The Better Connections to Your WorldThe Better … UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 2016 1 Corporate Information Notice of Annual General Meeting Statement

Annual Report 2016

The Better Connections to Your WorldThe Better Connections to

UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 2016 1

Corporate Information

Notice of Annual General Meeting

Statement Accompanying Notice of Annual General Meeting

Chairman’s Statement

Financial Highlights and Review

Management Discussion and Analysis

Directors’ Profiles

Profile of Key Senior Management

Audit Committee Report

2

3

7

8

10

11

14

17

18

CONTENTS

Statement on Corporate Governance

Statement on Risk Management and Internal Control

Additional Compliance Information

Directors’ Responsibility Statement

Financial Statements

List of Properties

Analysis of Shareholdings

Proxy Form

20

33

35

41

42

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119

UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 20162

Corporate Information

Amirul Azhar bin BaharomIndependent Non-Executive Chairman

Cheng WongManaging Director

Dee Kok YongExecutive Director

Yau Ming TeckIndependent Non-Executive Director

Cheng Siow ChunIndependent Non-Executive Director

BOARD OF DIRECTORS

REGISTERED OFFICE

10th Floor, Menara Hap Seng No. 1 & 3 Jalan P. Ramlee50250 Kuala LumpurTel : 03 2382 4288Fax : 03 2382 4170

HEAD OFFICE

Lot 48, Jalan Industri 2/1Rawang Integrated Industrial Park48000 RawangSelangor Darul EhsanTel : 03 6091 2626Fax : 03 6091 2323

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn BhdUnit 30-01, Level 30, Tower AVertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTel : 03 2783 9299Fax : 03 2783 9222

PRINCIPAL BANKERS

United Overseas Bank (Malaysia) BhdAmBank (M) Berhad

STOCK EXCHANGE

Main Market ofBursa Malaysia Securities BerhadStock Name : UMSNGBStock Code : 7227Sector : Industrial Products

AUDIT COMMITTEE

Yau Ming TeckChairman of Audit Committee,Independent Non-Executive Director

Amirul Azhar Bin BaharomIndependent Non-Executive Director


NOMINATION COMMITTEE

Yau Ming TeckChairman of Nomination Committee,Independent Non-Executive Director



REMUNERATION COMMITTEE

Yau Ming TeckChairman of Remuneration Committee,Independent Non-Executive Director



COMPANY SECRETARIES

Anna Lee Ai Leng (LS 0009729)Lim Lee Kuan (MAICSA 7017753)

AUDITORS

Crowe HorwathLevel 16, Tower CMegan Avenue II12, Jalan Yap Kwan Seng50450 Kuala LumpurTel : 03 2788 9999Fax : 03 2788 9998


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting of the Company will be held at Tasik Puteri Golf & Country Club, Bandar Tasik Puteri, 48000 Rawang, Selangor Darul Ehsan on Tuesday, 23 May 2017 at 9.30 a.m. for the following purposes:

AGENDA

Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2016 together with the Reports of the Directors and the Auditors thereon.

(Please refer to Explanatory Note 1)

2. To re-elect the following Directors who retire by rotation in accordance with Article 126 of the Articles of Association and who being eligible offer themselves for re-election:

(a) Encik Amirul Azhar Bin Baharom, (b) Mr Yau Ming Teck

Ordinary Resolution 1Ordinary Resolution 2

3. To approve the payment of Directors’ Fees of RM108,500 for the financial year ending 31 December 2017.

Ordinary Resolution 3

4. To approve the payment of Directors’ benefits payable to the Board of the Company and its subsidiaries amounting to RM21,000 for the financial period from 1 January 2017 until the next Annual General Meeting.


5. To re-appoint Messrs. Crowe Horwath as Auditors of the Company and to authorise the Directors to determine their remuneration.


Special Business

To consider and if thought fit, to pass the following Ordinary Resolution, with or without modification:-

6. Authority to Issue Shares Pursuant to Section 75 of the Companies Act, 2016 Ordinary Resolution 6

“THAT pursuant to Section 75 of the Companies Act, 2016 (“the Act”) and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company, at any time until the conclusion of the next Annual General Meeting 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 does not exceed ten per centum (10%) of the issued share capital (excluding treasury shares) of the Company at the time of issue and THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

7. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ Mandate”)


“THAT, subject always to the Companies Act, 2016 (“the Act”), the Memorandum and Articles of Association of the Company and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Company and/or its Subsidiaries shall be mandated to enter into recurrent transactions of a revenue or trading nature with the Related Parties specified in Section 1.3 of the Circular to Shareholders dated 28 April 2017, subject to the transactions are in the ordinary course of business necessary for the day-to-day operations and on normal commercial terms not more favourable than those generally available to the public and which are not to the detriment of the minority shareholders.

Amirul Azhar bin BaharomIndependent Non-Executive Chairman

Cheng WongManaging Director

Dee Kok YongExecutive Director

Yau Ming TeckIndependent Non-Executive Director


BOARD OF DIRECTORS

REGISTERED OFFICE

10th Floor, Menara Hap Seng No. 1 & 3 Jalan P. Ramlee50250 Kuala LumpurTel : 03 2382 4288Fax : 03 2382 4170

HEAD OFFICE

Lot 48, Jalan Industri 2/1Rawang Integrated Industrial Park48000 RawangSelangor Darul EhsanTel : 03 6091 2626Fax : 03 6091 2323

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn BhdUnit 30-01, Level 30, Tower AVertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTel : 03 2783 9299Fax : 03 2783 9222

PRINCIPAL BANKERS

United Overseas Bank (Malaysia) BhdAmBank (M) Berhad

STOCK EXCHANGE

Main Market ofBursa Malaysia Securities BerhadStock Name : UMSNGBStock Code : 7227Sector : Industrial Products

AUDIT COMMITTEE

Yau Ming TeckChairman of Audit Committee,Independent Non-Executive Director



NOMINATION COMMITTEE

Yau Ming TeckChairman of Nomination Committee,Independent Non-Executive Director



REMUNERATION COMMITTEE

Yau Ming TeckChairman of Remuneration Committee,Independent Non-Executive Director



COMPANY SECRETARIES

Anna Lee Ai Leng (LS 0009729)Lim Lee Kuan (MAICSA 7017753)

AUDITORS

Crowe HorwathLevel 16, Tower CMegan Avenue II12, Jalan Yap Kwan Seng50450 Kuala LumpurTel : 03 2788 9999Fax : 03 2788 9998


Notice of Annual General Meetingcont’d

AND THAT such approval shall continue to be in force until:

(i) the conclusion of the next Annual General Meeting (“AGM”), at which time it will lapse, unless by a resolution passed at the said AGM, such authority is renewed;

(ii) the expiration of the period within the next AGM of the Company is required to be held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(iii) revoked or varied by a resolution passed by the Shareholders in a General Meeting;

whichever is the earlier.

AND FURTHER that the Directors of the Company be 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 this Shareholders’ Mandate.”

8. Proposed New Shareholders’ Mandate for Recurrent Related Party Transactions Ordinary Resolution 8

“THAT subject to the Companies Act, 2016 (“the Act”), the Memorandum and Articles of Association of the Company and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company to enter into any category of RRPTs as stated in Section 1.3 of the Circular to Shareholders dated 28 April 2017, which are necessary for the Company’s day-to-day operations subject further to the following:-

(a) the transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those available to the public and on terms not to the detriment of the minority shareholders; and

(b) disclosure is made in the annual report of the breakdown of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year and that such approval shall commence immediately upon the passing of this ordinary resolution and continue to be in force until:-

(i) the conclusion of the next annual general meeting (“AGM”) of the Company following the general meeting at which the Proposed Shareholders’ Mandate was passed, at which time the shareholders’ mandate will lapse, unless by a resolution passed at a general meeting, the authority is renewed; or

(ii) the expiration of the period within which the next AGM is required by law to be held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(iii) it is revoked or varied by resolution passed by the shareholders of the Company in a general meeting,

whichever is the earlier; AND FURTHER that the Directors of the Company be 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 this Shareholders’ Mandate.”



9. Proposed Renewal of Authority for the Company to purchase its own shares of up to 10% of the issued share capital of the Company (“Proposed Renewal of Share Buy-Back Authority”)


“THAT subject always to the Companies Act, 2016, the provisions of the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and all other applicable laws, guidelines, rules and regulations, the Company be and is hereby authorised to purchase such amount of ordinary shares in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities as the Directors may deem fit and expedient in the interest of the Company, provided that: (i) the aggregate number of shares purchased does not exceed 10% of the total

issued and paid-up share capital of the Company as quoted on Bursa Securities as at the point of purchase;

(ii) the maximum fund to be allocated by the Company for the purpose of purchasing the shares shall be backed by equivalent amount of retained profits and share premium; and

(iii) the Directors of the Company may decide either to retain the shares purchased as treasury shares or cancel the shares or retain part of the shares so purchased as treasury shares and cancel the remainder or to resell the shares or distribute the shares as dividends.

AND THAT the authority conferred by this resolution will commence after the passing of this ordinary resolution and will continue to be in force until:-

(i) the conclusion of the next Annual General Meeting (“AGM”) at which time it shall lapse unless by ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions; or

(ii) the expiration of the period within which the next AGM after that date is required by law to be held; or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting;

whichever occurs first.

AND THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement or to effect the purchase(s) of the shares with full power to assent to any condition, modification, variation and/or amendment as may be imposed by the relevant authorities and to take all such steps as they may deem necessary or expedient in order to implement, finalise and give full effect in relation thereto.”

10. To transact any other business of which due notice shall have been given in accordance with the Companies Act, 2016.

By Order of the BoardANNA LEE AI LENG (LS 0009729)LIM LEE KUAN (MAICSA 7017753)Company Secretaries

Selangor Darul Ehsan28 April 2017



Notes:

(A) The audited financial statements are laid in accordance with Section 340(1)(a) of the Companies Act 2016 for discussion only under Agenda 1. They do not require shareholders’ approval and hence, will not be put for voting.

(1) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company. A member may appoint any person to be his proxy without limitation. If the proxy is not a member, he need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.

(2) A member shall be entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.

(3) Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one 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.

(4) If no name is inserted in the space provided for the name of your proxy, the Chairman of the meeting will act as your proxy. (5) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 10th Floor Menara Hap

Seng, No. 1 & 3 Jalan P. Ramlee, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

(6) If the appointer is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney.

(7) The Date of Record of Depositors for the purpose of determining Members’ entitlement to attend, vote and speak at the Meeting is 16 May 2017.

(8) Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all Resolutions set out in this Notice will be put to vote by way of poll.

(9) Explanatory Notes on

(i) Ordinary Resolutions 3 & 4

Section 230(1) of the CA 2016 provides amongst others, that the fees of the Directors and any benefits payable to the Directors of a listed company shall be approved at a general meeting.

In this respect, the Board wishes to seek shareholders’ approval for the following payments to Directors at the 13th AGM in two (2) separate resolutions as below:

• Resolution3onpaymentofDirectors’FeesofRM108,500forthefinancialyearending31December2017;and • Resolution 4 on payment of Directors’ benefits payable to the Board of the Company and its subsidiaries

amounting to RM21,000 for the financial period from 1 January 2017 until the next AGM. (ii) Ordinary Resolution 6 Authority to Issue Shares Pursuant to Section 75 of the Companies Act, 2016

The proposed Ordinary Resolution 6, if approved, will give flexibility to the Directors of the Company to issue shares up to a maximum of ten per centum (10%) of the issued share capital of the Company at the time of such issuance of shares and for such purposes as they consider would be in the best interest of the Company without having to convene separate general meetings. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

This is the renewal of the mandate obtained from the shareholders at the last Annual General Meeting (“the previous mandate”). The previous mandate was not utilised and no proceeds were raised. The purpose of this general mandate sought will provide flexibility to the Company for any possible fund raising activities but not limited for futher placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of borrowings and/or acquisitions.



(iii) Ordinary Resolutions 7 & 8 Proposed Renewal of Existing and New Shareholders’ Mandate for Recurrent Related Party Transactions of a

Revenue or Trading Nature (“Proposed Shareholders’ Mandate”)

The proposed Ordinary Resolutions 7 & 8 if approved, will provide a renewed and new mandate for the Group to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature pursuant to the provisions of the Listing Requirements of Bursa Malaysia Securities Berhad.

Please refer to the Circular to Shareholders dated 28 April 2017 dispatched together with the Annual Report 2016.

(iv) Ordinary Resolution 9 Proposed Renewal of Authority for the Company to Purchase Its Own Shares of Up to 10% of the Issued and Paid-

Up Share Capital of the Company (“Proposed Renewal of Share Buy-Back Authority”)

The proposed Ordinary Resolution 9, if approved, will provide a renewed mandate for the Company to purchase and/or hold up to ten per centum (10%) of the issued and paid-up share capital of the Company. This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting.

Please refer to the Statement to Shareholders in relation to the Proposed Renewal of Share Buy-Back Authority dated 28 April 2017 for further information.

Statement Accompanying Notice of Annual General Meeting

(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)

Details of individuals who are standing for election as Directors

No individual is seeking election as a Director at the Thirteenth Annual General Meeting of the Company.


Dear Valued Shareholders,

On behalf of the Board of Directors of UMS-Neiken Group Berhad (“UMSNGB” or “the Company”), I am pleased to present the Annual Report and the Annual Audited Financial Statements of the Company for the financial year ended 31 December 2016.

Chairman’s Statement

FINANCIAL REVIEW

For the financial year under review, the Group achieved an increase in revenue and pre-tax profit of RM65.871 million and RM13.442 million respectively compared to the previous financial year of RM60.098 million and pre-tax profit of RM11.901 million. Earnings per share of the Group increased from 12.1 sen in the previous financial year to 12.6 sen for the current financial year.

The performance for FY 2016 had improved mainly due to the performance in the electrical wiring accessories segment, which achieved better profit margin and increased in sales especially for domestic market and higher demand from the export market through our subsidiary in Vietnam. The Group had also a one-off gain on remeasuring to fair value the pre-existing interests of an associate and gain from bargain purchase of a subsidiary in Singapore of RM0.97 million and RM0.57 million respectively.

However, the Group earnings would have performed better had not it been affected by less favourable foreign exchange movement of US Dollar against Ringgit Malaysia for export sales as compared to the previous financial year and weaker performance in home appliance segment.

OPERATIONAL UPDATE

Despite the challenges faced in year 2016, the Group managed to sustain the operation well and intensify sales demand especially in domestic market. The performance was also enhanced due to better profit margin attained.

To cater for the increase in sales demand, the Group also had repositioned the operations of our subsidiary in Vietnam to be able to adapt to the sudden higher than expected demand for export sales.

In broadening our reach to Singapore market, the Group had acquired the remaining shares in an associate Company in Singapore to become a wholly owner subsidiary. With streamlining and realigning its’ operational and marketing strategy, we strongly believe it will contribute positively to the Group in the coming years.

2017 AND BEYOND

Based on Bank Negara Malaysia Annual Report 2016, the Malaysian economy recorded a growth of 4.2% in 2016, despite considerable external and domestic pressures. The global economic landscape was challenging given the subdued demand and low commodity prices. Domestically, the economy continued to face challenges from higher cost of living amid soft employment environment. Concurrently, business and consumer sentiments were affected by global and domestic factors, including the heightened volatility in financial markets and the significant underperformance of the Ringgit.


Dear Valued Shareholders,

On behalf of the Board of Directors of UMS-Neiken Group Berhad (“UMSNGB” or “the Company”), I am pleased to present the Annual Report and the Annual Audited Financial Statements of the Company for the financial year ended 31 December 2016.

Chairman’s Statementcont’d

Global economic activity is projected to improve in 2017, lead by an expansion in domestic demand in the advanced and emerging market economies, boosted in part by expansionary fiscal policies in selected major economies. The outlook would also be supported by a recovery in commodity prices amid the move to reduce oversupply conditions. Nonetheless, the global economy will continue to be subjected to several downside risks. These include a potential retreat from globalisation and free trade in the advanced economies, and uncertainty over the UK and EU negotiations. Anticipation of monetary policy divergence between the US and the other major economies could also result in over adjustment in the foreign exchange markets amidst destabilising capital flows.

With the gradual improvement in global growth, recovery in global commodity prices and the continued growth of domestic demand are expected to collectively support Malaysia’s growth performance. The Malaysian economy is projected to register a sustained growth of 4.3% - 4.8% in 2017.

Foreseeing 2017 still a challenging year especially due to the weakening of Ringgit and uncertainty of global economy, which may affect our cost in material and export demands, the Group remains optimistic and continue to sustain the growth on the back of the satisfactory results achieved in 2016. Further, the Group is still in a robust cash flow and low gearing ratio position, We are also in the midst of exploring new potential investment or business opportunity in to add on another revenue stream to the Group.

DIVIDENDS

The Company paid a single tier interim dividend of 3.0 sen per ordinary share amounting to approximately RM2,358,000 in the previous financial year.

On 22 February 2017, the directors declared a single tier interim dividend of 3.0 sen per ordinary share amounting to approximately RM2,358,000 in respect of the financial year ended 31 December 2016. The interim dividend was paid on 31 March 2017.

CORPORATE SOCIAL RESPONSIBILITY

We are very much aware of our corporate social responsibility (“CSR”) and to this effect we have formed a CSR Committee, which consists of key personnel management across the Group. The role of the Committee is to continuously commit, monitor and make sustainable efforts to improve the CSR objectives. We are happy to note that the Board had approved of a budget of RM200,000 per year for this efforts.

Below are some of the activities undertaken during the year:

(i) Recycling of paper based products and scrap items;(ii) Yearly sponsorship to students, and(iii) Donations to various educational, social and welfare

programmes.

APPRECIATION

On behalf of the Board of Directors and the Company, I would like to express my sincere appreciation and gratitude to our shareholders, stakeholders, my fellow directors, our dedicated management team and all employees of the Group for their unwavering trust, commitment, passion, loyalty, intelligence, support and contribution in 2016 and wish the same can continously bring us to succeed in another challenging year of 2017.

