenure in office for the financial year under review are as set out below.

Designation Directors Attendance

Chairman Dato’ Mohamed Salleh Bin Bajuri 2/2

Members Dato’ Seri Wong Siew HaiDatuk Dr. Wong Lai Sum Shum Sze Keong

2/21/11/1

Note: On 29 August 2019, Datuk Dr. Wong Lai Sum had relinquished her position as a member of RSC and in place thereof, Mr. Shum Sze Keong was appointed as a member of RSC on 29 August 2019. Dato’ Mohamed Salleh Bin Bajuri was also re-designated as Chairman of RSC.

Dato’ Mohamed Salleh Bin Bajuri is the representative of the AC to the RSC 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 that 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 that should be brought to the attention of the RSC.

The RSC is tasked pursuant to its Terms of Reference to assist the Board with risk management (i.e., reviewing and recommending the risk management policies and strategies for the Group in managing overall risk exposure of the Group); and sustainability (i.e., reviewing and recommending sustainability strategies and performance in advancing the Group’s sustainability ambition and direction).

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

(a) Identified and monitored the top 5 Group Risks by business segments and on Group-wide basis.(b) Reviewed the Key Risks Indicators (“KRI”) and worked with management to minimise its impact to the Group.(c) Received update on Business Continuity Plan from management and monitored developments.(d) Reviewed Sustainability Statement.(e) Reviewed Insurance Coverage of the Group.


- Companies have an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework.

10.1 Internal audit function

The key features and state of internal control and risk management of the Group are set out 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 Listing Requirements. Detailed information on the Internal Audit function is outlined in the AC Report.

None of the Internal Audit personnel has any relationship or conflict of interest that could impair their objectivity and independence in conducting their Internal Audit functions.


PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

PART 1 - COMMUNICATION WITH STAKEHOLDER


- There is continuous communication between the company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations.

- Stakeholders are able to make informed decisions with respect to the business of the company, its policies on governance, the environment and social responsibility.

11.1 Effective, transparent and regular communication with its stakeholders

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.

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.

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].

PART 2 - CONDUCT OF GENERAL MEETINGS


- Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings.

12.1 Notice for an Annual General Meeting

General meeting serves as the principal platform for the Board and Management to engage with shareholders and encourage effective shareholders’ communication on the Group’s performance, corporate and business developments and any other matters affecting shareholder interests. The Company Secretaries, by order of the Board, served a notice of AGM to all shareholders of the Company at least 28 days prior to its forthcoming AGM to provide the shareholders sufficient time to consider the proposed resolutions that will be discussed and decided at the AGM. Notice of the AGM clearly sets out details of the resolutions proposed accompanied by explanatory notes on the rationale of each resolution to enable the shareholders to make informed decisions in exercising their voting rights.

The Notice of AGM also provides information to the shareholders with regard to, amongst others, their entitlement to attend the AGM, the right to appoint a proxy and the qualifications of a proxy.

Before the commencement of AGM, the management will give a presentation that include detail of performance, key developments and financial results for the reporting year. The Board is satisfied with the current programme at AGM and there have been no major contentious issues noted with shareholders.

To further promote participation of members through proxy(ies), which is in line with the insertion of Paragraph 7.21 of the Listing Requirements, the Company’s Constitution includes the right of proxies to speak at general meetings, to allow a member who is an exempt authorised nominee to appoint multiple proxies for each omnibus account it holds and expressly disallows any restriction on proxy’s qualification.


mailto:[email protected]


PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS (Cont’d)

PART 2 - CONDUCT OF GENERAL MEETINGS (Cont’d)

12.2 Attendance in General Meetings

The general meeting also serves as an avenue for the Chairman and the Board members to engage in a two-way communication with shareholders where the shareholders are encouraged to participate in the question-and-answer session with the Board and exercise their right to vote on the proposed resolutions. The Board will ensure that all Board members, particularly the chairperson of each Board Committee will attend general meetings to facilitate engagement with shareholders and to address any relevant questions and concerns raised by the shareholders. The External Auditors will be present at the AGM to respond to any queries from shareholders on the audit conducted, the preparation and content of the auditors’ report, the accounting policies adopted by the Group, and the independent audit review of the Group’s financial position.

12.3 Voting

The Company’s General Meeting is not held in a remote location. The Board conducts poll voting for all resolutions set out in the notice of a general meeting and posts a summary of key matters discussed at the AGM on the Company’s website.

Shareholders are allowed to appoint any person(s) as their proxy(ies) to attend, participate, speak and vote in his/her stead at a general meeting.

The Board has adopted electronic voting to facilitate greater shareholder participation at general meetings.

COMPLIANCE STATEMENT

The Board is satisfied that to the best of its knowledge, the Company is substantially in compliance with the principles and practices set out in the Code as well as the relevant Listing Requirements for the FY2020. Any practices in the new Code that have not been implemented during the financial year will be reviewed by the Board and implemented where possible and relevant to the Group’s business.

This Statement is approved by the Board of Directors on 5 June 2020.



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;(e) Oversee the implementation of the Anti-Bribery Policies and Procedures for the Group;(f) Investigate any concerns received on possible improprieties within the Group; and(g) Evaluate the internal and external audit processes.

The Board will review the terms of reference (“TOR”) of the AC from time to time (if so required) to ensure that the AC continues to carry out its functions effectively. The last review of the TOR by the Board was conducted on 5 June 2020. The Company has uploaded the TOR onto the Company’s website at www.sam-malaysia.com.

COMPOSITION

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

Designation Designation Attendance

Chairman Datuk Dr. Wong Lai Sum (Independent Non-Executive Director)* appointed as Chairman on 27 November 2019

2/2

Members Lee Hock Chye(Independent Non-Executive Director)

4/4

Dato’ Mohamed Salleh Bin Bajuri(Independent Non-Executive Director)

4/4

Dato’ Sri Lee Tuck Fook(Independent Non-Executive Director)

3/4

Shum Sze Keong(Non-Independent Non-Executive Director)

4/4

YM Tunku Afwida Binti Dato’ Tunku Abdul Malek(Independent Non-Executive Director)* appointed on 28 February 2020

Not Applicable

Dato’ Mohamed Salleh Bin Bajuri, Dato’ Sri Lee Tuck Fook and YM Tunku Afwida Binti Dato’ Tunku Abdul Malek are Chartered Accountants registered with the Malaysian Institute of Accountants. The above composition of the AC meets the requirements of paragraph 15.09(1)(c) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”), which stipulates that at least one member of the AC must be a qualified accountant.

All members of the AC are financially literate and are able to analyse and interpret financial statements to effectively discharge their duties and responsibilities as members of the AC.

The Nominating and Remuneration Committee (“NRC”) had on 20 May 2020 reviewed the terms of office and performance of the AC members. Based on its review, the NRC is satisfied that the AC and its members have discharged their functions, duties and responsibilities in accordance with the TOR and supported the Board in ensuring the Group upholds appropriate corporate governance standards.

AUDIT COMMITTEE REPORT

http://www.sam-malaysia.com


SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

In line with the TOR, the AC held 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”).

(b) Received verbal assurance from the CFO that adequate processes and controls were in place for an effective and efficient financial statements close process in the preparation of the quarterly consolidated financial statements.

External auditors

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

of internal control and any other areas of concern arising from their interim and final audit. No major concerns were raised by the External Auditors.

(d) Reviewed and assessed the performance of the existing External Auditors for the Group.(e) Reviewed with External Auditors any significant findings in relation to audit.(f) Discussed reservation arising from audit and any other matters the External Auditors had wished to discuss.(g) Reviewed the assistance provided by the Group to the External Auditors and the overall conduct of the audit.(h) Reviewed and evaluated the independence of the External Auditors, obtained assurance of independence from the External

Auditors and recommended the re-appointment of the Group’s External Auditors.

Internal auditors

(a) 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.

(b) Reviewed the internal audit plan adopted by the Internal Audit function.(c) 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.

(d) Reviewed the implementation of these recommendations through follow up audit reports from the Internal Auditors.(e) Reported to the Board on its activities and significant findings and results.(f) Reviewed any appraisal or assessment of the performance of the outsourced service providers.(g) Reviewed the circular to shareholders on recurrent related party transactions (“RPPT”) of a revenue nature and trading

nature.(h) Reviewed related party transactions (“RPT”) entered into by the Group.(i) Reviewed the RRPT and ensured that these RRPT comply with approved procedures and policies and the mandate from the

shareholders.(j) 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 and also the AC’s Report prior to the Board’s approval for inclusion in the Annual Report.

RPT and RRPT

(a) Reviewed the reports of RPT and RRPT to ensure the actual transacted amounts were within the prescribed approved limit.(b) Reviewed and ensured that proper records are maintained to identify and capture all the RPT and RRPT.(c) Reviewed the proposed renewal of existing and new shareholders’ mandate for RRPT of a revenue and/or trading nature

before recommending to the Board.(d) Reviewed the non-recurrent related party transaction which transaction is below 0.25% of percentage ratios, and not subject

to announcement to Bursa Malaysia.

AUDIT COMMITTEE REPORT (Cont’d)


INTERNAL AUDIT FUNCTION

The internal audit function is outsourced to external service providers. The AC is assisted by in house internal audit personnel on the administrative matters. 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 approved by the AC, audit work is conducted by outsourced internal audit service providers. The Group’s Internal Audit function reports directly to the AC.

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. These processes provide reasonable assurance that such internal control system would continue to operate satisfactorily and effectively in the Group. The Internal Audit function also conducts investigations and interviews when required or at the request of the AC.

The Internal Audit function submits the internal audit report with audit findings and recommendations on areas of concern to the AC for its review and deliberation on a quarterly basis.

During the financial year, internal audit was conducted in the following areas: (a) Procurement Management (b) Inventory Management (c) Production Planning and Controls Management

The AC is pleased to confirm that the results of each of these audits are satisfactory.

During the financial year, the total costs incurred for the Internal Audit Function was RM301,476.

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 Management Discussion and Analysis and the Sustainability Reporting section of 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.

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 AC will identify the risks from the internal audit carried out and report to the Risk & Sustainability Committee (“RSC”) and for RSC’s further action if any.

The RSC reviews and recommends 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.

Relationship with external auditors

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 Group. The External Auditors have an obligation to bring to the attention of the Board of Directors, the AC and Management any significant defects in the Group’s systems of reporting, deficiencies in internal control and failure to comply with approved accounting standards and legal and regulatory requirements.

The audit fees payable by the Company and by the Group to the External Auditors amounted to RM65,000 and RM244,000 respectively. The non-audit fees payable by the Company and by the Group to the External Auditors and a company affiliated to the External Auditors amounted to RM120,000.

The Board, through the AC, has assessed and affirmed the independence and suitability of the External Auditors to continue in office annually. The scope of the assessment covered calibre 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 and threshold 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 Company and of the Group 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 compliance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act 2016.

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.

This AC Report was approved by the Board of Directors on 5 June 2020.



BOARD RESPONSIBILITY

The Board of Directors (“Board”) of SAM Engineering & Equipment (M) Berhad (“Company” or “SAMEE”) affirms its overall responsibility for the system of internal control and risk management of the Company and its subsidiaries (“Group”) 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 its 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 independent service providers. Internal control issues as well as actions taken by Management to address these issues are tabled by the outsourced service providers for deliberation during the AC meetings.

Each business unit and their supporting departments have 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 and is embedded in the Group’s management systems. In order to manage risks 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 and Sustainability Committee (“RSC”) to undertake the review of the existing risk management framework and risk dashboards, which detail the likelihood and impact of the significant risks and their corresponding action plans.

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

Risk Management Framework

The 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.

EventIdentification

• 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 con-sidering both likelihood and impact.

• Evaluate possible responses including avoid, accept, reduce and sharing of the 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 are held.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


RISK MANAGEMENT (CONT’D)

Risk Management Framework (Cont’d)

The Group’s overall risk management framework is as illustrated in the diagram below: (Cont’d)

Information and Communication

• Relevant information for decision-making is captured and communicated timely to enable management 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 risks identified and shortlisted principal risks will be presented to Management.• Track and report the outcome of Enterprise Risk Management through risk register dashboards to Management and Risk

and Sustainability 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.

INTERNAL CONTROL SYSTEM

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 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 close process in the preparation of each quarterly consolidated financial statements.

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 documents 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 outsourced service providers report directly to the AC to assist the AC in discharging their duties and responsibilities.

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

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (Cont’d)


INTERNAL CONTROL SYSTEM (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) An Anti-Bribery and Corruption Policy is established for the purpose of setting the Group’s “top-down” tone for a zero-tolerance approach towards bribery and corruption.

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

6. Business Continuity Management

The Company and its major subsidiaries have established the Business Continuity Management (“BCM”) Policy which sets out the objectives, scope, strategies and emergency response procedures as well as the line of authority and responsibility for effective implementation of business continuity management throughout the Group. In addition, Business Continuity Plans are established for critical business functions and critical application systems. These plans were reviewed and updated and table top mock runs were also conducted. In addition, a disaster recovery mock run was also carried out on the core information technology systems to ascertain the preparedness in response to business disruption situations. Findings and feedbacks were gathered and analysed for continual improvement.

* Note: SAM Precision (Thailand) Limited was excluded from the BCM.

7. Information Technology (“IT”) Security and Cyber Resilience

The security and resiliency of the Group’s information and technology infrastructure is crucial to maintaining its business operations to meet customers’ and stakeholders’ expectations and in safeguarding its reputation. The Information Technology Cybersecurity and Incident Response Policy together with Information Technology Disaster Recovery Procedures were established to ensure that the Group’s information systems and data are properly safeguarded and adequately protected from major threats such as errors, frauds, privacy violations, service disruptions and natural disasters.

Continuous and systematic reviews are conducted by Group IT Department to identify potential threats including cyber threats and to enhance the technology infrastructure, processes and controls to strengthen the Group’s ability to prevent, detect and respond to any potential business disruptions and systems failures. In addition, external consultants are engaged to carry out targeted assessments on IT core risks such as cyber security and resilience assessments to benchmark the existing IT capabilities against international standards and best practices.



REVIEW OF THIS STATEMENT

Audit Committee

The AC has reviewed this Statement and addressed individual lapses in internal controls and risk management via the outsourced service providers. 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 Auditors

The External Auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in Audit and Assurance Practice Guide (“AAPG”) 3, 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 financial year ended 31 March 2020 (“FY2020”), 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 Issuers, or

b) is factually inaccurate.

AAPG 3 does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the 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’s system of risk management and internal controls do not eliminate the possibility of collusion, deliberate circumvention of procedures by employees, 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.

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 was approved by the Board of Directors on 5 June 2020.



OTHER INFORMATION

Recurrent Related Party Transactions (RRPT) of revenue or trading nature for the year ended 31 March 2020

Details of RRPT made during the financial year ended 31 March 2020 pursuant to the shareholders’ mandate obtained by the company at the Annual General Meeting held on 28 August 2019 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

SAMEE Group 74,013 Tan Kai Hoe, Goh Wee Keng, Shum Sze Keong, Teo Siew Geok, Tan Guan Thong, Ng Boon Keat, Temasek, Accuron, SAM Singapore

Tan Kai Hoe is the Non-Independent Non-Executive Chairman of SAMEE, Director and Deputy Chairman of SAM Singapore and Director and President & CEO of Accuron.

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

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

Teo Siew Geok is the Chief Financial Officer of SAMEE Group, Director of SAM (Suzhou) Co. Ltd., Director of SAM Technologies (M) Sdn Bhd, a subsidiary of SAMEE.

Tan Guan Thong is the Chief Operating Officer of SAM Singapore Group, Director of certain subsidiaries of SAMEE and SAM (Suzhou) Co. Ltd.

Ng Boon Keat, Chief Operating Officer of SAMEE Group, Director of certain subsidiaries of SAMEE and Aviatron.

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

Sales of fabrication/ machining services/special service

9,126

Provision of corporate management services, engineering and administrative services

1,218

Sale of assembly, machining and special process services

-

Purchase of fabrication/ machining services/special process

(4,611)

Purchase of corporate management services, engineering and administrative services/fitting and quality assurance services

(3,223)

Rental of office, factory premises and machines

(5,874)


Recurrent Related Party Transactions (RRPT) of revenue or trading nature for the year ended 31 March 2020 (Cont’d)

Notes

SAMEE : SAM Engineering & Equipment (M) Berhad

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

SAM Singapore : Singapore Aerospace Manufacturing Pte Ltd, the immediate holding company of SAMEE

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

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

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

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

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.

OTHER INFORMATION (Cont’d)

FINANCIAL STATEMENTS

71 Directors’ Report

75 Statements of Financial Position

77 Statements of Profit or Loss and Other Comprehensive Income

79 Consolidated Statement of Changes in Equity

81 Statement of Changes in Equity

82 Statements of Cash Flows

87 Notes to the Financial Statements

163 Statement by Directors

163 Statutory Declaration

164 Independent Auditors’ Report


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 2020.

Principal activities

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

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

Ultimate holding company

The Company is an indirect 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 6 to the financial statements.

Results

GroupRM’000

CompanyRM’000

Profit for the year attributable to owners of the Company 79,823 40,519

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 declared and paid by the Company were as follows:

i) A total dividend of RM39,266,005 in respect of the financial year ended 31 March 2019 comprising of:

• a first interim single tier dividend of 17.43 sen per ordinary share was declared on 28 May 2019 and paid on 13 August 2019; and

• a special single tier dividend of 11.62 sen per ordinary share was declared on 28 May 2019 and paid on 13 August 2019.

ii) In respect of the financial year ended 31 March 2020:

• a first interim single tier dividend of 14.76 sen per ordinary share was declared on 5 June 2020 and to be paid on 26 August 2020.

