METRONIC GLOBAL BERHADmetronic-group.com/upload/kcfinder/files/AR2016 - Annual Report... · HVAC Integrated Security CCTV Fire Electrical Power ... background of company Metronic

Annual Report 2016

Technology Total Solution Provider

METRONIC GLOBAL BERHAD (632068-V)No. 2 Jalan Astaka U8/83, Seksyen U8, Bukit Jelutong40150 Shah Alam, Selangor Darul Ehsan, MalaysiaTel: 603-7847 2111 Fax: 603-7847 5111Email: [email protected]

www.metronic-group.com

METRONIC GLOBAL BERHAD (632068-V) Annual Report 2016

SecurityIntegratedHVAC

CCTV

Fire Electrical

Power

Lightning IT

content

contentVision and Mission 2

Corporate Information 3

Corporate Profile 4

Corporate Structure 6

Five-Year Financial Highlights 7

Profile of Directors 8

Profile of Chief Executive Officer 10

Profile of Senior Management 11

Chairmans Statement 14

Management Discussion and Analysis 16

Statement on Corporate Governance 18

Audit Committee Report 32

Statement on Risk Management and Internal Control 37

Directors Report and Audited Financial Statements 39

List of Properties 134

Analysis of Shareholdings 135

Notice of Annual General Meeting 137

Proxy Form

Metronic Global berhad (632068-V)

2

our Vision To be an internationally recognized

leading engineering and technology total solution provider.

our Mission To apply our unique management

style that incorporates our manpower resources, experience, expertise, innovation and creative approach.

To continously seek new technologiesthatmeetourclientsrequirements.

To create a workplace that motivatesour employees.

To develop strategic relationshipswithpartners who have skill that enhance and complement our own.

Tocontinuallyimprovetheeffectivenessofthequalitymanagementsystem.

Tomaximizevalueofourstakeholders.

Vision & Mission

annual report 2016

3

CORPORATE INFORMATION

board oF directors

patricK chin hau YuiIndependent Non-Executive Chairman

ric Koh Wai cheeExecutive Director

Khor ben JinIndependent Non-Executive Director

Kua Khai shYuanNon Independent Non-Executive Director

audit coMMittee

Khor Ben JinChairman

Patrick Chin Hau YuiMember

noMination coMMittee

Patrick Chin Hau YuiChairman

Khor Ben JinMember

reMuneration coMMittee

Patrick Chin Hau YuiChairman

Khor Ben JinMember

coMpanY secretarY

Wong Yuet Chyn (MAICSA 7047163)

share reGistrar

Shareworks Sdn BhdNo. 2-1, Jalan Sri Hartamas 8Sri Hartamas, 50480 Kuala LumpurWilayah Persekutuan (KL)Tel :0362011120Fax:0362013121

auditors

SIEWBOONYEONG&ASSOCIATES(AF0660)Chartered AccountantsWisma SBY9-C,JalanMedanTuankuMedanTuanku,50300KualaLumpurTel :0326938837Fax:0326938836

solicitors

Messrs Ngeh & Co.

banKers

Malayan Banking BerhadUnited Overseas Bank (Malaysia) Berhad

stocK eXchanGe listinG

Main Market of Bursa Malaysia Securities BerhadStockname:MetronicStockcode:0043

corporate Website

www.metronic-group.com


4

CORPORATE PROFILE

coMpanY historY and deVelopMent

background of company

MetronicGlobalBerhad(TheCompanyorMGB)wasincorporatedinMalaysiaundertheCompaniesAct,1965on22October2003.ThecompanywaslistedonMESDAQMarketofBursaMalaysiaSecuritiesBerhad(BursaSecurities)on24May2004andsubsequentlytransferredtotheMainBoard(nowknownasMainMarket)ofBursaSecuritieson12 July 2007.

ThesubsidiariesoftheCompanyspecialiseinsystemintegrationofintelligentbuildingmanagementsystems(IBMS)andintegratedsecuritymanagementsystem(ISMS),e-projectmanagement(e-PM)ofmechanicalandelectricalservice and provision of online administration service for the healthcare sector. Fundamental to this success is the missionoftheCompanyanditssubsidiaries(theGrouporMGBGroup)tocontinuallyexceedcustomersincreasingexpectations.TheMGBGroupfocusesonbuildingandintegratingworld-classtechnologytothemarketandiscommittedtocontinuouslyimproveitsquality,serviceandproductivity.

the evolution of the MGb Group

TheoriginoftheMGBGroupcanbetracedbacktoAugust1984whenMetronicEngineeringSdnBhd(MESB)wasincorporatedtoprovidebuildingautomationservicespecializinginthefieldofIBMSandISMS.MESBsubsequentlyexpandeditsbusinessactivitiestoincludee-PMofmechanicalandelectricalserviceandsupplyofengineeringsystems.MESBcarriesproductsbyprincipalssuchasTACControlsPteLtdandHoneywellIntegratedSecurity,USAwhichareamongst the worlds leading companies in IBMS and ISMS.

Duringtheearlyyears,MESBplayedapivotalroleinnationbuildingbyprovidingstate-of-the-arte-projectmanagementandsystemintegrationservicesforhospitals,officebuilding,shoppingcomplexes,airports,oilrefineriesandmanufacturingplants.Overtheyears,theGrouphasleverageditsexpertisetodevelopuniqueandinnovativeIBMSandISMSproducts,solutionandservices,mainlyintheareasofintelligentbuildings.

Astechnologyprogresses,intelligentbuildingshaveevolvedfrommerestand-aloneentitiesintointerconnectedhubswithinthecitywideinfrastructure,knownasintelligentcities.Withtheconvergenceoftechnology,stand-alonebuildingsareslowlyformingintosmaller,ecosystemscomprisingatightlyintegratednetworkofbuildingsthatbetterenablethemanagementandoptimizationofsystemsandresources.Thedrivingforceoftheevolutionofintelligentcitiesistheabilitytoreducecost,optimisemanpowerutilisationandenhanceservicelevelsthroughaggregation,serviceintegrationand process automation.

Overtheyears,theGrouphasstrengtheneditspositioninthevaluechaintowardsbecominganICMSprovider.Byconverging newer technologies with the JBCM (Java Based Control & Monitoring Software) platform, the Group is abletoprovideavalue-addedpropositionforitscustomersbyenhancingandexpandingitsproductapplications.Inline with the Groups plan to migrate as a provider of ICMS, these technologies will significantly enhance application security,manageability,reliabilityandavailabilityofanyapplicationwhileloweringthecostofoperationsforitscustomers.

Inamovetodiversifyandcomplement itsexistingcorebusiness, in2008,theGroupviaMetronic iCaresSdnBhd(Micares)venturedintoThirdPartyAdministrationandManagedCareOrganisationbusinessesforthehealthcaresectorvia the connectivity applications and infrastructure for the exchange of transactional information through internet.In the year2013,theGrouphasdisposedofftheICTSupportServicesDivision.ThedisposalofMicaresprovidesanopportunityfortheGrouptorealizeitsinvestmentatanattractivereturn,generatefundsforworkingcapitalandinvestmentinotherpotentialbusinessesandrepaymentofborrowings.TherationalefordisposalisalsoduetothefinancialandbusinessprospectisuncertainwiththerecentconsolidationwithintheinsuranceindustryandthevariousmergersandacquisitionofsomeofMicaresmajorclientswhichmayaffectMicaresbusiness.

Forgeographicalexpansion,MGBGrouphasembarkedonaseriesofacquisitionstrategiesoverthelastfewyearstocomplement the local market. As at today, the Group has reached China, India, Vietnam and Middle East countries.

annual report 2016

5

CORPORATE PROFILE(CONTd)

principal business actiVities, products and serVices

Presently,MGBGroup,throughitssubsidiaries,specializesinIBMSandISMSwhichencompasshardwareandsoftwarerequiredforthecontrolandmanagementofanintelligentbuildingwithcomponentsincludingheating,ventilationandairconditioning,lighting,fireandsecurityequipment.

Thekeydriversthatareguidingthebuilding/constructionindustrytoadoptthistechnologyare:

TheonsetofthenetworkconvergenceoftheCCTV,computers,alarmsystemandaccesscontrolwiththeadvancetechnologyofbiometrics;

PrevalentuseofinternetandIPnetworking;and Theefficiencyofthesystemasitsavestimeandtravelcost

Theintegrationofthebuilding/industrialautomationsystemsecuritysystemhasbecomeoneofthemostpopularmethodsusedbymanycorporationsinconvergingtheirexistingsystemintoanallencompassingsystem.Two(2)ofthemaincomponentsoftheIBMSandISMSarethehardwareandthesoftwaresolution.ThehardwareportionincludessecuritydevicessuchasCCTV,thevideorecording(eitherdigitaloranalogue),accesscontrolandtheintrusiondevices.Thesoftwaresolutionisanimportantfeaturewhichensuresthatthisequipmentcommunicatedandworkscoherentlyinacommonpersonalcomputer-basedenvironment.

TheGroupispresentlyakeyplayerintheIBMSandISMSindustryinMalaysiaandwithitsexpertiseinsystemintegrationand knowledge of advanced technology.

ThebusinessdivisionsoftheMGBGrouparehighlightedasfollows:

(i) ibMs division

is an integration ofBuildingAutomationSystem,AccessControl,ClosedCircuit TV (CCTV) SystemandAddressableFireControl&MonitoringSystemintoonesingleintelligentsystem.Therearethreesub-divisionsasfollows: BuildingAutomationSystem(BAS) JavaBasedControl&MonitoringSoftware(JBCM) SmartHome

(ii) isMs division

ISMSprovidesahigh levelsecuritysolutionsby integratingall the individualsecuritysystem likeCCTV,CardAccess,PerimeterIntrusionDetectionSystem,DoorMonitoringSystem,GuardTourSystemandAssetTrackingSystem into one single intelligent device.

(iii) e-pM engineering services division

TheGroupisinvolvedintheprovisionofengineeringservicesspecialisinginthefieldofMechanicalandElectrical(M&E)

TheGroupiscontinuallydevelopingtheBuildingM&EknowledgeandexpertisewithintheGroupaspartofthedivisionsobjectivestobesufficientlypreparedtobeacompetitiveDesignandConstructM&EContractor.

(iv) industrial automation division

TheGroup,throughitsstrategicalliancewithaJapanesepartnerisinvolvedintheprovisionofindustrialautomationspecializinginAutomatedStorageandRetrievalSystem(ASRS).ThelogisticsolutionsofferedbytheGroupfocusesonefficientstorageofgoodswhilepreservingthequalityandfacilitatesmoothretrievalasandwhenneeded.Someofthesolutionsofferedhelpimproveproductqualityduringspeedyinspection,performmultipledistributioncentreswithcross-dockingfacilities,enablethetimelysupplyoflargevariety/highvolumegoodsanddemandcanbeascertainedinrealtimethroughtheinventorycontrolsystem.