Amirul Baharom Non-Executive Chairman/Independent Non-Executive Director


Revenue RM (’000) Profit for the financial year attributable to the owners of Company RM (’000)

Net Asset Per Share (RM) Basics Earning Per Share (Sen)

2012 2013 2014 2015 2016

80,799

61,98762,000

60,908

2012 2013 2014 2015 2016

6,405

5,351

9,1229,484

9,905

12.60

65,871

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

0.74 0.810.91

1.02

1.12

8.05

6.81

11.61

12.07

2012 2013 2014 2015 2016

RM’000 RM’000 RM’000 RM’000 RM’000

STATEMENT OF PROFIT OR LOSS

Revenue 80,799 61,987 62,000 60,098 65,871

Profit before taxation 8,448 8,308 12,252 11,901 13,442

Profit after taxation 6,405 5,351 9,122 9,487 9,912

Profit for the financial year attributable to owners of the Company 6,405 5,351 9,122 9,484 9,905

Net dividend paid 1,573 1,965 1,965 1,965 2,358

STATEMENT OF FINANCIAL POSITION

Share capital 40,000 40,000 40,000 40,000 40,000

Total Assets 72,030 88,496 89,085 95,450 109,194

Total equity attributable to owners of the Company 59,265 63,547 71,757 79,912 87,785

Cash and bank balances, deposits with financial institutions 13,038 14,145 15,749 24,437 25,371

FINANCIAL RATIOS

Return on shareholder’s equity 10.81% 8.42% 12.71% 11.87% 11.28%

Gross dividend per share (sen) 2.00 2.50 2.50 2.50 3.00

Basic earning per share (sen) 8.0 6.8 11.6 12.1 12.6

Net asset per share (RM) 0.74 0.81 0.91 1.02 1.12

Financial Highlights and Review


Revenue RM (’000) Profit for the financial year attributable to the owners of Company RM (’000)

Net Asset Per Share (RM) Basics Earning Per Share (Sen)

2012 2013 2014 2015 2016

80,799

61,98762,000

60,908

2012 2013 2014 2015 2016

6,405

5,351

9,1229,484

9,905

12.60

65,871

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

0.74 0.810.91

1.02

1.12

8.05

6.81

11.61

12.07

Management Discussion and Analysis

FINANCIAL HIGHLIGHTS AND REVIEW

Revenue

The Group achieved a revenue of RM65.871m for the financial year ended 31 December 2016, an increase of 10% as compared to RM60.098m in the previous financial year. It was mainly due to the remarkable performance in the electrical accessories segment for both domestic market and export market, which is the core business of the Group.

Cost of Sales

Total cost of sales for the Group for the current financial year was RM46.138m, an increase of 11% as compared to RM41.663m in the previous financial year, which was in proportion with the higher revenue for the financial year.

Gross profit margin recorded a marginal decrease to 30%, from 31% in the previous financial year, mainly due to the higher inventory write-down amounted to an approximately RM1.126m, of which its 53% arose from home appliance segment and Singapore subsidiary.

For material and imported goods, it also generated upwards cost pressure due to the weakening of MYR against USD and commodity cost increase. For the financial year, it was manageable and was mitigated by the strong performance in export sales.

Other Income

On 15 September 2016, the Group acquired the remaining shares of an associate company in Singapore and it incurred a one-off gain on remeasuring to fair value the pre-existing interests of an associate and gain from bargain purchase, at approximately RM0.972m and RM0.571m respectively. This is mainly due to the lower purchase offer on an investment property of the acquired subsidiary.

However, the above was negated mainly by the lower unrealised foreign exchange gain at RM0.354m from RM2.031m in the previous financial year.

Expenses

Selling & Distribution Cost

Our sales and distribution costs had reduced significantly due to the lower carriage cost and commission incurred in line of lower revenue of home appliance segment and cancellation of yearly sales incentive.

Administrative Cost

As compared to previous financial year, administrative cost increased by 5% (or RM0.343m). This is mainly due to higher professional cost in relation to the acquisition of the company as aforementioned in Singapore and its inclusion of administration cost of approximately RM0.487m.

Other Operating Cost

Other operating costs had also reduced by 11% (or RM0.156m) compared to last financial year as we have made allowances for impairment in trade receivables of approximately RM0.129m in the previous financial year.

Finance cost

The financing cost remains the same for the financial year compared to the previous year even though we have taken into account the financing cost of the newly acquired subsidiary in Singapore.


Management Discussion and Analysiscont’d

Taxation

The Group’s effective tax rate for the year to date is higher than the statutory rate, mainly due to the previous year’s higher non-taxable gain became taxable in the current financial year. This is especially for unrealised foreign exchange gain for Malaysia manufacturing subsidiary, non-tax deductibles of one-off gain arising from remeasuring to fair value the pre-existing interests of an associate and gain from bargain purchase in relation to acquisition of Singapore company, Further it is compounded of the non-availability of group relief for losses suffered by our loss making subsidiary that is engaged in trading of home appliances. Our Vietnam subsidiary nevertheless, enjoyed a lower tax rate of 7.5% by virtue of the tax holiday exemption accorded by them.

Profit Attributable to Equity Shareholders of the Company

Profits after tax attributable to owners of the Company increased by RM0.421m, from RM9.484m in the previous financial year to RM9.905m in the current financial year. Earning per share also increased from 12.07 cents to 12.60 cents accordingly.

Net Assets Per Share

Net assets per share for the current financial year improved to RM1.12 as compared to RM1.02 in the previous financial year.

Liquidity, Gearing and Capital Resources

The Group cash position increased from RM23.243m to RM24.134m. This however excludes the placement of fixed deposit of RM1.237m, which is used as collateral for banking facility purposes. Net cash flow from operations in current financial year was RM6.424m, of which approximately RM2.266m used for settlement of bank loan, RM2.657m for capital expenditure investment, RM2.358m for dividend payout and RM3.623 for tax payments.

The gearing level of the Group, increased to 0.12 times from 0.07 times in the previous financial year, upon consolidated with acquired Singapore company. The wholly owned subsidiary has a term loan financing of approximately RM5.608m for two factory buildings.

DIVIDEND PAYOUT

The Board of Directors has approved the interim single tier dividend of 3.0 sen per ordinary share for the current financial year, and it will paid on 31 Mar 2017.

The Group has no dividend payout policy yet, however, such declaration or payment will determined upon, amongst others, earnings, financial condition, capital commitments, distribution reserves and future prospects to be considered by the Board.

CORPORATE OBJECTIVES AND STRATEGIES

First and foremost, as a responsible business entity, our main objective is to maximise the shareholders’ value. In the pursuit of this objective, the Group will be focusing on these 3 key factors:

Quality and Innovative Products

Our key emphasis on our electrical products is on the quality and safety aspect. This is done through stringent selection of vendors and suppliers who can provide quality materials without compromising on costs and design. In order to support this, we have adopted the ISO9001 manufacturing process that ensures all product quality processes to be sustained in orderly manner.


Management Discussion and Analysiscont’d

Customer Satisfaction

Another key focal point for the Group is to maintain long-term relationship with our customers. In order to achieve this, we are consistently mindful to provide prompt delivery, customer care and efficient support. Close coordination between our production team, forwarding agencies and transport companies is vital.

Competitive Pricing Strategy

The other factor is the competitive pricing strategy being practiced. We strive to keep our manufacturing costs low across our subsidiaries and this have resulted in our ability to offer competitive pricing to our customers. We will continually look at ways of improvements in our processes and identify areas where we can maximise our production capabilities and lowering our productions costs.

That said, over and above improving our margins for our current products as aforementioned, we are also constantly looking at different revenue streams, which can further boost the group earnings and ultimately better returns to the shareholders.

BUSINESS OPERATIONS REVIEW

The Group currently operates in 2 manufacturing plants, one in Malaysia and the other is in Vietnam.

Malaysia Operation

The products from the Malaysian manufacturing facility are largely targeted for domestic market. However in recent years, due to demand from the export market, which constitute 33% of total productions in the last financial year, the focus of the production has also shifted to cater for the export market.

Further, our R&D center is also based in Malaysian facility and any significant changes to the technology and design of our products are being done in Malaysia.

Vietnam Operation

The plant Vietnam is designed for bulk quantity orders and caters for lower margin products. These products are predominantly aimed for export market. The plant also acts to support the Malaysian operations in case of any sudden increase in demand in Malaysia. Currently the utilization rate of the plant is only hovering between 30% - 40% and we are planning to ramp it up to 50% - 60% in the next financial year.

OUTLOOK FOR FUTURE PROSPECTS

The Group is mindful that the global economy environment is volatile and full with uncertainty. Further with the fluctuation in commodity prices as well as the weakening of Ringgit, which may increase the costs of material and imported of goods, may add pressures to our bottom line. The government policies on foreign workers and the levy imposed will also create uncertainty amongst the manufacturers.

Despite the challenges, the Group will remain optimistic and continuously intensify the domestic sales growth year on year. For export market meanwhile, the Group is looking into setting up a manufacturing plants in Saudi Arabia and Indonesia in order broaden our reach into the Middle East and Indonesia respectively.

For newly acquired Singapore company, which has a track record of more than 10 years in Singapore, we are confident after some adjustments and realignment of its sales strategy, it will contribute positively to the Group in the coming years. We would focus in expanding its customer base and sales performance by introducing more range of products as well as partnership with some local agencies.


INDEPENDENT NON-EXECUTIVE CHAIRMAN

AMIRUL AZHAR BIN BAHAROM, Malaysian, male, aged 44 En Amirul Azhar bin Baharom was appointed to the Board on 13 April 2015 as an Independent Non-Executive Director and subsequently, he was redesignated as the Independent Non-Executive Chairman on 1 June 2016. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee.

He holds a LLB Honours from the Staffordshire University, United Kingdom. He began his career as a Research Analyst with Cazenove & Co. and had been in the financial services industry for a number of years where he was attached with the Securities Commission, BDO Capital Consultants Sdn. Bhd. and KAF Fund Management Sdn. Bhd. He had also served as the Group Managing Director and CEO of Vastalux Energy Berhad. Currently, he is the Deputy Chief Executive of Reliance Pacific Berhad.

Encik Amirul Baharom also sits on the Board of Spring Gallery Berhad, Tecnic Group Berhad and several other private limited companies.

He has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2016. He does not have any family relationship with any Director and/or major shareholder of the Company and has no conflict of interest with the Company. He does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2016.

MANAGING DIRECTOR

CHENG WONG, Malaysian, male, aged 67

Mr Cheng Wong was appointed to the Board on 20 October 2005 as the Executive Chairman cum Managing Director and subsequently, he has relinquished his position as the Executive Chairman on 1 June 2016 and remains as Managing Director of the Company. Mr Cheng started his career with Seng Electric Co. (“Seng Electric”) as an electrical wholesaler and distributor. He subsequently became a partner of Seng Electric.

In 1976, Seng Electric was converted to a private limited company under the name Seng Electric Co (M) Sdn Bhd (“SECSB”). Mr Cheng was appointed as the Managing Director of SECSB whose primary responsibilities were in marketing and financial management of SECSB. His capacity as the Managing Director of SECSB has given him invaluable experience in the marketing of electrical products in the Malaysian market.

In 1980, Mr Cheng is one of the founder members of United MS Electrical Mfg. (M) Sdn Bhd ("UMSE"), a subsidiary of UMS-Neiken Group Berhad. He took on the role of Managing Director in UMSE and his main responsibilities include overseeing the financial planning, corporate matters, product diversification and supervision of marketing activities for both domestic and foreign markets.

Mr Cheng has over 35 years of experience in the electrical wiring accessories market.

He also sits on the board of all subsidiaries of UMS-Neiken Group Berhad and does not hold any directorships in other listed companies.

He has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2016. He is the uncle of Mr Dee Kok Yong, the Executive Director and Ms Cheng Siow Chun, the Independent Non-Executive Director of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2016. The particulars of his shareholdings are set out on page 120 of this Annual Report.

EXECUTIVE DIRECTOR

DEE KOK YONG, Malaysian, male, aged 41 Dee Kok Yong was appointed to the Board on 31 October 2005. He is the Chairman of the Risk Management Committee.

Mr Dee obtained his Advanced Certificate in Marketing issued by the Chartered Institute of Marketing from Systematic College, Malaysia in year 2000.

Mr Dee joined Aves Technology Sdn Bhd as a Marketing Executive before moving on to Tanigra Marketing Sdn Bhd and served there from 1997 to 1998 as a Sales Executive where he gain experience in the sales and marketing on building materials from the construction industry. He joined United MS Cables Mfg. (M) Sdn Bhd as a Marketing Executive where he was in charge of sales in the northern and central regions of Malaysia. In year 2000, he joined UMSE as Marketing Executive in the Export division and was later promoted to the role of Marketing Manager in year 2003. Following his appointment as a director of UMSE on 1 March 2008, he was re-designated as the General Manager of UMSE.

Mr Dee also sits on the Board of Neiken Electric (S) Pte Ltd and UNS-Neiken Industry Sdn Bhd, the subsidiaries of UMS-Neiken Group Berhad and does not hold any directorships in other listed companies.

He has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2016. He is the nephew of Mr Cheng Wong, the Managing Director of the Company. He has no conflict of interest with the Company and has not been convicted of any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2016. The particulars of his shareholdings are set out on page 120 of this Annual Report.

INDEPENDENT NON-EXECUTIVE DIRECTOR

YAU MING TECK, Malaysian, male, aged 46

Mr Yau Ming Teck was appointed to the Board on 13 April 2015 as an Independent Non-Executive Director. He is the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee.

Mr Yau graduated with an Economics Degree from Monash University, Melbourne in 1993. Currently, he is a qualified Certified Practicing Accountant (CPA) of the CPA Australia and a Chartered Accountant of Malaysian Institute of Accountants. He is a skilled financial expert with skills predominantly in the area of corporate finance, financial management and strategic planning honed for twenty-one years.

He started his career in Coopers & Lybrand in the Insolvency & Corporate Division and remained there for three years. Whilst with Coopers, he handled a wide portfolio of clients with diverse background and industries.

In 1997, he joined a company listed on the Main Board of Bursa Securities as a Corporate Finance Manager and last served as a Financial Controller of another company listed on the Main Board of Bursa Securities in 2003. During his tenure in the public listed companies, his main functions were taking charge of various corporate exercises and their implementations. In 2004, he embarked on his private business practice in corporate and financial advisory in the area of corporate finance, mergers and acquisitions and restructuring with the main focus of the business in the People’s Republic of China, Singapore and Australia.

Mr Yau currently sits on the board of HLT Global Berhad as an independent Non-Executive Director.


Directors’ Profiles






MANAGING DIRECTOR








EXECUTIVE DIRECTOR




















MANAGING DIRECTOR








EXECUTIVE DIRECTOR



















MANAGING DIRECTOR








EXECUTIVE DIRECTOR














Directors’ Profilescont’d



CHENG SIOW CHUN, Malaysian, female, aged 36 Cheng Siow Chun was appointed to the Board on 17 September 2008 as Non-Independent Non-Executive Director and subsequently, she was redesignated as an Independent Non-Executive Director on 1 June 2016. She is a member of the Audit Committee, Nomination Committee and Remuneration Committee.

Ms Cheng holds a Master of International Journalism and a Degree of Mass Communications from Liverpool John Moores University, UK.

Ms Cheng joined RSP Architects Sdn. Bhd. as Public Relations & Communications Manager on November 2016. Prior to joining this company, Ms. Cheng served six years in the Public Relations & Communications and Marketing divisions of OSK Property Holidngs Berhad.

She had served as a Teaching Assistant at Liverpool John Moores University and she was also a Lecturer at Tunku Abdul Rahman University College Kuala Lumpur from year 2008 to year 2010. She does not hold any directorships in other listed companies.

Ms Cheng has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2016. She is the niece of Mr Cheng Wong, the Managing Director of the Company. She has no conflict of interest with the Company and has not been convicted of any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on her by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2016.

GROUP ACCOUNTANT

CHEAN KIM WEI, Malaysian, male, aged 39 Mr Chean Kim Wei joined UMSE as an Accountant on 16 July 2007 and subsequently promoted as Group Accountant to manage the UMSNGB group consolidation, tax planning and administration, corporate banking and financial related aspects until present.

Mr Chean graduated with an ACCA (Association of Chartered Certified Accountants) on 2 February 2002 and subsequently, qualified as a CA (Chartered Accountant) of Malaysian Institution of Accountants (MIA) on 17 July 2004 and FCCA (Fellow Chartered Certified Accountant) on 15 August 2008.

Prior joining UMSE, he has extended his requisite skills and knowledge by involved into statutory company secretarial related works, audit, taxation, treasury management, human resource and office administration, from different industry of non-listed SME companies. Mr Chean does hold any directorships in other listed companies. He does not have any family relationship with any Director and/ or major shareholder of the Company and has no conflict of interest with the Company. He does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2016.

Directors’ Profilescont’d



CHENG SIOW CHUN, Malaysian, female, aged 36 Cheng Siow Chun was appointed to the Board on 17 September 2008 as Non-Independent Non-Executive Director and subsequently, she was redesignated as an Independent Non-Executive Director on 1 June 2016. She is a member of the Audit Committee, Nomination Committee and Remuneration Committee.

Ms Cheng holds a Master of International Journalism and a Degree of Mass Communications from Liverpool John Moores University, UK.

Ms Cheng joined RSP Architects Sdn. Bhd. as Public Relations & Communications Manager on November 2016. Prior to joining this company, Ms. Cheng served six years in the Public Relations & Communications and Marketing divisions of OSK Property Holidngs Berhad.

She had served as a Teaching Assistant at Liverpool John Moores University and she was also a Lecturer at Tunku Abdul Rahman University College Kuala Lumpur from year 2008 to year 2010. She does not hold any directorships in other listed companies.

Ms Cheng has attended all Board of Directors’ Meetings held during the financial year ended 31 December 2016. She is the niece of Mr Cheng Wong, the Managing Director of the Company. She has no conflict of interest with the Company and has not been convicted of any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on her by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2016.

GROUP ACCOUNTANT

CHEAN KIM WEI, Malaysian, male, aged 39 Mr Chean Kim Wei joined UMSE as an Accountant on 16 July 2007 and subsequently promoted as Group Accountant to manage the UMSNGB group consolidation, tax planning and administration, corporate banking and financial related aspects until present.

Mr Chean graduated with an ACCA (Association of Chartered Certified Accountants) on 2 February 2002 and subsequently, qualified as a CA (Chartered Accountant) of Malaysian Institution of Accountants (MIA) on 17 July 2004 and FCCA (Fellow Chartered Certified Accountant) on 15 August 2008.

Prior joining UMSE, he has extended his requisite skills and knowledge by involved into statutory company secretarial related works, audit, taxation, treasury management, human resource and office administration, from different industry of non-listed SME companies. Mr Chean does hold any directorships in other listed companies. He does not have any family relationship with any Director and/ or major shareholder of the Company and has no conflict of interest with the Company. He does not have any convictions for any offences within the past five (5) years, other than traffic offences, if any. There were no sanctions and/or penalties imposed on him by any relevant regulatory bodies, which were material and made public during the financial year ended 31 December 2016.