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

DIRECTORS’ REPORTfor the year ended 31 March 2020


Directors of the Company

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

Tan Kai HoeGoh Wee KengShum Sze KeongDato’ Mohamed Salleh Bin BajuriDato’ Seri Wong Siew HaiDato’ Sri Lee Tuck FookLee Hock ChyeDatuk Dr. Wong Lai SumYM Tunku Afwida Binti Dato’ Tunku Abdul Malek (Appointed on 1 January 2020)

Directors of subsidiaries

Pursuant to Section 253(2) of the Companies Act 2016, the Directors who served in the Company’s subsidiaries during the financial year until the date of this report are as follows:

Goh Wee KengNg Boon KeatTan Guan ThongTeo Siew GeokPeter Lim Hee Seng (Appointed on 9 December 2019)Lim Kean Thye (Resigned on 9 December 2019)

Directors’ interests in shares

The interests and deemed interests in the ordinary shares 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 1.4.2019

Bought/(Sold)

Balance at 31.3.2020

Interests in the Company:

Goh Wee Keng

Direct interests:

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


Indirect interests:

- others* 11,800 - 11,800

* Interests pursuant to Section 59(11)(c) of the Companies Act 2016.

None of the other Directors holding office at 31 March 2020 had any interest in the ordinary shares of the Company and of its related corporations during the financial year.

DIRECTORS’ REPORT (Cont’d)

for the year ended 31 March 2020




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.

Issue of shares and debentures

There were no changes in the 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 other than through the Employees’ Share Grant Scheme as disclosed in the financial statements.

Employees’ Share Grant Scheme

At an extraordinary general meeting held on 14 August 2018, the Company’s shareholders approved the establishment of the Employees’ Share Grant Scheme (“ESGS”) of up to 5% of the total number of issued shares of the Company to eligible employees of the Group. The ESGS will be administered by the ESGS Committee in accordance with the By-Laws of the ESGS.

The salient features of the scheme are, inter alia, as follows:

(a) The ESGS shall be in force for a period of 5 years from 30 November 2018 (“ESGS Period”) and may be extended at the discretion of the Board upon the recommendation of the ESGS Committee provided that the ESGS Period shall not in aggregate exceed a duration of 10 years from 30 November 2018, or such longer duration as may from time to time be permitted by the relevant authorities.

(b) The total number of shares which may be made available under the ESGS shall not exceed in aggregate 5% of the total number of issued shares of the Company (excluding treasury shares, if any) at any point in time during the ESGS Period.

(c) Eligible employees are employees employed by and are on the payroll of any company in the Group (excluding dormant subsidiaries) and his/her employment has been confirmed by the company who are at least 18 years of age and is not undischarged bankrupt. The Directors and senior management of the Group will not participate in the ESGS;

(d) Not more than 10% of the aggregate number of shares to be issued under the ESGS shall be allocated to any individual eligible employee who, either singly or collectively through persons connected with the eligible employee, holds 20% or more of the total number of issued shares of the Company (excluding treasury shares, if any); and

(e) The shares issued pursuant to the ESGS shall rank pari passu in all respects with the existing shares of the Company.

Indemnity and insurance costs

During the financial year, the total cost of insurance amounting to RM48,000 was incurred by the Company to cover the Directors and officers of the Group and of the Company for a total sum insured of RM40 million. There were no indemnity given to or insurance effected for the auditors of the Group and of the Company.


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

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 2020 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, have indicated their willingness to accept re-appointment.

The auditors’ remuneration is disclosed in Note 21 to the financial statements.

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

_________________________________ _________________________________Tan Kai Hoe Goh Wee KengDirector Director

Penang,

Date: 18 June 2020




STATEMENTS OF FINANCIAL POSITIONas at 31 March 2020

Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Assets

Property, plant and equipment 3 306,605 277,080 1,000 606

Right-of-use assets 4 53,179 - - -

Intangible assets 5 13,901 15,094 356 310

Investments in subsidiaries 6 - - 276,692 266,692

Deferred tax assets 7 4,104 2,504 - -

Prepayments 8 15,250 25,517 - -

Total non-current assets 393,039 320,195 278,048 267,608

Inventories 9 144,930 116,622 - -

Contract assets 10 139,359 126,430 - -

Trade and other receivables 8 222,371 199,788 3,416 15,520

Derivative financial assets 11 111 506 - -

Current tax assets 7 3,187 5 47

Cash and bank balances 14,792 23,992 339 613

Total current assets 521,570 470,525 3,760 16,180

Total assets 914,609 790,720 281,808 283,788

Equity

Share capital 12 212,731 212,731 212,731 212,731

Reserves 13 397,157 322,899 56,765 54,848

Equity attributable to owners of the Company 609,888 535,630 269,496 267,579


Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Liabilities

Loans and borrowings 14 19,916 25,958 - -

Lease liabilities 35,658 - - -

Deferred income 16 1,569 1,342 - -

Derivative financial liabilities 11 48 - - -

Provisions 17 268 671 - -

Deferred tax liabilities 7 11,308 6,970 - -

Total non-current liabilities 68,767 34,941 - -

Loans and borrowings 14 62,323 73,850 - -

Lease liabilities 7,193 - - -

Deferred income 16 2,297 188 - -

Trade and other payables 18 138,624 126,731 12,312 16,209

Contract liabilities 10 4,569 462 - -

Derivative financial liabilities 11 3,880 1,365 - -

Provisions 17 8,387 6,900 - -

Current tax liabilities 8,681 10,653 - -

Total current liabilities 235,954 220,149 12,312 16,209

Total liabilities 304,721 255,090 12,312 16,209

Total equity and liabilities 914,609 790,720 281,808 283,788

STATEMENTS OF FINANCIAL POSITION (Cont’d)

as at 31 March 2020

The notes on pages 87 to 162 are an integral part of these financial statements.


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEfor the year ended 31 March 2020

Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Revenue 19 938,667 754,966 56,787 67,510

Cost of sales (790,850) (635,487) - -

Grossprofit 147,817 119,479 56,787 67,510

Other operating income 15,426 19,282 31 29

Distribution expenses (2,101) (2,367) (32) (127)

Administrative expenses (40,302) (33,863) (14,681) (12,925)

Net loss on impairment of financial instruments and contract assets 21 (9,141) (1,016) (3) (15)

Other operating expenses (7,598) (4,061) (1,583) (8,119)

Results from operating activities 104,101 97,454 40,519 46,353

Interest income 84 97 - -

Finance costs 20 (4,534) (2,754) - -

Net finance costs (4,450) (2,657) - -

Profitbeforetax 21 99,651 94,797 40,519 46,353

Tax expense 23 (19,828) (16,284) - -

Profitfortheyear 79,823 78,513 40,519 46,353


Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

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

Cash flow hedge 756 (3,965) - -

Foreign currency translation differences for foreign operations 32,281 22,114 - -

Total other comprehensive income for the year, net of tax 33,037 18,149 - -

Total comprehensive income for the year 112,860 96,662 40,519 46,353

Profitfortheyearattributableto:

Owners of the Company 79,823 78,513 40,519 46,353

Total comprehensive income for the year attributable to:

Owners of the Company 112,860 96,662 40,578 46,353

Basic/Diluted earnings per ordinary share (sen) 24 59.06 58.09

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (Cont’d)




CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 March 2020

Attributable to owners of the Company

Non-distributable Distributable

Share capital

RM’000

Hedging reserve RM’000

TranslationreserveRM’000

RetainedearningsRM’000

Total equity

RM’000

At 1 April 2018 212,731 2,572 39,477 215,763 470,543

Other comprehensive (expense)/income for the year

- Cash flow hedge - (3,965) - - (3,965)

- Foreign currency translation differences for foreign operations - - 22,114 - 22,114

Total other comprehensive (expense)/income for the year - (3,965) 22,114 - 18,149

Profit for the year - - - 78,513 78,513

Total comprehensive (expense)/income for the year - (3,965) 22,114 78,513 96,662

Transaction with owners of the Company

- Dividends to owners of the Company (Note 25) - - - (31,575) (31,575)

At 31 March 2019 212,731 (1,393) 61,591 262,701 535,630

Note 12 Note 13




Share capital

RM’000

Employees’ share grant

scheme reserveRM’000

Hedging reserve RM’000

TranslationreserveRM’000

RetainedearningsRM’000

Total equity

RM’000

At 1 April 2019 212,731 - (1,393) 61,591 262,701 535,630

Other comprehensive income for the year

- Cash flow hedge - - 756 - - 756

- Foreign currency translation differences for foreign operations - - - 32,281 - 32,281

Total other comprehensive income for the year - - 756 32,281 - 33,037

Profit for the year - - - - 79,823 79,823

Total comprehensive income for the year - - 756 32,281 79,823 112,860

Transactions with owners of the Company

- Dividends to owners of the Company (Note 25) - - - - (39,266) (39,266)

- Share-based payment transactions - 664 - - - 664

- 664 - - (39,266) (38,602)

At 31 March 2020 212,731 664 (637) 93,872 303,258 609,888

Note 12 Note 13

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Cont’d)




STATEMENT OF CHANGES IN EQUITYfor the year ended 31 March 2020



Sharecapital

RM’000

Employees’ Share Grant

Scheme reserveRM’000

Retained earningsRM’000

Total equity

RM’000

At 1 April 2018 212,731 - 40,070 252,801

Profit for the year representing total comprehensive income for the year - - 46,353 46,353

Transaction with owners of the Company

- Dividends to owners of the Company (Note 25) - - (31,575) (31,575)

At 31 March 2019/1 April 2019 212,731 - 54,848 267,579

Profit for the year representing total comprehensive income for the year - - 40,519 40,519

Transactions with owners of the Company

- Share-based payment transactions - 664 - 664

- Dividends to owners of the Company (Note 25) - - (39,266) (39,266)

- 664 (39,266) (38,602)

At 31 March 2020 212,731 664 56,101 269,496

Note 12 Note 13



Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Cashflowsfromoperatingactivities

Profit before tax 99,651 94,797 40,519 46,353

Adjustments for:

Property, plant and equipment

- depreciation 3 42,188 34,212 187 240

- gain on disposal 21 (45) (9,060) - -

- written off/(back) 2,143 (8) - -

Depreciation of right-of-use assets 4 7,704 - - -

Intangible assets

- amortisation 5 2,771 2,322 64 25

- written off - 12 - -

Amortisation of government grant (370) (180) - -

Fair value loss on derivatives 21 3,714 248 - -

Interest income (84) (97) (31) (24)

Interest expense 20 3,364 2,754 - -

Accretion of interest on lease liabilities 20 1,170 - - -

Dividend income 19 - - (44,400) (55,870)

Employees’ Share Grant Scheme expenses 15 664 - 59 -

Impairment loss on

- amount due from a subsidiary - - 3 15

- investments in subsidiaries 21 - - - 6,237

Provision for

- warranties 17 2,192 2,416 - -

- onerous contract 17 - 45 - -

Warranty written off 17 - (168) - -

Reversal of provision for

- warranties 17 (924) (1,964) - -

- onerous contract 17 (657) - - -

Operatingprofit/(loss)beforechanges in working capital 163,481 125,329 (3,599) (3,024)

STATEMENTS OF CASH FLOWSfor the year ended 31 March 2020


STATEMENTS OF CASH FLOWS (Cont’d)


Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Changes in working capital:

Trade and other receivables A (21,618) (32,508) 12,706 (5,781)

Inventories (31,742) (25,928) - -

Contract assets (12,929) (18,873) - -

Trade and other payables 11,608 (4,707) 4,503 2,301

Contract liabilities 4,107 (1,707) - -

Provisions (45) (3) - -

Deferred income 2,630 998 - -

Cash generated from/(used in) operations 115,492 42,601 13,610 (6,504)

Dividends received B - - 36,000 38,870

Income tax (paid)/refunded (17,428) (10,009) 42 15

Net cash from operating activities 98,064 32,592 49,652 32,381

Cashflowsfrominvestingactivities

Purchase of plant and equipment C (60,997) (91,303) (581) (207)

Purchase of intangible assets D (815) (11,285) (110) (308)

Interest received 84 97 31 24

Investment in a subsidiary - - (10,000) -

Proceeds from disposal of plant and equipment 49 14,302 - -

Net cash used in investing activities (61,679) (88,189) (10,660) (491)


Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Cashflowsfromfinancingactivities

Dividends paid (39,266) (31,575) (39,266) (31,575)

Interest paid (4,534) (2,754) - -

(Repayment)/Drawdown of term loans (5,047) 19,785 - -

Repayment of foreign currency loan - (6,292) - -

(Repayment)/Drawdown of revolving credit (12,522) 67,903 - -

Payment of lease liabilities (6,827) - - -

Net cash (used in)/from financingactivities (68,196) 47,067 (39,266) (31,575)

Net (decrease)/increase in cash and cash equivalents (31,811) (8,530) (274) 315

Cash and cash equivalents at beginning of year 23,992 21,556 613 298

Effect of exchange rate fluctuations on cash and cash equivalents 22,611 10,966 - -

Cash and cash equivalents at end of year E 14,792 23,992 339 613

Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Cash outflows for leases as a lessee

Included in net cash from operating activities:

Payment relating to:

- short-term leases 21 1,436 - 80 -

- leases of low-value assets 21 113 - 17 -

- interest on lease liabilities 20 1,170 - - -

Included in net cash from financingactivities

Payment of lease liabilities 6,827 - - -

Totalcashoutflowsforleases 9,546 - 97 -






NOTES

A. During the financial year, amount due from subsidiaries of RM10,000,000 (2019 : Nil) was capitalised into equity via the issuance of 10,000,000 (2019 : Nil) new ordinary shares to the Company.

B. Dividends received - Company

During the financial year, the Company received dividends by way of the following:

2020RM’000

2019RM’000

Cash received 36,000 38,870

Contra with amount due to a subsidiary 8,400 17,000

44,400 55,870

C. Purchase of plant and equipment

During the financial year, the Group and the Company acquired plant and equipment by way of the following:

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

Cash payment 60,997 91,303 581 207

Capitalisation from prepayment/payment for amount incurred in prior year 9,773 (26,700) - -

Total additions 70,770 64,603 581 207

D. During the financial year, the Group and the Company acquired intangible assets with an aggregate amount of RM815,000 and RM110,000 (2019 : RM2,091,000 and RM308,000) respectively by way of the following:

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

Total additions 815 2,091 110 308

Prior year addition paid in current year - 9,194 - -

Total cash payment 815 11,285 110 308

E. Cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise cash and bank balances as shown on the statements of financial position.


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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 IV11900 Penang

Registeredoffice

Suite 18.05, MWE PlazaNo.8, Lebuh Farquhar10200 Penang

The consolidated financial statements of the Company as at and for the financial year ended 31 March 2020 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 6 to the financial statements.

The immediate holding company is Singapore Aerospace Manufacturing Pte. Ltd. and 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 18 June 2020.

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 2020• Amendments to MFRS 3, Business Combinations - Definition of a Business• Amendments to MFRS 101, Presentation of Financial Statements and MFRS 108, Accounting Policies, Changes in

Accounting Estimates and Errors - Definition of Material• Amendments to MFRS 9, Financial Instruments, MFRS 139, Financial Instruments: Recognition and Measurement

and MFRS 7, Financial Instruments: Disclosures - Interest Rate Benchmark Reform

MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 June 2020• Amendment to MFRS 16, Leases - Covid-19-Related Rent Concessions

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021• MFRS 17, Insurance Contracts


1. Basis of preparation (Cont’d)

(a) Statement of compliance (Cont’d)

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: (Cont’d)

MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2022• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements

to MFRS Standards 2018-2020) • Amendments to MFRS 3, Business Combinations - Reference to the Conceptual Framework• Amendments to MFRS 9, Financial Instruments (Annual Improvements to MFRS Standards 2018-2020)• Amendments to Illustrative Examples accompanying MFRS 16, Leases (Annual Improvements to MFRS Standards

2018-2020) • Amendments to MFRS 101, Presentation of Financial Statements - Classification of Liabilities as Current or Non-

current • Amendments to MFRS 116, Property, Plant and Equipment - Proceeds before Intended Use• Amendments to MFRS 137, Provisions, Contingent Liabilities and Contingent Assets - Onerous Contracts - Cost

of Fulfilling a Contract• Amendments to MFRS 141, Agriculture (Annual Improvements to MFRS Standards 2018-2020)

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, where applicable, in the respective financial years when the above mentioned accounting standards, amendments or interpretations become effective.

The initial application of the accounting standards, amendments and interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and the Company.

(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.

(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 the following notes:

• Note 4 - Extension options and incremental borrowing rate in relation to leases• Note 9 - Valuation of inventories• Note 17 - Provision for warranty

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)



2. Significantaccountingpolicies

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.

Arising from the adoption of MFRS 16, Leases, there are changes to the accounting policies applied to lease contracts entered into by the Group entities as compared to those applied in previous financial statements. The impact arising from the changes are disclosed in Note 33.

(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.

(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) 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.


2. Significantaccountingpolicies(Cont’d)

(a) Basis of consolidation (Cont’d)

(v) 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 period 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.

(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.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“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) Recognition and initial 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 asset (unless it is a trade receivable without significant financing component) or a financial liability is initially measured at fair value plus or minus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance. A trade receivable without a significant financing component is initially measured at the transaction price.

An embedded derivative is recognised separately from the host contract where the host contract is not a financial asset, and accounted for separately if, and only if, the derivative is not closely related to the economic characteristics and risks of the host contract and the host contract is not measured at 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.





(c) Financial instruments (Cont’d)

(ii) Financial instrument categories and subsequent measurement

Financial assets

Categories of financial assets are determined on initial recognition and are not reclassified subsequent to their initial recognition unless the Group or the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change of the business model.

(a) Amortised cost

Amortised cost category comprises financial assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Interest income is recognised by applying effective interest rate to the gross carrying amount except for credit impaired financial assets (see Note 2(g)(i)) where the effective interest rate is applied to the amortised cost.

(b) Fair value through profit or loss

All financial assets not measured at amortised cost or fair value through other comprehensive income as described above are measured at fair value through profit or loss. This includes derivative financial assets (except for a derivative that is a designated and effective hedging instrument). On initial recognition, the Group or the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at fair value through other comprehensive income as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets categorised as fair value through profit or loss are subsequently measured at their fair value. Net gains or losses, including any interest or dividend income, are recognised in the profit or loss.

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

Financial liabilities

The categories of financial liabilities at initial recognition are as follows:

(a) Amortised cost

Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method.

Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.





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

Financial liabilities (Cont’d)

(b) 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), contingent consideration in a business combination and financial liabilities that are specifically designated into this category upon initial recognition.

On initial recognition, the Group or the Company may irrevocably designate a financial liability that otherwise meets the requirements to be measured at amortised cost as at fair value through profit or loss:

(a) if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise;

(b) a group of financial liabilities or assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the Group’s key management personnel; or

(c) if a contract contains one or more embedded derivatives and the host is not a financial asset in the scope of MFRS 9, where the embedded derivative significantly modifies the cash flows and separation is not prohibited.

Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value with gains or losses, including any interest expense are recognised in the profit or loss.

For financial liabilities where it is designated as fair value through profit or loss upon initial recognition, the Group and the Company recognise the amount of change in fair value of the financial liability that is attributable to change in credit risk in the other comprehensive income and remaining amount of the change in fair value in the profit or loss, unless the treatment of the effects of changes in the liability’s credit risk would create or enlarge an accounting mismatch.

(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.

Financial guarantees issued are initially measured at fair value. Subsequently, they are measured at higher of:

• the amount of the loss allowance; and• the amount initially recognised less, when appropriate, the cumulative amount of income recognised in

accordance to the principles of MFRS 15, Revenue from Contracts with Customers.

Liabilities arising from financial guarantees are presented together with other provisions.

(iv) Hedge accounting

At inception of a designated hedging relationship, the Group and the Company document the risk management objective and strategy for undertaking the hedge. The Group and the Company also document the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.





(iv) Hedge accounting (Cont’d)

Cashflowhedge

A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component of, 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 accumulated in equity and the ineffective portion is recognised in profit or loss. The effective portion of changes in the fair value of the derivative that is recognised in other comprehensive income is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge.

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 immediately.

The Group designates only the change in fair value of the spot element of forward contracts as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (“forward points”) and/or the foreign currency basis spread are separately accounted for as cost of hedging and recognised in a cost of hedging reserve within equity.

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 hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve and the cost of hedging reserve remains in equity until, for a hedge of a transaction resulting in recognition of a non-financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.

If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.

(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 transferred, 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 of the financial asset and the sum of consideration received (including any new asset obtained less any new liability assumed) 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. A financial liability is also derecognised when its terms are modified and the cash flows of the modified liability are substantially different, in which case, a new financial liability based on modified terms is recognised at fair value. 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.

(vi) Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group or the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and liability simultaneously.




(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. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

Years

Buildings 30Electrical installation and fittings 3 - 50Factory equipment 5 - 10Motor vehicles 5Office equipment, furniture and fittings 3 - 10Plant and machinery 5 - 10

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




(e) Leases

The Group has applied MFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application, if any is recognised as an adjustment to retained earnings at 1 April 2019. Accordingly, the comparative information presented for 2019 has not been restated - i.e. it is presented, as previously reported under MFRS 117, Leases and related interpretations.

Currentfinancialyear

(i) Definition of a lease

A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

• the contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

• the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• the customer has the right to direct the use of the asset. The customer has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the customer has the right to direct the use of the asset if either the customer has the right to operate the asset; or the customer designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component. The Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. However, for leases of properties in which the Group is a lessee, it has elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component.

(ii) Recognition and initial measurement

As a lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the respective Group entities’ incremental borrowing rate. Generally, the Group entities use their incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in-substance fixed payments less any incentives receivable;• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at

the commencement date;• the exercise price under a purchase option that the Group is reasonably certain to exercise; and• penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.




(e) Leases (Cont’d)

Currentfinancialyear(Cont’d)

(iii) Subsequent measurement

As a lessee

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a revision of in-substance fixed lease payments, or if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Previousfinancialyear

As a lessee

(i) Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as investment property if held to earn rental income or for capital appreciation or for both.

(ii) Operating lease

Leases, where the Group does not assume substantially all the risks and rewards of ownership are classified as operating leases and, the leased assets are not recognised on the statement of financial position.

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

(i) Computer software

Computer software are measured at cost less any accumulated amortisation and any accumulated impairment losses.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred.

Expenditure on development activities, whereby the application of research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.

The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly attributable to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Other development expenditure is recognised in profit or loss as incurred.

Capitalised development expenditure is measured at cost less any accumulated amortisation and any accumulated impairment losses.

(iii) Amortisation

Amortisation is based on the cost of the asset less its residual value. Computer software are amortised on a straight-line basis over a period of 3 to 6 years while development expenditure are amortised on a straight-line basis over a period of 10 years. Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(g) Impairment

(i) Financial assets

The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at amortised cost and contract assets. Expected credit losses are a probability-weighted estimate of credit losses.

The Group and the Company measure loss allowances at an amount equal to lifetime expected credit loss, except for cash and bank balance for which credit risk has not increased significantly since initial recognition, which are measured at 12-month expected credit loss. Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime expected credit loss.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit loss, the Group and the Company consider reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information, where available.

Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the asset, while 12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within the 12 months after the reporting date. The maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group and the Company are exposed to credit risk.

The Group and the Company estimate the expected credit losses on trade receivables using a provision matrix with reference to historical credit loss experience.




(g) Impairment (Cont’d)

(i) Financial assets (Cont’d)

An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and the carrying amount of the asset is reduced through the use of an allowance account.

At each reporting date, the Group and the Company assess whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

The gross carrying amount of a financial asset is written off (either partially or full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s or the Company’s procedures for recovery amounts due.

(ii) Other assets

The carrying amounts of other assets (except for inventories, contract assets 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 to reduce the carrying amounts of the 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) Contract asset/Contract liability

A contract asset is recognised when the Group’s or the Company’s right to consideration is conditional on something other than the passage of time. A contract asset is subject to impairment in accordance to MFRS 9, Financial Instruments (see Note 2(g)(i)).

A contract liability is stated at cost and represents the obligation of the Group or the Company to transfer goods or services to a customer for which consideration has been received (or the amount is due) from the customers.

(j) Contract cost

(i) Incremental cost of obtaining a contract

The Group or the Company recognises incremental costs of obtaining contracts when the Group or the Company expects to recover these costs.

(ii) Costtofulfilacontract

The Group or the Company recognises a contract cost that relate directly to a contract or to an anticipated contract as an asset when the cost generates or enhances resources of the Group or the Company, will be used in satisfying performance obligations in the future and it is expected to be recovered.

These contract costs are initially measured at cost and amortised on a systematic basis that is consistent with the pattern of revenue recognition to which the asset relates. An impairment loss is recognised in profit and loss when the carrying amount of the contract cost exceeds the expected revenue less expected cost that will be incurred. Where the impairment condition no longer exists or has improved, the impairment loss is reversed to the extent that the carrying amount of the contract cost does not exceed the amount that would have been recognised had there been no impairment loss recognised previously.

(k) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances 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.

(l) 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.

(i) 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.

(ii) Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.




(m) Revenue and other income

(i) Revenue from contracts with customers

Revenue is measured based on the consideration specified in a contract with a customer in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. The Group or the Company recognises revenue when (or as) it transfers control over a product or service to customer. An asset is transferred when (or as) the customer obtains control of the asset.

The Group or the Company transfers control of a good or service at a point in time unless one of the following over time criteria is met:

(a) the customer simultaneously receives and consumes the benefits provided as the Group or the Company performs;

(b) the Group’s or the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

(c) the Group’s or the Company’s performance does not create an asset with an alternative use and the Group or the Company has an enforceable right to payment for performance completed to date.

(ii) 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.

(iii) Interest income

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

(iv) 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.

(n) 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.

(o) 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.




(o) Income tax (Cont’d)

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 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.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.

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.

(p) Employeebenefits

(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.

(iii) Employees’ Share Grant Scheme

The Company established an Employees’ Share Grant Scheme (“ESGS”) to eligible employees of the Group. The amount granted under the ESGS is a fixed sum as determined by the ESGS Committee and is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.

The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the ultimate amount recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

(iv) Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.




(q) 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 share 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 and share options granted to employees.

(r) 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.

(s) 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.

(t) 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.

(u) Fair value measurements

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

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

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value 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.


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)3.

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13

,324

-13

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159

--

-64

914

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Fact

ory

equi

pmen

t28

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-28

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1,86

8(1

4)(9

76)

301,

555

30,9

66

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or v

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2,15

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0-

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t, fu

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and

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25,3

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)-

1,18

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432,

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(3,6

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11,7

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921

585,

166

(14,

707)

570,

459

70,7

70(3

76)

(4,7

73)

-32

,551

668,

631



Pr

oper

ty, p

lant

and

equ

ipm

ent (

Cont

’d)

At

1 A

pril

2018

RM’0

00A

dditi

ons

RM’0

00D

ispo

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ten

off

RM’0

00Reclassification

RM’0

00

Effe

ct o

f m

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ents

in

exc

hang

e ra

tes

RM’0

00

At

31 M

arch

2019

RM’0

00

Gro

up

Cost

2019

Leas

ehol

d la

nd16

,889

-(2

,849

)-

-66

714

,707

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ldin

gs52

,032

-(4

,800

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294

49,5

26

Elec

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al in

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n an

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13

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480

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Fact

ory

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pmen

t27

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1,34

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1,18

228

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682,

150

Offi

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Plan

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2,33

140

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(47)

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33,9

8416

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432,

207

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ital e

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19,2

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582

19,4

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511,

120

64,6

03(1

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,688

)-

23,2

1258

5,16

6



Pr

oper

ty, p

lant

and

equ

ipm

ent (

Cont

’d)

At

31 M

arch

20

19,

as p

revi

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y re

port

ed

RM’0

00

Adj

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At 1

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s re

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Effe

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RM’0

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At 3

1 M

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202

0

Tota

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31 M

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2020

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Dep

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Leas

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82)

--

--

--

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Bui

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1,82

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10,7

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511

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154

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Fact

ory

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-18

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3,12

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0)(3

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5822

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Mot

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1,83

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661,

977

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977

Offi

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20,8

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(22)

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)1,

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24,0

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4,91

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14,6

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1,49

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281,

490

308,

086

(3,7

82)

304,

304

42,1

88(3

72)

(2,6

30)

18,5

3636

1,77

225

436

2,02

6


3.

Prop

erty

, pla

nt a

nd e

quip

men

t (Co

nt’d

)

At 1

Apr

il20

18RM

’000

Dep

reci

atio

n fo

r the

yea

rRM

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Dis

posa

ls

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00

Writ

ten

off

RM’0

00

Effe

ct o

fM

ovem

ents

in

exch

ange

rate

sRM

’000

At 3

1 M

arch

201

9To

tal a

t 31

Mar

ch20

19RM

’000

Acc

umul

ated

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prec

iatio

n RM

’000

Acc

umul

ated

im

pairm

ent

RM’0

00

Gro

up

Dep

reci

atio

n an

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ent l

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2019

Leas

ehol

d la

nd4,

132

300

(801

)-

151

3,78

2-

3,78

2

Bui

ldin

gs16

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1,87

5(1

,649

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728

17,3

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Elec

tric

al in

stal

latio

n an

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11,2

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9(1

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)(2

41)

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10,5

4715

410

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ory

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pmen

t16

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2(7

61)

(528

)66

518

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5818

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1,77

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Offi

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20,2

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)69

220

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4220

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t and

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0,68

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(47)

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4,91

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914

270,

466

34,2

12(5

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)(2

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)11

,943

307,

832

254

308,

086




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

At 31 March 2020

RM’000

At 31 March 2019

RM’000

At 1 April 2018

RM’000

Group

Carrying amounts

Leasehold land - 10,925 12,757

Buildings 32,171 32,165 35,625

Electrical installation and fittings 2,442 2,623 2,253

Factory equipment 8,467 9,866 11,265

Motor vehicles 253 312 397

Office equipment, furniture and fittings 5,985 4,489 4,134

Plant and machinery 248,366 197,293 141,644

Capital expenditure-in-progress 8,921 19,407 32,579

306,605 277,080 240,654

At 1 April

RM’000Additions

RM’000

Written off

RM’000

At 31 March

RM’000

Company

Cost

2020

Motor vehicles 523 - - 523

Office equipment, furniture and fittings 2,346 565 (4) 2,907

Electrical installation and fittings 1,002 16 - 1,018

Factory equipment 13 - - 13

3,884 581 (4) 4,461

2019

Motor vehicles 523 - - 523


Electrical installation and fittings 1,002 - - 1,002


3,697 207 (20) 3,884



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

At 1 April

RM’000

Depreciation for the year

RM’000

Written off

RM’000

At 31 March

RM’000

Company

Depreciation

2020

Motor vehicles 483 40 - 523


Electrical installation and fittings 761 7 - 768

Factory equipment 12 1 - 13

3,278 187 (4) 3,461

2019

Motor vehicles 413 70 - 483


Electrical installation and fittings 753 8 - 761


3,058 240 (20) 3,278

At 31 March 2020

RM’000

At 31 March 2019

RM’000

At 1 April 2018

RM’000

Carrying amounts

Motor vehicles - 40 110

Office equipment, furniture and fittings 750 324 279

Electrical installation and fittings 250 241 249

Factory equipment - 1 1

1,000 606 639



4. Right-of-use assets

Leasehold land

RM’000Buildings

RM’000

Officeequipment

RM’000Total

RM’000

At 1 April 2019 10,925 43,222 282 54,429

Addition - 6,130 - 6,130

Depreciation (283) (7,354) (67) (7,704)

Effect of movements in exchange rates 638 (312) (2) 324

At 31 March 2020 11,280 41,686 213 53,179

The Group leases land, factory buildings and office equipment. The leases for land is for a period of 60 years, whereas the leases for factory buildings run between 3 to 10 years and office equipment for 5 years. Lease payments for factories are increased every 2 to 3 years to reflect current market rentals.

4.1 Extension options

One of the lease of factory building contain extension options exercisable by the Group 3 years before the end of the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control.

Lease liabilities recognised

(discounted) RM’000

Potential future lease

payments not included in

lease liabilities (discounted)

RM’000

Historical rate of exercise

of extension options

%

Group

Buildings 10,277 14,406 100

4.2 Significant judgements and assumptions in relation to leases

The Group assesses at lease commencement by applying significant judgement whether it is reasonably certain to exercise the extension options. Group entities consider all facts and circumstances including their past practice and any cost that will be incurred to change the asset if an option to extend is not taken, to help them determine the lease term.

The Group applied judgement and assumptions in determining the incremental borrowing rate of the respective leases. Group entities first determine the closest available borrowing rates before using significant judgement to determine the adjustments required to reflect the term, security, value or economic environment of the respective leases.

4.3 Restriction imposed by lease

The lease contracts for land and office equipment prohibits the Group to sublease the leased assets.



5. Intangible assets

At 1 April 2019

RM’000Additions

RM’000

Effect of movements in

exchange rates RM’000

At 31 March 2020

RM’000

Group

2020

Cost

Development expenditure 14,743 680 875 16,298

Computer software 9,700 135 427 10,262

24,443 815 1,302 26,560

At 1 April 2018

RM’000Additions

RM’000

Written off

RM’000

Effect of movements in

exchange rates RM’000

At 31 March 2019

RM’000

Group

2019

Cost

Development expenditure 13,506 581 - 656 14,743

Computer software 8,870 1,510 (1,006) 326 9,700

22,376 2,091 (1,006) 982 24,443



In

tang

ible

ass

ets

(Con

t’d)

At 1

Apr

il20

19RM

’000

Am

ortis

atio

n fo

r the

yea

r RM

’000

Effe

ct o

fm

ovem

ents

in

exch

ange

rate

s RM

’000

At 3

1 M

arch

202

0To

tal a

t 31

Mar

ch

2020

RM

’000

Acc

umul

ated

am

ortis

atio

n RM

’000

Acc

umul

ated

Im

pairm

ent

RM’0

00

2020

Acc

umul

ated

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ortis

atio

n an

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ent l

oss

Dev

elop

men

t exp

endi

ture

2,83

61,

784

242

4,86

2-

4,86

2

Com

pute

r sof

twar

e 6,

513

987

297

7,54

325

47,

797

9,34

92,

771

539

12,4

0525

412

,659

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Apr

il 20

18RM

’000

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ortis

atio

n fo

r the

yea

r RM

’000

Writ

ten

off

RM’0

00

Effe

ct o

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ovem

ents

in

exch

ange

rate

s RM

’000

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201

9To

tal a

t 31

Mar

ch

2019

RM

’000

Acc

umul

ated

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ortis

atio

n RM

’000

Acc

umul

ated

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pairm

ent

RM’0

00

2019

Acc

umul

ated

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Dev

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ture

1,26

81,

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-73

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6-

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6

Com

pute

r sof

twar

e 6,

468

827

(994

)21

26,

259

254

6,51

3

7,73

62,

322

(994

)28

59,

095

254

9,34

9



5. Intangible assets (Cont’d)

At 31 March 2020

RM’000

At 31 March 2019

RM’000

At 1 April 2018

RM’000

Group

Carrying amounts

Development expenditure 11,436 11,907 12,238

Computer software 2,465 3,187 2,402

13,901 15,094 14,640

Computer softwareRM’000

Company

Cost

At 1 April 2018 2,513

Additions 308

At 31 March 2019/1 April 2019 2,821

Additions 110

At 31 March 2020 2,931

Amortisation

At 1 April 2018 2,486

Amortisation for the year 25

At 31 March 2019/1 April 2019 2,511

Amortisation for the year 64

At 31 March 2020 2,575

Carrying amount

At 1 April 2018 27

At 31 March 2019 310

At 31 March 2020 356



6. Investments in subsidiaries - Company

2020RM’000

2019RM’000

Costs of investments 315,560 305,560

Less: Impairment loss (38,868) (38,868)

276,692 266,692

During the current financial year, the Company recorded an impairment loss of Nil (2019 : RM6,237,000) on its investment cost in certain subsidiaries after having assessed the recoverable amount of the said subsidiaries.