6

CORPORATE STRUCTUREAS AT 5 APRIL 2017

METRONICENGINEERING

SDN BHD (125404-M)

MTWOCOUNTRYDEVELOPMENT

SDN BHD (FORMERLY KNOWN AS IPANEL

MALAYSIA SDN BHD) (590326-A)

METRONICMICROSYSTEM

(BEIJING)CO.LTD(PRC)

(COMPANY NO.023500)

BONANZAPARTNERSSDN BHD (1129416-H)

IDEALULTIMATE SDN BHD

(823540-V)

100% 100%

100%

70% 58%

METRONICVIETNAMCOMPANY

LTD

METRONICSAUDI ARABIA

LLC

100%

100%

50%

M ONE COUNTRY

DEVELOPMENTSDN BHD

(733049-M)

METRONICINTEGRATED

SYSTEMSDNBHD(332032-D)

ANHUI LAIANMETRONICWATERSUPPLYCO.LTD.

(PRC)

METRONICENGINEERING

PVTLTD

100%

100%

100% 89%

METRONICGAHARUSDN BHD

(753991-V)

annual report 2016

7

FIVE-YEAR FINANCIAL HIGHLIGHTS

2012 2013 2014 2015 2016 rM000 rM000 rM000 rM000 rM000

Revenue 36,148 31,048 33,057 36,335 48,066Profit/(loss)beforetax (26,761) 5,098 1,856 3,503 (871)Profit/(loss)fortheyear (25,343) 5,128 1,241 4,061 (5,009)Profit/(loss)attributetoequity holders of the company (25,894) 5,160 1,241 3,973 (5,005)Shareholders funds 34,515 44,116 47,123 57,159 62,242Netearnings/(loss) per share (cent) (4.08) 0.79 0.18 0.54 (0.66)Net assets per share attributabletoequityholders of the company (cent) 5.44 6.82 6.81 7.83 8.21

36,148

31,048

33,057

36,335

48,066

20122013 2014

2015

2016

34,5155.44

44,1166.82

47,1236.81

62,242

57,1597.83

8.21

2012

2012

2013

2013

2014

2014

20162015

20152016

(26,761)

5,098

1,856

3,503

(871)

2012 2016

2013 2014 2015

(25,343)

5,128 1,241

4,061

(5,009)

2012 2016

2013 2014 2015

(4.08)

0.79 0.18

0.54

(0.66)

2012 2016

2013 2014 2015

reVenue (RM000)

proFit/(loss) For the Year (RM000)

net earninGs/(loss) per share (RM000)

shareholders Funds(RM000)

net assets per share (RM000)

proFit/(loss) beFore taX (RM000)


8

PROFILE OF dIRECTORS

patricK chin hau YuiMalaysian, Male, Aged 48 yearsIndependent Non-Executive Chairman

PatrickChinHauYuiwasappointedasIndependentNon-ExecutiveDirectoroftheCompanyon3November2016.HeisalsoamemberofAuditCommitteeandRemunerationCommittee.HealsositsasChairmanoftheNominationCommittee.

HeobtainedaMasterofBusinessAdministrationfromUniversityofStrathclyde,Glasgow,ScotlandaswellasBachelorofBusinessAdministrationfromUniversityofSouthernQueensland,Australia.Hehasmorethan20yearsofWholesaleBanking (Corporate, Commercial, SME) and Investment Banking experience in client coverage, account management and businessdevelopmentinthebankingandfinanceindustry.HeheadedtheDebtCapitalMarketandStructuredLendingbusinessofanInvestmentBankwhereheled,directedandmanagedtheOriginationUnit inmarketing,structuring,loan syndication, implemented annual operating plan and medium term Strategic Plan towards growing the advisory servicesoncross-bordermergerandacquisitiondeals.Hewasresponsibletoidentifybusinessopportunitiesfromhighnet-worth and institutional clients and develop new markets. He had spent several years as the General Manager and HeadofCommercialBankingofalocalbank,spearheadedthemiddlemarketsegmentinareasofbusinessdevelopmentandaccountrelationshipmanagementcoveringbothconventional&Islamicbanking.HehasheldthepositionasaVice-President inCorporateBankingbasedinSingaporehandlingLargeCorporateclientscoveringbothSingaporeand Malaysia.

Hedoesnotholdanydirectorshipinotherpubliclistedcompanies.Hehasnofamilyrelationshipwithanyofthedirectorsand/ormajorshareholdersoftheCompanyanditssubsidiaries.Hedoesnothaveanyconflictof interestwiththeCompanyandhasnotbeenconvictedforanyoffencesinthepast5years.HedoesnotholdanysharesintheCompany.

ric Koh Wai cheeMalaysian, Male, Aged 39 yearsExecutive Director

Ric Koh Wai Chee was appointed as Executive Director of the Company on 31 March 2017. He holds a Bachelor of Business(BankingandFinance)fromMonashUniversityMelbourne,AustraliaandisaCertifiedCreditProfessional(BusinessCredit)gradedbyTheInstituteofBankersMalaysia.HealsoholdsaBachelorofBusinessminorinLawandAccountingandisamemberofGoldenKeyNationalHonourSociety(Australia).HewasgiventheFacultyofBusinessDeanawardforhisDiplomaofBusinessStudiesbytheAlexanderCollege,Australia.

Heisagoal-drivenprofessionalwith17yearsofsignificant,progressiveinvestmentbankingexperienceandexpertise.Hehasoutstandingcomprehensionoffinancialelementsincludingassets,liabilities,cashflow,riskanalysis,budgeting,investmentstrategies,debtandcapitalmarkets.

HewastheAssociateDirectorofAmInvestmentBankBhd,aninvestmentbankfrom1999to2010andthereafterjoinedOSKInvestmentBank(L)LtdasmemberoftheBoardandasitsChiefOperatingOfficer.HewasaDirectorofSpecialtyFinance with RHB Investment Bank Bhd from 2013 to 2016. Prior to his appointment in 2017, he was a Director in Group Corporate Banking with RHB Bank Bhd.


annual report 2016

9

PROFILE OF dIRECTORS(CONTd)

Khor ben JinMalaysian, Male, Aged 41 years

Independent Non-Executive Director

KhorBenJinwasappointedasIndependentNon-ExecutiveDirectoroftheCompanyon3November2016.HeistheChairmanofAuditCommitteeandamemberofbothNominationCommitteeandRemunerationCommittee.

HeisaFellowmemberoftheAssociationoftheCharteredCertifiedAccountants,UnitedKingdom(FCCA),aCharteredAccountantregisteredwithMalaysianInstituteofAccountants(CA),aCertifiedInternalAuditorrecognizedbyUnitedStatesofAmerica(CIA)andaCharteredMemberoftheInstituteofInternalAuditorsMalaysia(CMIIA).HeisaCertifiedInternalAuditor and has extensive experience in internal audit consulting services, risk management exercises and corporate governance reviewwithpublic listedcompanies involved inboth industrialandconsumerproductsmanufacturing,integrated livestock farming activities, property development, construction and trading services.


Kua Khai shYuanMalaysian, Male, Aged 32 years

Non-Independent Non-Executive Director

Kua Khai Shyuan was appointed as Non-Independent Non-Executive Director of the Company on 30 March 2017. He holdsaBachelorDegreeinCommerceManagementandMarketingfromCurtinUniversityofTechnology.

Hebeganhis career in year 2007 acting asRegionalManager forMalaysiaRegion in amulti-national healthcareproductscompanyandwasresponsiblefortheoverallmobilesalesteamaswellasthesupplychainmanagementofthecompanysproductrange.Inyear2009,hejoinedalocalcompanyspecializinginthefabricationofplasticsmouldsandplasticinjectionmouldingastheHeadofMarketingDivision.

Currently he serves as the Executive Director of DGB Berhad, where his role includes assisting the Group Managing Director in charting the overall strategy and direction of the Group as well as customer relationship management and supply chain management.HealsoservesasExecutiveDirectorofTrivePropertyGroupBerhad,wherehisroleincludesshaping,leadingandexecutingoftheGroupsstrategyandintegratedbusinessmanagement.HeisalsotheNon-IndependentNon-Executive Director of M N C Wireless Berhad, a company listed on ACE Market of Bursa Malaysia Securities.

Hehasnofamilyrelationshipwithanyofthedirectorsand/ormajorshareholdersoftheCompanyanditssubsidiaries.HedoesnothaveanyconflictofinterestwiththeCompanyandhasnotbeenconvictedforanyoffencesinthepast5years. He does not hold any shares in the Company.


10

PROFILE OF CHIEF EXECUTIVE OFFICER

Vincent set hin FooKMalaysian, Male, Aged 51 yearsChief Executive Officer

Vincent Set Hin Fook was appointed as Chief Executive Officer of the Company on 5 January 2015. He was formerly director ofanumberofpublic-listedcompaniesappointedduringturn-around and restructuring exercise. He was formerly the CEO of LinxisSdnBhd,acustomizedsoftwaredevelopmentandR&DcenteraswellasconceptualizeandmarketingofE-commercebusinessmodels.Overhiscorporatecareer,hehasservedin senior management team and start-up consultant with a numberoflocalandinternationalcompaniesandhasgainedextensive practical experience in strategic management and businessperformanceimprovementarea.

He holds a Bachelor of Science in Physics from the University of Malaya and Master of Science in Electrical Engineering from University of Mississippi, Oxford, United States.

Hehasnofamilyrelationshipwithanyofthedirectorsand/ormajorshareholdersoftheCompanyanditssubsidiaries.HedoesnothaveanyconflictofinterestwiththeCompanyandhasnotbeenconvictedforanyoffenseinthepast5years.Heholds 30,000 shares in the Company.

annual report 2016

11

PROFILE OF SENIOR MANAGEMENT

seated from left to right:Chan Eng Seng, Ric Koh Wai Chee, Vincent Set Hin Fook, Ng Kim Nam Vincent.

standing from left to right:LeeRuiChuan,LawrenceChiaSweeLoong,LowChinTat,EricBoonChuanKit,AlexWongLehKui.

ric Koh Wai cheeMalaysian, Male, aged 39 yearsExecutive Director

Please refer Profile of Directors.

Vincent set hin FooKMalaysian, Male, aged 51 yearsChief Executive Officer

Please refer Profile of Chief Executive Officer.


12

PROFILE OF SENIOR MANAGEMENT(CONTd)

chan enG senGMalaysian, Male, Aged 46 yearsGeneral Manager Service

ChanEngSengwasappointedasGeneralManagerServicefortheEngineeringDivisionin2012.HeholdsaDiplomainElectrical&ElectronicsEngineeringfromKolejTunkuAbdulRahman.HejoinedMetronicin1994asServiceEngineerand possesses 22 years of experience in the engineering field specialising in service and maintenance.

HiscurrentlyheadstheServiceandMaintenanceDepartmentwhichprovidesaftersalesserviceforprojectscompleted,andrelatedtestingandcommissioningworks.NotableprojectshandledunderhissupervisionincludeKLCCTower3,KLCCConventionCenterandTelekomBuilding.