Profile of Key Senior Management


Audit Committee Report

The Board of Directors of UMS-Neiken Group Berhad (“the Board”) is pleased to present the Audit Committee (“AC”) Report for the financial year ended 31 December 2016.

COMPOSITION AND MEETINGS

As at the date of this Annual Report, the AC comprises three (3) members as follows:

Chairman Yau Ming Teck - Independent Non-Executive Director

MembersAmirul Azhar Bin Baharom - Independent Non-Executive DirectorCheng Siow Chun - Independent Non-Executive Director

During the financial year ended 31 December 2016, the AC held a total of five (5) meetings and the details of attendance of each AC Member are as follows:

Name of Director Attendance

Yau Ming Teck 5/5

Amirul Azhar Bin Baharom 5/5

Cheng Siow Chun 5/5

The AC Chairman, Mr Yau Ming Teck, is a member of the Malaysian Institute of Accountants (MIA) and accordingly, the Company complies with paragraph 15.09(1)(c)(i) of MMLR.

Details of the members of the AC are contained in the Profile of Directors as set out on pages 14 to 16 of this Annual Report.

The Senior Management, external auditors and persons carrying out the internal audit function or activity, or both are invited to attend the meeting where considered necessary. The Company Secretary is responsible for distributing the agenda of the meetings and relevant information to the AC members well in advance of their meetings, and recording the proceedings of the AC meetings.

The Board reviews the terms of office of the AC members and assesses the performance of the AC and its members through an annual Board Committee effectiveness evaluation. The Board is satisfied that the AC and its members discharged their functions, duties and responsibilities in accordance with the AC’s Terms of Reference (TOR), supporting the Board in ensuring the Group upholds appropriate CG standards.

SUMMARY OF ACTIVITIES OF THE AC

During the financial year ended 31 December 2016, the AC has carried out the following works in accordance with its terms of reference to meet its responsibilities:

(a) reviewed the unaudited quarterly reports on the consolidated results of the Group to ensure adherence to the regulatory reporting requirements and appropriate resolution prior to submission to the Board of Directors for approval.

(b) reviewed the annual audited financial statements of the Company and of the Group prior to the submission to the Board of Directors for consideration and approval.

(c) discussed and reviewed the audit plan of the external auditors in terms of their scope of audit prior to their commencement of their annual audit.

(d) reviewed the recurrent related party transactions to ensure that they were not detrimental to the interests of the minority shareholder every quarter;


Audit Committee Reportcont’d

SUMMARY OF ACTIVITIES OF THE AC (cont’d)

(e) discussed and reviewed with the external auditors, the applicability and the impact of the new accounting standards and new financial reporting regime issued by the Malaysian Accounting Standards Board;

(f) reviewed the internal audit report which outlined the recommendations towards correcting areas of weaknesses and ensured that there were management action plans established for the implementation of the recommendations of the persons carrying out the internal audit function or activity.

(g) reviewed the audit reports from the external auditors in relation to audit and accounting matters arising from the statutory audit; matters arising from the audit of the Group in meetings with the external auditors without the presence of the executive Board members and management.

(h) discussed and reviewed the re-appointment of external auditors and their audit fees, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit, before the recommendation to the Board of Directors for approval.

(i) met twice with the external auditors without the presence of the executive directors and management in the AC meetings held on 24 February 2016 and 23 November 2016 to enquire on significant findings, fraud consideration, if any, and/ or management cooperation level; and

(j) reviewed and confirmed the minutes of the AC meetings.

SUMMARY OF WORK OF THE INTERNAL AUDIT FUNCTION

The Company recognised that an internal audit function is essential to ensuring the effectiveness of the Group’s systems of internal control and is an integral part of the risk management process. The internal audit function for the Group has been outsourced to Audex Governance Sdn Bhd who conducts an independent review of the Group’s key processes and control system in place.

The internal audit activities have been carried out according to the internal audit plan that was approved by the AC. The Board had via the AC evaluated their effectiveness by reviewing the results of its works in AC meetings.

A summary of the works of the internal audit function for the financial year ended 31 December 2016 is as follows:-

(a) carried out sampling test on the Group’s compliance with its policies and procedures as well as relevant rules and regulations;

(b) evaluation of the Group’s adequacy and effectiveness of the internal control review covering the Inventory

Management, Procurement, Research & Development and Financial Statement Close Process as per the Internal Audit Plan;

(c) review of the accounting records;

(d) presentation of audit findings and recommendation of corrective actions to be taken by Management in the quarterly AC meetings; and

(e) conducted follow-up audits to ensure corrective actions had been taken.

The internal audit function shall be independent of the activities or operation it audits and reports directly to the AC on the audit of the Group’s operating units, reviewing the units’ compliance to internal control procedures, highlighting weaknesses and making appropriate recommendations for improvement.

The Group had incurred a total amount of RM43,309.37 for the internal audit function during the financial year ended 31 December 2016.

This report is made in accordance with the resolution of the Board of Directors dated 5 April 2017.


Statement on Corporate Governance

The Board of Directors of UMS-Neiken Group Berhad (“the Company” or “UMSNGB”) is committed to ensure the corporate governance adopted by the Company is in line with the principles set out in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) in building and overseeing a responsible and ethical organization committed to enhancing long-term, sustainable shareholder value. The Board further acknowledges the recommendations set out in MCCG 2012 and strives to continuously evaluate the status of practices and the adopted alternatives.

The Board is pleased to provide the following statements that the best practices of good corporate governance having regard to the Recommendations stated under each Principle in the MCCG 2012 have generally been practiced within the Group throughout the financial year ended 31 December 2016 unless otherwise stated.

1.0 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

1.1 Clear functions of the Board and those delegated to Management

The Board is responsible for formulating and reviewing the strategic plans and key policies of the Company, and charting the course of the Group’s business operations whilst overseeing the Management’s performance, risk assessment and controls over business operations.

The Board delegates and confers some of its authorities and discretion on the Chairman, Executive Directors, and Management as well as on properly constituted Board Committees comprising mainly/exclusively Non-Executive Directors.

There is a clear division of responsibilities between the Chairman of the Board and the Managing Director

(“MD”). The Chairman leads strategic planning at the Board level, while the Executive Director, led by the MD, is responsible for the implementation of the policies laid down and executive decision-making.

The role of Management is to support the Executive Director and implement the smooth general operations and financial business of the Company, in accordance with the delegated authority of the Board. There is presently a Board Charter which sets out briefly the role, structure and functions as well as responsibilities of the Board. There is division of responsibilities amongst the directors to ensure a balance of authority and power as well as to enhance accountability of each director.

The Board Committees are made up of the Audit Committee (“AC”), Nomination Committee (“NC”), Remuneration Committee (“RC”) and Risk Management Committee (“RMC”); and are entrusted with specific responsibilities to oversee the Group’s affairs, with authority to act on behalf of the Board in accordance with their respective Terms of Reference. At each Board meeting, minutes of the Board Committee meetings are presented to keep the Board informed. The Chairman of the relevant Board Committees also reports to the Board on key issues deliberated by the Board Committees at their respective meetings.

In general, the Non-Executive Directors are independent of the Management with their roles to constructively steer and monitor the success of the Management in delivering the approved targets and business plans set by the Board. They have free and open contact with Management at all levels, and they engage with the external and internal auditors to address matters concerning Management and provide an independent judgement in the best interest of the Group.

Matters requiring the Board’s approval include the annual business plan and budget, capital management and investment policies, authority limits/levels, risk management policies, declaration of dividends, business continuity plan, issuance of new securities, business restructuring, expenditure above a certain limit, material acquisitions and disposition of assets.


Statement on Corporate Governancecont’d

1.0 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (cont’d)

1.2 Clear roles and responsibilities in discharging fiduciary and leadership functions

The Board has primary responsibility for the governance and management of the Group and fiduciary responsibility for the financial health of the Group. The Group acknowledges the importance of having an effective Board to lead and control the Group. The principal responsibilities of the Board include:

(a) Review and adopt the Company’s strategic plans

The Board has in place a strategy planning process, whereby the MD presents and proposes to the Board and the Management’s business plans for the ensuing year for the Board’s review and approval. The Board will deliberate both the Management and its own perspectives, and challenge the Management’s views and assumptions to ensure the best outcome.

(b) Oversee the conduct of the Company’s business

The MD is responsible for the day-to-day management of the business and operations of the Group in respect of both its regulatory and commercial functions. He is supported by the Management and the Group Accountant.

The Management’s performance, under the leadership of the MD, is assessed by the Board through monitoring the adherence in delivering the approved targets and business plans against the performance of the Group.

(c) Identify principal risks and ensuring the implementation of appropriate internal controls and mitigation measures

The AC, through the internal audit function, advises the Board on areas of high risk faced by the Group and the adequacy of compliance and control throughout the organisation. The AC reviews the action plan implemented and makes relevant recommendations to the Board to manage risks.

(d) Succession Planning

The Board has entrusted the NC and RC with the responsibilities to review candidates for the Board and key management positions and to determine remuneration packages for these appointments, as well as to formulate nomination, selection, remuneration and succession policies for the Group.

(e) Oversee the development and implementation of a shareholder communications policy for the Company

The Company strongly believes that effective and timely communication is essential in maintaining good relations with the shareholders, investors and investment community.

In addition to the above, shareholders and investors can make inquiries about investor relations matters with designated management personnel directly responsible for investor relations matters via dedicated e-mail addresses available on the corporate website.

(f) Review the adequacy and integrity of management information and internal control system of the Company

The Board is ultimately responsible for the adequacy and integrity of the Company’s internal control system. Details pertaining to the Company’s internal control system and the reviews of its effectiveness are set out in the Statement on Risk Management and Internal Control of this Annual Report.



1.3 Ethical standards through Code of Conduct

The Board is guided by the Company’s Code of Conduct (“the Code”) for Directors and Employees in discharging its oversight role effectively. The Code requires all Directors to observe high ethical business standards, and to apply these values to all aspects of the Group’s business and professional practice and act in good faith in the best interests of the Group and its shareholders.

A summary of the Code has been published on the corporate website.

1.4 Strategies promoting sustainability

The Board shall endeavour to formalise the Company’s strategies on promoting sustainability and publish the same on the corporate website.

1.5 Access to information and advice

The Directors have individual and independent access to the advice and dedicated support services of the company secretaries in ensuring the effective functioning of the Board. The Directors may seek advice from Management on issues under their respective purview. The Directors may also interact directly with Management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns from them.

In addition, the Board may seek independent professional advice at the Company’s expense on specific issues to enable it to discharge its duties in relation to matters being deliberated.

1.6 Qualified and competent company secretaries

The Board is regularly updated and apprised by the company secretaries on new regulation issued by the regulatory authorities. The company secretaries also serve notice to the Directors and Principal Officers to notify them of closed periods for trading in UMSNGB shares.

The company secretaries attend and ensure that all Board meetings are properly convened and that accurate and proper records of the proceedings and resolutions passed are taken and maintained in the statutory register of the Company.

The company secretaries works closely with Management to ensure that there are timely and appropriate information flows within and to the Board and Board Committees.

During the year under review and up to the date of this report, the Company Secretaries had facilitated the Board on the following matters:-

i. Organised and attended all Board and Board Committee meetings and ensured that meeting procedures are followed and deliberations at such meetings are well minuted;

ii. Prepared meeting agendas and documents required for the shareholders’ meetings; iii. Released announcements and submitted annual financial statements and annual report to Bursa

Securities on a timely manner; iv. Updated the Board on the amendments to the Listing Requirements and guidelines, and brought to

the attention of the Board all circulars from Bursa Securities; v. Highlighted to the Board all compliance and governance issues and advised the Board on achieving

highest standard of corporate governance in accordance to the recommendations in the MCCG 2012; and

vi. Recommended available training programmes for the Directors to attend.

The Board is satisfied with the performance of the Company Secretaries in assisting them to discharge their duties.




1.7 Board Charter

The Board Charter serves as a referencing point for the Board’s activities to enable the Directors to carry out their stewardship role and discharge their fiduciary duties towards the Company. It also seeks to include a formal schedule of matters reserved for the deliberation and decision of the Board to drive the control and direction of the Company, which will be reviewed periodically to ensure its relevance and compliance. The Board Charter is available on the Company’s website at www.ums-neiken.com.

The Board adopted its Board Charter on 25 April 2013. The Board Charter is subject to review by the Board as and when necessary to ensure it complies with all applicable laws, rules and regulations of the regulators and remain consistent with the policies and procedures of the Board.

2.0 STRENGTHEN COMPOSITION

2.1 Nomination Committee (NC)

The NC was established on 27 April 2006 and comprises exclusively of Independent Non-Executive Directors.

Mr Yau Ming Teck was appointed as the Chairman of the NC since 2015. The Board noted that the MCCG 2012 recommends that the Chairman of the NC should be a Senior Independent Non-Executive Director identified by the Board. As such, the Board will identify/appoint a Senior Independent Director for the Company as it deems necessary.

The members of the Nomination Committee during the financial year are as follows:-

Chairman : Mr Yau Ming Teck Member : Encik Amirul Azhar Bin Baharom Member : Ms Cheng Siow Chun

The NC is guided by specific terms of reference and the NC’s duties are as follows:

• To recommend candidates for all directorships to be filled by shareholders or the Board; • TorecommendcandidatestofilltheseatsonBoardCommittees; • ToassessthecontributionofeachindividualDirector; • To review annually the Board structure, size, composition and the balance between Executive

Directors, Non-Executive Directors and Independent Directors to ensure that the Board has the appropriate mix of skills and experience including core competencies which Directors should bring to the Board and other qualities to function effectively and efficiently;

• To take the necessary steps to ensure that women candidates are sought as part of the Company’srecruitment exercise to facilitate an on-going implementation of its gender diversity policy;

• ToreviewannuallytheindependenceofIndependentDirectors; • Toensureexistenceofanappropriate frameworkandsuccessionplanfor theExecutiveDirectorand

senior management of the Company; • To identifysuitableorientation,educationalandtrainingprogrammesforcontinuousdevelopmentof

Directors; • To establish and implement processes for assessing the effectiveness of the Board as a whole, the

Committees of the Board and assessing the contribution of each Director; and • ToconsiderothermattersasreferredtotheCommitteebytheBoard.

During the financial year ended 31 December 2016, the NC had two (2) meetings and was attended by all its members.



2.0 STRENGTHEN COMPOSITION (cont’d)

2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors

Board appointment process

The NC is responsible for identifying and recommending suitable candidates for Board membership and also for assessing the performance of the Directors on an on-going basis. The Board will have the ultimate responsibility and final decision on the appointment. This process shall ensure that the Board membership accurately reflects the long-term strategic direction and needs of the Company while it determines the skills matrix needed to support the strategic direction and needs of the Company.

Management shall then engage broadly to develop a pool of interested potential candidates meeting the skills, expertise, personal qualities and diversity requirements for both the Board and the Committee appointments.

The NC evaluates and matches the criteria of the candidate, and will consider diversity, including gender, where appropriate, and recommends to the Board for appointment.

Consideration will be given to those individuals possessing the identified skill, talent and experience.

The NC will contact those persons identified to determine the interest in serving the Company. This communication will ensure that prospective Board members have clarity regarding the nominating process as well as Director/Board profiles, roles and responsibilities, expectations of time commitments and other information as required.

In making the selection, the Board is assisted by the NC to consider the following aspects:

n Probity, personal integrity and reputation – the person must have the personal qualities such as honesty, integrity, diligence and independence of mind and fairness.

n Competence and capability – the person must have the necessary skills, ability and commitment to carry out the role.

Re-election of Directors

Any Director appointed during the year is required under the Company’s Articles of Association to retire and seek re-election by the shareholders at the following Annual General Meeting (“AGM”) immediately after their appointment. The Articles also require that one-third of the Directors including the Managing Director retire by rotation and seek re-election at each AGM and that each Director shall submit himself/herself for re-election at least once in every three (3) years.

The Directors to retire from office at the forthcoming AGM are Mr Yau Ming Teck and Encik Amirul Azhar Bin Baharom.

The nomination of Directors for purpose of re-election shall also be determined and thereafter recommended by the NC for approval by the Board. In nominating Directors for re-election, the NC is guided by the provisions of the Articles of Association of the Company, the MCCG 2012 and the Listing Requirements.

Annual Assessment of Directors

The Board is tasked to review and evaluate its own performance and the performance of its Committees on an annual basis. The performance evaluation comprises a Board Assessment, an Individual Director Self-Assessment and an Assessment of Independence of Independent Directors.

The assessment of the Board is based on specific criteria, covering areas such as the Board structure, Board operations, roles and responsibilities of the Board, the Board Committees and the Chairman’s role and responsibilities.




2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors (cont’d)

Annual Assessment of Directors (cont’d)

For Individual Director Self-Assessment, the assessment criteria include contribution to interaction, quality of inputs, and understanding of role. The results of the assessment would form the basis of the NC’s recommendation to the Board for the re-election of Directors at the next AGM.

During the financial year under review, the NC had reviewed:-

(a) the effectiveness of the board as a whole and of the committees of the Board and the contribution and performance of each individual Director;

(b) the independence of the independent Directors; and (c) the Directors who are subject to retirement by rotation at the forthcoming AGM, and are eligible for

re-election.

Diversity policy

The Board acknowledges the need to enhance Board diversity, as it is essential to the functioning of the Board and indicates good governance practices. The Board endeavours to undertake diversification in terms of experience, skills, expertise, competencies, gender, ethnicity and age to enable the Company to maximise its business and governance performance.

The Board is presently of the view that there is no necessity yet to fix a specific gender diversity policy as the Board has four (4) male and one (1) female directors. The appointment of any Director(s) should be based on their merit, qualification and working experience.

The current diversity of the Board is as follows:

Gender Number of Directors

Male 4

Female 1

Total 5

Age Number of Directors

< 20 years -

20-29 years -

30-39 years 1

40-49 years 3

50-59 years -

60 years and above 1

Total 5

Ethnicity Number of Directors

Bumiputera 1

Chinese 4

Indian -

Others -

Total 5




2.3 Remuneration Policies and Procedures

Remuneration Committee (RC)

The members of the RC consist of all independent Non-Executive Directors and meet as and when required. The principal function of the RC is to assist the Board in their responsibilities in assessing the remuneration packages of the Executive Directors.

The members of the RC during the financial year are as follows:-

Chairman : Mr Yau Ming Teck Member : Encik Amirul Azhar Bin Baharom Member : Ms Cheng Siow Chun

During the financial year ended 31 December 2016, the RC had one (1) meeting and was attended by all its members.

The RC and the Board ensure that the Company’s remuneration policy remains supportive of the Company’s corporate objectives and is aligned with the interest of shareholders, and that the remuneration packages of Directors and key Senior Management Officers are sufficiently attractive to attract and to retain persons of high calibre.