During the financial year, the Company subscribed for 10,000,000 (2019: Nil) new ordinary shares in a subsidiary for RM10,000,000 (2019: Nil) through the capitalisation of an equivalent amount due from the said subsidiary. Details of the subsidiaries are as follows:

Name of entity

Principal place of business/Country of incorporation

Effective ownership

interest and voting interest Principal activities2020

%2019

%

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* Republic of Singapore 100 100 Manufacture of aircraft components and precision engineering parts

SAM Precision (M) Sdn. Bhd. (“SAMPM”)

Malaysia 100 100 Fabrication of precision tools and machinery parts and manufacture of aircraft and other equipment parts, spares, components and precision engineering parts

SAM Technologies (M) Sdn. Bhd. Malaysia 100 100 Dormant

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



6. Investments in subsidiaries - Company (Cont’d)

Details of the subsidiaries are as follows: (Cont’d)

Name of entity

Principal place of business/Country of incorporation

Effective ownership

interest and voting interest Principal activities2020

%2019

%

LKT Technology Sdn. Bhd. Malaysia 100 100 Dormant

Held by SAMTT

SAM Precision (Thailand) Limited* Thailand 100 100 Manufacture of dies, jigs 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.



D

efer

red

tax

asse

ts/(

liabi

litie

s)

Reco

gnis

ed d

efer

red

tax

asse

ts/(

liabi

litie

s)

Def

erre

d ta

x as

sets

and

liab

ilitie

s ar

e at

trib

utab

le to

the

follo

win

g:

Ass

ets

Liab

ilitie

sN

et

2020

RM’0

0020

19RM

’000

2020

RM’0

0020

19RM

’000

2020

RM’0

0020

19RM

’000

Gro

up

Prop

erty

, pla

nt a

nd e

quip

men

t - c

apita

l allo

wan

ce

959

385

(12,

299)

(7,9

28)

(11,

340)

(7,5

43)

Righ

t-of

-use

ass

ets

- -

(6,2

78)

-(6

,278

)-

Leas

e lia

bilit

ies

6,43

2-

--

6,43

2-

Prov

isio

ns

3,31

72,

656

--

3,31

72,

656

Tax

loss

car

ry-f

orw

ards

8690

8-

-86

908

Oth

er it

ems

1,29

743

1(7

18)

(918

)57

9(4

87)

Def

erre

d ta

x as

sets

/(lia

bilit

ies)

12,0

914,

380

(19,

295)

(8,8

46)

(7,2

04)

(4,4

66)

Set-

off o

f tax

(7,9

87)

(1,8

76)

7,98

71,

876

--

Net

def

erre

d ta

x as

sets

/(lia

bilit

ies)

4,10

42,

504

(11,

308)

(6,9

70)

(7,2

04)

(4,4

66)

Def

erre

d ta

x as

sets

and

liab

ilitie

s ar

e of

fset

whe

n th

e en

tity

has

a le

gally

enf

orce

able

rig

ht t

o se

t of

f cu

rren

t ta

x as

sets

aga

inst

cur

rent

tax

liab

ilitie

s an

d w

hen

the

defe

rred

taxe

s re

late

to th

e sa

me

auth

ority

. Def

erre

d ta

x as

sets

are

reco

gnis

ed to

the

exte

nt it

is p

roba

ble

that

futu

re ta

xabl

e pr

ofits

will

be

avai

labl

e ag

ains

t whi

ch th

e G

roup

ent

ities

can

util

ise

the

bene

fits

ther

efro

m.


7.

Def

erre

d ta

x as

sets

/(lia

bilit

ies)

(Con

t’d)

Mov

emen

ts in

tem

pora

ry d

iffer

ence

s du

ring

the

year

At

1 A

pril

2018

RM’0

00

Reco

gnis

edinprofitor

loss

(Not

e 23

)RM

’000

Exch

ange

di

ffer

ence

RM

’000

At

31 M

arch

20

19RM

’000

Adj

ustm

ent

on in

itial

ap

plic

atio

n of

MFR

S 16

RM’0

00

At

1 A

pril

2019

RM’0

00

Reco

gnis

edinprofitor

loss

(Not

e 23

)RM

’000

Exch

ange

di

ffer

ence

RM

’000

At

31 M

arch

20

20RM

’000

Gro

up

Def

erre

d ta

x as

sets

/(li

abili

ties)

Prop

erty

, pla

nt a

nd

equi

pmen

t

- cap

ital a

llow

ance

(6

,402

)(1

,111

)(3

0)(7

,543

)-

(7,5

43)

(2,5

37)

(1,2

60)

(11,

340)

Righ

t-of

-use

ass

ets

--

--

(7,3

96)

(7,3

96)

1,38

3(2

65)

(6,2

78)

Leas

e lia

bilit

ies

--

--

7,39

67,

396

(1,1

92)

228

6,43

2

Prov

isio

ns1,

005

527

1,12

42,

656

-2,

656

156

505

3,31

7

Tax

loss

car

ry-f

orw

ards

2,34

0(1

,430

)(2

)90

8-

908

(822

)-

86

Oth

er it

ems

300

-(7

87)

(487

)-

(487

)50

955

757

9

(2,7

57)

(2,0

14)

305

(4,4

66)

-(4

,466

)(2

,503

)(2

35)

(7,2

04)




7. 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):

2020RM’000

2019RM’000

Group

Tax loss carry-forwards 52,503 50,277

Capital allowance carry-forwards 9,774 9,325

Provisions and others 3,646 3,643

65,923 63,245

Company

Tax loss carry-forwards 7,055 4,829

Capital allowance carry-forwards 2,374 1,926

Provisions and others 3,646 3,643

13,075 10,398

The tax loss carry-forwards will expire in the following year of assessments under the tax legislation of Malaysia as shown below:

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

- Expire in YA2025 50,277 50,277 4,829 4,829

- Expire in YA2026 2,226 - 2,226 -

52,503 50,277 7,055 4,829

The capital allowance carry-forwards 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 entities can utilise the benefits therefrom.



8. Trade and other receivables

Note2020

RM’0002019

RM’000

Group

Non-current

Prepayments 8.1 15,250 25,517

Current

Trade

Amount due from:

- immediate holding company 8.2 9,517 16,861

- related companies 8.2 2,115 2,946

External parties 182,589 159,421

194,221 179,228

Non-trade

Amount due from:

- immediate holding company 8.2 231 -

- related companies 8.2 - 34

Other receivables 5,541 3,337

Deposits 1,415 1,390

Prepayments 20,963 15,799

28,150 20,560

222,371 199,788

237,621 225,305

Company

Non-trade

Amount due from:

- immediate holding company 8.2 231 -

- subsidiaries 8.2 2,882 15,214

- related companies 8.2 135 187

Other receivables 4 38

Deposits 10 10

Prepayments 154 71

3,416 15,520



8. Trade and other receivables (Cont’d)

8.1 Prepayments - Group

The non-current prepayments of the Group of RM15,250,000 (2019: RM25,517,000) were paid for the purchase of plant and machinery and intangible assets.

8.2 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.

9. Inventories - Group

2020RM’000

2019RM’000

Raw materials 102,201 88,614

Work-in-progress 37,015 24,437

Manufactured inventories 5,714 3,571

144,930 116,622

Recognised in profit or loss:

Inventories recognised as cost of sales 856,346 625,063

(Write down)/Reversal of inventories included in cost of sales (3,344) 41

9.1 Significant judgements and assumptions

In determining the amount of inventories to be written down or reversed, the Directors took into consideration the age of the inventories, likelihood of future consumption, rework and customer acceptance.

10. Contract assets/(liabilities)

2020RM’000

2019RM’000

Group

Contract assets 139,359 126,430

Contract liabilities (4,569) (462)

The contract assets primarily relate to the Group’s rights to consideration for work completed but not yet billed at the reporting date for the manufacture of aircraft components, design and assembly of modular or complete machine and equipment and related components, spares and precision engineering parts.



10. Contract assets/(liabilities) (Cont’d)

The contract liabilities primarily relate to advance consideration received from a customer in the aerospace segment, which revenue is recognised over time.

Significant changes to contract assets and contract liabilities during the year are as follows:

2020RM’000

2019RM’000

Group

Contract liabilities at the beginning of the period recognised as revenue 462 2,169

11. Derivativefinancialassets/(liabilities)-Group

Nominal value

RM’000

Non-current liabilitiesRM’000

Current assets

RM’000

Current liabilitiesRM’000

2020

Derivatives used for hedging

- Forward exchange contracts 126,723 (48) 111 (3,880)

2019

Derivatives used for hedging

- Forward exchange contracts 101,107 - 506 (1,365)

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. The majority of the forward exchange contracts have maturities of less than one year after the end of the reporting period save for certain ones used to hedge the purchase of plant and machinery.

12. Share capital - Group/Company

2020 2019

AmountRM’000

Number of shares(’000)

AmountRM’000

Number of shares(’000)

Issued and fully paid shares with no par value classified as equity instruments 212,731 135,167 212,731 135,167

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.



13. Reserves

Note2020

RM’0002019

RM’000

Group

Non-distributable

Employees’ Share Grant Scheme (“ESGS”) reserve 13.1 664 -

Hedging reserve 13.2 (637) (1,393)

Translation reserve 13.3 93,872 61,591

93,899 60,198

Group

Distributable

Retained earnings 303,258 262,701

397,157 322,899

Company

Non-distributable

Employees’ Share Grant Scheme (“ESGS”) reserve 13.1 664 -

Distributable

Retained earnings 56,101 54,848

56,765 54,848

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

13.1 Employees’ Share Grant Scheme (“ESGS”) reserve

The ESGS reserve relates to the performance-based Employees’ Share Grant Scheme operated by the Group as disclosed in Note 15 and is based on the cumulative fair value of the services received from eligible employees over the vesting period.

13.2 Hedging reserve

The hedging reserve comprises 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.



13. Reserves (Cont’d)

13.3 Translation reserve

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

14. Loans and borrowings - Group

2020RM’000

2019RM’000

Current

Unsecured

Term loans - variable rate 6,942 5,947

Revolving credit 55,381 67,903

62,323 73,850

Non-current

Unsecured

Term loans - variable rate 19,916 25,958

82,239 99,808

Certain loans and borrowings of the Group are granted with corporate guarantee given by the Company.

15. Employeebenefits

At an extraordinary general meeting held on 14 August 2018, the Company’s shareholders approved the establishment of the Employees’ Share Grant Scheme (“ESGS”) of up to 5% of the total number of issued shares of the Company to eligible employees of the Group. The ESGS will be administered by the ESGS Committee in accordance with the By-Laws of the ESGS.

The salient features of the scheme are, inter alia, as follows:

(a) The ESGS shall be in force for a period of 5 years from 30 November 2018 (“ESGS Period”) and may be extended at the discretion of the Board upon the recommendation of the ESGS Committee provided that the ESGS Period shall not in aggregate exceed a duration of 10 years from 30 November 2018, or such longer duration as may from time to time be permitted by the relevant authorities.

(b) The total number of shares which may be made available under the ESGS shall not exceed in aggregate 5% of the total number of issued shares of the Company (excluding treasury shares, if any) at any point in time during the ESGS Period.

(c) Eligible employees are employees employed by and are on the payroll of any company in the Group (excluding dormant subsidiaries) and his/her employment has been confirmed by the company who are at least 18 years of age and is not undischarged bankrupt. The Directors and senior management of the Group will not participate in the ESGS;



15. Employeebenefits(Cont’d)

The salient features of the scheme are, inter alia, as follows: (Cont’d)

(d) Not more than 10% of the aggregate number of shares to be issued under the ESGS shall be allocated to any individual eligible employee who, either singly or collectively through persons connected with the eligible employee, holds 20% or more of the total number of issued shares of the Company (excluding treasury shares, if any); and

(e) The shares issued pursuant to the ESGS shall rank pari passu in all respects with the existing shares of the Company.

Value of employee services received for issue of ESGS

Group

2020RM’000

2019RM’000

ESGS granted during the year 1,500 -

Amount recognised as employee expense over vesting period as determined by ESGS Committee 664 -

Company

2020RM’000

2019RM’000

ESGS granted during the year 119 -

Amount recognised as employee expense over vesting period as determined by ESGS Committee 59 -

RM605,000 (2019 : Nil) of the ESGS expense is not recognised in the profit or loss of the Company as it has been re-charged to the subsidiaries benefiting from the services of the employees.

16. Deferred income - Group

2020RM’000

2019RM’000

Non-current

Government grant 1,569 1,342

Current

Government grant 2,297 188

3,866 1,530


16. Deferred income - Group (Cont’d)

Government grant

The Group received government grants for the purchase of plant and machinery and wage support for a subsidiary in Singapore to retain local employees during the period of economic uncertainty. The grants are amortised on a systematic basis over the useful life of the plant and machinery or the period in which the Group benefits from the services of the employees. During the financial year, RM370,000 (2019 : RM180,000) was amortised and recognised as other income in profit or loss.

17. Provisions - Group

Provision for warranty

RM’000

Provision for onerous

contracts RM’000

Total RM’000

At 1 April 2018 5,944 961 6,905

Provisions made during the year 2,416 45 2,461

Amounts written off (168) - (168)

Reversed to profit or loss (1,964) - (1,964)

Effect of movements in exchange rates 292 45 337

At 31 March 2019/1 April 2019 6,520 1,051 7,571

Provisions made during the year 2,192 - 2,192

Reversed to profit or loss (924) (657) (1,581)

Effect of movements in exchange rates 439 34 473

At 31 March 2020 8,227 428 8,655

Presented as:

Non-current - 719 719

Current 5,944 242 6,186

At 1 April 2018 5,944 961 6,905


Current 6,520 380 6,900

At 31 March 2019 6,520 1,051 7,571


Current 8,227 160 8,387

At 31 March 2020 8,227 428 8,655




17. Provisions - Group (Cont’d)

Warranties

Warranties represent estimated liability 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.

Onerous contracts

A provision for onerous contracts is recognised when the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be derived. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

18. Trade and other payables

Note2020

RM’0002019

RM’000

Group

Trade

Amount due to related companies 18.1 433 1,350

External parties 53,566 45,048

Trade accruals 20,882 17,574

74,881 63,972

Non-trade

Amount due to:

- immediate holding company 18.1 113 653

- related companies 18.1 451 115

Other payables 2,241 2,776

Accrued expenses 60,938 59,215

63,743 62,759

138,624 126,731

Company

Non-trade

Amount due to:

- immediate holding company 18.1 - 515

- subsidiaries 18.1 6,496 10,989

Other payables 106 101

Accrued expenses 5,710 4,604

12,312 16,209



18. Trade and other payables (Cont’d)

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

The trade amount due to 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.

19. Revenue

2020RM’000

2019RM’000

Group

Revenue from contracts with customers 938,667 754,966

Company

Revenue from contracts with customers - management fee 12,356 11,616

Other revenue

- Dividend income from subsidiaries 44,400 55,870

- Interest income 31 24

56,787 67,510


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)19

. Re

venu

e (C

ont’d

)

19.1

D

isag

greg

atio

n of

reve

nue

Aer

ospa

ceEq

uipm

ent m

anuf

actu

ring

Tota

l

2020

RM’0

0020

19RM

’000

2020

RM’0

0020

19RM

’000

2020

RM’0

0020

19RM

’000

Gro

up

Prim

ary

geog

raph

ical

mar

kets

Mal

aysi

a6,

775

11,7

0230

,417

29,4

8337

,192

41,1

85

Asi

a (e

xclu

ding

Mal

aysi

a)68

,589

91,1

5120

9,39

817

1,40

727

7,98

726

2,55

8

Euro

pe-

-2,

210

2,29

72,

210

2,29

7

Nor

th A

mer

ica

365,

656

348,

732

247,

068

92,1

5461

2,72

444

0,88

6

Latin

Am

eric

a8,

554

7,98

3-

578,

554

8,04

0

449,

574

459,

568

489,

093

295,

398

938,

667

754,

966

Maj

or p

rodu

cts

and

serv

ice

lines

Man

ufac

ture

of a

ircra

ft c

ompo

nent

s, o

ther

airc

raft

rela

ted

equi

pmen

t par

ts, s

pare

s an

d pr

ecis

ion

engi

neer

ing

part

s44

9,25

645

9,35

0-

-44

9,25

645

9,35

0

Des

ign

and

asse

mbl

y of

mod

ular

or c

ompl

ete

mac

hine

an

d eq

uipm

ent;

man

ufac

ture

of c

ompo

nent

s an

d pr

ecis

ion

engi

neer

ing

part

s fo

r mod

ular

or c

ompl

ete

mac

hine

and

equ

ipm

ent

--

414,

144

223,

200

414,

144

223,

200

Man

ufac

ture

of c

ompo

nent

s, s

pare

s an

d pr

ecis

ion

engi

neer

ing

part

s, d

esig

n an

d as

sem

bly

of m

odul

ar o

r co

mpl

ete

mac

hine

and

equ

ipm

ent,

trim

and

form

die

s,

jigs

and

susp

ensi

on to

olin

g-

74,5

9872

,058

74,5

9872

,058

Supp

ort s

ervi

ces

318

218

351

140

669

358

449,

574

459,

568

489,

093

295,

398

938,

667

754,

966



. Re

venu

e (C

ont’d

)

19.1

D

isag

greg

atio

n of

reve

nue

(Con

t’d)

Aer

ospa

ceEq

uipm

ent m

anuf

actu

ring

Tota

l

2020

RM’0

0020

19RM

’000

2020

RM’0

0020

19RM

’000

2020

RM’0

0020

19RM

’000

Gro

up

Tim

ing

and

reco

gniti

on

At a

poi

nt in

tim

e-

-35

7,10

619

2,97

935

7,10

619

2,97

9

Ove

r tim

e44

9,57

445

9,56

813

1,98

710

2,41

958

1,56

156

1,98

7

Tota

l rev

enue

from

con

trac

ts w

ith c

usto

mer

s44

9,57

445

9,56

848

9,09

329

5,39

893

8,66

775

4,96

6

2020

RM’0

0020

19RM

’000

Com

pany

Prim

ary

geog

raph

ical

mar

kets

Mal

aysi

a12

,112

11,5

17

Asi

a (e

xclu

ding

Mal

aysi

a)24

499

12,3

5611

,616

Maj

or s

ervi

ce li

ne

Man

agem

ent f

ee12

,356

11,6

16

Tim

ing

and

reco

gniti

on

At a

poi

nt in

tim

e12

,356

11,6

16



. Re

venu

e (C

ont’d

)

19.2

N

atur

e of

goo

ds a

nd s

ervi

ces

The

follo

win

g in

form

atio

n re

flect

s th

e ty

pica

l tra

nsac

tions

of t

he G

roup

:

Nat

ure

of

good

s or

ser

vice

sTi

min

g of

reco

gniti

on o

r m

etho

d us

ed to

reco

gnis

e re

venu

eSignificant

paym

ent t

erm

sVa

riabl

e el

emen

t in

con

side

ratio

nO

blig

atio

n fo

r re

turn

s or

refu

nds

War

rant

y

Man

ufac

ture

of a

ircra

ft

com

pone

nts

and

othe

r ai

rcra

ft re

late

d eq

uipm

ent

part

s, s

pare

s an

d pr

ecis

ion

engi

neer

ing

part

s

Reve

nue

is re

cogn

ised

ove

r tim

e as

co

sts

are

incu

rred

. Con

trol

of g

oods

ar

e tr

ansf

erre

d ov

er ti

me

as th

e go

ods

have

no

alte

rnat

ive

use

and

ther

e is

an

enf

orce

able

righ

t to

paym

ent f

or

perf

orm

ance

com

plet

ed to

dat

e.