Hehasnofamilyrelationshipwithanyofthedirectorsand/ormajorshareholdersoftheCompanyanditssubsidiaries.HedoesnothaveanyconflictofinterestwiththeCompanyandhasnotbeenconvictedforanyoffenseinthepast5years.

nG KiM naM VincentMalaysian, Male, Aged 33 yearsProject Director

NgKimNamVincentwasappointedasProjectDirectorfortheEngineeringDivisiontohandletheMRTProjectin2015.HeholdsaDegreeinMechanicalEngineeringwithDesignfromUniversityofSunderland.HejoinedMetronicin2007asTesting&CommissioningEngineerandhasover9yearsofexperienceintheengineeringfield.

HecurrentlytakeschargeoftheongoingMRTProjectonmanagingthefullspectrumofpurchasing,specifications,manpowerrequirementwhileoverseeingthedesign,planning,installation,testingandcommissioningofthisproject.


laWrence chia sWee loonGMalaysian, Male, Aged 44 yearsHead of Department Design and Oversea Projects

LawrenceChiaSweeLoongwasappointedasHeadofDepartmentDesignandOverseaProjectsfortheEngineeringDivisionin2012.HeholdsaDiplomainTechnology(MechanicalandManufacturingEngineering)fromKolejTunkuAbdulRahmanandcompletedEngineeringCouncilPart2,UK.HejoinedMetronicin1995asProjectEngineerandhas21years of experience in the engineering field specialising in system design. During this period, he also held the post of CountryManagerfrom2005to2012forMetronicEngineeringS/BRepresentativeOffice(Vietnam)andsubsequentlyMetronic Vietnam Co. Ltd.

He currently handles system design with particular emphasis on BMS and ELV design and provides relevant support andsolutionforcommercialandMRTprojectsintheseareas.


annual report 2016

13

PROFILE OF SENIOR MANAGEMENT(CONTd)

aleX WonG leh KuiMalaysian, Male, Aged 35 yearsHead of Department Projects

AlexWongLehKuiwasappointedasHeadofDepartmentProjectsfortheEngineeringDivisionin2013.HeholdsaDegreeinElectrical&ElectronicsEngineeringfromUniversityTenagaNasionalMalaysia.HejoinedMetronicin2006asProjectEngineerandhas10yearsofexperienceintheengineeringfield.

HecurrentlytakeschargeoftheentireProjectteamtohandleallcommercialprojectsinrespectofmaterialsourcing,specifications,manpowerrequirementandprojectexecution.Healsooverseesthedesign,planning,installation,testingandcommissioningpriortoprojectcompletionandhandover.


eric boon chuan KitMalaysian, Male, Aged 43 years

Group Financial Controller

EricBoonChuanKitwasappointedasGroupFinancialControlleron15October2015.HegraduatedwithaDegreeinAccountingfromRoyalMelbourneInstituteofTechnology(RMIT)andhascompletedhisprofessionalqualificationCPAAustralia.HeiscurrentlyamemberoftheMalaysianInstituteofAccountants.

Hehasover15yearsworkingexperiencecommencingfromamediumsizedauditfirmfollowedbykeypostsintheFinance Department with various companies within the trading, manufacturing and education sectors covering financial reportingrequirementsoflistedissuer,operationalcontrols,fundingrequirementsforsustainabilityandorganizationalbudget.PriortojoiningMetronic,hewasFinancialControllerofGroupFinancewithamajorPublishingGroupthathasa significant presence in the local market and fast expanding operations in the ASEAN Region.

HecurrentlyoverseesallfinancialrelatedmattersoftheGroup,fundingrequirements,audit,tax,budgeting,internalcontrolsandriskmanagement,whileensuringcompliancewithBursalistingrequirementsinrespectofannouncements,financial reporting and corporate exercise in general.


loW chin tatMalaysian, Male, Aged 33 years

Senior Project Manager

LowChinTatwasappointedasSeniorProjectManagerfortheEngineeringDivisioninthecurrentyear.HeholdsaBachelorofElectrical&ElectronicsEngineering(Hons)fromUniversityTenagaNasionalMalaysia.HejoinedMetronicin2006asProjectEngineerandhas10yearsofexperienceintheengineeringfield.Priorto2013,hewastheAssistantProjectManagerprovidingsupervisiontoallcommercialprojects.Amongthenotableprojectswhichhewasinvolvedin were Lot 171 KLCC, Calvary Church and Cheras Hospital.

In2013,hewaspromotedtoProjectManagerandassignedtohandletheMRTprojectwhichistargetedtocompletein2017.Hecurrentlyplaysakeyroleinthedesign,planning,installation,testingandcommissioningoftheproject.



14

CHAIRMANS stateMent

Dear Shareholders,On behalf of the Board of Directors of Metronic Global Berhad (MGB or the Company), it is my pleasure to present the Annual Report and Audited Financial Statements for the financial year ended 31 December 2016.

operatinG enVironMent oVerVieW

Despite a slower Malaysia GDP growth of 4.2% in 2016 compared to growth rate of 5.0% during 2015, the Group recorded higher revenue and profit margins as detailed in our Review of Financial Results And Financial Condition under thesectionofManagementDiscussionAndAnalysis.Throughproperplanningandexecutionofourprojectsunderthe Engineering Division during the year, the Group had achieved satisfactory results consistently over the preceding 4 quarters,provingonceagainourcommitmenttodeliverpositiveresults.However,duetoothernon-coreoperationalfactors resulted from historical ventures and investments which the Group has now swiftly dealt with, have caused us higherimpairmentsandlossessufferedinthe4thquarteroftheyear.Thecleanupexerciseisnowcompleteandweare cautiously optimistic on steadily regaining our market leadership in the engineering and technology market in the financial years ending 2017 and ahead.

As for our property development sector, we are nearing the completion of our first phase of 16 units of the entire 42 unitsof3-storeyshoplots.Theperformanceofthissectorshouldbereflectedinthefinancialyearending2017astheGrouphadadoptedtheMFRSstandardswhichrecognizesrevenueuponcompletion.Theslowdowninthepropertymarket had also adversely affected the progress and performance of this sector.

corporate deVelopMents

Thecorporatedevelopmentsthattookplaceduringthefinancialyearanduptothedateofthisreportareasfollow:

(i) ThecurrentongoingMRTLine1projectknownasProjectMassRapidTransitSungaiBulohKajangLinewithacontractsumofRM42.9millionhasachieveditstargetedmilestonesin2016andisexpectedtobecompletedin2017.Asatthedateofthisreport,theGrouphasbeenabletomeetallthescheduledtimelinesprovidedbasedonitsvastexperience,technicalresources,financialstrengthandexpertiseinhandlingtheproject.

TheGrouphasalsobeenpreparingtotenderfortheMRTLine2projectstretchingfromSungaiBulohSerdangPutrajayawhichisscheduledtoopeninthe2ndquarterof2017,leveragingonourcompetitiveedgeandcorestrengthstosecureanothermaideninfrastructureproject.

annual report 2016

15

CHAIRMANS STATEMENT(CONTd)

(ii) Onsolarpowerdevelopment,theGrouphasreceivedconditionalletterofapprovalthroughitssubsidiary,BonanzaPartnersSdnBhd(BPSB)fromUnitPerancangEkonomiNegeriKelantantoallocatethelandareameasuring231acreslocatedatBandarBaruTokBali,Kelantanforthesolarphotovoltaicplantprojectconstructioninthecapacityof50MWwhichisextendableto250MW.Withthat,theGroupenteredintoaMemorandumofUnderstanding(MOU)withalocalpartnertoidentifyasuitabletechnicalpartnerandturnkeycontractorandtoconductfeasibilitystudiesontheviabilityoftheproject.

appreciation and acKnoWledGeMent

IwouldliketoextendmysincereappreciationtoallmyfellowDirectorsfortheirvaluablecontribution.

OnbehalfoftheBoard,Iwouldalsoliketothankourshareholders,customers,suppliers,businessassociates,bankersandotherstakeholdersfortheircontinuedsupport.Theappreciationalsogoestoouremployeesfortheircontinueddedicationandcommitment.Welookforwardtobetterperformancein2017andahead.

on behalf of the board

patrick chin hau YuiChairman


16

MANAGEMENT DISCUSSION ANd ANALYSIS

oVerVieW oF the Groups business and operations

MetronicGlobalBerhad (MGBor theGroup) through itswhollyownedsubsidiary,MetronicEngineeringSdnBhd(MESB), isatotalsolutionprovidercompanyhavingbeenintheindustrysince1984andconsideredtobeoneofthelocalpioneersintheengineeringbusiness.Wespecializeindesign,supply,install,testingandcommissioning,andservice and maintenance of Intelligent Building Management System (IBMS), Building Management System (BMS), EnergyManagementSystem(EMS),SecuritySystem(CardAccess,CCTVSystem,GuardTourandCarParkingSystem),InformationandCommunicationTechnologySystem(ICT),ExtraLowVoltageSystem,SmartHomeSystem,HomeAlarmandIntercomSystem.OurbusinessoperationsareprimarilylocatedinMalaysiawithofficesinShahAlam,northand south of Peninsular Malaysia and East Malaysia.

Ourtop3customersareMassRapidTransitCorporationSdnBhd,SamsungC&T(KL)SdnBhdandWCTConstructionSdnBhd,whereweundertakeprojectsinBuildingManagementSystem,ExtraLowVoltageSystem,BuildingAutomationSystem and Building Control System.

Our top 3 suppliers are Schneider Electric Industries (M) Sdn Bhd, Electplus Industry Sdn Bhd and United U-Li (M) Sdn Bhd.

MESBusedtobethemarketleaderinBuildingManagementSystembefore2012,andcaptureabout80%ofthemarketsharethen.During2012to2013,therewasmajorchangesinBoardcompositionwhichresultedindiversificationofbusinessventures.Thiswasfollowedbyshiftofbusinessdirectionsintopropertydevelopment,fertilizeranddistributionofhealthcareequipment.Asaresultoftheshiftofdirection,majorityoftheseniormanagementstaffresigned.

Withtherecruitmentofnewmanagementandfinancialprofessionalsin2015,webeganourrecoveryprocessinprojectdeliveryforallcommercialprojectandMRT.BacklogforMRTofRM13millionwhichwas9monthsbehindschedulewasexecutedandrecoveredwithin6months.Thereceivablesin2014ofRM65.8millionwerereducedsubstantiallyto RM27.4 million in 2015 and to RM18.2 million in 2016 which shows managements increased effort in recovering outstandingdebts.Thenewmanagementisalsofocusedonprojectdeliveryandcleaningupofunprofitableinvestmentactivities and operations.

TheGroupalsofaceddifficultytoperformduetosubstantialfinancialsupportprovidedtoourpropertydevelopmentsundertakenbysubsidiarycompanyMOneCountryDevelopmentSdnBhdinrelationtotheKualaKraidevelopmentprojectandCheraslandsacquisitionwhichareentirelycashfundedinternally.

Asaresultoftheabovefactors,cameanotherchallenge,whichistoretainskilledmanagementpersonnelandengineers,as we are skilled intensive industry. Continuous effort and measures are undertaken to maintain our talent pool in anticipationofsecuringmajorprojectsahead.