The RC is tasked to review annually the performance of the Executive Director and submits recommendations to the Board on specific adjustments in remuneration and/or reward payments that reflect their respective contributions for the year, and which depend on the performance of the Group, achievement of the goals and/or quantified organisational targets as well as strategic initiatives set at the beginning of each year.

. The Board as a whole determines the remuneration of Non-Executive Directors and recommends the same

for shareholders’ approval.

The remuneration package of the Executive Director consists of monthly salary, bonus and benefits-in-kind such as company car and the benefit of Directors and Officers Liability Insurance in respect of any liabilities arising from acts committed in their capacity as Directors and Officers of the Company. The Directors and principal officers are required to contribute jointly towards the premium of the said policy.

Details of the aggregate remuneration of Directors (including benefits-in-kind) for the financial year 2016 are as follows:

Group Company

Executive Director

(RM’000)

Non-Executive Director

(RM’000)

Executive Director

(RM’000)

Non-Executive Director

(RM’000)

Salaries, Bonus, Others 2,079 - - -

Fees - 106 - 106

Other Emoluments - 15 - 15

Benefits-in-kind 254 - - -

Total 2,333 121 - 121




2.3 Remuneration Policies and Procedures (cont’d)

Remuneration Committee (RC) (cont’d)

The number of Directors whose remuneration falls within the following bands is tabulated as below:

Group Company

Remuneration Band (RM)Executive

DirectorNon-Executive

DirectorExecutive

DirectorNon-Executive

Director

50,000 and below - 3 - 3

150,001 – 350,000 1 - - -

350,001 – 400,000 - - - -

1,750,001 – 2,000,000 1 - - -

3.0 REINFORCE INDEPENDENCE 3.1 Annual Assessment of Independence

The Board recognises that it is important to assess the independence of its Independent Directors. An “Independent Director” must satisfy the definition of “independent director” set out in Chapter 1.01 and Practice Note 13 of the Listing Requirements.

The Board, through the NC, shall assess the independence of Independent Directors annually. The criteria for assessing the independence of an Independent Director include the relationship between the Independent Director and the Company and his involvement in any significant transaction with the Company.

3.2 Tenure of Independent Directors

The Board has adopted a nine-year policy for Independent Non-Executive Directors. An Independent Director may continue to serve on the Board subject to the director’s re-designation as a Non-Independent Director. Otherwise, the Board will justify and seek shareholders’ approval at the AGM in the event it retains the director as an Independent Director.

None of the Independent non-Executive Directors served more than 9 years in the Company.

3.3 Shareholders’ approval for the Continuance Office as Independent Directors

The Board would seek shareholders’ approval at the AGM if an Independent Director who has served in that capacity for more than nine years shall remain as an Independent Director.

The NC will assess the independence of the Independent Director based on the assessment criteria developed by the NC, and recommended to the Board for recommendation to shareholders for approval. Justification for the Board’s recommendation would be provided to shareholders.

No shareholders’ approval will be sought for the purpose to retain Independent Director at the forthcoming AGM as none of the Independent Director of the Company has served the Board in that capacity for more than nine years.

3.4 Separation of the Positions of the Chairman and the MD

The Board composition is in compliance with Paragraph 15.02(1) of the Main LR of Bursa Securities and Recommendation 3.4 of the MCCG 2012, wherein it states that the positions of Chairman and the Managing Director should be held by different individuals, and the Chairman must be a non-executive member of the Board.



3.0 REINFORCE INDEPENDENCE (cont’d)

3.4 Separation of the Positions of the Chairman and the MD (cont’d)

There is a clear division of responsibility between the Chairman and the Managing Director to ensure that there is a balance of power and authority. The Chairman leads the Board and facilitates its work. He engages directly with the Managing Director to understand and oversee the strategy implementation and performance delivery. He is responsible for ensuring the processes of the Board are effective in carrying out its duties and responsibilities, including the timely provision of sufficient relevant information on financial and non-financial matters. The Chairman, in conjunction with the Managing Director and Company Secretary, sets agendas for the meetings of the Board that focus in strategic direction and performance of the Group. The Managing Director is responsible for the day to day management of the Group’s operations and business as well as implementation of the Board’s policies and decisions.

3.5 Composition of the Board

The Board currently comprises five (5) members, of whom three (3) are Independent Non-Executive Directors including the Chairman and two (2) Executive Directors. The three (3) Independent Non-Executive Directors fulfilled the criteria of independence as defined in the Main Market Listing Requirements.

The Independent Non-Executive Directors do not participate in the day-to-day management of the Company and do not involve themselves in business transactions or relationships with the Company, in order not to compromise their objectivity.

The Independent Non-Executive Directors remain in their positions to fulfil their responsibilities to provide check and balance to the Board for the avoidance of any potential conflict of interest. The Independent Non-Executive Directors are of the calibre necessary to provide an independent judgment on the issues of strategy, performance and resource allocation. They carry sufficient weight in the Boards’ decisions to ensure long-term interest of the shareholders, employees, customers and other stakeholders.

The five (5) members of the Board are persons of high calibre and integrity, and they possess the appropriate skills and provide a wealth of knowledge, experience and skills in the key areas of accountancy, business operations and development, finance and risk management, amongst others.

Jointly with the Group Accountant, the MD is accountable to the Board over the daily management and development of the Company.

The profile of each of the Member of the Board is presented on the pages 14 to 16 of this Annual Report.

4.0 FOSTER COMMITMENT

4.1 Time Commitment

The Board is to meet at least four (4) times in a year, with additional meetings convened whenever urgent/necessary and whenever important decisions are required. Board meetings are generally scheduled in advance with the relevant time and venue fixed tentatively on a certain date. Board members are aware of the expected time commitment and protocols for accepting new directorships.

The agenda for each Board meeting is circulated to all the Directors for their perusal prior to the convening of each meeting to enable Directors to obtain further clarifications/explanations prior to the meeting to ensure smooth proceeding of each meeting. The proceedings and resolutions reached at each Board meeting are minuted and signed by Chairman of the meeting.

Besides Board meetings, the Board exercises control on matters that require Board’s deliberation and approval through circulation of Directors’ Resolutions.



4.0 FOSTER COMMITMENT (cont’d)

4.1 Time Commitment (cont’d)

The Board is satisfied with the level of time commitment extended by the Directors in fulfilling their roles and responsibilities as Directors of the Company. This is evidenced by the attendance of each Director in respect of the Board meetings held during the financial year ended 31 December 2016 as follows:

Name of Director Attendance

Amirul Azhar Bin Baharom 5/5

Cheng Wong 5/5

Dee Kok Yong 5/5

Cheng Siow Chun 5/5

Yau Ming Teck 5/5

To ensure that the Directors have the time to focus and fulfil their roles and responsibilities effectively, the Directors must not hold directorships in more than five (5) public listed companies and shall notify the Chairman before accepting any new directorship.

To facilitate the Directors’ time planning, an annual meeting schedule is prepared and circulated at the beginning of every year, as well as the tentative closed periods for dealings in securities by Directors based on the targeted date of announcements of the Group’s quarterly results.

4.2 Training

All the Board members had completed the Mandatory Accreditation Programme (“MAP”) as prescribed by Bursa Securities. The Company will continue to identify suitable training for the Directors to equip and update themselves with the necessary knowledge in discharging their duty and responsibilities as Directors.

The Directors are encouraged to attend briefing, conferences, forums, trade fairs (locally and internationally), seminars and training to keep up with the latest developments in the industry and to enhance their skills and knowledge.

During the financial year ended 31 December 2016, the Group continued to indicate its interest to keep up with the latest development in the laws and regulations, business environment, and corporate governance development. The workshop organized by Bursa Malaysia Berhad for the Board Chairman series provided such a platform for effective leadership of the Board.

The details of the training and courses attended by members of the Board during the financial year ended 31 December 2016 were as follows:

Name of Directors Training and Course

Amirul Azhar Bin Baharom Bursa CG Breakfast Series With Directors:“The Board’s Response In Light Of Rising Shareholders”

Cheng Wong 2016 Tax & Budget Outlook conducted by Crowe Horwath CPE Sdn Bhd

Dee Kok Yong 2016 Tax & Budget Outlook conducted by Crowe Horwath CPE Sdn Bhd

All members of the Board Time & Priority Management Training conducted by TNI Consultancy



5.0 UPHOLD INTEGRITY IN FINANCIAL REPORTING

5.1 Compliance with applicable financial reporting standards

The Board is committed to providing a balanced, clear and meaningful assessment of the financial performance and prospects of the Company via all disclosures and announcements made.

The Board is assisted by the AC to oversee and scrutinise the process and quality of the financial reporting which includes reviewing and monitoring the integrity of the financial statements and the appropriateness of the Company’s accounting policies to ensure accuracy, adequacy and completeness of the report, as well as in compliance with the relevant accounting standards.

The Statement of Responsibility by Directors in respect of the preparation of the annual audited financial statements for the financial year ended 31 December 2016 is set out on page 41 of this Annual Report.

5.2 Assessment of suitability and independence of external auditors

Through the AC, the Company has established a transparent and appropriate relationship with the Group’s External Auditors. From time to time, the Auditors highlighted to the AC and the Board on matters that require the Board’s attention.

The AC is responsible for reviewing audit, recurring audit-related and non-audit services provided by the external auditors. These recurring audit-related and non-audit services comprise regulatory reviews and reporting, interim reviews, tax advisory and compliance services.

The terms of engagement for services provided by the external auditors are reviewed by the AC prior to submission to the Board for approval.

The AC has reviewed the provision of non-audit services by the external auditors during the year and concluded that the provision of these services did not compromise the external auditors’ independence and objectivity as the amount of the fees paid for these services was not significant when compared to the total fees paid to the external auditors.

The AC had reviewed the suitability and independence of external auditors, Messrs Crowe Horwath and recommended their re-appointment for the financial year ending 31 December 2017 to the Board for approval by the shareholders at the forthcoming AGM. The external auditors had provided a confirmation of their independence to the AC that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

6.0 RECOGNISE AND MANAGE RISKS

6.1 Sound framework to manage risks

The Board oversees, reviews and monitors the operation, adequacy and effectiveness of the Group’s system of internal controls.

The AC oversees the risk management framework of the Group and advises the Board on areas of high risk faced by the Group and the adequacy of compliance and control throughout the organisation. The AC also reviews the action plan implemented and makes relevant recommendations to the Board to manage residual risks.

The Company continues to maintain and review its internal control procedures to ensure the protection of its assets and its shareholders’ investment.

The key features of the Risk Management framework together with details of the Company’s internal control system and framework are set out in the Statement of Risk Management and Internal Control of the Company on pages 33 to 34 of this Annual Report.



6.0 RECOGNISE AND MANAGE RISKS (cont’d)

6.2 Internal Audit Function

The Company has outsourced its internal audit function to a professional services firm namely Audex Governance Sdn Bhd to assist the AC in discharging its duties and responsibilities in respect of reviewing the adequacy and effectiveness of the Group’s risk management and internal control systems.

The details of the internal audit function and activities as set out in the Audit Committee Report of this Annual Report.

7.0 ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

7.1 Corporate Disclosure Policy and Procedures

The Group acknowledges the importance of timely and equal dissemination of material information to the shareholders, investors and public at large. The Board will ensure that it adheres to and comply with the disclosure requirements of the Listing Requirements as well as the Corporate Disclosure Guide issued by Bursa Securities.

The Board shall ensure that all communications to the public are timely, factual, accurate, complete, broadly disseminated and where necessary, filed with regulators in accordance with applicable laws.

The MD and the Group Accountant are responsible for determining the materiality of the information and ensuring timely, complete and accurate disclosure of material information to the investing public in accordance with securities laws and stock exchange rules and regulations, monitoring compliance with this policy and overseeing the disclosure controls and procedures.

Sufficient information would be provided to the company secretary for drafting of the necessary announcement.

The Board is mindful that information which is expected to be material must be announced immediately, and that the confidential information should be handled properly to avoid leakage and improper use of such information.

7.2 Leverage on information technology for effective dissemination of information

The Group maintains a website at www.ums-neiken.com where shareholders as well as members of the public are invited to access the latest information on the Group. Alternatively, they may obtain the Group’s latest Annual Report and announcements via the Bursa Securities website at www.bursamalaysia.com.my. The Company will upload the internal corporate policies in the Corporate Governance section at the Company’s website in due course.

Through the Company’s website, the stakeholders are able to direct queries to the Company.

8.0 STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1 Encourage shareholder participation at general meetings

The Company dispatches notice of AGM and annual report to all shareholders at least twenty one days before the meeting to enable shareholders to go through the Annual Report and to note the resolutions to be passed at the meeting. The explanatory notes which contain the necessary information on the proposed resolutions on special business will enable a member to make an informed decision.

Shareholders are encouraged to participate in the question and answer session during the AGM in order to have a better understanding of the Group’s performance and seek clarification of other matters of concern. The Chairman, the Board, External Auditors, Company Secretary and the key management staff are available at the AGM to respond to shareholders’ enquiries and provide appropriate clarifications.



8.0 STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS (cont’d) 8.2 Encourage poll voting

Pursuant to the MMLR of Bursa Securities, any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, must be voted by poll. Hence, voting for all the resolutions as set out in the forthcoming and future general meetings will be conducted as such. An Independent scrutineer will be appointed to validate the votes cast at the general meetings.

8.3 Effective communication and proactive engagement

The Board recognizes the importance of communicating effectively with shareholders. To ensure shareholders and investors are well informed, information are disseminated through various disclosures and announcements to Bursa Securities. This includes the timely release of quarterly financial results on the Group’s performance and operations. The circulation of the Company’s Annual Report and the relevant announcements made through to Bursa Securities and the Company’s website are currently the primary means of communication between the Company, its shareholders and the general public.

From the Company’s perspective, the AGM also serves as a forum for Directors and Management to engage with the shareholders personally to understand their needs and seek their feedback. The Board welcomes questions and feedback from shareholders during and at the end of shareholders’ meeting and ensures their queries are responded in a proper and systematic manner.

COMPLIANCE STATEMENT

The Board has deliberated, reviewed and approved this Statement on Corporate Governance. The Board believes that the Company has in 2016 adopted the Principles and Recommendations of the MCCG 2012 in all material aspects, save as disclosed therein.

This statement is made in accordance with the resolution of the Board dated 5 April 2017.



Statement on Risk Management and Internal Control

INTRODUCTION

The Board of UMS-Neiken Group Berhad is pleased to present below the Statement on Risk Management and Internal Control which outlines the nature and scope of the risk management and internal controls of the Group, excluding associated companies, for the financial year ended 31 December 2016. This Statement has been prepared in accordance with Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Securities and as guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (“the Guidelines”).

BOARD’S RESPONSIBILITY

The Board acknowledges its responsibility and re-affirms its commitment in maintaining sound systems of risk management and internal control to safeguard shareholders’ investments and the Group’s assets as well as reviewing the adequacy and effectiveness of these systems. In this respect, the responsibility of reviewing the adequacy and effectiveness of the systems of internal controls has been delegated to the Audit Committee, which is empowered by its terms of reference to seek assurance on the adequacy and effectiveness of the internal control system through reports it receives from independent reviews carried out by the internal audit function and management letters, if any, issued by the external auditors. Significant control matters are reported to the Board by the Audit Committee.

However, as there are inherent limitations in any system of risk management and internal control, such systems put into effect by Management can only manage or minimise rather than eliminate all risks that may impede the achievement of the Group’s business objectives. Therefore, the risk management and internal control systems can only provide reasonable and not absolute assurance against material misstatement, operational failure, fraud or loss.

RISK MANAGEMENT FRAMEWORK

On a day-to-day basis, respective Heads of Department are responsible for managing risks of their departments. Significant risks identified and the corresponding internal controls implemented are discussed at regular meetings with the Heads of Department, key management staff and the Group Managing Director. These significant risks and its latest update are also brought to the attention of the Board members at their scheduled meetings via the Risk Management Committee (“RMC”) which consisted of four key officers of the Group determined by the Board. The Committee is responsible to review significant risks identified, measure and monitor risk at satisfactory level, at monthly meeting.

The abovementioned risk management practices of the Group serve as the on-going process used to identify, evaluate and manage significant risks for the financial year under review and up to the date of approval of this Statement. The Board shall re-evaluate the existing risk management practices, and where appropriate and necessary, revise such practices accordingly.

INTERNAL AUDIT FUNCTION

The internal audit function is outsourced to an independent professional firm which reports directly to the Audit Committee and assists the Board and the Audit Committee in providing independent assessment on the adequacy and effectiveness of the Group’s internal control system.

During the financial year ended 31 December 2016, the internal audit function carried out audit reviews according to the risk based internal audit plan approved by the Audit Committee. The entity and business processes reviewed were as follows:

Entity Business Processes

United MS Electrical Mfg. (M) Sdn Bhd Inventory Management, Procurement, Research & Development and Financial Statement Close Process


INTERNAL AUDIT FUNCTION (cont’d)

The results of the audit reviews and the recommendations for improvement were discussed with Senior Management and subsequently presented to the Audit Committee at their quarterly meetings. In addition, follow-up visits were also conducted to ascertain the status of implementation of agreed management action plans. The results of the follow-up reviews were also reported to the Audit Committee. Although certain internal control weaknesses were identified, none of the weaknesses has resulted in any material losses or contingencies that would require additional disclosure in this annual report.

The total professional fees paid for the outsourcing of internal audit function for the year ended 31 December 2016 amounting to RM43,309.37.

OTHER KEY FEATURES OF INTERNAL CONTROL

Other key features of the Group’s internal control are as follows:

• The Group maintains formal and structured line of reporting that includes the division of responsibilities anddelegation of authority. It sets out the roles and responsibilities, appropriate authority limit matrix, review and approval procedures within the various operational segments.

• A set of documented internal policies and procedures in relation to matters on human resource andadministration management, IT policy, inventory, sales & marketing, credit control management, Purchasing, ISO quality assurance and research & development with respective authority limit matrix, and of which is subject to regular review and improvement, are communicated to various departments for their execution and monitoring at best endeavor.

• Financial resultsarereviewedbytheAuditCommitteeandtheBoardonaquarterlybasis.Anannualbudget isprepared to facilitate the monitoring of Group financial performance and the review of its actual performance against budget.

• Relatedpartytransactionpoliciesandproceduresgoverningtheidentification,evaluationandmonitoringofanytransaction related to any significant shareholder and director for compliance and disclosure purpose at best endeavor of management. A summary of related party transaction, together with utilisation against shareholder approved mandate level, new transaction and its significance level if any, was present to the Audit Committee and the Board at their quarterly meetings.