Cre

dit p

erio

d w

ithin

the

indu

stry

st

anda

rd.

Dis

coun

ts m

ay

be o

ffere

d fo

r ce

rtai

n co

ntra

cts

dete

rmin

ed o

n a

case

to c

ase

basi

s.

Retu

rns

only

ap

plic

able

for

prod

ucts

that

do

not m

eet c

usto

mer

’s sp

ecifi

catio

ns.

Prod

uct w

arra

ntie

s ar

e as

sura

nce

type

w

arra

nty

and

do

not f

orm

a s

epar

ate

perf

orm

ance

ob

ligat

ion.

Des

ign

and

asse

mbl

y of

m

odul

ar o

r com

plet

e m

achi

ne a

nd e

quip

men

t; m

anuf

actu

re o

f com

pone

nts

and

prec

isio

n en

gine

erin

g pa

rts

for m

odul

ar o

r com

plet

e m

achi

ne a

nd e

quip

men

t

Reve

nue

is re

cogn

ised

ove

r tim

e as

co

sts

are

incu

rred

. The

se c

ontr

acts

w

ould

mee

t the

no

alte

rnat

ive

use

and

the

Gro

up h

as ri

ghts

to p

aym

ent

for w

ork

perf

orm

ed.

Cre

dit p

erio

d w

ithin

the

indu

stry

st

anda

rd.

Not

app

licab

le.

Retu

rns

only

ap

plic

able

for

prod

ucts

that

do

not m

eet c

usto

mer

’s sp

ecifi

catio

ns.

Prod

uct w

arra

ntie

s ar

e as

sura

nce

type

w

arra

nty

and

do

not f

orm

a s

epar

ate

perf

orm

ance

ob

ligat

ion.

Man

ufac

ture

of c

ompo

nent

s,

spar

es a

nd p

reci

sion

en

gine

erin

g pa

rts,

des

ign

and

asse

mbl

y of

mod

ular

or

com

plet

e m

achi

ne a

nd

equi

pmen

t; m

anuf

actu

re

of tr

im a

nd fo

rm d

ies

and

susp

ensi

on to

olin

g

Reve

nue

is re

cogn

ised

at a

poi

nt

in ti

me

whe

n th

e pa

rts

or m

achi

ne

are

deliv

ered

and

acc

epte

d by

the

cust

omer

s.

Cre

dit p

erio

d w

ithin

the

indu

stry

st

anda

rd.

Not

app

licab

le.

Retu

rns

only

ap

plic

able

for

prod

ucts

that

do

not m

eet c

usto

mer

’s sp

ecifi

catio

ns.

Prod

uct w

arra

ntie

s ar

e as

sura

nce

type

w

arra

nty

and

does

no

t for

m a

sep

arat

e pe

rfor

man

ce

oblig

atio

n.

Supp

ort s

ervi

ces

and

man

agem

ent s

ervi

ces

Reve

nue

is re

cogn

ised

at a

poi

nt in

tim

e w

hen

the

serv

ice

is re

nder

ed.

Cre

dit p

erio

d w

ithin

the

indu

stry

st

anda

rd.

Not

app

licab

le.

Not

app

licab

le.

Not

app

licab

le.



19. Revenue (Cont’d)

19.3 Transaction price allocated to the remaining performance obligations

The following table shows revenue from performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date. The disclosure is only providing information for contracts that have a duration of more than one year.

2021RM’000

2022RM’000

2023RM’000

TotalRM’000

Group

Design and assembly of modular or complete machine and equipment 50,387 50,387 37,790 138,564

The above revenue does not have variable consideration.

The Group applies practical expedients on exemption on disclosure of information on remaining performance obligations that have original expected durations of one year or less.

20. Finance costs

2020RM’000

2019RM’000

Group

Interest expense of financial liabilities that are not at fair value through profit or loss 3,364 2,754

Interest expense on lease liabilities 1,170 -

4,534 2,754

21. Profitbeforetax

Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

Profit before tax is arrived at after charging/(crediting):

Auditors’ remuneration

- Audit fees

- KPMG PLT 244 254 65 80

- Other auditors 192 217 - -

- Non-audit fees

- KPMG PLT 5 5 5 5

- Affiliate of KPMG PLT 115 15 115 15



21. Profitbeforetax(Cont’d)

Group Company

Note2020

RM’0002019

RM’0002020

RM’0002019

RM’000

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

Material expenses/(income)

Impairment loss on investments in subsidiaries 6 - - - 6,237

Realised loss on foreign exchange, net - - 82 -

Fair value loss on derivatives 3,714 248 - -

Personnel expenses

- Wages, salaries and others (including Directors’ emoluments) 114,592 105,766 10,568 8,981

- Employees’ Provident Fund contributions 10,413 10,575 885 825

- Termination benefits 194 286 194 257

Gain on disposal of property, plant and equipment (45) (9,060) - -

Foreign exchange gain, net:

- Unrealised (593) (834) (30) (5)

- Realised (830) (126) - (24)

Expenses arising from leases

Expenses relating to short-term leases a 1,436 - 80 -

Expenses relating to leases of low-value assets a 113 - 17 -

Rental expense - 9,709 - 76

Net loss on impairment of financialinstrumentsandcontract assets

Financial assets at amortised cost 6,297 812 3 15

Contract assets 2,844 204 - -

9,141 1,016 3 15

Note a

The Group leases IT equipment and apartments with contract terms ranging from 1 to 5 years. These leases are either short-term or of low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for such leases.



22. Key management personnel compensation

Key management personnel compensation are as follows:

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

Directors of the Company

- Fees 485 461 485 461

- Other emoluments 108 120 108 120

593 581 593 581

Other key management personnel

- Remuneration 4,263 4,122 1,762 1,546

- Employees’ Provident Fund contributions 317 341 205 180

4,580 4,463 1,967 1,726

5,173 5,044 2,560 2,307

Other key management personnel comprise persons other than the Directors of the Company, having authority and responsibility for planning and controlling the activities of the Group either directly or indirectly.

The estimated monetary value of benefits-in-kind receivable by Directors of the Group and of the Company amounted to RM1,964 and RM902 (2019 : RM6,945 and RM3,402) respectively.



23. Tax expense

Major components of tax expense include:

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

Income tax expense

Malaysia

- current year 16,627 8,774 - -

- prior year (2,348) 824 - -

14,279 9,598 - -

Overseas

- current year 2,814 5,206 - -

- prior year 232 (534) - -

3,046 4,672 - -

Total income tax expense 17,325 14,270 - -

Deferred tax expense

- origination of temporary differences 1,532 1,832 - -

- prior year 971 182 - -

2,503 2,014 - -

Total tax expense 19,828 16,284 - -



23. Tax expense (Cont’d)

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

Reconciliation of tax expense

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

Profit for the year 79,823 78,513 40,519 46,353

Total income tax expense 19,828 16,284 - -

Profit excluding tax 99,651 94,797 40,519 46,353

Income tax calculated using Malaysian tax rate at 24% (2019 : 24%) 23,916 22,751 9,724 11,125

Effect of different tax rates in foreign jurisdictions (2,044) (2,493) - -

Non-deductible expenses 2,025 1,675 290 1,713

Tax exempt income (101) (2,193) (10,656) (13,409)

Effect of tax incentives (3,551) (3,896) - -

Effect of deferred tax assets not recognised 643 203 642 571

Other items 85 (235) - -

20,973 15,812 - -

(Over)/Under provided in prior years (1,145) 472 - -

19,828 16,284 - -

24. 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 RM79,823,000 (2019 : RM78,513,000) and the weighted average number of ordinary shares outstanding, calculated as follows:

2020 2019

Weighted average number of ordinary shares at 31 March 135,166,967 135,166,967

Basic earnings per ordinary share (sen) 59.06 58.09

Diluted earnings per ordinary share

The diluted earnings per ordinary share is the same as basic earnings per ordinary share as there are no dilutive potential ordinary shares.



25. Dividends - Company

2020

A first interim single tier dividend of 17.43 sen and a special single tier dividend of 11.62 sen per ordinary share totalling RM39,266,005 for the financial year ended 31 March 2019 was declared on 28 May 2019 and paid on 13 August 2019.

Subsequent to the end of the financial year, the Company declared a first interim single tier dividend of 14.76 sen per ordinary share in respect of the financial year ended 31 March 2020 to be paid on 26 August 2020.

2019

A first interim single tier dividend of 14.01 sen and a special single tier dividend of 9.35 sen per ordinary share totalling RM31,575,005 for the financial year ended 31 March 2018 was declared on 7 June 2018 and paid on 10 August 2018.

26. 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 and the subsidiaries and associates of the holding companies.

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.

Significantrelatedpartytransactions

The significant related party transactions of the Group and the Company are shown below. The transactions were entered in the normal course of business under negotiated terms. The balances related to the below transactions are shown in Note 8 and Note 18.

i) Subsidiaries:

2020RM’000

2019RM’000

Company

Subscription of shares in a subsidiary 10,000 -

Allocation of share-based payments 605 -

Dividend income 44,400 55,870

Management fee income 12,356 11,616

Interest income - 1


26. Related parties (Cont’d)

Significantrelatedpartytransactions(Cont’d)

ii) Immediate holding company:

2020RM’000

2019RM’000

Group

Sales of aerospace parts 71,004 92,469

Dividend paid (28,152) (22,649)

Income from engineering services 580 568

Purchase of engineering services (495) (1,021)

Purchase of corporate management services (1,910) (689)

Rental of factory premises (3,794) (3,718)

Company

Dividend paid (28,152) (22,649)

Purchase of engineering services (433) (296)

Purchase of corporate management services (1,047) (1,487)

iii) Related companies:

2020RM’000

2019RM’000

Group

Sales of fabrication/machining services 9,126 15,331

Sales of aerospace parts 3,009 6,313

Purchase of corporate management services (880) (558)

Purchase of fabrication/machining services (4,611) (15,717)

Rental of floor space (1,976) (1,988)

Rental of machine (104) (152)

Corporate management services income 638 204

Purchase of equipment (495) -

Company

Corporate management services income 638 204

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 22 to the financial statements.




27. Operating segment - Group

The Group has two 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

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.

Other non-reportable segment comprise investment holding activities and provision of intra-group management services which did not meet the quantitative thresholds for reportable segments.

Segment assets

The total of segment asset is measured on all assets 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.



27. Operating segment - Group (Cont’d)

AerospaceRM’000

Equipment manufacturing

RM’000Elimination

RM’000Total

RM’000

2020

Revenue from external customers 449,574 489,093 - 938,667

Inter-segment revenue 1,288 - (1,288) -

Total revenue 450,862 489,093 (1,288) 938,667

Profit before tax (segment profit) 37,341 62,310 - 99,651

Included in the measure of segment profit are:

- Write-down of inventories (2,890) (454) - (3,344)

- Depreciation and amortisation (45,890) (6,773) - (52,663)

- Amortisation of government grant 370 - - 370

- (Loss)/Gain on disposal of property, plant and equipment (4) 49 - 45

Segment assets 672,201 242,408 - 914,609

Included in the measure of segment assets are:

Additions to non-current assets other than financial instruments and deferred tax assets

- Additions to property, plant and equipment 64,644 6,126 - 70,770

- Additions to right-of-use assets 5,811 319 - 6,130

- Additions to intangible assets 701 114 - 815




AerospaceRM’000

Equipment manufacturing

RM’000Elimination

RM’000Total

RM’000

2019

Revenue from external customers 459,568 295,398 - 754,966

Inter-segment revenue 2,510 11 (2,521) -

Total revenue 462,078 295,409 (2,521) 754,966

Profit before tax (segment profit) 45,614 49,183 - 94,797

Included in the measure of segment profit are:

- Reversal/(write-down) of inventories (758) 799 - 41

- Depreciation and amortisation (29,986) (6,548) - (36,534)

- Amortisation of government grant 180 - - 180

- Gain on disposal of property, plant and equipment - 9,060 - 9,060

Segment assets 595,471 195,249 - 790,720

Included in the measure of segment assets are:

Additions to non-current assets other than financial instruments and deferred tax assets

- Additions to property, plant and equipment 53,000 11,603 - 64,603

- Additions to intangible assets 1,549 542 - 2,091




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.

RevenueRM’000

Non-current assets

RM’000

Geographical information

2020

Malaysia 37,192 229,032

Asia (excluding Malaysia) 277,987 164,007

Europe 2,210 -

North America 612,724 -

Latin America 8,554 -

938,667 393,039

2019

Malaysia 41,185 229,231


Europe 2,297 -

North America 440,886 -

Latin America 8,040 -

754,966 320,195

Major customers

The following are major customers with revenue equal to or more than 10% of the Group’s total revenue:

Revenue

Customer2020

RM’0002019

RM’000 Segment

Customer A 219,633 232,748 Aerospace

Customer B 204,320 57,122 Equipment manufacturing

Customer C 128,522 88,055 Equipment manufacturing

Customer D 71,002 93,606 Aerospace

623,477 471,531



28. Capital commitments - Group

2020RM’000

2019RM’000

Property, plant and equipment

Contracted but not provided for 47,337 31,255

29. Financial instruments

29.1 Categoriesoffinancialinstruments

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

(a) Amortised cost (“AC”)(b) Fair value through profit or loss (“FVTPL”)

- Designated upon initial recognition (“DUIR”)(c) Derivatives used for hedging

Carrying amountRM’000

ACRM’000

FVTPL- DUIR

RM’000

Derivatives used for hedgingRM’000

Financial assets

2020

Group

Trade and other receivables (excluding prepayments) 201,408 201,408 - -

Cash and bank balances 14,792 14,792 - -

Derivative financial assets 111 - 107 4

216,311 216,200 107 4

2019

Group

Trade and other receivables (excluding prepayments) 183,989 183,989 - -

Cash and bank balances 23,992 23,992 - -

Derivative financial assets 506 - 506 -

208,487 207,981 506 -



29. Financial instruments (Cont’d)

29.1 Categoriesoffinancialinstruments(Cont’d)


ACRM’000

Financial assets

2020

Company

Other receivables (excluding prepayments) 3,262 3,262

Cash and bank balances 339 339

3,601 3,601

2019

Company

Other receivables (excluding prepayments) 15,449 15,449

Cash and bank balances 613 613

16,062 16,062


ACRM’000

FVTPL- DUIR

RM’000



2020

Group

Loans and borrowings 82,239 82,239 - -

Trade and other payables 138,624 138,624 - -

Derivative financial liabilities 3,928 - 3,191 737

224,791 220,863 3,191 737




29.1 Categoriesoffinancialinstruments(Cont’d)


ACRM’000

FVTPL- DUIR

RM’000


Financial liabilities (Cont’d)

2019

Group

Loans and borrowings 99,808 99,808 - -

Trade and other payables 126,731 126,731 - -

Derivative financial liabilities 1,365 - 118 1,247

227,904 226,539 118 1,247


ACRM’000


2020

Company


2019

Company





29.2 Netgainsandlossesarisingfromfinancialinstruments

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

Net (losses)/gains on:

Financial assets at amortised cost (5,792) (503) 47 (17)

Financial liabilities measured at amortised cost (2,701) (2,051) (71) 55

Financial assets and financial liabilities at fair value through profit or loss:

- Designated upon initial recognition

- Recognised in profit or loss (3,714) (248) - -

Derivatives used for hedging:

- Recognised in other comprehensive expense 756 (3,965) - -

(11,451) (6,767) (24) 38

29.3 Financial risk management

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

• Credit risk• Liquidity risk• Market risk

29.4 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 the individual characteristics of each customer. The Company’s exposure to credit risk arises principally from advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries.

Trade receivables and contract assets

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.

At each reporting date, the Group or the Company assesses whether any of the trade receivables and contract assets are credit impaired.

The gross carrying amounts of credit impaired trade receivables and contract assets are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables and contract assets that are written off could still be subject to enforcement activities.

There are no significant changes as compared to previous year.




29.4 Credit risk (Cont’d)

Trade receivables and contract assets (Cont’d)

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables and contract assets are represented by the carrying amounts in the statements of financial position.

Concentration of credit risk

The exposure to credit risk for trade receivables and contract assets as at the end of the reporting period by geographical region was:

Group

2020RM’000

2019RM’000

Malaysia 8,050 5,843


North America and Canada 218,844 221,263

Others 9,915 3,495

333,580 305,658

Recognition and measurement of impairment losses

Loss rates are based on actual credit loss experience over the past three years. The Group also considers differences between (a) economic conditions during the period over which the historic data has been collected, (b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables.

The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract assets as at year end which are grouped together as they are expected to have similar risk nature.