OtherchallengessuchasGSTimplementationrequiresprudentcashflowmanagementwhilecurrencydepreciationincreased the overall cost of material and operations.

reVieW oF Financial results and Financial condition

TheGrouprevenueincreasedfromRM36.3millionin2015toRM48.1millionin2016,beinganincreaseof32.5%.Theincreaseismainlycontributedbyover60projectssuccessfullyclosedandcompletedduringthecurrentfinancialyearwithrevenuerecognitionofRM10.3million.Increaseinstaffproductivityandorganizationalefficiencyplusgoodsupplychainmanagementwerealsocontributingfactorstowardstheincreaseinoverallgrossprofitmarginfrom38%inthepreviousyearto44%inthecurrentyear.Inthesamemanner,substantialcleanuptothebookswasdoneforaleanerandmoreefficientmanagementofprojects.

ItwasatthebeginningofthecurrentfinancialyearthattheGrouplaunchedanincentivedrivenperformanceschemetoachieveitsdesiredbudgetedresultstyinginperformancewithrewardswhichsawtheaboveactualresultsmaterializefor the year.

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MANAGEMENT dISCUSSION ANd ANALYSIS(CONTd)

TheGroupsufferedalossbeforetaxofRM0.9millioninthecurrentfinancialyearcomparedtoaprofitbeforetaxofRM3.5millioninthepreviousyear.InfacttheGroupwasalreadyenjoyingacumulativeprofitbeforetaxof9monthsending30September2016ofRM6.3millionwhenitsfourthquarterresultdippedbyRM7.2millionduemainlytonon-operationalfactors,whichotherwisewouldhavereflectedarelativelysteadygrowthinrevenueandprofitsduringthecurrentyear.

reVieW oF operatinG actiVities

Technologyproductsandsolutionsarethedrivingfactorsbehindtheperformanceofourcorebusiness.Thereforetheneed to upgrade our technical skill and maintain a competent team to stay competitive and provide innovative solutions remainscrucialtoourbusiness.

TheGroupalsoneed to invest inhumancapitaldevelopmentwhile retaining technicalkeystaff.The researchanddevelopment team is also important to provide development of new products and solutions to interface with more devicesandinternetofthings(IOT).

Thesuccessofthisbusinessdependsontheabovefactors.

anticipated or KnoWn risKs

TheGroupiscurrentlyexposedtothefollowingrisks:

1) Currencyriskfluctuation.2) Reducingconstructionandinfrastructureprojectsduetoeconomicenvironment.3) Exodusofkeypersonneltobecomecompetitor.4) Lowersuccessrateinsecuringtenderduetoobsoletetechnologyandincreaseintendercostpluscompetitive

pricing among competitors as well as delivery and performance.

Planstomitigaterisks:

1) SettingupaResearchandDevelopmentcentertocreatebetterBMSsolutionandreduceproductcost.Thecenter will also play a pivotal role in creating more functions and interfacing with more devices and internet of things(IOT).

2) Provide training, certification and incentive for more competent and skilled team as well as charting a career path for employees.

3) Attracttalentedstaffbychangingworkingenvironmenttoamoreconduciveandcorporateimage,andadoptinglatest technology to improve efficiency and productivity of staff.

ForWard-looKinG stateMent

ThemarketsizeinBMSbusinessisincreasingduetohighimpactopentenderrailinfrastructureprojectssuchasMRTLine2andLRT3,andalsohighprofileconstructionprojectsuchasLotKwhichwearetargetingforBMSandELVproject.OutofthetotalavailabletendersinthemarketworthapproximatelyRM700million,wehavealreadysubmittedtendersforRM210millionwhiletheremainingbalanceisawaitingforthetenderprocess.

Basedonour new initiative tomitigate the risks,withour combinedexperience, financial resourcesand technicalstrength, we are optimistic once again to secure more contracts and regain our market share and leadership position in this engineering and technology solutions provider industry.

We are continuously exploring and assessing opportunities and growth prospects to increase shareholder value.


18

STATEMENT ON CORPORATE GOVERNANCE

TheBoardofDirectors(Board)ofMetronicGlobalBerhad(MGBorthecompany)iscommittedtoensurethatthehigheststandardsofcorporategovernanceareobservedandpracticedconsistentlythroughouttheGroup.TheBoardviewsthisasafundamentalpartofdischargingitsresponsibilitytoprotectandenhanceshareholdersvalueandthefinancial performance of the Group.

TheBoardisaccountabletoMGBsmembersforthecorporategovernanceandperformanceofMGBsGroupandcommittedtoachievethehigheststandardsofbusinessintegrity,ethicsandprofessionalismacrosstheGroupsactivities.TheBoardisadoptingtheprinciplesandbestpracticesoftheMalaysiaCodeonCorporateGovernance2012(MCCG2012)andListingRequirementsofBursaMalaysiaSecuritiesBerhad(BursaSecurities).

principle 1 establishMent oF clear roles & responsibilities

1.1 clear Functions of the board and Management TheGroupisledbyanexperiencedBoardandmaintainsfullandeffectivecontrolovertheGroupsactivities.It

guidestheshortandlongtermgoals,settingobjectivesanddirections,reviewingandadoptingstrategicplans,overseeingtheconductofthebusinessandmanagingtheGroup.

AllBoardmembersparticipatefullyindecisionsonkeyissuesinvolvingtheGroupwhichincludeinteralia,approvalofmajorinvestments,divestments,capitalexpenditures,financialmatters,relatedpartytransactions,financialandoperatingresultsandperformanceoftheGroupandinestablishingkeypoliciesandprocedures.

1.2 board duties and responsibilities

TheBoardisresponsibleandaccountabletoretainfullandeffectivecontrolovertheperformanceandaffairsoftheGroup.AllmembersoftheBoardareexpectedtoshowgoodstewardshipandactinprofessionalmanner.

TheprincipalresponsibilitiesoftheBoardincludethefollowing;

Reviewandadopting thegroupcorporate strategy, plan anddirections for theCompany including itssubsidiaries

Reviewingtherelevance,appropriatenessandintegrityoftheinternalcontrolsystemoftheGroup

Promotingeffectivecommunicationbetweenshareholders,theCompanyandrelevantstakeholders.

ContinuousreviewingthesoundnessandadequacyofGroupsfinancialsystem,managementinformationsystem and internal control system

MonitoringtheconductofGroupsbusinessandensurestrictlycompliancetobestpracticesandprinciplesof corporate governance.

FormulatingGroupsannualbusinessplansandthemedium-termandlong-termstrategyplans.

Constructivelychallengingandcontributingtothedevelopmentofthebusinessstrategiesanddirectionofthe Company

Ensuringthatthecultureofaccountability,transparency,integrity,professionalismandresponsibleconductisconsistentlyadheredtobytheCompany

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STATEMENT ON CORPORATE GOVERNANCE(CONTd)

principle 1 establishMent oF clear roles & responsibilities (contd)

1.3 Formalized ethical standards through code of ethics

TheGrouphasformalizedethicalstandardsthroughaCodeofConductasaframeworkwhichisapplicabletoallemployeesandDirectorsoftheGroup.Theframeworkprovidesworkenvironmentwherehonesty,integrity,mutualrespect,fairnessandaccountabilityprevail.

1.4 strategies promoting sustainability

TheBoardensuresthattheGroupsstrategiespromotesustainability.TheGrouppracticesasystemofrewardsbasedinthephilosophyofpayforperformance.EmployeesarerewardedbasedonproductivityandcontributiontowardsachievementoftheGroupsimmediateandlongtermobjectives.

1.5 access to information and advice

AllDirectorshaveunrestrictedaccesstotheadviceandservicesoftheCompanySecretarytoenablethemtodischargetheirdutieseffectively.TheCompanySecretary,whoisqualified,experiencedandcompetent,advisestheBoardonanyupdatesrelatingtonewstatutoryandregulatoryrequirementspertainingto thedutiesandresponsibilitiesofDirectorsandtheirimpactandimplicationtotheCompanyandDirectorsincarryingouttheirfiduciarydutiesandresponsibilities.

1.6 company secretary

TheCompanySecretaryorganizeandattendsallBoardCommitteesmeetingsandensuresmeetingsareproperlyconvenedandaccurate.TheCompanySecretaryplaysanadvisoryroletotheBoardinrelationtotheCompanysconstitution,Boardspoliciesandproceduresandcompliancewiththeregulatoryrequirements,codesorguidance.

1.7 board charter

TheBoardhadapprovedandformalizedon21stApril2014aBoardChartersettingouttheduties,responsibilitiesand functions of the Board in accordance with the principles of good corporate governance set out in MCCG 2012.TheBoardCharterisavailableontheCompanycorporatewebsiteatwww.metronic-group.com.

principle 2 strenGthen coMposition oF the board

TheBoardcurrentlycomprises4members,ofwhomtwo(2)membersoftheBoardareIndependentNon-ExecutiveDirectors.ThisisincompliancewithParagraph15.02oftheListingRequirementsofBursaSecuritieswhichrequiresatleasttwo(2)directorsor1/3oftheBoardofDirectors,whicheverishigher,tobeindependent.

TheBoard comprises professionals and entrepreneurs drawn from varied backgrounds bringing in considerableknowledgeable,skillsandexpertisetotheGroup.TheBoardisassuredofabalancedandindependentviewatallBoarddeliberationsduetothepresenceofitsIndependentNon-ExecutiveDirectorswhoareindependentofthemanagementandsubstantialshareholdersoftheCompanyandarefreefromanydealingsorrelationshipswhichcouldinterferewiththeexerciseoftheirindependentjudgment.


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principle 2 strenGthen coMposition oF the board (contd)

2.1 nomination committee (contd)

TheNominationCommitteewasestablishedon11June2004withtheprimaryresponsibilityofensuringthattheBoardhasappropriatebalanceandsizeandtherequiredmixofskills,experienceandothercompetenciesandfor recommending the appointment of new directors to the Board.

TheCommitteecomprisedofIndependentNon-ExecutiveDirectors.Themembersareasfollow;

committee Members designation

patrick chin hau Yui Chairman(Appointed on 4 November 2016 ) Independent Non-Executive Chairman

Khor ben Jin Member(Appointed on 4 November 2016) Independent Non-Executive Director

ng Wee peng Chairman(Ceased on 1 November 2016) Independent Non-Executive Chairman

datuk tan choon hwa, Jp, JMK Member(Ceased on 3 November 2016) Independent Non-Executive Director

chin Yoon siong Member(Ceased on 31 March 2017) Independent Non-Executive Director

ThefollowingarethetermsofreferenceoftheNominationCommittee;

TooverseeandevaluatetheoverallcompositionoftheBoardintermsofappropriatesize,requiredmixofskills,experienceandcorecompetenciesandadequacyofbalancebetweenExecutiveDirectors,NonExecutiveDirectorsandindependentDirectorsbyperformingannualreview.

ToensurethatallDirectorsreceiveenoughandappropriatetrainingprogramsinordertokeepabreastwithchangesinnewstatutoryandregulatoryrequirements.

Toevaluate,accessandrecommendtotheBoard,thetermsofreferenceofBoardCommitteesandreviewtheadequacyofthecommitteestructureoftheBoardsCommittee.