• TheGroup’ssystemofriskmanagementandinternalcontrolappliesprincipallytotheGroupanditssubsidiariesbut do not apply to the associates. The Group’s interest in the associates is served through Board representation. This representation also provides the Board with information for timely decision-making on the continuity of the Group’s investments based on the performance of the associate.

ADEQUACY AND EFFECTIVENESS OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

The Board has received assurance from the Managing Director, Executive Director and Group Accountant that the Group’s risk management and internal control system are operating adequately and effectively in all material aspects. It is of the view that the risk management and internal control system is satisfactory and no material internal control failures nor have any of the reported weaknesses resulted in material losses or contingencies during the financial year under review.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

In accordance with Paragraph 15.23 of the Main Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the year ended 31 December 2016 and reported to the Board that nothing has come to their attention that caused them to believe that the Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal controls of UMS-Neiken Group Berhad.

This Statement was approved by the Board of Directors on 5 April 2017.

Statement on Risk Management and Internal Controlcont’d


Additional Compliance Information

1. UTILISATION OF PROCEEDS

The Company did not undertake any corporate proposal for fund raising during the financial year under review.

2. EMPLOYEES’ SHARE OPTION SCHEME

The Company did not implement any employees’ share option scheme during the financial year under review.

3. AUDIT AND NON-AUDIT FEES

For the financial year ended 31 December 2016, the amounts of audit and non-audit fees paid by the Company and the Group to the External Auditors are as follows:

GroupRM’000

CompanyRM’000

Audit fees 103 24

Non audit fees 3 -

4. VARIATION IN RESULTS

There were no variations between the audited results for the financial year ended 31 December 2016 and the unaudited results previously announced.

The Company did not issue any profit estimate, forecast or projection in any public documents during the financial year.

5. MATERIAL CONTRACTS

Other than the recurrent related party transactions of a revenue or trading nature as disclosed in item 6 below, there were no material contracts subsisting at the end of financial year or entered into since the end of previous financial year by the Company and its subsidiaries which involved the interests of directors and major shareholders.

6. RECURRENT RELATED PARTY TRANSACTIONS

The Company obtained the shareholders’ mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue and trading nature (“RRPT”) in their ordinary course of business at the Annual General Meeting held on 26 May 2016.

The Company will be seeking the shareholders’ approval for renewal of the shareholders’ mandate for the existing RRPT at the forthcoming Annual General Meeting to be held on 23 May 2017. The details of the new mandate to be sought are furnished in the Circular to Shareholders dispatched together with this Annual Report.


6. RECURRENT RELATED PARTY TRANSACTIONS (cont’d)

In accordance with Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the details of the RRPT conducted during the financial year ended 31 December 2016 pursuant to the shareholders’ mandate are as follows:

Parties transacting with the UMSNGB Group

Transacting company within the UMSNGB Group

Nature of transactions Related parties

Actual value of transactions for the financial year ended 31 December 2016

(RM)

UMSC (Provider)

UMSE(Recipient)

Purchase of copper wires and cables

Cheng Wongl A director and deemed major

shareholder of UMSNGBl A director of UMSCl Deemed interest in UMSC

through UMSH’s direct equity interest of 74.39% in UMSC

Ip Tai Hoil A deemed major shareholder

of UMSNGBl A shareholder of UMSC with a

direct equity interest of 5.83%

849,962.62

UMSC (Recipient)

UMSE(Provider)

Sales of electrical wiring accessories


shareholder of UMSNGB l A director of UMSCl Deemed interest in UMSC





206,938.71

Ming Kee(Provider)

UMSE(Recipient)

Purchase of hollow rivet


of UMSNGBl A shareholder of Ming Kee

with a direct interest of 87.50%l Deemed interest in Ming

Kee by virtue of the direct shareholding of 12.50% held by his wife in Ming Kee

194,931.27

HPE(Provider)

UMSE(Recipient)

Purchase of cables and trailing socket


of UMSNGBl Deemed interest in HPE by

virtue of his 100% equity interest in High Project Holding Ltd which wholly owns HPE

-

Additional Compliance Informationcont’d







(RM)

UMSC(Provider)

UMSUSS(Recipient)

Purchase of flexible cord



through UMSH’s direct equity of 74.39% in UMSC

-

UMSC(Provider)

UMSUSS(Recipient)

Purchase of flexible cord




-

UMSUSS(Provider)

UMSC(Recipient)

Sales of home appliances products







1,261

Ming Kee(Provider)

UMSI(Recipient)

Purchase of cables reel





-

UMSC(Provider)

UMSI(Recipient)

Purchase of cables




664,826.26

UMSC(Provider)

UMSI(Recipient)

Purchase of cables




-








(RM)

UMSI (Provider)

UMSC(Recipient)

Sale of all types of electrical products







-

UMSE(Provider)

CICO(Recipient)

Sale of machinery and equipment


shareholder of UMSNGB l A director of CICO


of UMSNGBl A director of CICOl Direct equity interest of 100%

in CICO

-

UMSC(Provider)

NSVN(Recipient)

Purchase of cables




602,687.01

UMSC(Provider)

NSVN(Recipient)

Purchase of cables




-

Ming Kee(Provider)

NSVN(Recipient)

Purchase of hollow rivet





-








(RM)

HPL (Provider)

NSVN (Recipient)

Purchase of power cord sets


of UMSNGBl Direct interest by virtue of his

100% shareholding in HPL

-

UMSC (Provider)

UMSNGB (Recipient)

Rental of warehouse







24,000.00

HPE(Provider)

NSVN(Recipient)

Purchase of cables and power cord set




-

HPL (Provider)

UMSE (Recipient)

Purchase of power cord sets


of UMSNGBl Direct interest by virtue of his

100% shareholding in HPL

-

HPE (Provider)

UMSI (Recipient)

Purchase of cables reel




-








(RM)

UMSC(Provider)

NES(Recipient)

Purchase of cables







39,982.09

Abbreviations

CICO : CICO Electrical Industries Sdn Bhd HPE : High Project Electric Wire & Cables Manufactory (Fenghua) Limited HPL : High Project Limited Ming Kee : Ming Kee Manufactory Ltd NES : Neiken Electric (S) Pte Ltd NSVN : Neiken Switchgear (VN) Co. Ltd UMSC : United MS Cables Mfg. Sdn Bhd UMSE : United MS Electrical Mfg. (M) Sdn Bhd UMSI : UMS – Neiken Industry Sdn Bhd UMSUSS : UMS – Universal Sales & Services Sdn Bhd



Directors’ Responsibility Statementin respect of the Financial Statements

The Board of Directors (“the Board”) is required to prepare financial statements for each financial year which have been made out in accordance with the applicable approved accounting standards and give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of their results and cash flows for that financial year.

In preparing the financial statements of the Company and of the Group for the financial year ended 31 December 2016, the Board has taken the following measures:

• adopted appropriate, adequate and applicable accounting standards and policies and applied them consistently; • made judgments and estimates that are reasonable and prudent; • ensured that all applicable accounting standards have been followed; and • prepared financial statements on the going concern basis.

The Board has also ensured that the quarterly and year-end audited financial statements of the Company and the Group are released to Bursa Malaysia Securities Berhad in a timely manner in order to keep our investing public informed of the Group’s latest performance and developments.

The Board is responsible to ensure that the Group and the Company keep accounting records which disclose with reasonable accuracy of the financial position of the Group and the Company which enable them to ensure that the financial statements comply with the Companies Act, 2016.

The Board is also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors‘ Report

Statements of Financial Position

43

48

48

49

53

FINANCIALSTATEMENTS

Statements of Profit or Loss and Other Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

55

57

59

61


Directors’ Report

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2016.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESULTS

The Group The Company

RM’000 RM’000

Profit after taxation for the financial year 9,912 2,479

Attributable to:-

Owners of the Company 9,905 2,479

Non-controlling interests 7 -

9,912 2,479

DIVIDENDS

Since the end of the previous financial year, the Company paid a single tier interim dividend of 3.0 sen per ordinary share amounting to approximately RM2,358,000 as declared in the directors’ report of the previous financial year.

On 22 February 2017, the directors declared a single tier interim dividend of 3.0 sen per ordinary share amounting to approximately RM2,358,000 in respect of the financial year ended 31 December 2016. The financial statements for the financial year ended 31 December 2016 do not reflect this declared dividend and such dividend will be accounted for as a liability in the financial year ending 31 December 2017.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.

ISSUES OF SHARES AND DEBENTURES

During the financial year:-

(a) there were no changes in the authorised and issued and paid-up share capital of the Company; and

(b) there were no issues of debentures by the Company.

TREASURY SHARES

The details of the treasury shares purchased and retained by the Company during the financial year are disclosed in Note 21 to the financial statements.

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.


BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for impairment losses on receivables.

At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowance for impairment losses on receivables in the financial statements of the Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, 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 which would render the values attributed to the current assets in the financial statements misleading.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

The contingent liability is disclosed in Note 42 to the financial statements. At the date of this report, there does not exist:-

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

(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

No contingent or other liability of the Group and of the Company 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 when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

Directors’ Reportcont’d


HOLDING COMPANIES

The immediate and ultimate holding companies are United MS Holdings Sdn. Bhd. and Chengco Enterprise Sdn. Bhd., respectively. Both the aforesaid holding companies are incorporated in Malaysia.

DIRECTORS

The directors who served since the date of the last report are as follows:-

CHENG WONG DEE KOK YONG CHENG SiOW CHUN YAU MiNG TECK AMiRUL AZHAR BiN BAHAROM

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year in shares in the Company and its related corporations during the financial year are as follows:-

Number of Ordinary Shares of RM0.50 Each

At1.1.2016 Bought Sold

At31.12.2016

Direct Interest in the Company

Dee Kok Yong 37,000 - - 37,000

Indirect Interests in the Company

Cheng Wong * 40,025,520 - - 40,025,520

Cheng Wong ^ 28,000 - - 28,000

* - Deemed interest by virtue of his shareholding in the immediate and ultimate holding companies.^ - Deemed interest by virtue of the shares held by his daughter.



At 31.12.2016

The Immediate Holding Company, United MS Holdings Sdn. Bhd.

Ordinary Shares

Cheng Wong

- Direct interest 1,800,374 - - 1,800,374

- indirect interest 9,836,832 - - 9,836,832



DIRECTORS’ INTERESTS (cont’d)

Number of Preference Shares of RM0.10 Each


At31.12.2016

The Immediate Holding Company,United MS Holdings Sdn. Bhd.

Preference Shares

Cheng Wong

- Direct interest 1,800,641 - - 1,800,641

- indirect interest 9,739,963 - - 9,739,963


At 1.1.2016 Bought Sold

At 31.12.2016

The Ultimate Holding Company,Chengco Enterprise Sdn. Bhd.

Ordinary Shares

Cheng Wong

- Direct interest 2,088,000 - - 2,088,000

By virtue of his interests in shares in the holding companies and in the Company, Cheng Wong is deemed to have interests in shares in the subsidiaries to the extent of the Company’s interests, in accordance with Section 8 of the Companies Act 2016.

The other directors holding office at the end of the financial year had no interests in shares of the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than the benefits shown under the Directors’ Remuneration section of our report) 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 except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 39 to the financial statements.

Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

DIRECTORS’ REMUNERATION

The details of the directors’ remuneration are disclosed in Note 38 to the financial statements.



SUBSIDIARIES

The details of the Company’s subsidiaries are disclosed in Note 6 to the financial statements.

The auditors’ reports on the financial statements of the subsidiaries did not contain any qualification.

None of the subsidiaries had any interest in shares in the Company during the financial year. Their interests in shares in other related corporations are disclosed in Note 6 to the financial statement.

AUDITORS’ REMUNERATION

During the financial year, the total amount paid to or receivable by the auditors as remuneration for their services rendered to the Group and the Company amounted to RM106,000 and RM24,000 respectively.

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

The significant event during the financial year is disclosed in Note 45 to the financial statements.

SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD

The significant event occurring after the reporting period is disclosed in Note 46 to the financial statements.

AUDITORS

The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the directors dated 5 April 2017

Cheng Wong Dee Kok Yong



We, Cheng Wong and Dee Kok Yong, being two of the directors of UMS-Neiken Group Berhad, state that, in the opinion of the directors, the financial statements set out on pages 53 to 116 are drawn up in accordance with Malaysian Financial Reporting Standards, international Financial Reporting Standards and the requirements of the Companies Act 1965 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 December 2016 and of their financial performance and cash flows for the financial year ended on that date.

The supplementary information set out in Note 47, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the directors dated 5 April 2017

Cheng Wong Dee Kok Yong

i, Cheng Wong, i/C No. 500703-10-5847, being the director primarily responsible for the financial management of UMS-Neiken Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 53 to 116 are, to the best of my knowledge and belief, correct, and i make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared byCheng Wong, i/C No. 500703-10-5847,at Kuala Lumpur in the Federal Territory on this 5 April 2017

Cheng Wong

Before me

Lai DinNo. W 668Commissioner for Oaths

Statement by DirectorsPursuant to Section 251(2) of the Companies Act 2016

Statutory DeclarationPursuant to Section 251(1) of the Companies Act 2016


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of UMS-Neiken Group Berhad, which comprise the statements of financial position as at 31 December 2016 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 financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 53 to 116.

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 of 31 December 2016, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, international Financial Reporting Standards and the requirements of the Companies Act 1965 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 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 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 judgment, 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.

We have determined the matters described below to be the key audit matters to be communicated in our report.

Acquisition accounting for Neiken Electric (S) Pte Ltd (formerly known as Neiken Switchgear (S) Pte Ltd)

Refer to Note 35 to the financial statements

Key Audit Matter

Following the acquisition of the remaining 50 percent of the share capital of Neiken Electric (S) Pte Ltd (“NES”) (formerly known as Neiken Switchgear (S) Pte Ltd) on 15 September 2016, NES is now consolidated into the Group financial statements, with the assets and liabilities purchased being accounted for at fair values at the date of the acquisition.

We focused on this area given the significant judgements involved in assessing the fair values of assets and liabilities acquired, as this directly impacts the amount of a gain from bargain purchase recognised on acquisition. The fair values are based on third party expert reports, in part, on assumptions about the NES’s future performance, which are inherently judgemental.

How our audit addressed the key audit matter

Our audit procedures to test the accounting for the transaction, included verifying the purchase price, contract clauses and terms connected with completion adjustments to the signed sale and purchase agreement. We evaluated the fair values allocated to the assets and liabilities acquired by the Group as part of the transaction with reference to appropriate supporting calculations and third party expert reports.

We tested all material consolidation entries recorded in connection with the acquisition.

Independent Auditors’ Reportto the Members of UMS-Neiken Group Berhad

(Incorporated in Malaysia) Company No: 650473-V


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (cont’d)

Key Audit Matters (cont’d)

Valuation of Investment Property

Refer to Note 9 to the financial statements

Key Audit Matter

The carrying value of investment properties amounted to RM10.6 million of which RM2.25 million of the investment property is vacant as at the end of the reporting period. This is an impairment indicator. Therefore an assessment of impairment was performed. The directors have used fair value less costs to sell (“FVLCTS”) as the recoverable amount in the assessment of impairment.

Significant judgement is required by directors when performing an impairment review.

How our audit addressed the key audit matter

Our audit procedures included, amongst others, assessed the appropriateness of the Group’s assessment of impairment process.

l Assessed management’s process in reviewing and identifying the indicative factors of impairment on the carrying value of the properties;

l Reviewed and performed sensitivity test of the input used on the value of the properties.

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 other information 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 other information and, in doing so, consider whether the other information 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 this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors for the Financial Statements

The directors of the Company are responsible for the preparation of the 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 1965 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 Group’s and the Company’s ability 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.

Independent Auditors’ Reportto the Members of UMS-Neiken Group Berhad(Incorporated in Malaysia) Company No: 650473-Vcont’d


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (cont’d)

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 a 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 theCompany, 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 areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

• Evaluate the appropriatenessof accountingpolicies usedand the reasonablenessof accountingestimates andrelated disclosures made by the directors.

• Concludeontheappropriatenessof thedirectors’useof thegoingconcernbasisofaccountingand,basedonthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability 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 theCompany, 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 achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities 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 financial 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 report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Independent Auditors’ Reportto the Members of UMS-Neiken Group Berhad

(Incorporated in Malaysia) Company No: 650473-Vcont’d


REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

in accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:-

(a) in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other Reporting Responsibilities

The supplementary information set out in Note 47 on page 117 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian institute of Accountants (“MiA Guidance”) and the directive of Bursa Malaysia Securities Berhad. in our opinion, the supplementary information is prepared, in all material respects, in accordance with the MiA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

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.

Crowe Horwath Chong Tuck WaiFirm No.: AF 1018 Approval No: 03023/03/2019 JChartered Accountants Chartered Accountant

5 April 2017

Kuala Lumpur

Independent Auditors’ Reportto the Members of UMS-Neiken Group Berhad(Incorporated in Malaysia) Company No: 650473-Vcont’d



2016 2015 2016 2015

Note RM’000 RM’000 RM’000 RM’000

ASSETS

NON-CURRENT ASSETS

investments in subsidiaries 6 - - 30,821 30,821

investments in associates 7 - 3,250 - -

Property, plant and equipment 8 30,153 23,075 - -

investment properties 9 10,557 2,296 - -

Development expenditure 10 - - - -

Prepaid lease payments 11 - 397 - -

Deferred tax assets 12 106 101 - -

Other investment 13 564 553 - -

41,380 29,672 30,821 30,821

CURRENT ASSETS

inventories 14 19,550 17,793 - -

Trade receivables 15 20,814 16,926 - -

Other receivables, deposits and prepayments 16 1,737 2,858 * 12

Amount owing by an associate 17 - 3,392 - -

Amount owing by a related party 18 7 11 - -

Current tax assets 335 361 36 47

Dividend receivable - - 2,400 2,045

Deposits with licensed banks 19 17,136 15,587 12,545 12,767

Cash and bank balances 8,235 8,850 118 79

67,814 65,778 15,099 14,950

TOTAL ASSETS 109,194 95,450 45,920 45,771

* Amount is less than RM1,000

Statements of Financial Positionat 31 December 2016

The annexed notes form an integral part of these financial statements.