Recognition and measurement of impairment losses (Cont’d)

GrossRM’000

Loss allowance

RM’000

Net balance RM’000

Group

2020

Current (Not past due) 316,031 11,089 304,942

1 - 30 days past due 25,255 892 24,363

31 - 60 days past due 3,400 124 3,276

61 - 90 days past due 837 50 787

345,523 12,155 333,368

Credit impaired

More than 90 days past due 227 15 212

345,750 12,170 333,580

Trade receivables 202,580 8,359 194,221

Contract assets 143,170 3,811 139,359

345,750 12,170 333,580

2019

Current (Not past due) 291,970 2,332 289,638

1 - 30 days past due 12,942 122 12,820

31 - 60 days past due 2,124 46 2,078

61 - 90 days past due 1,084 24 1,060

308,120 2,524 305,596

Credit impaired

More than 90 days past due 62 - 62

308,182 2,524 305,658

Trade receivables 180,951 1,723 179,228

Contract assets 127,231 801 126,430

308,182 2,524 305,658







Recognition and measurement of impairment losses (Cont’d)

The movements in the allowance for impairment in respect of trade receivables and contract assets during the year are shown below.

Trade receivables

Lifetime ECLRM’000

Contract assets

RM’000Total

RM’000

Group

Balance at 1 April 2018 866 570 1,436

Net remeasurement of loss allowance 812 204 1,016

Effect of movement in exchange rates 45 27 72

Balance at 31 March 2019/1 April 2019 1,723 801 2,524

Net remeasurement of loss allowance 6,297 2,844 9,141

Effect of movement in exchange rates 339 166 505

Balance at 31 March 2020 8,359 3,811 12,170

Cash and bank balances

The cash and bank balances are held with banks and financial institutions. As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.

These banks and financial institutions have low credit risks. In addition, some of the bank balances are insured by government agencies.

Other receivables

Credit risk on other receivables arose mainly from the amounts recoverable from material suppliers.

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.

As at the end of the reporting period, the Company did not recognise any allowance for impairment losses.





Inter-company advances


The Company provides unsecured advances mainly to subsidiaries. The Company monitors the ability of the subsidiaries to repay the advances on an individual basis.


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.

The advances provided are not secured by any collateral or supported by any other credit enhancements.

Recognition and measurement of impairment loss

Generally, the Group and the Company considers advances to subsidiaries to have low credit risk. The Group and the Company assumes that there is a significant increase in credit risk when the subsidiary’s financial position deteriorates significantly. As the Company is able to determine the timing of payments of these advances, the Company considers the advances to be in default when the subsidiaries are not able to pay when demanded. The Company considers such advances to be credit impaired when:

• The subsidiary is unlikely to repay its advance to the Company in full; or• The subsidiary is continuously loss making and is having a deficit shareholders’ fund.

The Group and the Company determine the probability of default for these advances individually using internal information available.

The following tables provide information about the exposure to credit risk and ECLs for inter-company advances as at year end.

Gross carrying amountRM’000

Impairment loss allowance

RM’000

Net balanceRM’000

Group

2020

Low credit risk 231 - 231

2019

Low credit risk 34 - 34





Inter-company advances (Cont’d)

Recognition and measurement of impairment loss (Cont’d)

Gross carrying amountRM’000

Impairment loss allowance

RM’000

Net balanceRM’000

Company

2020

Low credit risk 3,248 - 3,248

Credit impaired 28 (28) -

3,276 (28) 3,248

2019

Low credit risk 15,401 - 15,401

Credit impaired 25 (25) -

15,426 (25) 15,401

The movements in the allowance for impairment in respect of subsidiaries’ advances during the year are as follows:

Lifetime ECLRM’000

Company

Balance at 1 April 2018 10

Net remeasurement of loss allowance 15

Balance at 31 March 2019/1 April 2019 25

Net remeasurement of loss allowance 3

Balance at 31 March 2020 28





Financial guarantees


The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors the ability of the subsidiaries to service their loans on an individual basis.


The maximum exposure to credit risk amounted to RM43.3 million (2019: RM59.0 million) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

The financial guarantees are provided as credit enhancements to the subsidiaries’ loans and borrowings.

Recognition and measurement of impairment loss

The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. The Company considers a financial guarantee to be credit impaired when:

• The subsidiary is unlikely to repay its credit obligation to the bank in full; or• The subsidiary is continuously loss making and is having a deficit shareholders’ fund.

The Company determines the probability of default of the guaranteed loans and borrowings individually using internal information available.

As the end of the reporting period, the Company did not recognise any allowance for impairment in respect of financial guarantees.

29.5 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 bank balances 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.



. Fi

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)

29.5

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RM’0

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Cont

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Cont

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sRM

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Und

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RM’0

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1 - 2

year

sRM

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2 - 5

year

sRM

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Mor

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2020

Gro

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9,10

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15,7

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7,90

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267,

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214,

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29.

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(Con

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29.5

Li

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Cont

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sRM

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RM’0

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sRM

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2020

Com

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. Fi

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29.5

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Cont

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RM’0

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2019

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--




29.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates that will affect the Group’s financial position or cash flows.

29.6.1 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”).


The Group uses forward exchange contracts to hedge its foreign currency risk arising from sales and purchases denominated in foreign currency. Most of the forward exchange contracts have maturities of less than two years after the end of the reporting period. Where necessary, the forward exchange contracts are rolled over at maturity.

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 are as follows:

Denominated in

USDRM’000

SGDRM’000

EURORM’000

RMRM’000

Group

2020

Balances recognised in the statement of financialposition

Trade and other receivables 3,991 2,162 - 5,382Cash and bank balances 242 5,612 35 1,621Trade and other payables (278) (9,879) (1,252) (32,072)Lease liabilities - (21,672) - (4,719)

Net exposure 3,955 (23,777) (1,217) (29,788)

2019

Balances recognised in the statement of financialposition

Trade and other receivables 4,417 352 - 6,420

Cash and bank balances 423 1,596 6,214 2,912

Trade and other payables (524) (13,433) (1,126) (30,028)

Net exposure 4,316 (11,485) 5,088 (20,696)




29.6 Market risk (Cont’d)

29.6.1 Currency risk (Cont’d)

Currency risk sensitivity analysis

A 5% (2019 : 5%) strengthening of the functional currency of Group entities against the following currencies at the end of the reporting period would have increased/(decreased) 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.

Profitorloss

2020RM’000

2019RM’000

Group

USD (150) (164)

SGD 904 436

EURO 46 (193)

RM 1,132 786

1,932 865

A 5% (2019 : 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.

29.6.2 Interest rate risk

The Group’s variable rate 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.


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 risk 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.




29.6 Market risk (Cont’d)

29.6.2 Interest rate risk (Cont’d)

Exposure to interest rate risk

The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period are as follows:

Group Company

2020RM’000

2019RM’000

2020RM’000

2019RM’000

Fixed rate instruments


- Lease liabilities 42,851 - - -

Floating rate instruments


- Term loan 26,858 31,905 - -

- Revolving credit 55,381 67,903 - -

82,239 99,808 - -

(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.

(b) Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group’s post-tax profit or loss would have been RM312,508 (2019 : RM379,270) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.


29.

Fina

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29.7 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 (2019 : no transfer in either direction).

Level 2 fair value

Derivatives

The fair value of the forward exchange contracts is estimated by reference to the market rate for similar contracts obtained from the banks which the Group contracted with.

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. The carrying amount of floating rate term loans approximate fair value as their effective interest rates change accordingly to movements in the market interest rate.

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.

30. 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.

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than 25 percent of the issued and paid-up capital and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.

There was no change in the Group’s approach to capital management during the financial year.



31. Operating leases

Leases as lessee

In prior year, the non-cancellable operating lease rentals were payable as follows:

Group Company

2019RM’000

2019RM’000

Less than one year 8,150 14

Between one and five years 19,381 -

More than 5 years 12,631 -

40,162 14

The Group and the Company leased factories, 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.

32. Contingent liabilities, unsecured - Company

The Company has issued corporate guarantees to financial institutions for borrowings granted to certain subsidiaries for RM266,631,000 (2019 : RM243,211,000) of which, RM55,806,000 (2019 : RM84,673,000) were utilised at the end of the reporting period.

33. Significantchangesinaccountingpolicies

During the year, the Group and the Company adopted MFRS 16, Leases.

Definitionofalease

On transition to MFRS 16, the Group and the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied MFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under MFRS 117, Leases and IC Interpretation 4, Determining whether an Arrangement contains a Lease were not reassessed. Therefore, the definition of a lease under MFRS 16 has been applied only to contracts entered into or changed on or after 1 April 2019.

As a lessee

Where the Group and the Company are a lessee, the Group and the Company applied the requirements of MFRS 16 retrospectively with the cumulative effect of initial application, if any as an adjustment to the opening balance of retained earnings at 1 April 2019.

At 1 April 2019, for leases that were classified as operating lease under MFRS 117, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group entities’ incremental borrowing rates as at 1 April 2019. The rates applied ranged between 2.95% to 13.00%. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

The Group and the Company used the following practical expedients when applying MFRS 16 to leases previously classified as operating lease under MFRS 117:

- applied a single discount rate to a portfolio of leases with similar characteristics;- applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease

term as at 1 April 2019;- excluded initial direct costs from measuring the right-of-use asset at the date of initial application; and - used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.



33. Significantchangesinaccountingpolicies(Cont’d)

33.1 Impactsonfinancialstatements

Since the Group and the Company applied the requirements of MFRS 16 retrospectively with the cumulative effect of initial application at 1 April 2019, there are no adjustments made to the prior period financial statements presented.

The following table reconciles the difference between operating lease commitments previously disclosed applying MFRS 117 at 31 March 2019, and lease liabilities recognised in the statement of financial position at 1 April 2019.

RM’000

Group

Operating lease commitments at 31 March 2019 as disclosed in Note 31 40,162

Discounted using the incremental borrowing rates at 1 April 2019 34,194

Recognition exemption for short-term leases (866)

Recognition exemption for leases of low-value assets (198)

Extension options reasonably certain to be exercised 10,374

Lease liabilities recognised at 1 April 2019 43,504

Company

Operating lease commitments at 31 March 2019 as disclosed in Note 31 14

Recognition exemption for leases of low-value assets (14)


STATEMENT BY DIRECTORS

In the opinion of the Directors, the financial statements set out on pages 75 to 162 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 2020 and of their financial performance and cash flows for the financial year then ended.

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

_________________________________ _________________________________Tan Kai Hoe Goh Wee KengDirector Director

Penang,

Date: 18 June 2020

pursuant to Section 251(2) of the Companies Act 2016

I, Teh Mun Ling, 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 75 to 162 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 above named Teh Mun Ling, MIA CA16317, at George Town in the State of Penang on 18 June 2020.

_________________________________Teh Mun Ling

Before me:

Goh Suan Bee(No. P125)Commissioner for OathsPenang

STATUTORY DECLARATIONpursuant 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 2020 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 75 to 162.

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 2020, 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 financial year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of inventories - Group

Refer to the accounting policy in Note 2(h), Note 1(d) – Use of estimates and judgements and Note 9 - Inventories to the financial statements.

The key audit matter How the matter was addressed in our audit

The Group’s inventories amounted to RM145 million as at 31 March 2020 in the statement of financial position which represented 16% of the Group’s total assets.

The inventories are measured at the lower of cost and net realisable value. Identifying and determining the appropriate write down for 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;

• Tested the age profile of the inventories to receiving documents and production reports;

• Evaluated the Group’s basis of writing down slow-moving inventories based on the age of the inventory relative to past and present sales or consumption;

• Compared quality affected inventories that were written down to the Group’s Materials Review Board, Non-conformance Reports, Vendor Material Review Reports and Material Disposition Reports; and

• Compared the carrying value of inventories-in-progress and finished goods to sales made subsequent to the year end and checked that they were sold at prices 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 be communicated in our auditors’ report.

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF SAM ENGINEERING & EQUIPMENT (M) BERHAD(Registration No. 199401012509 (298188 - A)) (Incorporated in Malaysia)


INDEPENDENT AUDITORS’ REPORT (Cont’d)

TO THE MEMBERS OF SAM ENGINEERING & EQUIPMENT (M) BERHAD(Registration No. 199401012509 (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.

• 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.


Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)

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: (Cont’d)

• 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 6 to the financial statements.

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: 03272/06/2022 JChartered Accountants Chartered Accountant

Penang

Date: 18 June 2020

INDEPENDENT AUDITORS’ REPORT (Cont’d)

TO THE MEMBERS OF SAM ENGINEERING & EQUIPMENT (M) BERHAD(Registration No. 199401012509 (298188 - A)) (Incorporated in Malaysia)


ANALYSIS OF SHAREHOLDINGS

Distribution Schedule of Shareholdings as at 2 July 2020

No. of Holders Size of HoldingsTotal

Holdings %

233 less than 100 shares 8,500 0.01

892 100 to 1,000 shares 613,538 0.45

1,292 1,001 to 10,000 shares 4,777,424 3.54

323 10,001 to 100,000 shares 9,768,650 7.23

45 100,001 to less than 5% of issued shares 23,119,329 17.10

1 5% and above of issued shares 96,879,526 71.67

2,786 135,166,967 100.00

Substantial Shareholders as at 2 July 2020

No. Name

Direct Interest Indirect Interest

No. of Shares

% of Issued Capital

No. of Shares

% of Issued Capital

1. Singapore Aerospace Manufacturing Pte Ltd 96,879,526 71.67

2. Accuron Technologies Limited - - (a) 96,879,526 71.67

3. Temasek Holdings (Private) Limited - - (b) 96,879,526 71.67

Notes:(a) Deemed interested via Singapore Aerospace Manufacturing Pte Ltd pursuant to Section 8(4) of the Companies Act, 2016.(b) Deemed interested via Accuron Technologies Limited pursuant to Section 8(4) of the Companies Act, 2016.

Directors’ Shareholdings as at 2 July 2020

No. Name

Direct Interest Indirect Interest

No. of Shares

% of Issued Capital

No. of Shares

% of Issued Capital

1. Tan Kai Hoe - - - -

2. Goh Wee Keng 1,702,523 1.26 - -

3. Shum Sze Keong - - - -

4. Dato’ Mohamed Salleh Bin Bajuri - - - -

5. Dato’ Seri Wong Siew Hai - - (a) 11,800 0.01

6. Dato’ Sri Lee Tuck Fook - - - -

7. Lee Hock Chye - - - -

8. Datuk Dr Wong Lai Sum - - - -

9. YM Tunku Afwida Binti Dato’ Tunku Abdul Malek - - - -

10. Suresh Natarajan - - - -

Notes:(a) Deemed interest via children pursuant to Section 59(11)(c) of the Companies Act, 2016.


Thirty (30) Largest Securities Account Holders (Ordinary Shares) According to the Record of Depositors as at 2 July 2020

Name Shareholdings %

1 AFFIN HWANG NOMINEES (ASING) SDN BHDDBS VICKERS SECS (S) PTE LTD FOR SINGAPORE AEROSPACEMANUFACTURING PTE LTD

96,879,526 71.67

2 CARTABAN NOMINEES (TEMPATAN) SDN BHDICAPITAL.BIZ BERHAD

4,738,600 3.51

3 UOBM NOMINEES (ASING) SDN BHDUNITED OVERSEAS BANK NOMINEES (PTE) LTDFOR GOH WEE KENG

1,702,523 1.26

4 AMANAHRAYA TRUSTEES BERHADPUBLIC SMALLCAP FUND

1,645,800 1.22

5 AMANAHRAYA TRUSTEES BERHADPUBLIC STRATEGIC SMALLCAP FUND

1,560,404 1.15

6 AMANAHRAYA TRUSTEES BERHADPB ISLAMIC SMALLCAP FUND

1,042,000 0.77

7 AMANAHRAYA TRUSTEES BERHADPB SMALLCAP GROWTH FUND

1,004,800 0.74

8 AMANAHRAYA TRUSTEES BERHADPUBLIC ISLAMIC OPPORTUNITIES FUND

940,400 0.70

9 CARTABAN NOMINEES (ASING) SDN BHDEXEMPT AN FOR LGT BANK AG (FOREIGN)

858,857 0.64

10 AFFIN HWANG NOMINEES (ASING) SDN BHDDBS VICKERS SECS (S) PTE LTD FOR TEO SIEW GEOK

781,333 0.58

11 MAYBANK NOMINEES (TEMPATAN) SDN BHDMAYBANK TRUSTEES BERHAD FOR PUBLIC INDUSTRY GROWTH FUND (N14011930270)

725,300 0.54

12 CITIGROUP NOMINEES (TEMPATAN) SDN BHDURUSHARTA JAMAAH SDN. BHD. (AFFIN 2)

677,300 0.50

13 HLB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR NG YONG YIN

543,400 0.40

14 RAJESH SINGH BHINDER A/L PRETAM SINGH 456,000 0.34

15 MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAY ONG NGO @ TAY BOON FANG

418,400 0.31

16 HSBC NOMINEES (TEMPATAN) SDN BHDHSBC (M) TRUSTEE BHD FOR PERTUBUHAN KESELAMATAN SOSIAL (UOBAMM6939-406)

357,200 0.26

17 AMANAHRAYA TRUSTEES BERHADPUBLIC SELECT TREASURES EQUITY FUND

346,600 0.26

ANALYSIS OF SHAREHOLDINGS (Cont’d)


ANALYSIS OF SHAREHOLDINGS (Cont’d)

Thirty (30) Largest Securities Account Holders (Ordinary Shares) According to the Record of Depositors as at 2 July 2020 (Cont’d)

Name Shareholdings %

18 MAYBANK NOMINEES (TEMPATAN) SDN BHDMAYBANK TRUSTEES BERHAD FOR PUBLIC BALANCED FUND (N14011950210)

331,900 0.25

19 NG BOON KEAT 303,809 0.22

20 NAHOORAMMAH A/P SITHAMPARAM PILLAY 300,000 0.22

21 CITIGROUP NOMINEES (ASING) SDN BHDEXEMPT AN FOR UBS AG SINGAPORE (FOREIGN)

300,000 0.22

22 CARTABAN NOMINEES (TEMPATAN) SDN BHDTMF TRUSTEES MALAYSIA BERHAD FOR AFFIN HWANG DANA MALAYSIA

258,000 0.19

23 HSBC NOMINEES (TEMPATAN) SDN BHDHSBC (M) TRUSTEE BHD FOR MANULIFE INVESTMENT AL-FAID (4389)

242,600 0.18

24 CITIGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAN SIONG AN (470676)

223,000 0.16

25 LIM GAIK BWAY @ LIM CHIEW AH 217,100 0.16

26 MAYBANK NOMINEES (TEMPATAN) SDN BHDCAPITAL DYNAMICS ASSET MANAGEMENT SDN BHD FOR KESMINDUSTRIES BERHAD (CDAM30-990472)

217,000 0.16

27 LIM CHIAN PENG 200,000 0.15

28 OOI KOK KEE 189,267 0.14

29 MAYBANK NOMINEES (TEMPATAN) SDN BHDCAPITAL DYNAMICS ASSET MANAGEMENT SDN BHD FOR CHIENG LEE HOOK (CDAM46-230153)

182,900 0.14

30 AFFIN HWANG NOMINEES (ASING) SDN BHDDBS VICKERS SECS (S) PTE LTD FOR LEE CHEE WENG

178,590 0.13


NOTICE IS HEREBY GIVEN that the Twenty-Sixth (26th) Annual General Meeting (“AGM”) of SAM Engineering & Equipment (M) Berhad (“SAMEE” or the “Company”) will be held on a fully virtual basis at the Broadcast Venue at Gallery 1, Level 3, New World Petaling Jaya Hotel, Paradigm, 1 Jalan SS7/26A, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia on Wednesday, 2 September 2020 at 10.00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS:-

1. To receive the Audited Financial Statements for the financial year ended 31 March 2020 together with the Reports of the Directors and Auditors thereon.