Tooverseethesuccessionplanning,appointment/reappointmentandperformanceevaluationofthekeymanagement staff.

Toevaluateapersonsabilitytodischargehis/herresponsibilities/functionsasexpected

ToensuretheBoardhasbeenabletodischargeitsdutiesprofessionallyandeffectivelyinconsiderationofthescaleandbreadthoftheCompanysoperations

ToensurealltheDirectorscontinuetoupholdthehighestgovernancestandardsintheirconduct.

TheNominationCommitteedevelops,maintainandreviewthecriteriatobeusedintherecruitmentprocessandannualassessmentofdirector.Inassessingthesuitabilityofthecandidates,considerationisgiventocompetencies,commitment,contributionandperformance.


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2.2 recruitment process and annual assessment

TheBoarddelegatedtotheNCtheresponsibilityofrecommendingtheappointmentofanynewDirectors.TheNCalsoannuallyreviewstheeffectivenessoftheBoard,itsCommitteesandthecontributionofeachindividualDirector,includingtherequiredmixofskillsandcorecompetenciesnecessaryfortheBoardtodischargeitsdutieseffectively.

TheresponsibilitiesoftheNCinclude:-

Formulatingthenomination,selectionandsuccessionpoliciesformembersoftheBoard

MakingrecommendationstotheBoardonnewcandidatesforappointmentandthere-appointment/re-election of Directors to the Board

Reviewingtherequiredmixofskills,experienceandotherqualitiesoftheBoardannually

ReviewingandrecommendingtotheBoardtheappointmentofmembersofBoardCommitteesestablishedbytheBoardannually

EstablishingasetofperformancecriteriatoevaluatetheperformanceofeachmemberoftheBoard,andreviewingtheperformanceofthemembersoftheBoard

EnsuringthatrelevanteducationprogrammesareprovidedfornewmembersoftheBoard,andreviewingthe Directors continuing education programmes

2.3 remuneration policies

TheRemunerationCommitteewas established on 11June 2004with the responsibility of reviewing andrecommendingtotheBoardtheremunerationpackageofExecutiveDirectorsoftheGroup.Themainobjectiveis to ensure the level of remuneration is attractive enough to attract and retain the Executive Directors to run the Groupsuccessfully,subjecttocorporateandindividualperformance.FeesforIndependentDirectorswouldbedeterminedbythefullBoardwiththeapprovalfromshareholdersattheAnnualGeneralMeeting.

PresentlythecommitteecomprisesofthefollowingIndependentNon-ExecutiveDirectors:


patrick chin hau Yui Member(Appointed on 4 November 2016) Independent Non-Executive Chairman

Khor ben Jin Member(Appointed on 4 November 2016) Independent Non-Executive Director

datuk tan choon hwa, Jp, JMK Chairman(Ceased on 3 November 2016) Independent Non-Executive Director

ng Wee peng Member(Ceased on 1 November 2016 ) Independent Non-Executive Chairman




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2.3 remuneration policies (contd)

ThesizeandcompositionoftheboardareadequateandsuitablefortheCompanytoprovideappropriatebalanceofexecutive, independentandnon-independentDirectors.TheDirectorscomefromdiversebackgroundwithexpertise and skills in Engineering, accounting, information technology, industry, audit, tax and legal.

TheGroupHumanResourceandAdministrationprovidescomparativeremunerationmarketsurveyinformationtothecommitteeandthecommitteemakesrecommendationtotheBoard.TheBoardasawholedeterminestheirremuneration.Nodirectorisallowedtobepresentinthediscussionandvoteonhisorherownremuneration.

TheaggregateremunerationoftheDirectorsforthefinancialyearunderreview,distinguishingbetweenExecutiveandNon-ExecutiveDirectorsissetoutbelow; executive non-executiveringgit Malaysia director director total

Fees* 107,000 107,000Salariesandotheremoluments 146,429 146,429

Total 146,429 107,000 253,429

* DirectorsfeesforthefinancialyearissubjecttoshareholdersapprovalattheforthcomingAnnualGeneralMeeting.

ThenumberofDirectorsoftheCompany,whoseremunerationbandsfallwithinthefollowingsuccessivebandsofRM50,000,isasfollow:

executive non-executive directors directors

BelowRM50,000 6RM50,000-RM100,000 RM100,001-RM150,000 1 RM150,001-RM200,000 - RM200,001-RM250,000 RM250,001-RM300,000 RM300,001-350,000


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principle 3 reinForce independence

3.1 assessment of independence annually TheBoardundertakesanassessmentofitsIndependentDirectorsannually.TheBoardisincompliancewithMCCG

2012 that the tenure of Independent Directors do not exceed accumulative term of nine years. Upon completion ofnineyears,anindependentmaycontinuetoserveontheBoardsubjecttothedirectorsre-designationsasNon-IndependentDirector.TheboardmustjustifyandseekshareholdersapprovalintheeventitretainsasanIndependent Director, a person who has served in that capacity for more than nine years.

InaccordancewiththeCompanysArticlesofAssociation(Articles),allDirectorsaresubjecttore-electionbyshareholdersatthenextAnnualGeneralMeetingfollowingtheirappointmentbytheBoard.

TheArticlesalsoprovidethatallDirectorsshallretirebyrotationsothateachshallretirefromofficeatleastoncein every three (3) years.

Directorswhoareoforovertheageofseventyyearsarerequiredtosubmitthemselvesforre-appointmentannuallyin accordance to Section 129 (6) of the Companies Act 1965

3.2 tenure of independent directors

TheBoardhasadoptedtherecommendationofMCCG2012thatthetenureofanindependentdirectorshouldnot exceed a cumulative term of nine (9) years. Upon the completion of the nine (9) years, an independent director maycontinuetoserveontheBoardsubjecttothedirectorsre-designationasnon-independentdirectorortoobtainshareholdersapprovalintheeventitretainsasanindependent.

3.3 shareholders approval for the re-appointment of independent director

Fortheyearunderreview,noneofthecurrentindependentboardmembershadservedtheCompanyformorethan nine (9) years cumulatively.

3.4 separate positions of the chairman and Management

ThereiscleardivisionofresponsibilitybetweentheNon-ExecutiveChairmanandtheExecutiveDirectortoensurethereisabalanceofpowerandauthority.TheBoardiscurrentlyledbyaNon-ExecutiveChairmanwhoisprimarilyresponsiblefortheorderlyconductandworkingoftheBoard.TheExecutiveDirectorandChiefExecutiveOfficerareprimarily responsible for implementingthepoliciesanddecisionsof theBoard,overseeingandmanagingthedaytodayoperationsandmanagingthedevelopmentandimplementationoftheCompanysbusinessandcorporatestrategies.There isnocombinationoroverlappingof rolesbetweenthecurrentChairmanandtheExecutiveDirectoroftheCompanysincethesetwopositionsareheldbyseparateindividuals.

TheBoardcomprisesofamajorityof independentdirectorstoensurebalanceofpowerandauthoritytotheBoard.

TheBoardhasnotestablishedanygenderdiversitypolicy.However,theBoarddorecognizetheimportanceofgender diversity in the Board and will continue to review this to enhance corporate governance practices.


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principle 3 reinForce independence (contd)

3.5 composition of the board

TheBoardasatthedateofthisstatementcomprisesfive(5)members:-

a) One (1) Independent Non-Executive Chairmanb) One(1)ExecutiveDirectorc) Three(3)IndependentNon-ExecutiveDirectors

TheNon-ExecutiveDirectorsareIndependentasdefinedintheBursaSecuritiesMMLR.TheIndependentDirectorsare:-

a) Patrick Chin Hau Yui (Appointed on 3 November 2016)b) KhorBenJin(Appointed on 3 November 2016)c) Ng Wee Peng (Resigned on 1 November 2016 )d) DatukTanChoonHwa,JP,JMK(Resigned on 3 November 2016)e) Choh Kim Peng (Resigned on 15 September 2016)f) Chin Yoon Siong (Resigned on 31 March 2017)

TheBoardisoftheviewthatthecurrentsizeoftheBoardisappropriateandviewsthattheBoardcompositionhastherightmixofskills,experienceandstrengthinqualitiesthatrelevanttothebusinesswhichenabletheBoardtocarryoutitsresponsibilitiesinaneffectiveandcompetentmanner.

principle 4 - Foster coMMitMent

4.1 commitment of the board Members

TheDirectorsarecommittedtodevotesufficienttimetocarryouttheirresponsibilities.DirectorsshouldnotifytheChairmanbeforeacceptinganydirectorship.Thenotificationshouldincludeanindicationoftimetheywillspendon the new appointment.

TheIndependentNon-ExecutiveDirectorsarerequiredtodeclaretotheBoarddetailsoftheirsignificantbusinessandinterestofwhichthesaidDirectorwouldberequiretoabstainfromdecisionvotingshouldthesubjectresolutioninvolveanychancesofconflictofinterestwithhisexistingbusinessandinterest,directorindirectly.

TheExecutiveDirectorsarehoweverrequiredtodeclaretotheBoardofallthesignificantbusinessandinterestsandtoindicatebroadlythetimespendonsuchcommitment,otherthanthetimespendontheCompany.

AlltheDirectorsarerequiredtoadvisetheBoardofanysubsequentchangesofsuchcommitmentdeclared.

Boardmeetingsarescheduledatquarterlyintervalswithadditionalmeetingsconvenedasandwhennecessary.Ateachquarterlymeeting,theBoarddeliberatedandapprovedtheGroupsbusinessplan,includingfinancialperformance to date.


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principle 4 - Foster coMMitMent (contd)

4.1 commitment of the board Members (contd)

Duringtheyearunderreview,5boardmeetingswereheldandthedetailsoftheattendanceofeachDirectorareasfollow;

no ofname of directors meeting attended %

patrick chin hau Yui 1/1 100Independent Non-Executive Chairman(Appointed on 3 November 2016)

Khor ben Jin 1/1 100Independent Non-Executive Director (Appointed on 3 November 2016)

tan Kian hong 4/5 80Executive Director

ng Wee peng 4/4 100Non-Executive Chairman(Resigned on 1 November 2016)

chin Yoon siong 4/5 80Independent Non-Executive Director(Resigned on 31 March 2017)

datuk tan choon hwa, Jp, JMK 3/4 75Independent Non-Executive Director(Resigned on 3 November 2016)

choh Kim peng 4/4 100Independent Non-Executive Director (Resigned on 15 September 2016)

TheBoardisprovidedwithagendatogetherwithasetofBoardpaperpriortotheBoardmeetings.TheBoardpapersincludeminutesofpreviousmeeting,quarterlyfinancialresults,andprogressreportsofGroupBusinesses,strategiesproposals,regulatoryandauditreports fortheBoardsreviewandapproval.ThesedocumentsareissuedinadvancetoenabletheBoardtoseekclarificationfromthemanagementtoenableeffectivedischargeitsduties.SeniormanagementandadvisorsareinvitedtoattendboardmeetingswherenecessarytoprovideadditionalinformationandinsightsontherelevantagendaitemstabledattheBoardmeetings.