2016 2015 2016 2015

Note RM’000 RM’000 RM’000 RM’000

EqUITY AND LIABILITIES

EqUITY

Share capital 20 40,000 40,000 40,000 40,000

Treasury shares 21 (510) (510) (510) (510)

Reserves 22 48,295 40,422 6,285 6,164

Equity attributable to owners of the Company 87,785 79,912 45,775 45,654

Non-Controlling interest 56 49 - -

TOTAL EqUITY 87,841 79,961 45,775 45,654

NON-CURRENT LIABILITIES

Term loans 23 9,433 4,935 - -

Deferred tax liabilities 24 1,602 1,133 - -

11,035 6,068 - -

CURRENT LIABILITIES

Trade payables 25 4,119 3,762 - -

Other payables and accruals 26 3,377 3,510 24 26

Amount owing to a related party 18 717 542 - -

Amount owing to directors 27 350 351 121 91

Short-term borrowings 28 1,155 592 - -

Dividend payable - 5 - -

Current tax liabilities 600 659 - -

10,318 9,421 145 117

TOTAL LIABILITIES 21,353 15,489 145 117

TOTAL EqUITY AND LIABILTIES 109,194 95,450 45,920 45,771

Statements of Financial Positionat 31 December 2016cont’d




2016 2015 2016 2015

Note RM’000 RM’000 RM’000 RM’000

REVENUE 30 65,871 60,098 2,401 2,045

COST OF SALES (46,138) (41,663) - -

GROSS PROFIT 19,733 18,435 2,401 2,045

OTHER INCOME 3,531 3,963 394 452

23,264 22,398 2,795 2,497

SELLING AND DISTRIBUTION EXPENSES (842) (1,684) - -

ADMINISTRATIVE EXPENSES (7,479) (7,136) (310) (318)

OTHER EXPENSES (1,219) (1,375) - -

FINANCE COSTS (327) (317) - -

SHARE OF RESULTS IN ASSOCIATE, NET OF TAX 45 15 - -

PROFIT BEFORE TAXATION 31 13,442 11,901 2,485 2,179

INCOME TAX EXPENSE 32 (3,530) (2,414) (6) 25

PROFIT AFTER TAXATION 9,912 9,487 2,479 2,204

OTHER COMPREHENSIVE INCOME

items that May be Reclassified Subsequently to Profit or Loss

Foreign currency translation differences 335 222 - -

Share of other comprehensive income of associate (9) 426 - -

TOTAL OTHER COMPREHENSIVE INCOME 326 648 - -

TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 10,238 10,135 2,479 2,204

Statements of Profit or Loss and Other Comprehensive Income

for the financial year ended 31 December 2016




2016 2015 2016 2015

Note RM’000 RM’000 RM’000 RM’000

PROFIT AFTER TAXATION ATTRIBUTABLE TO:-

Owners of the Company 9,905 9,484 2,479 2,204

Non-controlling interest 7 3 - -

9,912 9,487 2,479 2,204

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:-

Owners of the Company 10,231 10,132 2,479 2,204

Non-controlling interest 7 3 - -

10,238 10,135 2,479 2,204

EARNINGS PER SHARE (SEN)

Basic 33 12.6 12.1

Diluted 33 12.6 12.1

Statements of Profit or Loss and Other Comprehensive Incomefor the financial year ended 31 December 2016cont’d



Non-Distributable Distributable

NoteShare

CapitalTreasury

SharesShare

Premium

ForeignExchange

TranslationReserve

RetainedProfits

Attributableto Owners

of The Company

Non-controlling

InterestTotal

Equity

The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Balance at 1.1.2015 40,000 (510) 1,531 (681) 31,417 71,757 - 71,757

Profit after taxation for the financial year - - - - 9,484 9,484 3 9,487

Other comprehensive income for the financial year:

- Share of an associate’s other comprehensive income - - - 426 - 426 - 426

- Foreign currency translation differences - - - 222 - 222 - 222

Total comprehensive income for the financial year - - - 648 9,484 10,132 3 10,135

Contributions by and distributions to owners of the Company:

- Dividends payable/paid:

- by the Company 34 - - - - (1,965) (1,965) - (1,965)

- by subsidiary to non-controlling interest - - - - - - (5) (5)

- - - - (1,965) (1,965) (5) (1,970)

Change in a subsidiary’s ownership interests in a subsidiary that do not result in loss of control - - - - (12) (12) 51 39

Total transactions with owners - - - - (1,977) (1,977) 46 (1,931)

Balance at 31.12.2015 40,000 (510) 1,531 (33) 38,924 79,912 49 79,961

Balance at 31.12.2015/1.1.2016 40,000 (510) 1,531 (33) 38,924 79,912 49 79,961

Profit after taxation for the financial year - - - - 9,905 9,905 7 9,912

Other comprehensive income for the financial year:

- Share of an associate’s other comprehensive income - - - (9) - (9) - (9)

- Foreign currency translation differences - - - 335 - 335 - 335

Total comprehensive income for the financial year - - - 326 9,905 10,231 7 10,238


- Dividends payable/paid by the Company 34 - - - - (2,358) (2,358) - (2,358)

Balance at 31.12.2016 40,000 (510) 1,531 293 46,471 87,785 56 87,841

Statements of Changes in Equityfor the financial year ended 31 December 2016



Non-

Distributable Distributable

NoteShare

CapitalTreasury

SharesShare

PremiumRetained

Profits Total

The Company RM’000 RM’000 RM’000 RM’000 RM’000

Balance at 1.1.2015 40,000 (510) 1,531 4,394 45,415

Profit after taxation/Total comprehensive income for the financial year - - - 2,204 2,204


- Dividend 34 - - - (1,965) (1,965)

Balance at 31.12.2015/1.1.2016 40,000 (510) 1,531 4,633 45,654

Profit after taxation/Total comprehensive income for the financial year - - - 2,479 2,479


- Dividend 34 - - - (2,358) (2,358)

Balance at 31.12.2016 40,000 (510) 1,531 4,754 45,775

Statements of Changes in Equityfor the financial year ended 31 December 2016cont’d




2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES

Profit before taxation 13,442 11,901 2,485 2,179

Adjustments for:-

Amortisation of prepaid lease payments - 13 - -

Bad debts written off - 221 - -

Depreciation of investment properties 89 43 - -

Depreciation of property, plant and equipment 1,967 1,611 - -

impairment losses on:

- investment in an associate - * - -

- receivables 69 251 - -

interest expense 327 317 - -

inventories written down 1,126 343 - -

Dividend income from:

- other investment (9) - - -

- a subsidiary - - (2,400) (2,045)

Gain from bargain purchase (571) - - -

Gain on disposal of plant and equipment (156) (115) - -

Gain on disposal of investment in a subsidiary that do not result in loss of control - - - (29)

Gain on remeasuring to fair value the pre-existing interests of an associate (972) - - -

interest income (610) (585) (394) (400)

Reversal of impairment loss:

- other receivables (20) (13) - -

- trade receivables (61) (307) - -

Reversal of inventories written down (27) (354) - -

Share of results in an associate (45) (15) - -

Unrealised gain on foreign exchange (354) (2,031) - -

Operating profit/(loss) before working capital changes 14,195 11,280 (309) (295)

increase in inventories (1,437) (213) - -

(increase)/Decrease in trade and other receivables (735) 7,400 12 (12)

(Decrease)/increase in trade and other payables (1,320) 1,659 (2) -

increase in amount owing by an associate (501) (146) - -

Decrease/(increase) in amount owing by a related party 4 (10) - -

increase/(Decrease) in amount owing to a related party 168 (133) - -

CASH FROM/(FOR) OPERATIONS/BALANCE CARRIED FORWARD 10,374 19,837 (299) (307)

Statements of Cash Flowsfor the financial year ended 31 December 2016



The Group The Company2016 2015 2016 2015

Note RM’000 RM’000 RM’000 RM’000

CASH FROM/(FOR) OPERATIONS/ BALANCE BROUGHT FORWARD 10,374 19,837 (299) (307)

interest paid (327) (317) - -income tax (paid)/refund (3,623) (2,784) 5 (41)

NET CASH FLOW FROM/(FOR) OPERATING ACTIVITIES 6,424 16,736 (294) (348)

CASH FLOWS (FOR)/FROM INVESTING ACTIVITIES

Repayment from a subsidiary - - - 6,376Repayment from a related party 7 - - -Net cash outflow for the acquisition of a

subsidiary 35 (364) - - -Purchase of property, plant and equipment 36 (2,657) (3,300) - -Addition of investment property - (63) - -Purchase of other investment - (512) - -increase in investment in a subsidiary - - - (2,000)Proceeds from disposal of investment in

a subsidiary that do not result in loss of control - 39 - 39

Proceeds from disposal of plant and equipment 204 148 - -

interest received 610 585 394 400Repayment from an associate 703 74 - -Dividends received 9 - 2,045 4,800Placement of fixed deposits pledged (43) (103) - -

NET CASH (FOR)/FROM INVESTING ACTIVITIES (1,531) (3,132) 2,439 9,615

CASH FLOWS FOR FINANCING ACTIVITIES

Dividend paid (2,358) (1,965) (2,358) (1,965)Repayment to a subsidiary - - - (1,308)(Repayment from)/Advances to directors (1) 30 30 (27)Repayment of hire purchase obligations (100) (367) - -Repayment of term loan (2,266) (2,603) - -Net repayment of bankers’ acceptances - (765) - -

NET CASH FOR FINANCING ACTIVITIES (4,725) (5,670) (2,328) (3,300)

NET INCREASE/(DECREASE) IN CASH AND CASH EqUIVALENTS 168 7,934 (183) 5,967

EFFECTS OF FOREIGN EXCHANGE TRANSLATION 723 736 - -

CASH AND CASH EqUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 23,243 14,573 12,846 6,879

CASH AND CASH EqUIVALENTS AT END OF THE FINANCIAL YEAR 37 24,134 23,243 12,663 12,846

* Amount less than RM1,000

Statements of Cash Flowsfor the financial year ended 31 December 2016cont’d



1. GENERAL INFORMATION

The Company is a public company limited by shares and is incorporated under the Companies Act 1965 in Malaysia. The domicile of the Company is Malaysia. The registered office and principal place of business are as follows:-

Registered office : 10th Floor Menara Hap Seng, No. 1 & 3, Jalan P. Ramlee, 50250 Kuala Lumpur.

Principal place of business : Lot 48, Jalan industri 2/1, Rawang integrated industrial Park, 48000 Rawang, Selangor Darul Ehsan.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 5 April 2017.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3. HOLDING COMPANIES

The immediate and ultimate holding companies are United MS Holdings Sdn. Bhd. and Chengco Enterprise Sdn. Bhd., respectively. Both the aforesaid holding companies are incorporated in Malaysia.

4. BASIS OF PREPARATION

The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Malaysian Financial Reporting Standards (“MFRSs”), international Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

4.1 During the current financial year, the Group has adopted the following new accounting standards and/or interpretations (including the consequential amendments, if any):-

MFRSs and/or IC Interpretations (Including the Consequential Amendments)

MFRS 14 Regulatory Deferral Accounts

Amendments to MFRS 10, MFRS 12 and MFRS 128: investment Entities – Applying the Consolidation Exception

Amendments to MFRS 11: Accounting for Acquisitions of interests in Joint Operations

Amendments to MFRS 101: Disclosure initiative

Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation

Amendments to MFRS 116 and MFRS 141: Agriculture – Bearer Plants

Amendments to MFRS 127: Equity Method in Separate Financial Statements

Annual improvements to MFRSs 2012 – 2014 Cycle

The adoption of the above accounting standards and/or interpretations (including the consequential amendments, if any) did not have any material impact on the Group’s financial statements.

Notes to the Financial Statementsfor the financial year ended 31 December 2016


Notes to the Financial Statementsfor the financial year ended 31 December 2016cont’d

4. BASIS OF PREPARATION (cont’d)

4.2 The Group has not applied in advance the following accounting standards and/or interpretations (including the consequential amendments, if any) that have been issued by the Malaysian Accounting Standards Board (“MASB”) but are not yet effective for the current financial year:-

MFRSs and/or IC Interpretations (Including the Consequential Amendments) Effective Date

MFRS 9 Financial instruments (iFRS 9 issued by iASB in July 2014) 1 January 2018

MFRS 15 Revenue from Contracts with Customers 1 January 2018

MFRS 16 Leases 1 January 2019

iC interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018

Amendments to MFRS 2: Classification and Measurement of Share-based Payment Transactions

1 January 2018

Amendments to MFRS 4: Applying MFRS 9 Financial instruments with MFRS 4 insurance Contracts

1 January 2018*

Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an investor and its Associate or Joint Venture

Deferred until further notice

Amendments to MFRS 15: Effective Date of MFRS 15 1 January 2018

Amendments to MFRS 15: Clarifications to MFRS 15 ‘Revenue from Contracts with Customers’

1 January 2018

Amendments to MFRS 107: Disclosure initiative 1 January 2017

Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017

Amendments to MFRS 140 – Transfers of investment Property 1 January 2018

Annual improvements to MFRS Standards 2014 – 2016 Cycles:

• AmendmentstoMFRS12:ClarificationoftheScopeofStandard 1 January 2017

Annual improvements to MFRS Standards 2014 – 2016 Cycles:

• AmendmentstoMFRS1:DeletionofShort-termExemptionsforFirst-timeAdopters

• AmendmentstoMFRS128:MeasuringanAssociateorJointVentureatFairValue

1 January 2018

* Entities that meet the specific criteria in MFRS 4.20B may choose to defer the application of MFRS 9 until the earlier of the application of the forthcoming insurance contracts standard or annual periods beginning before 1 January 2021.

The adoption of the above accounting standards and/or interpretations (including the consequential amendments, if any) is expected to have no material impact on the financial statements of the Group upon their initial application except as follows:-

MFRS 9 (iFRS 9 issued by iASB in July 2014) replaces the existing guidance in MFRS 139 and introduces a revised guidance on the classification and measurement of financial instruments, including a single forward-looking ‘expected loss’ impairment model for calculating impairment on financial assets, and a new approach to hedge accounting. Under this MFRS 9, the classification of financial assets is driven by cash flow characteristics and the business model in which a financial asset is held. Therefore, it is expected that the Group’s investments in unquoted shares that are currently stated at cost less accumulated impairment losses will be measured at fair value through other comprehensive income upon the adoption of MFRS 9. The Group is currently assessing the financial impact of adopting MFRS 9.

MFRS 15 establishes a single comprehensive model for revenue recognition and will supersede the current revenue recognition guidance and other related interpretations when it becomes effective. Under MFRS 15, an entity shall recognise revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the distinct promised goods or services underlying the particular performance obligation is transferred to the customers. The amendments to MFRS 15 further clarify the concept of ‘distinct’ for the purposes of this accounting standard. in addition, extensive disclosures are also required by MFRS 15. The Group anticipates that the application of MFRS 15 in the future may have an impact on the amounts reported and disclosures made in the financial statements. However, it is not practicable to provide a reasonable estimate of the financial impacts of MFRS 15 until the Group performs a detailed review.



cont’d

4. BASIS OF PREPARATION (cont’d)

4.2 The adoption of the above accounting standards and/or interpretations (including the consequential amendments, if any) is expected to have no material impact on the financial statements of the Group upon their initial application except as follows (cont’d):-

MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and will replace the current guidance on lease accounting when it becomes effective. Under MFRS 16, the classification of leases as either finance leases or operating leases is eliminated for lessees. All lessees are required to recognise their leased assets and the related lease obligations in the statement of financial position (with limited exceptions). The leased assets are subject to depreciation and the interest on lease liabilities are calculated using the effective interest method. The Group anticipates that the application of MFRS 16 in the future may have an impact on the amounts reported and disclosures made in the financial statements. However, it is not practicable to provide a reasonable estimate of the financial impacts of MFRS 16 until the Group performs a detailed review.

The amendments to MFRS 107 require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. Accordingly, there will be no financial impact on the financial statements of the Group upon its initial application. However, additional disclosure notes on the statements of cash flows may be required.

5. SIGNIFICANT ACCOUNTING POLICIES

5.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and management are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(a) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(b) Income Taxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax expenses and deferred tax balances in the year in which such determination is made.



5. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

5.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)

(c) Impairment of Non-Financial Assets

When the recoverable amount of an asset is determined based on the estimate of the value in use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

(d) Classification between Investment Properties and Owner-occupied Properties

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. if these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. if the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

(e) Impairment of Trade and Other Receivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loans and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. if the expectation is different from the estimation, such difference will impact the carrying value of receivables.

(f) Write-down of Inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

(g) Fair Value Estimates for Certain Financial Assets and Financial Liabilities

The Group carries certain financial assets and financial liabilities at fair value, which requires extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity.

(h) Classification of Leasehold Land

The classification of leasehold land as a finance lease or an operating lease requires the use of judgement in determining the extent to which risks and rewards incidental to its ownership lie. Despite the fact that there will be no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part of the indefinite economic life of the land, management considered that the present value of the minimum lease payments approximated to the fair value of the land at the inception of the lease. Accordingly, management judged that the Group has acquired substantially all the risks and rewards incidental to the ownership of the land through a finance lease.



cont’d


5.2 BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to the end of the reporting period.

Subsidiaries are entities (including structured entities, if any) controlled by the Group. The Group controls an entity when the Group is exposed to, 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.

Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate.

intragroup transactions, balances, income and expenses are eliminated on consolidation. intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

(a) Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred.

in a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis.

(b) Non-Controlling Interests

Non-controlling interests are presented within equity in the consolidated statement of financial position, separately from the equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

(c) Changes in Ownership Interests in Subsidiaries Without Change of Control

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group.




5.2 BASIS OF CONSOLIDATION (cont’d)

(d) Loss of Control

Upon the loss of control of a subsidiary, the Group recognises any gain or loss on disposal in profit or loss which is calculated as the difference between:-

(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former subsidiary; and

(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any non-controlling interests.

Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or transferred directly to retained profits). The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

5.3 GOODWILL

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Under the acquisition method, any excess of the sum of the fair value of the consideration transferred in the

business combination, the amount of non-controlling interests recognised and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities at the date of acquisition is recorded as goodwill.

Where the latter amount exceeds the former, after reassessment, the excess represents a bargain purchase gain and is recognised as a gain in profit or loss.

in respect of equity-accounted associates, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted associates.

5.4 FUNCTIONAL AND FOREIGN CURRENCIES

(a) Functional and Presentation Currency

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency.

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

(b) Transactions and Balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss.



cont’d


5.4 FUNCTIONAL AND FOREIGN CURRENCIES (cont’d)

(c) Foreign Operations

Assets and liabilities of foreign operations are translated to RM at the rates of exchange ruling at the end of the reporting period. income, expenses and other comprehensive income of foreign operations are translated at exchange rates ruling at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity; attributed to the owners of the Company and non-controlling interests, as appropriate.

Goodwill and fair value adjustments arising from the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period.