(Please refer to Explanatory Note (B)(1))

2. To re-elect Datuk Dr. Wong Lai Sum who retires by rotation pursuant to Regulation 95 of the Company’s Constitution and being eligible, offers herself for re-election. Resolution 1

Dato’ Mohamed Salleh Bin Bajuri who also retires by rotation in accordance with Regulation 95 of the Company’s Constitution, has expressed his intention not to seek for re-election. Hence, he will retain in office until the close of the 26th AGM.

(Please refer to Explanatory Note (B)(3))

3. To re-elect the following Directors who retire in accordance with Regulation 102 of the Company’s Constitution and being eligible, offered themselves for re-election:-

3.1 YM Tunku Afwida Binti Dato’ Tunku Abdul Malek3.2 Suresh Natarajan

Resolution 2Resolution 3

4. To approve the payment of Directors’ fee as tabulated below, payable to each Director, as applicable, for the period from 3 September 2020 until the next AGM of the Company:-

Fee for each Director RM50,000

Fee for the Chairman of the Audit Committee RM10,000

Fee for the Chairman of the following Board Committees:-- Nominating & Remuneration Committee- Risk & Sustainability Committee

RM7,500

Fee for each Member of Board Committees RM5,000 Resolution 4

5. To approve the payment of the following benefits to Directors, payable to each Director, as applicable, for the period from 3 September 2020 until next AGM of the Company:-

Meeting Allowance for each Director RM2,000 per meeting

Benefits-In-Kind (for all Directors) RM50,000 per annum Resolution 5

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. Resolution 6

NOTICE OF 26TH ANNUAL GENERAL MEETING


NOTICE OF 26TH ANNUAL GENERAL MEETING (Cont’d)

AS SPECIAL BUSINESS:-

To consider and if thought fit, to pass the following as resolutions, with or without any modifications:-

7. Ordinary ResolutionAuthority to issue and allot shares

“THAT subject always to the Companies Act, 2016 (“Act”), the Constitution of the Company and approvals of the relevant governmental and/or regulatory authorities, if applicable, the Directors be and are hereby empowered to issue and allot shares in the Company, pursuant to Section 75 and Section 76 of the Act, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this Resolution does not exceed ten per centum (10%) of the issued and paid-up share capital (excluding treasury shares) of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad;

AND THAT such authority shall commence immediately upon the passing of this Resolution and continue to be in force until:-

(a) the conclusion of the Company’s next AGM, at which time it will lapse, unless the authority is renewed by a resolution passed at the general meeting;

(b) 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

(c) revoked or varied by resolution passed by the Company’s shareholders in a general meeting,

whichever is earlier.” Resolution 7

8. Ordinary Resolution Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions(“RRPT”)

“THAT subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and/or its subsidiaries (“SAMEE Group”) to enter into recurrent related party transactions of a revenue or trading nature as specified in Section 2.5 of the Circular to Shareholders dated 30 July 2020 which transactions are necessary for the day-to-day operations in the ordinary course of business of SAMEE 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:-

(a) the conclusion of the Company’s next AGM, at which time it will lapse, unless the authority is renewed by a resolution passed at the general meeting;

(b) 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

(c) revoked or varied by resolution passed by the Company’s shareholders in a general meeting,

whichever is earlier.

AND THAT the Directors of the Company be and are hereby authorised to complete and 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 RRPT.” Resolution 8


AS SPECIAL BUSINESS:- (Cont’d)

9. Ordinary ResolutionMandate for the Directors who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than twelve (12) years, to continue to act as an Independent Non-Executive Director of the Company

“THAT approval be and is hereby given to the following Directors who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than twelve (12) years, to continue to act as Independent Non-Executive Directors of the Company in compliance with the Malaysian Code on Corporate Governance:-

(a) Dato’ Seri Wong Siew Hai(b) Dato’ Sri Lee Tuck Fook(c) Mr. Lee Hock Chye”

Resolution 9Resolution 10Resolution 11

10. To transact any other business of which due notice shall have been given.

By Order of the Board,

THUM SOOK FUN, SSM PC NO. 201908000139 (MIA 24701)CHEW PECK KHENG, SSM PC NO. 202008001118 (LS 0009559)Company Secretaries

Date: 30 July 2020Penang

(A) Notes:-

1. As part of the initiatives and the safety measures to curb the spread of Coronavirus Disease 2019 (“COVID-19”), and having regard to the well-being and the safety of our shareholders, the 26th AGM will be conducted on a fully virtual basis through live streaming and online remote voting via Remote Participation and Voting (“RPV”) facilities which are available on Securities Services e-Portal (“SSeP”) at https://www.sshsb.net.my/login.aspx.

Please follow the procedures provided in the Administrative Guide for the 26th AGM in order to register, participate and vote remotely via RPV facilities.

2. The Broadcast Venue is strictly for the purpose of compliance with Section 327(2) of the Companies Act 2016 which stipulates that the Chairman of the meeting shall be present at the main venue of the 26th AGM and in accordance with Regulation 64 of the Company’s Constitution which allows a meeting of members to be held at more than one venue, using any technology or method that enables the members of the Company to participate and to exercise the members’ right to speak and vote at the general meeting.


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(A) Notes:- (Cont’d)

3. As the 26th AGM will be conducted via a virtual meeting, a member entitled to participate and vote at the meeting may appoint up to two (2) proxies or the Chairman of the Meeting as his/her proxy(ies) to participate and vote in his or her stead, by indicating the voting instruction in the Form of Proxy:-

a) A proxy may but need not to be a member of the Company. There shall be no restriction as to the qualification of the proxy.

b) Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

c) A proxy appointed to participate and vote at the meeting shall have the same rights as the member to speak at the meeting.

Pursuant to the Guidance on the Conduct of General Meetings for Listed Issuers issued by Securities Commission Malaysia, the right to speak is not limited to verbal communication only but includes other modes of expression. Therefore, all shareholders and proxies shall communicate with the main venue of the AGM via real time submission of typed texts through a text box within Securities Services e-Portal’s platform during the live streaming of the AGM as the primary mode of communication. In the event of any technical glitch in this primary mode of communication, shareholders and proxies may email their questions to [email protected] during the AGM. The questions and/or remarks submitted by the shareholders and/or proxies will be broadcasted and responded by the Chairman/Board/relevant adviser during the AGM.

4. 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. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.

5. 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. Where an Exempt Authorised Nominee appoints more than one (1) proxy in respect of each Omnibus Account, the appointment shall be invalid unless the Exempt Authorised Nominee specifies proportion of its shareholding to be represented by each proxy.

6. The appointment of proxy(ies) may be made in hardcopy form or by electronic means as follow:-

a) In Hardcopy FormThe instrument appointing a proxy or representative and the duly registered power of attorney or other authority (if any), under which it is signed or a duly notarized certified copy of that power or authority, shall be deposited at the Registered Office of the Company at Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 George Town, Pulau Pinang.

b) By SSePThe Form of Proxy may also be lodged electronically via SSeP at https://www.sshsb.net.my

(Please refer to the Administrative Guide for more details)

in either case, not less than 48 hours before the time appointed for holding the meeting or at any adjournment thereof.

7. The Company shall be entitled to reject an instrument of proxy which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the instrument of proxy.

8. In respect of deposited securities, only members whose names appear on the Record of Depositors on 24 August 2020 (General Meeting Record of Depositors) shall be eligible to participate, speak and vote at the meeting or appoint proxy(ies) to participate, speak and vote on his/her behalf.

9. Pursuant to Paragraph 8.29A(1) of the Listing Requirements, all resolutions set out in this notice will be put to vote by way of a poll.


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(B) Explanatory Notes to Ordinary Business:-

1. The first agenda of this meeting is meant for discussion only, as the provision of Section 340(1)(a) of the Act does not require a formal approval for the Audited Financial Statements from the shareholders. Hence, this Agenda is not put forward to shareholders for voting.

2. Resolution 1 – Re-election of Director who retires in accordance with Regulation 95 of the Company’s Constitution

Regulation 95 of the Company’s Constitution states that all directors shall retire from office once at least in each 3 years, but shall be eligible for re-election. An election of directors shall take place each year. A retiring Director shall retain office until the close of the meeting at which he retires.

In determining the eligibility of the Directors to stand for re-election at the forthcoming AGM, the Nominating & Remuneration Committee’s (“NRC”) has assessed the Directors and was satisfied with the assessment.

The Board approved the NRC’s recommendation for the re-election of the retiring Director pursuant to Regulation 95 of the Company’s Constitution at the forthcoming AGM of the Company. The retiring Director has abstained from deliberation as well as decision on her own eligibility to stand for re-election at the relevant NRC and Board meetings.

3. Dato’ Mohamed Salleh Bin Bajuri who retires in accordance with Regulation 95 of the Company’s Constitution, had expressed his intention not seek for re-election as Director of the Company. Hence, he will retain office until the conclusion of the 26th AGM.

4. Resolution 2 and 3 – Re-election of Directors who retire in accordance with Regulation 102 of the Company’s Constitution

Regulation 102 of the Company’s Constitution states that the Directors shall have power at any time, and from time to time appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors, but so that the total number of Directors shall not at any time exceed the number fixed in accordance with this Constitution. Any Director so appointed shall hold office only until the next annual general meeting and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotation at that meeting.

YM Tunku Afwida Binti Dato’ Tunku Abdul Malek and Mr. Suresh Natarajan have been appointed as Independent Non-Executive Directors of the Company on 1 January 2020 and 1 July 2020 respectively and are subject to re-election pursuant to Regulation 102 of the Company’ Constitution. Both the retiring Directors have consented to their re-election.

5. Resolution 4 and 5 – Proposed payment of Directors’ Remuneration

Section 230(1) of the Act provides amongst others, that the “fee” of the Directors and “any benefits” payable to the Directors of a listed company shall be approved at the general meeting. Pursuant thereto, shareholders’ approval is sought for the payment of fees and benefits payable to Directors, in two separate resolutions as follows:-

Resolution 4 – Payment of Directors’ fees in respect of the period from 3 September 2020 until the next AGM; and

Resolution 5 – Payment of Benefit to Directors for the period from 3 September 2020 until the next AGM.

The Board of Directors at its meeting held on 5 June 2020 approved the NRC’s recommendation for the proposed Directors’ fees for the period from 3 September 2020 until the next AGM. There is no revision to the proposed Directors’ fees as compared to the previous 25th AGM of the Company.

The benefits payable to each Director pursuant to Section 230(1)(b) of the Act have been reviewed by the Board of Directors of the Company, all of whom have recognised that the benefits payable are in the best interest of the Company. As for the meeting allowance it will be accorded based on the attendance of the Director at meetings.

In the event, the proposed amount is insufficient, e.g. due to enlarged Board size, approval will be sought at the next AGM for the shortfall.




(B) Explanatory Notes to Ordinary Business:- (Cont’d)

6. Resolution 6 – Re-appointment of Auditors

Pursuant to Section 271(3)(b) of the Act, shareholders shall appoint auditors who shall hold office until the conclusion of the next AGM in year 2021. The current auditors, Messrs. KPMG PLT has expressed their willingness to continue in office.

The Board and Audit Committee of the Company have considered the re-appointment of Messrs. KPMG PLT as auditors of the Company and collectively agreed that Messrs. KPMG PLT has met the relevant criteria prescribed by Paragraph 15.21 of Main Market Listing Requirements of Bursa Securities (“Listing Requirements”).

The Board of Directors recommends the re-appointment of Messrs. KPMG PLT as External Auditors of the Company to hold the office until the conclusion of the next AGM.

(C) Explanatory Notes to Special Business:-

1. Resolution 7 – Authority to issue and allot shares

The Ordinary Resolution proposed herein is primarily to seek for the renewal of the Previous Mandate (as defined herein) to give flexibility to the Board of Directors to issue and allot shares up to 10% of the total number of issued share (excluding treasury shares) of the Company for the time being, at any time in their absolute discretion for such purposes as the Board of Directors considers to be in the best interests of the Company (hereinafter referred to as the “General Mandate”). This General Mandate is sought to avoid any delays and costs involved with the convening of a general meeting. This General Mandate, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next AGM of the Company.

The Company had been granted a general mandate by its shareholders at the last AGM held on 28 August 2019 of which will lapse at the conclusion of the 26th AGM (hereinafter referred to as the “Previous Mandate”).

As at the date of this Notice, the Previous Mandate granted by the shareholders had not been utilised and hence, no proceeds were raised therefrom.

The General Mandate, upon renewal, will provide flexibility to the Company for any possible fund-raising activities, including but not limited to placing of shares for the purpose of funding future investment project(s), working capital and/or acquisitions.

2. Resolution 8 – Proposed Renewal of Shareholders’ Mandate

The proposed Ordinary Resolution 8, if approved by shareholders, will authorise the Proposed 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 dated 30 July 2020, 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 Renewal of Existing Shareholders’ Mandate is set out in the Circular dated 30 July 2020.


(C) Explanatory Notes to Special Business:- (Cont’d)

3. Resolution 9 to 11 – Mandate for the Directors who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than twelve (12) years, to continue to act as an Independent Non-Executive Directors of the Company

The proposed resolution is to seek the shareholders’ approval to retain Dato’ Seri Wong Siew Hai, Dato’ Sri Lee Tuck Fook and Mr. Lee Hock Chye (“Independent Non-Executive Directors”) as Independent Non-Executive Directors of the Company.

Both the NRC and the Board have at the annual assessment assessed the independence of these Independent Non-Executive Directors, and recommended them to continue to serve as Independent Non-Executive Directors of the Company based on the justifications that the above Independent Directors remain objective and independent in expressing their views and in participating in deliberation and decision making of the Board and Board Committees. Their length of service on the Board does not in any way interfere with their exercise of independent judgement and ability to act in the best interests of the Company. In addition, they have also confirmed and declared in writing that they are Independent Directors and have satisfied all the criteria of an Independent Director set out in Paragraph 1.01 of the Listing Requirements.

The full details of the Board’s justifications to retain Independent Non-Executive Directors as Independent Directors of the Company are set out in the Corporate Governance Overview Statement in the Company’s Annual Report 2020.

The proposed Ordinary Resolutions 9, 10, and 11 if passed, will enable the Company to retain Dato’ Seri Wong Siew Hai, Dato’ Sri Lee Tuck Fook and Mr. Lee Hock Chye as Independent Non-Executive Directors of the Company.

In line with Practice 4.2 of the Malaysian Code on Corporate Governance 2017 (“MCCG”), the approval of shareholders will be sought through two-tier voting process as described in the Guidance to Practice 4.2 of the said MCCG.

Personal data privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to participate, 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 ACCOMPANYING NOTICE OF AGM(Pursuant to Paragraph 8.27(2) of the Listing Requirements)

1. Details of individuals who are standing for election as Directors

As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election or re-appointment) at this forthcoming 26th AGM.

2. General mandate for issue of securities in accordance with Paragraph 6.03(3) of the Listing Requirements

Details of the general mandate to issue securities in the Company pursuant to Section 75 and Section 76 of the Act are set out in Explanatory Note (C)(1) of the Notice of the 26th AGM.



Dear Valued Shareholders,

We are pleased to invite you to the FULLY VIRTUAL Twenty-Sixth Annual General Meeting (“26th AGM”) of SAM Engineering & Equipment (M) Berhad (“SAMEE” or the “Company”) that will be conducted through live streaming and online remote voting using the Remote Participation and Voting (“RPV”) facilities. Details as follows:-

Date : Wednesday, 2 September 2020 Time : 10.00 a.m.Broadcast Venue : Gallery 1, Level 3, New World Petaling Jaya Hotel, Paradigm,

1 Jalan SS7/26A, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia

Please note that the Company has prepared a pre-meeting business presentation at 9.30 a.m. and you are invited to join the said presentation remotely via RPV facilities.

SHAREHOLDER(S)/PROXY(IES)/CORPORATE REPRESENTATIVE(S) from the public are NOT ALLOWED to be physically present at the Broadcast Venue on the day of the 26th AGM.

Please note that the following documents relating to 26th AGM are available for download from Bursa Malaysia Berhad and the Company’s website at https://www.sam-malaysia.com/ from 30 July 2020 onward:-

1) Notice of 26th AGM;2) Proxy Form;3) Administrative Guide for the 26th AGM;4) Annual Report 2020;5) Corporate Governance Report 2020; and6) Circular to Shareholders in relation to the proposed renewal of existing shareholders’ mandate for recurrent related party

transactions of a revenue or trading nature dated 30 July 2020.