4.2 training

TheBoardbelievesthattheDirectorsshouldcontinuetoattendthetrainingfromtimetotimeandaccordinglyshall and has provided and encouraged them to attend seminars, workshops, conferences and other training programstokeepabreastwithnewdevelopmentsincorporatematteraswellasindustrypracticesforthemtodischargetheirdutiesandresponsibilitiesmoreeffectively.

All the Directors have attended the Mandatory Accrediation Programme (MAP). During the financial year ended 31December2016,theDirectorshaveattendedrelevantcoursesandtrainingprogrammestoenhancetheirknowledgetoeffectivelydischargetheirdutiesandobligations.


26

principle 4 - Foster coMMitMent (contd)

4.2 training (contd)

ThecoursesandtrainingprogrammesattendedbytheDirectorsin2016areasfollows:

name of director courses/ training programmes attended

NgWeePeng CorporateGovernanceandEthics:Strengthening ProfessionalismThroughEthics

Choh Kim Peng Mandatory Accreditation Program

Chin Yoon Siong Strategic Management, Marketing, E-commerce, Synergy of Resources for Better Results

principle 5 uphold inteGritY in Financial reportinG

5.1 compliance and applicable Financial reporting standards

TheAuditCommitteewasestablishedon8April2004toreviewandmonitortheGroupsfinancialresultsandsystem of internal controls. During the year under review, the Committee comprised the following Independent Non-Executive Directors.

TheattendancesofMembersattheAuditCommitteeheldin2016arereflectedasfollows;

no ofcommittee Members meeting attended %

Khor ben Jin(Chairman) 1/1 100Independent Non-Executive Director (Appointed on 4 November 2016)

patrick chin hau Yui(Member) 1/1 100Independent Non-Executive Chairman (Appointed on 4 November 2016)

choh Kim peng(Member) 4/4 100Independent Non-Executive Director (Ceased on 15 September 2016)

ng Wee peng(Member) 4/4 100Independent Non-Executive Chairman (Ceased on 1 November 2016)

chin Yoon siong(Member) 4/5 80Independent Non-Executive Director (Ceased on 31 March 2017)

datuk tan choon hwa, Jp, JMK(Member) 3/4 75Independent Non-Executive Director (Ceased on 3 November 2016)


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principle 5 uphold inteGritY in Financial reportinG (contd)

5.2 assessment of sustainability and independence of auditors

AuditCommitteewillreviewandmonitorthesuitabilityandindependenceofexternalauditors.Theindependenceofexternalauditorscanbeimpairedbytheprovisionofnon-auditservicestotheGroup.Detailsofthefunctionsand activities of the Committee are set out on pages 24 to 27 of the Annual Report.

principle 6 recoGniZe and ManaGe risKs

6.1 Framework of Managing risks

TheRiskManagementCommitteewasestablishedinyear2005bytheBoardtoundertaketheresponsibilitiesofoverseeing the formulation of an effective and efficient risk management framework and policies for the Company anditssubsidiariesofwhichthekeyelementistoensurecorrectbalanceofriskandcontrol.

TheCommittee isunder thepurviewof theBoard.TheCommitteecomprisesmembersamongst theseniormanagementandareactivelyinvolvedinthedaytodayoperationsofbusinessandhaveregulardiscussionswiththe senior management.

6.2 internal audit Function

TheBoard has engaged the services of RMSCorporateManagement SdnBhd to carry out the internalauditfunctionduringthefinancialyearended31December2016.TheinternalauditfunctionistoprovideanindependentassurancetotheBoard.TheresponsibilitiesoftheinternalauditorsaretoassisttheAuditCommitteeindischargingitsresponsibilitiestoreviewtheadequacyandtheintegrityoftheGroupsinternalcontrolsystemandthemanagementinformationsystemsincludingsystemforcompliancewithapplicablelawandregulations.

principle 7 ensure tiMelY and hiGh QualitY disclosure

7.1 corporate disclosure policies

TheBoardstrivestocomplywithcorporatedisclosurerequirementssetbyBursaMalaysiaSecuritiesBerhadandfollowsthemainformsofinformationdisclosure:

a. Continuousdisclosurewhichisitscoredisclosureobligationandprimarymethodofinformingthemarketand shareholders.

b. Periodicaldisclosureintheformoffullyearandquarterlyreportingoffinancialresultsandmajorinvestments,capitalexpenditureandfundingactivitiesproposedbytheCompanyandtheAnnualReport.

c. Specific informationdisclosureasandwhenrequired,ofadministrativeandcorporatedevelopments,usually in the form of Bursa releases.

All informationmadeavailable toBursaMalaysiaSecuritiesBerhad is immediately available to shareholders,stakeholdersandthepublicontheCompanysInvestorRelationssectionofthewebsite:www.metronic-group.com

7.2 leverage on information technology for effective dissemination of information

TheBoardcontinuesuseofinformationtechnologytodisseminationinformationtoshareholders.AdesignatedwebsiteforinvestorrelationsisdevelopedandmaintainedbyITprofessionaltoensurethewebsitearesecureanduptodate.ThewebsitehasadedicatedsectiontoprovideinformationsuchasannouncementsmadetoBursaSecuritiesandcopiesoftheannualreport.TheCompanymaintainsacorporatewebsite(www.metronic-group.com)toallowpublicaccesstotheGroupsinformation,businessactivitiesandlatestdevelopments,aswellastoprovidefeedback.



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principle 8 strenGthen relationship betWeen coMpanY and shareholders

8.1 shareholder participation at General Meeting

TheGroupvaluesdialoguewithinvestorsandanalystasameansofeffectivecommunicationthatenablestheBoardtoconveyinformationaboutlatestdevelopmentoftheGroup.

TheCompanysAnnualMeetingprovidesavitalplatformforbothprivateandinstitutionalshareholderstoshareviewpointsandacquireinformationonissuerelevanttotheGroup.AttheAnnualGeneralMeeting,shareholdersareencouragedtoquestionresolutionsproposedortoseekmoreinformationontheGroupsbusinessoperationsingeneral.TheChairmanandothermemberoftheBoardtogetherwiththeCompanysauditorswillbeinattendancetoprovideexplanationtoallshareholdersqueries.

8.2 encourage poll Voting

TheBoardencouragepollvotingtoeffectsubstantiveresolutionsandmakeannouncementofdetailedresultsshowingthenumberofvotescastforandagainsteachresolution.TheBoardalsoencouragestheuseofelectronicmeans for poll voting.

8.3 communication and engagements with shareholders

Information on the Group's activities is provided in the Annual Report and Financial Statements in hard copy, which are despatched to shareholders.

TheCompanyalsoencouragestheshareholdersandinvestorstoparticipateinonlineaccessofthecompanysAnnualReportandalluptodateannouncementfromtimetotime,whicharemakeavailableinstantlyatbothBursaSecuritiesandthecompanyswebsiteatwww.metronic-group.com.

InvestorsandthepublicwhowishtocontacttheGrouponanyenquiry,commentorproposalcanchannelthemthroughe-mailorcontactthefollowingperson:-

Name : VincentSetHinFookContactnumber : 03-78472111E-mailAddress : [email protected]

accountabilitY and audit

a) Financial reporting

TheBoardensuredthatthefinancialstatementshavebeenpreparedinaccordancetotheapplicableapprovedaccountingstandards,therequirementsoftheCompaniesAct1965andotherregulatoryprovisions.Inpreparingthefinancialstatements, theBoardhasascertainedthat judgmentsandestimatesmadeare reasonableandprudent,andappropriateaccountingpolicieshavebeenadoptedandappliedconsistently.

TheBoardtakesduecareandresponsibilitiesforpresentingabalancedandunderstandableassessmentoftheGroupsfinancialperformanceandprospectsinrespectofallquarterlyresults,annualfinancialstatementsandannouncementsissuedbytheCompany.TheBoardisassistedbytheAuditCommitteetoscrutinizeinformationfordisclosuretoensureitstimeliness,accuracy,adequacyandcompliancetotheappropriateaccountingstandards.

b) risk Management and internal control

TheBoardestablishesthattheinternalauditfunctionreportsdirectlytotheAuditCommittee.

TheStatementofRiskManagementandInternalControlprovidesanoverviewofthestatesofinternalcontrolwithin the Group.


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accountabilitY and audit (contd)

c) directors responsibilities statement for the Financial statements

ThroughtheAuditCommittee,theBoardhasestablishedatransparentandappropriaterelationshipwiththeGroupsexternalandinternalauditorsinseekingtheirprofessionaladviceandtowardensuringcompliancewithapplicableaccountingstandardsandstatutoryrequirements.TheexternalandinternalauditorsdoreporttomembersoftheCompany on their findings which are included as part of the Companys financial report in respect of the financial year.

TheDirectorsarerequiredbytheCompanyAct1965topreparefinancialstatementsforeachfinancialyearwhichgiveatrueandfairviewofthestateoftheCompanyandtheGroupandtheirresultsandcashflowsforthatyear.

Inpreparingthosefinancialstatements,theDirectorsarerequiredto-

a) Useappropriateaccountingpoliciesandapplythemconsistently;

b) Makejudgmentandestimatesthatarereasonableandprudent;

c) Statewhetherapplicableaccountingstandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and;

d) Preparethefinancialstatementsonagoingconcernbasis.

TheDirectorsareresponsibleforensuringthatproperaccountingrecordsarekept,anddisclosedwithreasonableaccuracyatanytime,thefinancialpositionoftheCompanyandGroupandtoenablethemtoensurethatthefinancial statements comply with the Companies Act, 1965.

TheDirectorsaresatisfiedthatinpreparingthefinancialstatementsoftheCompanyandGroupfortheyearended31December2016,theCompanyandGrouphaveusedtheappropriateaccountingpoliciesandappliedthemconsistently.TheDirectorsaretheopinionthatallrelevantapprovedaccountingstandardshavebeenfollowedandconfirmthatthefinancialstatementshavebeenpreparedonagoingconcernbasis.

corporate social responsibilitY

a) safety and health

TheGroupiscommittedtoprovideasafeandhealthyworkingenvironmentforemployeesintheGroupundertherequirementsofInternationalforStandardization(ISO).InternalAuditisbeingcarriedoutperiodicallytoensurecontinuousadherencetoallsafetymeasuresisbeingobserved.

b) skill development

TheGroupstrivestomotivateandretainthebestemployeesthroughcontinuoustrainingbysendingthemtoattendcoursesandseminarsrelevanttotheirjobfunctionstoimprovetheirknowledgeandskills.Duringtheyearunderreview,theGrouputilizedHumanResourcesDevelopmentFundforselectivetrainingtoenhanceemployeestechnicalandsoftskills.ItistheGroupaspirationthatemployeesoftheGroupbecomerespectedandresponsiblecitizensofsocietyaswellasleadersintheirrespectivefieldsofspecializations

c) Workers welfare

TheGroupisamulti-racialorganization.Topromotecloserworkingrelationshipandfosterbetterunderstandingamong the multi-racial employees, the Group provided opportunities for the employees from different departments and levels to interact, integrate and develop teamwork through sport activities and company trips.