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign subsidiary, or a partial disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that foreign operation attributable to the owners of the Company are reclassified to profit or loss as part of the gain or loss on disposal. The portion that related to non-controlling interests is derecognised but is not reclassified to profit or loss.

in addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are reattributed to non-controlling interests and are not recognised in profit or loss. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence, the proportionate share of the accumulative exchange differences is reclassified to profit or loss.

in the consolidated financial statements, when settlement of an intragroup loan is neither planned nor likely to occur in the foreseeable future, the exchange differences arising from translating such monetary item are considered to form part of a net investment in the foreign operation and are recognised in other comprehensive income.

5.5 FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognised in the statements of financial position when the

Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement and their definitions in MFRS 132. interest, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to

settle either on a net basis or to realise the asset and settle the liability simultaneously.

A financial instrument is recognised initially at its fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.




5.5 FINANCIAL INSTRUMENTS (cont’d)

(a) Financial Assets

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate.

(i) Financial Assets at Fair Value through Profit or Loss

Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Group’s right to receive payment is established.

Financial assets at fair value through profit or loss could be presented as current assets or non-current assets. Financial assets that are held primarily for trading purposes are presented as current assets whereas financial assets that are not held primarily for trading purposes are presented as current assets or non-current assets based on the settlement date.

(ii) Held-to-maturity Investments

As at the end of the reporting period, there were no financial assets classified under this category.

(iii) Loans and Receivables Financial Assets

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Loans and receivables financial assets are classified as current assets, except for those having settlement dates later than 12 months after the reporting date which are classified as non-current assets.

(iv) Available-for-sale Financial Assets

As at the end of the reporting period, there were no financial assets classified under this category.



cont’d



(b) Financial Liabilities

(i) Financial Liabilities at Fair Value through Profit or Loss

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

(ii) Other Financial Liabilities

Other financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(c) Equity Instruments

Equity instruments classified as equity are measured at cost and are not remeasured subsequently.

(i) Ordinary Shares

incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(ii) Treasury Shares

When the Company’s own shares recognised as equity are bought back, the amount of the consideration paid, including all costs directly attributable, are recognised as a deduction from equity. Own shares purchased that are not subsequently cancelled are classified as treasury shares and are presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares.

Where treasury shares are sold, the difference between the sales consideration and the carrying amount of the treasury shares are shown as a movement in equity. When the consideration received is more than the carrying amount, the credit difference arising is taken to the share premium account. Where the consideration received is less than the carrying amount, the debit difference is offset against reserves.

(d) 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 the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.





(d) Derecognition (cont’d)

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

5.6 INVESTMENTS IN SUBSIDIARIES

investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable. The cost of the investments includes transaction costs.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and

the carrying amount of the investments is recognised in profit or loss.

5.7 INVESTMENTS IN ASSOCIATES

An associate is an entity in which the Group has a long-term equity interest and where it exercises significant influence over the financial and operating policies.

The investment in an associate is accounted for in the consolidated financial statements using the equity method based on the financial statements of the associate made up to 15 September 2016. The Group's share of the post acquisition profits and other comprehensive income of the associate is included in the consolidated statements of profit or loss and other comprehensive income, after adjustment if any, to align the accounting policies with those of the Group, from the date that significant influence commences up to the effective date on which significant influence ceases or when the investment is classified as held for sale. The Group's interest in the associate is carried in the consolidated statements of financial position at cost plus the Group’s share of the post acquisition retained profits and reserves. The cost of investment includes transaction costs.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation.

Unrealised gains on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered.

When the Group ceases to have significant influence over an associate and the retained interest in the former associate is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as the initial carrying amount of the financial asset in accordance with MFRS 139. Furthermore, the Group also reclassifies its share of the gain or loss previously recognised in other comprehensive income of that associate into profit or loss when the equity method is discontinued.

5.8 PROPERTY, PLANT AND EqUIPMENT

Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and impairment losses, if any.

Freehold land is stated at cost less impairment losses, and is not depreciated.



cont’d


5.8 PROPERTY, PLANT AND EqUIPMENT (cont’d)

Depreciation is charged to profit or loss (unless it is included in the carrying amount of another asset) on a straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

Buildings 2% - 17% Plant and machinery 7% - 20% Motor vehicles 10% - 33% Office equipment 10% - 33% Furniture and fittings 10% - 33% Computers 10% - 20% Electrical installation 10% Renovation 33% The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at

the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and 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.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset, being the difference between the net disposal proceeds and the carrying amount, is recognised in profit or loss. The revaluation reserve included in equity is transferred directly to retained profits on retirement or disposal of the asset.

5.9 INVESTMENT PROPERTIES

investment properties are properties held either to earn rental income or for capital appreciation or for both. investment properties are stated at cost less accumulated depreciation and impairment losses, if any.

Depreciation is charged to profit or loss on a straight-line method over the estimated useful lives of the investment properties. The estimated useful lives of the investment properties are within 50 years to 55 years.

investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal.

On the derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.

Transfers are made to or from investment property only when there is a change in use. All transfers do not change the carrying amount of the property reclassified.




5.10 DEVELOPMENT EXPENDITURE

Development expenditure is recognised as an expense except that costs incurred on development projects are capitalised as non-current assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if, an entity can demonstrate all of the following:-

(a) its ability to measure reliably the expenditure attributable to the asset under development; (b) the product or process is technically and commercially feasible; (c) its future economic benefits are probable; (d) its intention to complete and the ability to use or sell the developed asset; and (e) the availability of adequate technical, financial and other resources to complete the asset under

development.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over a period of 5 years when the products are ready for sale or use. in the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.

The amortisation method, useful life and residual value are reviewed, and adjusted if appropriate, at the end of each reporting period.

5.11 IMPAIRMENT

(a) Impairment of Financial Assets

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the armotised cost would have been had the impairment not been recognised.

(b) Impairment of Non-financial Assets

The carrying values of assets, other than those to which MFRS 136 - impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. impairment is measured by comparing the carrying values of the assets with their recoverable amounts. When the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount and an impairment loss shall be recognised. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value in use, which is measured by reference to discounted future cash flow using a pre-tax discount rate. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

An impairment loss is recognised in profit or loss.



cont’d


5.11 IMPAIRMENT (cont’d)

(b) Impairment of Non-financial Assets (cont’d)

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately.

5.12 LEASED ASSETS

(a) Finance Assets

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. 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. The corresponding liability is included in the statement of financial position as hire purchase payables.

Minimum lease payments made under finance leases are apportioned between the finance costs and the reduction of the outstanding liability. The finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the profit or loss and allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each accounting period.

(b) Operating Lease

All leases that do not transfer substantially to the Group all the risks and rewards incidental to ownership are classified as operating leases and, the leased assets are not recognised on the Group’s statement of financial position.

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

The lump sum upfront lease payments made in respect of leasehold land which in substance is an operating lease is classified as prepaid lease payments. The prepaid lease payments are stated at cost less accumulated amortisation. The amortisation is charged to profit or loss in equal instalments over the respective lease periods.

5.13 INVENTORIES

inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in-first-out basis and comprises the purchase price, production or conversion costs and incidentals incurred in bringing the inventories to their present location and condition.

Net realisable value represents the estimated selling price less the estimated cost of completion and the estimated costs necessary to make the sale.

5.14 BORROWING COSTS

Borrowing costs that are directly attributable to the acquisition, construction or production of qualified assets, are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. The capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.




5.14 BORROWING COSTS (cont’d)

All other borrowing costs are recognised in profit or loss as expenses in the period in which they incurred.

investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

5.15 INCOME TAXES

(a) Current Tax

Current tax assets and liabilities are expected amount of income tax recoverable or payable to the taxation authorities.

Current taxes are measured using tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period and are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss (either in other comprehensive income or directly in equity).

(b) Deferred Tax

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs.

(c) Goods and Services Tax (“GST”)

Revenues, expenses and assets are recognised net of GST. However, when the GST incurred are related to purchases of assets or services which are not recoverable from the taxation authorities, the GST are included as part of the costs of the assets acquired or as part of the expense item whichever is applicable.

Receivables and payables are stated with the amount of GST included (where applicable).

The net amount of the GST recoverable from or payable to the taxation authorities at the end of the reporting period is included in other receivables or other payables.



cont’d


5.16 CASH AND CASH EqUIVALENTS

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity periods of three months or less.

5.17 PROVISIONS

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation. The unwinding of the discount is recognised as interest expense in profit or loss.

5.18 EMPLOYEE BENEFITS (a) Short-term Benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognised in profit or loss, in the period in which the associated services are rendered by employees of the Group.

(b) Defined Contribution Plans

The Group’s contributions to defined contribution plans are recognised in profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.

5.19 RELATED PARTIES

A party is related to an entity (referred to as the “reporting entity”) if:-

(a) A person or a close member of that person’s family is related to a reporting entity if that person:-

(i) has control or joint control over the reporting entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key management personnel of the reporting entity or of a parent of the

reporting entity.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:-

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third

entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the

reporting entity or an entity related to the reporting entity. if the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a) above. (vii) A person identified in (a)(i) above has significant influence over the entity or is a member of the

key management personnel of the entity (or of a parent of the entity). (viii) The entity, or any member of a group of which it is a part, provides key management personnel

services to the reporting entity or to the parent of the reporting entity.




5.19 RELATED PARTIES (cont’d)

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the reporting entity either directly or indirectly, including any director (whether executive or otherwise) of that entity.

5.20 CONTINGENT LIABILITIES

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. it can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

5.21 EARNINGS PER ORDINARY SHARE

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

Diluted earnings per ordinary share is determined by adjusting the consolidated profit or loss attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares.

5.22 FAIR VALUE MEASUREMENTS

Fair value is 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, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction 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.

For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:-

Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can access at the measurement date;

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

Level 3: inputs are unobservable inputs for the asset or liability.

The transfer of fair value between levels is determined as of the date of the event or change in circumstances that caused the transfer.



cont’d


5.23 REVENUE AND OTHER INCOME

(a) Sale of Goods

Revenue is measured at fair value of the consideration received or receivable and is recognised upon delivery of goods and customers’ acceptance and where applicable, net of returns, GST, cash and trade discounts.

(b) Interest Income

interest income is recognised on an accrual basis using the effective interest method.

(c) Dividend Income

Dividend income from investment is recognised when the right to receive dividend payment is established.

(d) Rental Income

Rental income is accounted for on a straight-line method over the lease term.

5.24 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. An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

6. INVESTMENTS IN SUBSIDIARIES

The Company

2016 2015

RM’000 RM’000

Unquoted shares in Malaysia at cost:-

At 1 January 31,891 29,901

Addition during the financial year - 2,000

Disposal during the financial year - (10)

At 31 December 31,891 31,891

Accumulated impairment losses (1,070) (1,070)

30,821 30,821



6. INVESTMENTS IN SUBSIDIARIES (cont’d)

Details of the subsidiaries are as follows:-

Name of Subsidiary

Principal Place of Business/Country of Incorporation

Percentage of Issued Share Capital

Held by Parent Principal Activities

2016 2015

% %

Subsidiaries of the Company

United MS Electrical Mfg. (M) Sdn. Bhd. (“UMSE”)

Malaysia 100 100 Designing, manufacturing and trading of electrical wiring accessories.

UMS-Neiken (M) Sdn. Bhd. (“UMSN”)

Malaysia 100 100 Marketing and trading in electrical products, accessories and appliances.

UMS-Universal Sales & Services Sdn. Bhd. * (“UMSUSS”)

Malaysia 100 100 Sales and services of electrical home appliances.

UMS Lamp (M) Sdn. Bhd. (“UMSL”)

Malaysia 100 100 Marketing and trading in lamps and fitting products. However, the company has temporarily ceased its operations in the previous financial year.

UMS-Neiken industry Sdn. Bhd. * (“UMSi”)

Malaysia 90 90 import and export or trading in any type of electrical products.

Subsidiaries of UMSE

Neiken Switchgear (VN) Co. Ltd. # (“NSVN”)

Vietnam 100 100 Manufacturing and trading of electrical wiring accessories.

Neiken Electric (S) Pte. Ltd. #

(“NES”) (formerly known as Neiken Switchgear (S) Pte. Ltd.)

Republic ofSingapore

100 - Wholesale and distribution of electrical wiring accessories and related products.

* - 1 equity share held though UMSE # - These subsidiaries were audited by member firms of Crowe Horwath International of which Crowe Horwath is a member.



cont’d

6. INVESTMENTS IN SUBSIDIARIES (cont’d)

(a) During the financial year, the Group acquired an additional 50% equity interests in NES for a consideration of SGD1,405,381. Consequently, NES became a wholly-owned subsidiary of the Group. The details of the acquisition are disclosed in Note 35 to the financial statements.

(b) The non-controlling interests at the end of the reporting period comprise the following:-

Effective Equity Interest The Group

2016 2015 2016 2015

% % RM’000 RM’000

UMSi 10 10 56 49

(c) The summarised financial information (before intra-group elimination) for each subsidiary that has non-controlling interests that are material to the Group is as follows:-

UMSI

2016 2015

RM’000 RM’000

At 31 December

Current assets 1,693 984

Non-current liabilities (21) (46)

Current liabilities (1,108) (445)

Net assets 564 493

Financial Year Ended 31 December

Revenue 1,117 1,332

Profit for the financial year 71 151

Total comprehensive income 71 151

Total comprehensive income attributable to non-controlling interests 7 15

Dividends paid to non-controlling interests - (5)

Net cash flows from/(for) operating activities 219 (541)

Net cash flows from investing activity 1 2

Net cash flows for financing activity (50) (15)



7. INVESTMENTS IN ASSOCIATES

The Group

2016 2015

RM’000 RM’000

Unquoted shares outside Malaysia, at cost - 1,200

Share of post acquisition profits - 1,565

Share of post acquisition other comprehensive income - 485

- 3,250

Accumulated impairment losses:-

At 1 January (*) -

Addition during the financial year - (*)

Written off during the financial year * -

At 31 December - (*)

- 3,250


The details of the associates are as follows:-

Name of AssociatePrincipal Place

of BusinessEffective Equity

Interest Principal Activities

2016 2015

% %

Neiken Electric (S) Pte. Ltd. (“NES”) (formerly known as Neiken Switchgear (S) Pte. Ltd.)

Republic ofSingapore

^ 50 Wholesale and distribution of electrical wiring accessories and related products.

Neiken Africa (Proprietary) Limited (“NAP”)

Republic ofBotswana

# 50 Dormant.

^ - The associate has been reclassified to investments in subsidiaries during the financial year. # - The associate has been struck off during the financial year.

(a) The Group recognised its share of results in NES based on the unaudited financial statements drawn up to 15 September 2016 (2015 - 31 December 2015).



cont’d

7. INVESTMENTS IN ASSOCIATES (cont’d)

(b) The summarised financial information for each associate that is material to the Group is as follows:-

NES

2016 2015

RM’000 RM’000

At 31 December

Non-current assets - 15,918

Current assets - 6,626

Non-current liabilities - (7,207)

Current liabilities - (8,845)

Net assets - 6,492

9-month Period Ended 15 September/12-month Period Ended 31 December

Revenue 6,227 11,391

Profit for the financial period/year 91 30

Total comprehensive income 73 881

Group’s share of profit for the financial period/year 45 15

Group’s share of other comprehensive (expenses)/income (9) 426

Reconciliation of net assets to carrying amount

Group’s share of net assets above - 3,246

Premium on acquisition - 16

Elimination of unrealised losses - (12)

Carrying amount of the Group’s interest in this associate - 3,250

(c) in the previous financial year, the Group has not recognised losses relating to Neiken Africa (Proprietary) Limited, where its share of losses exceeds the Group’s interest in this associate. The Group’s cumulative share of unrecognised losses at the end of reporting period and the share of the current financial year’s loss were immaterial. The Group has no obligation in respect of these losses.

(d) The Group assessed the recoverable amount of the investments in associates and determined that an impairment loss should be recognised as the recoverable amount is lower than the carrying amount. A written off of investment at RM38, representing the write-down of the investments in associate to the recoverable amount was recognised in “other expenses” line item of the Statements of Profit or Loss and Other Comprehensive income.



8. PROPERTY, PLANT AND EqUIPMENT

At1.1.2016 Additions Disposal

Acquisition of A

Subsidiary Depreciation

ChargeExchange

DifferenceAt

31.12.2016

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

The Group

Net Book Value

Freehold land and buildings 16,622 - - 5,848 (265) 72 22,277

Factory and buildings 1,501 - - - (114) 70 1,457

Plant and machinery 3,261 1,640 (48) - (862) 44 4,035

Motor vehicles 1,326 963 - 220 (626) 7 1,890

Office equipment 165 107 - 20 (42) (3) 247

Furniture and fittings 107 21 - 51 (24) 1 156

Computers 93 26 - - (32) - 87

Renovation - - - 6 (2) - 4

23,075 2,757 (48) 6,145 (1,967) 191 30,153

At1.1.2015 Additions Disposal

DepreciationCharge

ExchangeDifference

At31.12.2015

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

The Group

Net Book Value

Freehold land and buildings 16,672 191 - (241) - 16,622

Factory and buildings 811 612 - (98) 176 1,501

Plant and machinery 2,485 1,428 (33) (738) 119 3,261

Motor vehicles 524 1,262 - (468) 8 1,326

Office equipment 113 79 - (29) 2 165

Furniture and fittings 68 50 - (11) - 107

Computers 41 78 - (26) - 93

20,714 3,700 (33) (1,611) 305 23,075



cont’d

8. PROPERTY, PLANT AND EqUIPMENT (cont’d)

AtCost

AccumulatedDepreciation

ImpairmentLosses

Net BookValue

RM’000 RM’000 RM’000 RM’000

The Group

2016

Freehold land and buildings 25,135 (2,818) (40) 22,277

Factory and buildings 2,298 (841) - 1,457

Plant and machinery 26,547 (21,760) (752) 4,035

Motor vehicles 4,348 (2,458) - 1,890

Office equipment 1,241 (994) - 247

Furniture and fittings 392 (236) - 156

Computers 262 (175) - 87

Electrical installation 249 (249) - -

Renovation 251 (247) - 4

60,723 (29,778) (792) 30,153

2015

Freehold land and buildings 18,835 (2,173) (40) 16,622

Factory buildings 2,195 (694) - 1,501

Plant and machinery 24,983 (20,970) (752) 3,261

Motor vehicles 3,601 (2,275) - 1,326

Office equipment 978 (813) - 165

Furniture and fittings 288 (181) - 107

Computers 236 (143) - 93

Electrical installation 249 (249) - -

51,365 (27,498) (792) 23,075

(a) The freehold land and buildings with a total net book value of approximately RM22,277,000 (2015 - RM16,622,000) have been pledged to financial institutions as security for banking facilities granted to subsidiaries as disclosed in Note 23 to the financial statements.