If you wish to receive a printed copy of the Annual Report 2020 and/or Circular to Shareholders, please submit your request at https://www.sshsb.com.my/new/requestarep.aspx. We will endeavour to post the printed copy to you within four (4) market days from the date of receipt of your submitted request.

To participate and vote at the 26th AGM using the RPV facilities, please follow the procedures provided in the Administrative Guide for the 26th AGM in order to register, participate and vote remotely via RPV facilities.

If you are a Shareholder and you are not able to participate in the 26th AGM via RPV facilities, you may appoint the Chairman of the meeting as your proxy and indicate the voting instruction in the Proxy Form. Please complete and return your physical Proxy Form in accordance with the instructions thereon to the Company’s registered office at Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Georgetown, Pulau Pinang not less than forty-eight (48) hours before the time set for holding the AGM or any adjournment thereof. Alternatively, you may also lodge your e-Proxy Form through the Securities Services e-Portal at https://www.sshsb.net.my not less than forty-eight (48) hours before the time set for holding the AGM or any adjournment thereof.

Should you require any assistance, kindly contact our secretarial agent, Securities Services (Holdings) Sdn. Bhd., Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Georgetown, Pulau Pinang during office hours at 604-263 1966.

In view of the current unprecedented situation, the Company may be required to make changes to the administration and arrangement of the 26th AGM on short notice as it deems necessary. Please check the Company’s website at https://www.sam-malaysia.com/ or announcements for the latest updates regarding the 26th AGM.

We thank you for your continued support to the Company and look forward to connecting with you via the RPV facilities on the day of the 26th AGM.

By order of the Board,

Thum Sook Fun (SSM PC No. 201908000139, MIA 24701)Chew Peck Kheng (SSM PC No. 202008001118, LS 0009559)Company Secretaries

PenangDate: 30 July 2020

NOTIFICATION TO SHAREHOLDERSof a fully virtual Twenty-Sixth Annual General Meeting

SAM ENGINEERING & EQUIPMENT (M) BERHADCompany Registration No. 199401012509 (298188-A)

(Incorporated in Malaysia)

https://www.sam-malaysia.com/





ADMINISTRATIVE GUIDEfor the Twenty-Sixth Annual General Meeting

SAM ENGINEERING & EQUIPMENT (M) BERHADCompany Registration No. 199401012509 (298188-A)


Date : Wednesday, 2 September 2020

Time : 10.00 a.m.

Meeting Platform : Securities Services e-Portal at https://www.sshsb.net.myBroadcast Venue : Gallery 1, Level 3, New World Petaling Jaya Hotel, Paradigm,

1 Jalan SS7/26A, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia

1. INTRODUCTION

1.1 The Twenty-Sixth Annual General Meeting (“26th AGM”) of SAM Engineering & Equipment (M) Bhd. (“the Company” or “SAMEE”) will be conducted and held as a FULLY VIRTUAL meeting through live streaming and online remote participation using Remote Participation and Voting (“RPV”) facilities.

1.2 With the RPV facilities, you may exercise your right as a member of the Company to participate and vote at the 26th AGM. Alternatively, you may also appoint the Chairman of the Meeting as your proxy to attend and vote on your behalf at the 26th AGM. Details of the procedures for RPV and e-proxy submission are set out in item 5 below.

1.3 Please note that shareholders/proxies/corporate representatives from the public are NOT ALLOWED to be present in-person at the Broadcast Venue on the day of the 26th AGM.

1.4 Kindly note that it is your responsibility to maintain your continuous connection to the internet at all times in order to participate and vote during the Fully Virtual AGM. Kindly note that the quality of the live streaming is dependent on the bandwidth and stability of your internet connection.

2. CONDUCT OF 26th AGM via REMOTE PARTICIPATION AND VOTING

2.1 Shareholders may participate (including posing questions to the Board of Directors (“Board”) and/or Management of the Company via real time submission of typed texts) and vote (collectively, “participate”) remotely at the 26th AGM using RPV facilities provided by SS E Solutions Sdn. Bhd. (“SSES”) via its SSES Online website at https://www.sshsb.net.my/login.aspx.

2.2 Voting at the 26th AGM will be conducted by poll in accordance with Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Poll Administrator and Independent Scrutineers will be appointed to conduct the polling process and verify the results of the poll respectively.

2.3 Strictly NO recording or photography of the proceedings of the 26th AGM is allowed.

2.4 There will be NO distribution of door gifts/vouchers for participation in the 26th AGM.





ADMINISTRATIVE GUIDE (Cont’d)

for the Twenty-Sixth Annual General Meeting

3. ENTITLEMENT TO PARTICIPATE THE 26TH AGM

3.1 In respect of the deposited securities, only Shareholders whose names appear in the General Meeting Record of Depositors on 24 August 2020 (“General Meeting ROD”) shall be eligible to participate and vote at the meeting or appoint proxy(ies) to participate and vote on his/her behalf.

4. PROXY

4.1 If you are unable to participate the 26th AGM, you are encouraged to appoint a proxy or the Chairman of the Meeting as your proxy and indicate the voting instructions in the physical Proxy Form in accordance with the notes and instructions printed therein.

4.2 Please deposit the physical Proxy Form at the registered office of the Company located at Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Georgetown, Pulau Pinang not less than forty-eight (48) hours before the time appointed for holding the meeting.

4.3 Alternatively, you may choose to submit the Proxy Form(s) through the SSES Online portal (Please note that you need to register with SSES in order to do this - Details of the procedure for user registration are set out at item 5.1 (a) below) with the following steps:-

i) Log in to Securities Services e-Portal at https://www.sshsb.net.my

ii) Under “Company Name”, choose “SAM Engineering & Equipment (M) Berhad”.

iii) Under “Corporate Exercise/Event”, choose “26th AGM on 2 September 2020 at 10:00a.m. – Submission of Proxy Form”.

iv) Enter the CDS account number that holds the listed securities and corresponding number of the said securities. Input the information of the relevant proxy(ies) and the number of securities to be represented thereof.

v) Indicate how the votes are to be casted against each resolution or leave this blank if you wish to let the proxy(ies) decide for you.

vi) Review and confirm the details before submission.

One e-Proxy Form is required to be submitted for each CDS account(s) that holds your SAMEE listed securities. A copy of your submitted e-Proxy Form(s) can be accessed via My Records.

4.4 Please e-mail SSES at [email protected] at least forty-eight (48) hours before the meeting in the event that:

i) you intend to change/revoke the appointment of your proxy(ies); or

ii) you are able to participate the 26th AGM (in which case, the appointment of your proxy(ies) would be revoked).





5. PROCEDURES FOR RPV

To participate using the RPV facilities, please read and follow the procedures and actions set out below:-

Procedures Actions

Before the 26th AGM

a. Register as a user with SSES Note: If you are already signed up as user with SSES, you are not required to register again.

For first time registration with SSES, please register latest by 24 August 2020 using the following steps:-

i) Access SSES website at: https://www.sshsb.net.my/login.aspx

ii) Click “REGISTER NOW” and follow the relevant instructions to complete your registration.

iii) An email acknowledgment will be provided the next business day.

iv) Please verify your email address within seven (7) days upon receipt of the said email acknowledgment to complete the registration process.

b. Submit your online remote participation request

Remote participation registration for the 26th AGM is open now until 10.00 am on Monday, 31 August 2020.

If your shareholding has been split into different CDS accounts, please register all relevant CDS account(s) you have or represent as an individual shareholder or corporate or authorised representative otherwise, only that portion of your shareholding reflected in the registered CDS account will be accounted for during voting.

Please submit your online remote participation request using the following steps:-

i) Log in to SSES website at:- https://www.sshsb.net.my/login.aspx

ii) Look for the following, in sequence, and click the “>” button respectively to register:-• Company Name: SAM Engineering & Equipment (M) Berhad • Corporate Exercise/Event: 26th AGM on 2 September 2020 at

10:00a.m. – Registration for Remote Participation

iii) Please check if you are attending as Individual shareholder or Corporate or Authorised Representative of a Body Corporate(For body corporates, the appointed corporate or authorised representative has to upload the evidence of authority (e.g. Certificate of Appointment of Corporate Representative, Power of Attorney, letter of authority or other documents proving authority). All documents that are not in English or Bahasa Malaysia have to be accompanied by a certified translation in English in 1 file. The original evidence of authority and translation thereof, if required, have to be submitted to SS E Solutions Sdn Bhd at Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Georgetown, Pulau Pinang for verification before the registration closing date and time above)

iv) Enter the relevant CDS account number holding the SAMEE listed securities.

v) Upon completion of your registration, you will receive an email notification that your request(s) has been received and is/are being verified.

vi) The registration details will be verified against the General Meeting ROD and you will receive an email notification by 1 September 2020 whether your registration is a success or a failure.





5. PROCEDURES FOR RPV (Cont’d)

To participate using the RPV facilities, please read and follow the procedures and actions set out below:- (Cont’d)

Procedures Actions

On the day of the 26th AGM

a. Login to SSES Online Log in with your user ID and password at https://www.sshsb.net.my/login.aspx

The Live Stream Meeting will be accessible at 9:15 a.m.

b. Participate through Live Streaming

To join the live stream of the business presentation (9:30 a.m.) or the 26th AGM (10:00 a.m.), please look for the following and click “>” to access the Live Stream Meeting:-

• Company Name: SAM Engineering & Equipment (M) Berhad• Corporate Exercise/Event: 26th AGM on 2 September 2020 at 10.00 am

– Live Stream Meeting

During the 26th AGM, if you have any questions, you may use the query box to transmit your question. The Chairman/Board/relevant adviser will try to respond to questions submitted by remote participants during the 26th AGM.

Note: Questions submitted online will be moderated before being sent to the Chairman to avoid repetition.

c. Online Remote Voting Please note that the voting session for the 26th AGM will commence from 10:00 a.m. up to a time when the Chairman announces the closure of the voting session.

To vote, please follow the following steps (assuming that you have logged in):-

i) Look for the following and click “>” to enter the webpage for submitting your votes:-

• Company Name: SAM Engineering & Equipment (M) Berhad • Corporate Exercise/Event: 26th AGM on 2 September 2020 at

10.00 am – Remote Voting

ii) Indicate, confirm and submit your votes accordingly. A record of your submitted votes may be accessed at My Records in the SSES Portal

Please note that if you are a proxy, and the Shareholder had already inputted his/her votes in the proxy form, the Shareholder’s input shall take precedence.

d. End of remote participation Upon the announcement by the Chairman of the closure of the 26th AGM, the Live Stream Meeting will end.




Shareholders and proxies may raise questions before the 26th AGM to the Chairman or Board of Directors by submitting the said questions electronically to [email protected] no later than 25 August 2020, 5.00 p.m. The Chairman or Board of Directors will endeavour to address the questions received at the 26th AGM.

6. ENQUIRY

If you have any enquiry prior to the 26th AGM, please contact the following on Mondays to Fridays from 9:00 a.m. to 5:00 p.m. (except on public holidays):-

SS E Solutions Sdn. Bhd.c/o Suite 18.05, MWE Plaza, No. 8 Lebuh Farquhar, 10200 George Town, Pulau Pinang

General Line: 604-263 1966Fax Number: 604-262 8544Email: [email protected]

I/We (Full Name in Block Letters) __________________________________________________ (Tel:) _____________________________

NRIC No./Passport No./Company No. ____________________________________________ of ________________________________

__________________________________________________________________________________________________________ being a

member/members of SAM ENGINEERING & EQUIPMENT (M) BERHAD (“Company”), hereby appoint the following person(s):-

First Proxy

Name NRIC/Passport No.:Proportion of shareholding

to be presented

No. of shares %

and

Second Proxy

Name NRIC/Passport No.:Proportion of shareholding

to be presented

No. of shares %

or the Chairman of the meeting as *my/our proxy to vote in *my/our name(s) on my/our behalf at the Twenty-Sixth Annual General Meeting (“AGM”) of the Company to be held on a fully virtual basis at the Broadcast Venue at Gallery 1, Level 3, New World Petaling Jaya Hotel, Paradigm, 1 Jalan SS7/26A, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia on Wednesday, 2 September 2020 at 10:00 a.m. and at any adjournment thereof.

*My/Our proxy is to vote on the resolution referred to in the Notice of AGM as indicated below:-

No. RESOLUTIONS For Against

ORDINARY BUSINESS

1. To re-elect Datuk Dr. Wong Lai Sum as Director.

2. To re-elect YM Tunku Afwida Binti Dato’ Tunku Abdul Malek as Director.

3. To re-elect Mr. Suresh Natarajan as Director.

4. To approve the payment of Directors’ fee.

5. To approve the payment of benefits to Directors.

6. To re-appoint Messrs. KPMG PLT as auditors.

SPECIAL BUSINESS

7. Ordinary Resolution - Authority for Directors to issue and allot shares.

8. Ordinary Resolution - Proposed renewal of shareholders’ mandate for RRPT.

9. Ordinary Resolution - Mandate to retain Dato’ Seri Wong Siew Hai as an Independent Non-Executive Director of the Company.

10. Ordinary Resolution - Mandate to retain Dato’ Sri Lee Tuck Fook as an Independent Non-Executive Director of the Company.

11. Ordinary Resolution - Mandate to retain Mr. Lee Hock Chye as an Independent Non-Executive Director of the Company.

(Please indicate with an “X” in the appropriate box how you wish your proxy to vote. If no instruction is given, the proxy will vote or abstain at his/her discretion).

* Strike out whichever not applicable.

Signed this ______________ day of _______________ 2020. ____________________________________Signature of Shareholder/Common Seal

PROXY FORM

NUMBER OF SHARES HELD

CDS ACCOUNT NO. SAM ENGINEERING & EQUIPMENT (M) BERHADCompany Registration No. 199401012509 (298188-A)


Notes:-1. As part of the initiatives and the safety measures to curb the spread of Coronavirus Disease 2019 (“COVID-19”), and having regard to the well-being and the safety of our shareholders, the 26th AGM will

be conducted on a fully virtual basis through live streaming and online remote voting via Remote Participation and Voting (“RPV”) facilities which are available on Securities Services e-Portal (“SSeP”) at https://www.sshsb.net.my/login.aspx.Please follow the procedures provided in the Administrative Guide for the 26th AGM in order to register, participate and vote remotely via RPV facilities.

2 The Broadcast Venue is strictly for the purpose of compliance with Section 327(2) of the Companies Act 2016 which stipulates that the Chairman of the meeting shall be present at the main venue of the 26th AGM and in accordance with Regulation 64 of the Company’s Constitution which allows a meeting of members to be held at more than one venue, using any technology or method that enables the members of the Company to participate and to exercise the members’ right to speak and vote at the general meeting.

3. As the 26th AGM will be conducted via a virtual meeting, a member entitled to participate and vote at the meeting may appoint up to two (2) proxies or the Chairman of the Meeting as his/her proxy(ies) to participate and vote in his or her stead, by indicating the voting instruction in the Form of Proxy:-a) A proxy may but need not to be a member of the Company. There shall be no restriction as to the qualification of the proxy.b) Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.c) A proxy appointed to participate and vote at the meeting shall have the same rights as the member to speak at the meeting.Pursuant to the Guidance on the Conduct of General Meetings for Listed Issuers issued by Securities Commission Malaysia, the right to speak is not limited to verbal communication only but includes other modes of expression. Therefore, all shareholders and proxies shall communicate with the main venue of the AGM via real time submission of typed texts through a text box within Securities Services e-Portal’s platform during the live streaming of the AGM as the primary mode of communication. In the event of any technical glitch in this primary mode of communication, shareholders and proxies may email their questions to [email protected] during the AGM. The questions and/or remarks submitted by the shareholders and/or proxies will be broadcasted and responded by the Chairman/Board/relevant adviser during the AGM.

4. 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. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.

5. 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. Where an Exempt Authorised Nominee appoints more than one (1) proxy in respect of each Omnibus Account, the appointment shall be invalid unless the Exempt Authorised Nominee specifies proportion of its shareholding to be represented by each proxy.

6. The appointment of proxy(ies) may be made in hardcopy form or by electronic means as follow:-a) In Hardcopy Form

The instrument appointing a proxy or representative and the duly registered power of attorney or other authority (if any), under which it is signed or a duly notarized certified copy of that power or authority, shall be deposited at the Registered Office of the Company at Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 George Town, Pulau Pinang.

b) By SSePThe Form of Proxy may also be lodged electronically via SSeP at https://www.sshsb.net.my(Please refer to the Administrative Guide for more details)

in either case, not less than 48 hours before the time appointed for holding the meeting or at any adjournment thereof.7. The Company shall be entitled to reject an instrument of proxy which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the

instructions of the appointor specified on the instrument of proxy.8. In respect of deposited securities, only members whose names appear on the Record of Depositors on 24 August 2020 (General Meeting Record of Depositors) shall be eligible to participate, speak and

vote at the meeting or appoint proxy(ies) to participate, speak and vote on his/her behalf.9. Any alteration in this form must be initialled.

Please fold across the line and close

STAMP

Please fold across the line and close

To,

The Company SecretariesSAM Engineering & Equipment (M) Berhad

Company Registration No. 199401012509 (298188-A)

Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar,10200 George Town, Penang, Malaysia.




https://www.sshsb.net.my

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Plot 17, Hilir Sungai Keluang Tiga, Plot 17, Hilir Sungai Keluang Tiga, Bayan Lepas Free Industrial Zone, Phase IV, 11900 Penang, Malaysia.Bayan Lepas Free Industrial Zone, Phase IV, 11900 Penang, Malaysia.Tel: 604-643 6789 Fax: 604-644 7017Tel: 604-643 6789 Fax: 604-644 7017

ANNUAL REPORT 2020ANNUAL REPORT 2020

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Documents

SAM ENGINEERING & EQUIPMENT (M) BERHAD CROSSOVER · 2020. 9. 3. · • Chairman, Agrobank Bhd (formerly known as Bank Pertanian Malaysia) • Managing Director, JB Securities Sdn