30


corporate social responsibilitY (contd)

d) the environment

TheGrouprecognizestheimportanceofenvironmentalconservation.TheGrouphasadoptedeco-friendlypracticesinitsdaytodayworkinordertominimizetheimpactofenvironment.Forexample,wasteandconstructiondebrisweredisposedatapproveddumpsites.StaffandclientsareencouragedtofullymaximizethebenefitsofIOT(eg:emailinstantmessagingetc)forcommunication.ThegrouphasalsoimplementedrecyclingofusedpaperandpromotinggoodpracticesonenergysavingbyswitchingoffunusedequipmentsandlightingsviaIntelligentBuilding Management System.

e) dynamic and high performance Workforce

TheCompanyplacesgreatimportanceonhiringtherightcandidatefortherightjob.AstheCompanymovesforwarditwillcontinuetofocusonattractingqualitytalentwhobestfitonjobrequirementsandcomplementitsworkculture.TheCompanyfirmlybelievesthatbyaligningitsrecruitmentstrategies,theCompanywillcontinuetoattractthebesttalenttofurtherenhancetheCompanysvalueandachievements.

AtourGrouplevel,ourmaleandfemaleemployeesratioshowsadistributionof81:19asat31December2016,ascomparedto83:17at31December2015.Ourtotalstaffstrengthstoodat150asat31December2016,ascomparedto167asat31December2015.

f) Workforce diversity

TheBoardiscommittedinrecognizingandutilizingthecontributionofdiverseskillsandtalentfromitsdirectors,officers and employees as a mean of enhancing the Groups performance. Diversity may result from wide range offactorswhichincludeage,gender,ethnicityorculturalbackground.

TheBoard isactivelymanaging itsworkforcediversity toensureequalemploymentopportunityregardlessofgender.Itfostertheenvironmentwheretheabilitytocontributeandaccessemploymentopportunitiesisbasedonperformance,skillsandmerits.Thesewillincludeequalopportunityinrespecttoemploymentandemploymentcondition such as hiring, training for professional development and promotion for career advancement.

As at the reporting date, the Board has not set a gender diversity target, however, it is moving towards a more genderequalityofemployees.ItwillfocusongettingtheparticipationofwomenandthoseofdifferentethnicityonitsBoardandwithinseniormanagementandthepersonselectedmustbeabletocontributepositivelytothedevelopment of the Group.

annual report 2016

31


other inForMation

audit and non-audit Fees

Forthefinancialyearended31December2016,auditandnon-auditfeespaidtotheexternalauditorswereRM129,743and RM8,000 respectively.

Material contracts

TherewerenomaterialcontractsinvolvingtheinterestoftheDirectorsandmajorshareholdersoftheCompanyduringthe financial year.

contract relating to loans

TherewerenocontractsrelatingtoloansbytheCompanyanditssubsidiariesinrespectoftheprecedingitem.

stateMent on coMpliance With the reQuireMents oF bursa MalaYsia in relation to application oF principles and adoption oF best practises laid doWn in the MalaYsian code oF corporate GoVernance

TheBoard ispleasedtoreport to itsshareholdersthat theGrouphassubstantiallycompliedwithandshall remaincommittedtoattainingthehighestpossiblestandardsthroughthecontinuedadoptionofthebestpractisesasstipulatedinthePrinciplesandRecommendationsoftheMCCG2012andallotherapplicablelaws.

ThisstatementwasmadeandapprovedbytheBoardon12April2017.


32

AUDIT COMMITTEE REPORT

TheAuditCommitteeofMetronicGlobalBerhad(MGBortheCompany)wasestablishedbyaresolutionoftheBoardofDirectors(theBoard)on8April2004.TheCommittee,operatingwithinaspecifictermsofreferencewasestablishedtoassisttheBoardoftheCompanyindischargingtheirdutiesandresponsibilities.

TheAuditCommitteemeetsregularlywiththeseniormanagementandtheinternalandexternalauditorstoreviewtheGroups operations, financial reports and the system of internal controls and compliance.

a. MeMbers

TheMembersoftheAuditCommitteeduringthefinancialyearended31December2016uptopresentareasfollows:-


Khor ben Jin Chairman(Appointed on 4 November 2016) Independent Non-Executive Director

patrick chin hau Yui Member(Appointed on 4 November 2016) Independent Non-Executive Chairman

choh Kim peng Chairman(Ceased on 15 September 2016) Independent Non-Executive Director

ng Wee peng Member(Ceased on 1 November 2016 ) Independent Non-Executive Chairman

datuk tan choon hwa, Jp, JMK Member(Ceased on 3 November 2016) Independent Non-Executive Director


b. terMs oF reFerence

TheAuditCommitteeisgovernedbythefollowingtermsofreference:

1) composition

TheAuditCommitteeshallbeappointedbytheBoardfromamongsttheirmembersandshallcompriseat least three directors, all ofwhommust be non-executive directors,with amajority of thembeingindependentdirectors.TheChairmanwhoshallbeelectedfromamongstmembersofCommittee,shallbeanindependentNon-ExecutiveDirector.TheBoardshallatalltimesensurethattheAuditCommitteeshouldbefinancialliterateandatleastonememberoftheCommitteemustbeamemberoftheMalaysianInstituteofAccountants(MIA).IfheisnotamemberofMIA,hemustfulfillsuchotherrequirementsasprescribedbyBursaMalaysiaSecuritiesBerhad(BursaSecurities).

NoalternativedirectormaybeappointedasamemberoftheCommittee.

IntheeventofanyvacancyintheCommitteeresultinginthenumberbeingreducedtobelowthree,theBoard shall within three months of that event fill the vacancy.

TheBoardwillreviewthetermsoftheofficeandtheperformanceoftheCommitteeanditsmembersatleast once every 3 years.

annual report 2016

33

AUdIT COMMITTEE REPORT(CONTd)

b. terMs oF reFerence (contd)

2) objective

Theprimaryobjectiveof theCommittee is toassist theBoard in theeffectivedischargeof itsfiduciaryresponsibilitiesinthefollowingaspects:

i) ReviewtheadequacyandintegrityoftheGroupsinternalcontrolsystems,managementinformationsystem including systemof compliancewith applicable laws, regulations, rules, directives andguidelines.

ii) Ensure that the risk management framework to manage material risk is in place and adhered to.iii) Oversee financial reporting and evaluate the internal and external audit processes.

3) authority

TheCommitteeisauthorizedtoinvestigateanymatterwithinitstermsofreferencewithfullandunrestrictedaccesstobothinternalandexternalauditorsandalltheGroupsrecords,propertiesandpersonnel.

TheCommitteeisauthorizedandshallbeentitledtoobtainexternallegalandotherindependentprofessionaladvice to assist in executing its duties.

4) Meeting

TheCommitteeshallmeetatleastfour(4)timesayeartocoincidewiththereviewofthequarterlyandannualfinancialstatementspriortopresentationtotheBoardforapproval.Additionalmeetingsmaybecalled as and when necessary at the discretion of the Chairman of the Committee.

Inordertoformaquorum,themajorityofmemberspresentmustbeindependentnon-executivedirectors.OthermembersoftheBoardandSeniorManagement,InternalandExternalAuditorsmayattendmeetingsuponinvitationbytheCommittee.

TheCompanySecretaryistheSecretaryoftheCommitteeandshallberesponsiblefordrawinguptheagendawith theconsentof theChairman.Theagenda togetherwith the relevantdocumentsshallbecirculatedtothecommitteemembers,oneweekpriortoeach

meeting.TheCompanySecretaryshallberesponsibleforrecordingattendance,keepingminutesofmeetingsandcirculatingtocommitteemembersandmembersoftheBoard.

TheAuditCommitteemet5timesduringthefinancialyear.TheAuditCommitteemettwicewiththeexternalauditorswithoutthepresenceofmanagementduringthefinancialyearended31December2016.


34

b. terMs oF reFerence (contd)

5) duties and responsibilities

Infulfillingitsprimaryobjectives,theCommitteeshallundertakethefollowingdutiesandresponsibilities:

i) Review with the external auditors, the audit scope and plan, including any changes to the audit planandscope.Reviewtheadequacyoftheinternalauditscopeandplan,aswellasthefunctions,competency and resource of the internal audit function and that it has the necessary authority to carry out its work.

ii) Reviewtheindependenceandobjectivityoftheexternalauditorsandtheirservices,includingnon-auditservicesandtheprofessionalfees,soastoensureaproperbalancebetweenobjectivityandvalue for money.

iii) Reviewtheappointmentandperformanceofexternalauditors,theauditfeeandanyquestionofresignationordismissalbeforemakingrecommendationstotheBoard.

iv) Reviewthequarterlyresultsandtheyear-endfinancialstatements,priortotheapprovalbytheBoardfocusingparticularlyon: Changesinorimplementationofmajoraccountingpolicies Significantorunusualevents Significantadjustmentsfromauditand Compliancewithaccountingstandardsandotherlegalrequirements

v) Review the external and internal audit reports to ensure that appropriate and prompt remedial actions aretakenbythemanagementonmajordeficienciesincontrolsorproceduresthatareidentified.

vi) Review themajor audit findings and themanagements responses during the yearwith themanagement, internal and external auditors, including the status of previous audit recommendations.

vii) ReviewtheassistancegivenbytheGroupsemployeestoboththeinternalandexternalauditors,andany difficulties encountered in the course of the audit work, including any restrictions on the scope ofactivitiesoraccesstorequiredinformation.

viii) Reviewtheadequacyandintegrityofinternalcontrolsystems,includingenterpriseriskmanagementinformation system, and the internal or external auditors evaluation of the said systems.

ix) Directandwhereappropriatemonitoranyspecialprojectsorinvestigationconsiderednecessary,andreviewinvestigationreportsonanymajordefalcations,fraudsandthefts.

x) Discussproblemsandreservationsarisingfromtheinterimandfinalaudit,andanymattertheexternalauditorsmaywishtodiscuss(intheabsenceofmanagementwherenecessary)

xi) Review the appointment and performance of internal auditors.xii) Reviewany relatedparty transactionsandconflictof interestsituations thatmayarisewithin the

CompanyortheGroup,includinganytransaction,procedureorcourseofconductthatraisesquestionson managements integrity.

xiii) MonitororganizationalcompliancewithstatutoryandListingRequirementsofBursaSecuritiesandotherlegislativeandreportingrequirements.

xiv) Anyotheractivities,asauthorizedbytheBoard.


annual report 2016

35


c. suMMarY oF audit coMMittees actiVities

Duringthefinancialyearended31December2016,theAuditCommitteeconvened5meetings.DetailsoftheattendanceoftheCommitteemembersareasfollows:

no ofcommittee Members meeting attended %

Khor ben Jin(Chairman) 1/1 100Independent Non-Executive Director (Appointed on 4 November 2016)

patrick chin hau Yui(Member) 1/1 100Independent Non-Executive Chairman (Appointed on 4 November 2016)

choh Kim peng(Member) 4/4 100Independent Non-Executive Director (Ceased on 15 September 2016)

ng Wee peng(Member) 4/4 100Independent Non-Executive Chairman (Ceased on 1 November 2016)

chin Yoon siong(Member) 4/5 80Independent Non-Executive Director (Ceased on 31 March 2017)

datuk tan choon hwa, Jp, JMK(Member) 3/4 75Independent Non-Executive Director (Ceased on 3 November 2016)

Themeetingswereappropriatelyheldandsufficientnoticeissuedtothemembers.

Inlinewiththetermsofreference,thefollowingactivitieswerecarriedoutbytheAuditCommitteeduringthefinancialyearunderreview:

i) ReviewedunauditedquarterlyfinancialresultsoftheCompanyincludingtheannouncementspertainingtheretopriortosubmissiontotheBoardfortheconsiderationandapproval.

ii) Reviewed the audited financial statements of the Group and of the Company for the financial year ended 31 December2016andissuesarisingfromtheauditedthereofpriortosubmissiontotheBoardforconsiderationand approval.

iii) Reviewedtheauditplanpresentedbytheexternalauditorspriortotheirannualreportastotheirscopeofwork and strategy.

iv) Reviewed matters arising from the statutory audit of the Group in a meeting with the External Auditors without the presence of any executive officer of the Group.

v) Reviewedtheannualauditplanpreparedbytheinternalauditorstoensureadequatescopeandcoverageon their activities.

vi) Reviewedinternalauditreportpreparedbytheinternalauditorsespeciallywithregardstoissuesraised,recommendations made and managements response to their recommendations.

vii) Reviewedtheriskassessmentreportspreparedbytheinternalauditorsandtherecommendationsmade.


36


c. suMMarY oF audit coMMittees actiVities (contd)

Inlinewiththetermsofreference,thefollowingactivitieswerecarriedoutbytheAuditCommitteeduringthefinancialyearunderreview:(Contd)

viii) Reviewed all related party transactions and recurrent related party transactions that arose within the Group onaquarterlybasistoensurethattheyarewithinthemandateobtained.

ix) Reviewed the performance of the internal and external auditors and made recommendations to the Board on their reappointment and remuneration.

x) Reviewed the Audit Committees Report, Statement on Risk Management and Internal Control and Statement of Corporate Governance and its recommendations to the Board for inclusion in the Annual Report.

d. internal audit Function

TheGroupappointedanexternalconsultingcompanytoundertaketheinternalauditfunctionduringthefinancialyearended31December2016.

Theroleandresponsibilitiesoftheinternalauditfunctionareasfollows:

i) Toundertakeindependentandregularreviewsofthesystemofinternalcontrolsandgiveassurancethatsuch system continues to operate satisfactorily and effectively.

ii) Toreviewtheriskidentificationandevaluationprocessandensurecontrolsimplementedbythemanagementare consistent with Groups risk management policy.

TheInternalAuditorshavecarriedouttheirdutiesinaccordancewithitstermsofreferenceandtheannualauditplanwasapprovedbytheAuditCommitteeandtheBoard.

ThetotalcostincurredfortheinternalauditfunctionwasRM17,000.00forthefinancialyear2016.Theinternalaudit function is outsourced to Messrs RMS Corporate Management Sdn Bhd.

annual report 2016

37

STATEMENT ON RISK MANAGEMENT ANd INTERNAL CONTROL

the board of directors (the board) is pleased to provide the following statement on risk Management and internal control pursuant to paragraph 15.26(b) of the bursa Malaysia securities berhad Main Market listing requirements. the statement on risk Management and internal control below outlines the nature and scope of internal controls of Metronic Global berhad and its subsidiaries (the Group) during the financial year ended 31 december 2016.

1. boards responsibility

TheBoardrecognizestheimportanceofsoundinternalcontrolsandriskmanagementpracticeforgoodcorporategovernance.TheBoardaffirmsitsoverallresponsibilityfortheGroupssystemofinternalcontrol(theSystem)which includes establishmentof an appropriate control environment and framework aswell as reviewing itsadequacyandintegrity.

Nevertheless,theBoardrecognizesthattheGroupssystemisdesignedtomanageratherthaneliminatetheriskoffailuretoachievetheGroupsbusinessobjectivesinviewofthelimitationsinherentinanyinternalcontrolsystem.Accordingly,theSystemcanonlyprovidereasonablebutnotabsoluteassuranceagainstmaterialmisstatementand loss.

2. risk Management Framework

TheBoardconfirmsthatthereisanon-goingprocessofreviewing,identifying,evaluatingandmanagingsignificantrisksfacedbytheGroup.RiskassessmentandevaluationareintegralpartoftheGroupsbusinessandoperatingprocesses.ThedailyrunningofthebusinessisentrustedtotheExecutiveDirector(ED),ChiefExecutiveOfficer(CEO)andtheirmanagementteam.UnderthepurviewoftheEDandCEO,therespectiveHeadofeachoperatingsubsidiaryisresponsibleformanagingtherisksoftheoperatingsubsidiary,andtheHeadofDepartmentswitheachoperatingsubsidiaryisresponsibleformanagingtheriskofhis/herrespectivedepartmentaspartoftheirday-to-day duties.

3. internal audit Function

Theinternalauditfunctionisoutsourcedtoanexternalconsultantduringthefinancialyearended31December2016.Theinternalauditorsadoptedarisk-basedapproachandpreparedtheauditplanbasedontheriskprofileoftheGroup.TheinternalauditorsprovidedindependentreviewsonriskmanagementandcontrolprocessesimplementedbythemanagementandreportedtotheAuditCommitteewhichreviewedtheadequacy,integrityand effectiveness of the System.

ThefindingsofinternalauditwerecommunicatedtothemanagementoftheGroupandtheAuditCommittee.

TheAuditCommitteereviewedthereportsfrominternalauditorsandresponsesfromthemanagementbeforereporting the findings and making recommendations to the Board in strengthening the System.

4. other internal control process

Apartfromriskmanagementandinternalaudit,theGroupsotherkeycontrolprocessesincludethefollowing:

i) Thereisanorganizationstructurewithwelldefinedreportinglinesofresponsibilityandaccountabilityanddelegation of authority.

ii) Documentedpoliciesandproceduresareupdatedwherenecessarytoreflectanychangingoperationalrisks.TheBoardapprovesappropriateresponsesoramendmentsintheGrouppolicies.

iii) TheAuditCommitteecomprisestwo(2)IndependentNon-ExecutiveDirectors.TheAuditCommitteewasestablishedwithaviewtoassisttheBoardintheeffectivedischargeofitsfiduciaryresponsibilityinrespectof the Groups Internal Control Systems, risk management and financial reporting.

iv) QuarterlyresultsarereviewedbytheBoardandtheAuditCommitteebeforeannouncementtotheBursaSecurities.


38

STATEMENT ON RISK MANAGEMENT ANd INTERNAL CONTROL(CONTd)

4. other internal control process (contd)

Apartfromriskmanagementandinternalaudit,theGroupsotherkeycontrolprocessesincludethefollowing:(Contd)

v) TherearemanagementmeetingsattendedbytheCEOandthemanagementteamtodiscussandreportonoperationalperformance,businessstrategy,keyoperatingstatistics,legalandregulatorymattersofeachbusinessunit.

vi) TheGroupsprincipaloperatingsubsidiary,MetronicEngineeringSdnBhdisISO9001:2000accredited.ItsemployeesareguidedbytheQualityManualwherestandardoperatingproceduresaretobefollowed.InadditiontotheperiodicexternalISOaudit,internalauditiscarriedoutonannualbasiswherethefindingsorissuesaredocumentedanddeliberatedbythemanagementteaminthemanagementreviewmeetings.

5. review of the statement by external auditors

TheexternalauditorshavereviewedthisStatementonRiskManagement&InternalControlfortheinclusionintheannualreportforthefinancialyearended31December2016.TheexternalauditorsconductedthereviewinaccordancewiththeRecommendedPracticeGuide5:GuidanceforAuditorsontheReviewofDirectorsStatementonInternalControl(RPG5)issuedbytheMalaysianInstituteofAccountants.ThereviewhasbeenconductedtoassesswhethertheStatementonRiskManagement&InternalControlisbothsupportedbythedocumentationpreparedbyorfortheDirectorsandappropriatelyreflectstheprocessestheDirectorshadadoptedinreviewingtheadequacyandintegrityofthesystemofinternalcontrolsfortheGroup.RPG5doesnotrequiretheexternalauditors to consider whether the Directors Statement on Risk Management &Internal Control covers all risks and controls, or to form an opinion on the effectiveness of the Groups risk and control procedures. RPG 5 also does notrequiretheexternalauditorstoconsiderwhethertheprocessesdescribedtodealwithmaterialinternalcontrolaspects of any significant matters disclosed in the annual report will, in fact, mitigate the risks identified or remedy thepotentialproblems.Basedontheirreview,theexternalauditorshavereportedtotheBoardthatnothinghadcometotheirattentionthatcausedthemtobelievethattheStatementonRiskManagement&InternalControlisinconsistentwiththeirunderstandingoftheprocesstheBoardhasadoptedinthereviewoftheadequacyandintegrity of risk management and internal control of the Group.

6. conclusion

TherewasnomaterialorsignificantbreakdownorweaknessinthesystemofinternalcontroloftheGroupthatresulted inmaterial losses or contingencies for the year under review. TheBoard and themanagementwillcontinually review and improve the existing risk management processes and internal control system to ensure theiradequacyandeffectivenessinthedynamicbusinessenvironment.

39

FInAncIAL StAteMentS

FInAncIAL StAteMentSDirectors Report 40

StatementbyDirectors44

Statutory Declaration 45

Independent Auditors Report 46

Statements of Financial Position 54

Statements of Profit or Loss andOther Comprehensive Income 56

StatementsofChangesinEquity58

Statements of Cash Flows 60

Notes to the Financial Statements 63


40

Company No. 632068V

Note 8

Group Company

DIRECTORS REPORT

annual report 2016

41

Company No. 632068V

No. of Ordinary Shares of RM0.10 each Balance Balance

01.01.2016 Bought Sold 31.12.2016 Direct interest in the Company

(other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in Note 34 of the financial statements, or the fixed salary of a fulltime employee of the Company) Note 37 (b)

dIRECTORS REPORT(CONTd)


42

Company No. 632068V

Note 41

Note 42


annual report 2016

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Company No. 632068V



44

Company No. 632068V

54 132

133

STATEMENT BY dIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

Company No. 632068V

54 132

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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Company No. 632068V

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annual report 2016

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Company No. 632068V

4 133

STATUTORY dECLARATIONPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

Company No. 632068V

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46

Company No. 632068V

Opinion

412

Basis for Opinion

Auditors Responsibilities for the Audit of the Financial Statements

Independence and Other Ethical Responsibilities

Key Audit Matters

INDEPENDENT AUdITORS REPORTTO THE MEMBERS OF METRONIC GLOBAL BERHAd

Company No. 632068V

Opinion

412

Basis for Opin

METRONIC GLOBAL BERHADmetronic-group.com/upload/kcfinder/files/AR2016 - Annual Report... · HVAC Integrated Security CCTV Fire Electrical Power ... background of company Metronic

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