(b) included in assets of the Group at the end of the reporting period was a motor vehicle with a total net book value of approximately RM378,000 (2015 - RM974,000) which was acquired under hire purchase terms.



9. INVESTMENT PROPERTIES

The Group

2016 2015

RM’000 RM’000

Leasehold land, at cost:-

At 1 January 2,381 2,318

Additions - 63

Acquisition of a subsidiary 8,357 -

Exchange differences 199 -

At 31 December 10,937 2,381

Accumulated depreciation:-

At 1 January (85) (42)

Depreciation during the financial year (89) (43)

Acquisition of a subsidiary (176) -

Exchange differences (30) -

At 31 December (380) (85)

Net book value at 31 December 10,557 2,296

Fair value 16,503 13,051

At the end of the financial year, the investment property of approximately RM8,305,000 (2015 - Nil) has been pledged to a licensed bank as security for banking facilities granted to the Group.

10. DEVELOPMENT EXPENDITURE

The Group

2016 2015

RM’000 RM’000

Development expenditure, at cost:-

At 1 January - 2,173

Written off - (2,173)

At 31 December - -

Accumulated amortisation:-

At 1 January - (2,173)

Written off - 2,173

At 31 December - -

Carrying value at 31 December - -



cont’d

11. PREPAID LEASE PAYMENTS

The Group

2016 2015

RM’000 RM’000

Long-term leasehold land, at cost:-

At 1 January 550 470

Reclassification during the financial year (550) -

Exchange differences - 80

At 31 December - 550

Accumulated amortisation:-

At 1 January 397 (119)

Amortisation charge during the year - (13)

Reclassification during the financial year (397) -

Exchange differences - (21)

At 31 December - (153)

Carrying value at 31 December - 397

12. DEFERRED TAX ASSETS

The Group

2016 2015

RM’000 RM’000

At 1 January 101 101

Recognised in profit or loss (Note 32) 5 -

At 31 December 106 101

Deferred tax assets are attributable to the following:-

The Group

2016 2015

RM’000 RM’000

Accelerated capital allowances over depreciation (36) (36)

Other temporary differences 142 137

106 101



13. OTHER INVESTMENT

The Group2016 2015

RM’000 RM’000

Quoted shares outside Malaysia 564 553

Represented by:-

At fair value 564 553

The Group designated this financial asset at fair value through profit or loss.

14. INVENTORIES

The Group2016 2015

RM’000 RM’000

Raw materials 5,966 6,135

Work-in-progress 3,201 2,523

Finished goods 9,858 8,686

Goods-in-transit 525 449

19,550 17,793

Recognised in profit or loss:-

inventories recognised as cost of sales 37,754 29,572

Amount written down to net realisable value 1,126 343

Reversal of inventories previously written down (27) (354)

15. TRADE RECEIVABLES

The Group2016 2015

RM’000 RM’000

Trade receivables 21,130 17,086

Allowance for impairment losses (316) (160)

20,814 16,926

Allowance for impairment losses:-

At 1 January (160) (345)

Acquisition of a subsidiary (778) -

Addition for the financial year (69) (122)

Reversal during the financial year 61 307

Written off during the financial year 638 -

Exchange differences (8) -

At 31 December (316) (160)



cont’d

15. TRADE RECEIVABLES (cont’d)

The Group’s normal trade credit terms range from 30 to 120 (2015 - 30 to 120) days.

16. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Other receivables:-

Third parties 506 1,146 - -

Advances to suppliers 510 1,214 - -

Goods and services tax recoverable 91 124 - -

1,107 2,484 - -

Allowance for impairment losses (127) (140) - -

980 2,344 - -

Deposits 119 233 - -

Prepayments 638 281 * 12

1,737 2,858 * 12

Allowance for impairment losses:-

At 1 January (140) (13) - -

Addition during the financial year - (129) - -

Reversal during the financial year 20 13 - -

Exchange difference (7) (11) - -

31 December (127) (140) - -

* Amount is less than RM1,000

(a) The advances to suppliers are unsecured and interest-free. The amount owing will be offset against future purchases from the suppliers.

(b) included in deposits of the Group at the end of previous financial year was an amount of approximately RM138,000 being the deposit paid for the purchase of a motor vehicle.



17. AMOUNT OWING BY AN ASSOCIATE

The Group

2016 2015

RM’000 RM’000

Amount Owing by An Associate

Current

Trade balance:

- NSS - 308

Non-trade balance:

- NSS - 3,084

- 3,392

(a) in the previous financial year, the trade balance was subjected to the normal trade credit terms ranging from 90 to 120 days. The amount owing was settled in cash.

(b) in the previous financial year, the non-trade balance was unsecured and payments made on behalf. The amount owing was repayable and settled in cash. interest rate of 4% per annum was imposed on each month end outstanding until full settlement.

18. AMOUNTS OWING BY/(TO) A RELATED PARTY

The Group

2016 2015

RM’000 RM’000

Amount Owing by A Related Party

Current

Trade balance:

- United MS Cables Mfg Sdn. Bhd. (“UMSC”) 7 11

Amount Owing to A Related Party

Current

Trade balance:

- UMSC (717) (549)

Non-trade balance:

- UMSC - 7

(717) (542)



cont’d

18. AMOUNTS OWING BY/(TO) A RELATED PARTY (cont’d)

(a) The relationships with the related parties are disclosed in Note 39 to the financial statements.

(b) The trade balances are subjected to the normal trade credit terms ranging from 90 to 120 (2015 - 90 to 120) days. The amounts owing are to be settled in cash.

(c) in the previous financial year, the non-trade balance represented unsecured interest-free advances and payment made on behalf. The amount owing was settled in cash.

19. DEPOSITS WITH LICENSED BANKS

(a) The deposits with licensed banks of the Group and the Company at the end of the reporting period bore effective interest rates ranging from 0% to 3.72% (2015 - 0.25% to 3.51%) per annum and 3.36% to 3.72% (2015 - 3.10% to 3.40%) per annum respectively. The deposits have maturity periods ranging from 1 day to 12 months (2015 - 1 day to 12 months) and 1 day (2015 - 1 day to 6 months) for the Group and the Company respectively.

(b) included in deposits with licensed banks of the Group at the end of the reporting period was an amount of approximately RM1,237,000 (2015 - RM1,194,000) which has been pledged to licensed banks as security for banking facilities granted to the Group.

20. SHARE CAPITAL

The Group/The Company

2016 2015 2016 2015

Number of Shares RM’000 RM’000

Ordinary Shares of RM0.50 Each:-

Authorised 100,000,000 100,000,000 50,000 50,000

issued and Fully Paid-Up 80,000,000 80,000,000 40,000 40,000

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company, and are entitled to one vote per ordinary share at meetings of the Company.

21. TREASURY SHARES There were no shares repurchased during the year. The repurchased transactions were financed by internally

generated funds. The repurchased shares are being held as treasury shares and carried at cost in accordance with the requirements of Section 67A of the Companies Act 1965. Treasury shares have no rights to vote, dividends and participation in other distribution.

Of the total 80,000,000 issued and fully paid-up ordinary shares as at the end of the reporting period, 1,404,200 ordinary shares are held as treasury shares by the Company. None of the treasury shares were resold or cancelled during the financial year.



22. RESERVES


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Share premium (a) 1,531 1,531 1,531 1,531

Foreign exchange translation reserve (b) 293 (33) - -

Retained profits 46,471 38,924 4,754 4,633

48,295 40,422 6,285 6,164

(a) Share Premium

The share premium reserve represents the premium paid on subscription of ordinary shares in the Company over and above the par value of the shares issued, net of transaction costs (if any). The share premium reserve is not distributable by way of dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act 1965.

(b) Foreign Exchange Translation Reserve

The foreign exchange translation reserve arose from the translation of the financial statements of foreign subsidiaries and the Group’s share of an associate’s foreign currency translation differences.

23. TERM LOANS (SECURED)

The Group

2016 2015

RM’000 RM’000

Current (Note 28)

Not later than 1 year 1,122 559

Non-current

Later than 1 year and not later than 2 years 1,161 585

Later than 2 years and not later than 5 years 3,732 1,922

Later than 5 years 4,540 2,428

9,433 4,935

10,555 5,494

Details of the term loans are as follows:-

Number of Monthly

InstalmentsMonthly

Instalment

Date of Commencement

of Repayment

RM’000

Term loan 1 180 66 May 2013

Term loan 2 120 19 March 2012

Term loan 3 192 30 April 2014



cont’d

23. TERM LOANS (SECURED) (cont’d)

(a) The term loans are secured by:-

(i) a legal charge on the existing loan agreement cum assignment over a 4 storey detached factory cum office building, freehold property and investment property of a subsidiary; and

(ii) a corporate guarantee of the Company.

(b) The term loan bore effective interest rates ranging from 2.30% to 4.42% (2015 - 4.55%) per annum and repayable in 120 to 192 (2015 - 180) monthly instalments.

24. DEFERRED TAX LIABILITIES

The Group2016 2015

RM’000 RM’000

At 1 January 1,133 1,102Recognised in profit or loss (Note 32) (28) 31Acquisition of a subsidiary 497 -

At 31 December 1,602 1,133

Deferred tax liabilities are attributable to the following:-

The Group2016 2015

RM’000 RM’000

Accelerated capital allowances over depreciation 906 906

Revaluation surplus 1,043 549Other temporary differences (347) (322)

1,602 1,133

25. TRADE PAYABLES

The normal trade credit terms granted to the Group and the Company range from 14 to 90 (2015 - 14 to 90) days.

26. OTHER PAYABLES AND ACCRUALS

The Group The Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Other payables:-Third parties 552 425 - 2Advances from customers 788 1,089 - -Goods and services tax payable 4 - - -

1,344 1,514 - 2Accruals 2,033 1,996 24 24

3,377 3,510 24 26



27. AMOUNT OWING TO DIRECTORS

The amount owing is non-trade in nature, unsecured, interest-free and repayable on demand. The amount owing is to be settled in cash.

28. SHORT-TERM BORROWINGS

The Group

2016 2015

RM’000 RM’000

Hire purchase payable (Note 29) 33 33

Term loan (Note 23) 1,122 559

1,155 592

29. HIRE PURCHASE PAYABLE (SECURED)

The Group

2016 2015

RM’000 RM’000

Minimum hire purchase payments:

- not later than 1 year 34 34

Less: Future finance charges (1) (1)

Present value of hire purchase payable 33 33

Current (Note 28)

- not later than 1 year 33 33

(a) The hire purchase payable of the Group is secured by the Group’s motor vehicles under hire purchase.

(b) The hire purchase payable of the Group at the end of the reporting period bore an effective interest rate of 6.22% (2015 - 4.80%) per annum. The interest rate is fixed at the inception of the hire purchase arrangements.

30. REVENUE

Revenue of the Group represents the invoiced value of goods sold less trade discounts and returns, whilst revenue of the Company is in respect of gross dividend income from subsidiaries.



cont’d

31. PROFIT BEFORE TAXATION


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Profit before taxation is arrived at after charging/(crediting):-

Amortisation of prepaid lease payments - 13 - -

Auditors’ remuneration:

- audit fees:

- current financial year 103 109 24 24

- underprovision in the previous financial year - 10 - 2

- non-audit fees:

- current financial year 3 3 - -

Bad debts written off - 221 - -

Depreciation of investment properties 89 43 - -

Depreciation of property, plant and equipment 1,967 1,611 - -

Directors’ fee 106 103 106 103

Directors’ non-fee emoluments:

- salaries, bonuses and allowances 2,118 2,009 15 62

- defined contribution benefits 230 232 - -


- investment in an associate - * - -

- other receivables - 129 - -

- trade receivables 69 122 - -

interest expense on financial liabilities not at fair value through profit or loss:

- bank overdrafts 10 10 - -

- bills payable 1 4 - -

- hire purchase 3 10 - -

- term loan 307 293 - -

- others 6 - - -

inventories written down 1,126 343 - -

Rental of premises 52 33 - -

Staff costs (including other key management personnel) 10,587 10,386 - -

Dividend income from other investment (9) - - -

Dividend income from a subsidiary - - (2,400) (2,045)

Gain from bargain purchase (571) - - -

Gain on disposal of investment in a subsidiary that do not result in loss of control - - - (29)

Gain on remeasuring to fair value the pre-existing interests of an associate (972) - - -

Gain on disposal of plant and equipment (156) (115) - -



31. PROFIT BEFORE TAXATION (cont’d)


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Profit before taxation is arrived at after charging/(crediting):- (cont’d)

Gain on foreign exchange:

- unrealised (354) (2,031) - -

- realised (821) (658) - -

Total interest income on financial assets not at fair value through profit or loss (610) (585) (394) (400)

Reversal of impairment loss:

- other receivables (20) (13) - -

- trade receivables (61) (307) - -

Reversal of inventories written down (27) (354) - -

Rental income (80) (17) - -


32. INCOME TAX EXPENSE


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

income tax:

- for the current financial year 3,555 2,724 1 15

- under/(over)provision in the previous financial year 8 (341) 5 (40)

3,563 2,383 6 (25)

Deferred tax assets: (Note 12)

- for the current financial year (5) - - -

Deferred tax liabilities: (Note 24)

- for the current financial year (24) 33 - -

- realisation of deferred tax liabilities in amortisation of revalued properties (3) - - -

- overprovision in the previous financial year (1) (2) - -

(28) 31 - -

(33) 31 - -

3,530 2,414 6 (25)



cont’d

32. INCOME TAX EXPENSE (cont’d)

A reconciliation of the income tax expense applicable to the profit before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group and the Company is as follows:-


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Profit before taxation 13,442 11,901 2,485 2,179

Tax at the statutory tax rate of 24% (2015 - 25%) 3,226 2,975 596 545

Tax effects of:-

Non-taxable income (738) (273) (670) (609)

Non-deductible expenses 1,111 252 75 79

Effects of differential in tax rates of subsidiaries (45) (21) - -

Deferred tax assets not recognised during the financial year 136 46 - -

Utilisation of deferred tax assets previously not recognised (92) (222) - -

Tax incentive (75) - - -

Under/(Over)provision in the previous financial year

- current year tax 8 (341) 5 (40)

- deferred tax liabilities (1) (2) - -

income tax expense for the financial year 3,530 2,414 6 (25)

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2015 - 25%) of the estimated assessable profit for the financial year.

No deferred tax asset is recognised in respect of the following items:-


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Unutilised tax losses 958 546 - -

Accelerated capital allowances over depreciation 70 60 - -

Other temporary differences 492 365 - -

1,520 971 - -



33. EARNINGS PER SHARE

The Group

2016 2015

Profit attributable to owners of the Company (RM’000) 9,905 9,484

Weighted average number of ordinary shares at 31 December (‘000) 78,596 78,596

Basic earnings per ordinary share (Sen) 12.6 12.1

The Company has not issued any dilutive potential ordinary shares and hence, the diluted earnings per share is equal to the basic earnings per share.

34. DIVIDEND

The Company

2016 2015

RM’000 RM’000

Paid:-

A single tier interim dividend of 3.00 sen per ordinary share (2015 - 2.50 sen) in the current financial year 2,358 1,965

On 22 February 2017, the Board declared a single tier interim dividend of 3.0 sen per ordinary share amounting to approximately RM2,358,000 in respect of the financial year ended 31 December 2016. The financial statements for the financial year ended 31 December 2016 do not reflect this declared dividend and such dividend will be accounted for as a liability in the financial year ending 31 December 2017.

35. ACqUISITION OF A SUBSIDIARY

On 15 September 2016, the Company acquired the remaining 50% equity interests in Neiken Electric (S) Pte. Ltd. (“NES”) (formerly known as Neiken Switchgear (S) Pte. Ltd.) as disclosed in Note 6 to the financial statements.



cont’d

35. ACqUISITION OF A SUBSIDIARY (cont’d)

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:-

The Group

2016

RM’000

Property, plant and equipment 6,145

investment properties 8,181

inventories 1,419

Trade and other receivables 2,154

Cash and bank balances 2,468

Trade payables and other payables (1,670)

Amount owing to immediate holding company (1,758)

Term loan (7,327)

Current tax liabilities (22)

Deferred tax liabilities (497)

Net identifiable assets acquired 9,093

Less: Share of net assets previously held as investment in associate (3,286)

Less: Gain on remeasurement of net identifiable assets and liabilities previously held as investments in associate at fair value at acquisition date (972)

Less: Gain on bargain purchase (571)

Total purchase consideration 4,264

Less: Amount owing by the vendor (1,432)

Less: Cash and bank balances of the subsidiary (2,468)

Net cash outflow for the acquisition of a subsidiary 364

(a) The subsidiary has contributed revenue of RM2,453,066 and loss after taxation of RM391,293 to the Group since the date of acquisition.

if the acquisition was effective at the beginning of the current financial year, the Group’s revenue and profit

after taxation for the current financial year would have been RM72,098,142 and RM9,977,621 respectively.

(b) The remeasurement to fair value of the Group’s existing 50% interests in NES resulted in a gain of approximately RM972,000 (fair value of approximately RM4,258,000 less its carrying value at acquisition date of approximately RM3,286,000) was recognised in profit or loss under the “Other income” line item to the financial statements.

There were no acquisitions of new subsidiaries in the last financial year.

36. PURCHASE OF PROPERTY, PLANT AND EqUIPMENT

The Group

2016 2015

RM’000 RM’000

Cost of property, plant and equipment purchased 2,757 3,700

Amount financed through hire purchase (100) (400)

Cash disbursed for purchase of property, plant and equipment 2,657 3,300



37. CASH AND CASH EqUIVALENTS

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:-


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks 17,136 15,587 12,545 12,767


25,371 24,437 12,663 12,846

Less: Deposit pledged to licensed bank (1,237) (1,194) - -

24,134 23,243 12,663 12,846

38. KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel of the Group and of the Company include executive directors and non-executive directors of the Company and certain members of senior management of the Group and of the Company.

(a) The key management personnel compensation during the financial year are as follows:-


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Directors

Directors of the Company

Executive Directors

Short-term employee benefits:

- salaries, bonuses and other benefits 2,103 1,947 - -

Defined contribution benefits 230 232 - -

2,333 2,179 - -

Non-executive Directors


- fees 106 103 106 103

- other benefits 15 62 15 62

121 165 121 165

2,454 2,344 121 165



cont’d

38. KEY MANAGEMENT PERSONNEL COMPENSATION (cont’d)

(a) The key management personnel compensation during the financial year are as follows:- (cont’d)


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Directors (cont’d)

Directors of the Subsidiaries

Executive directors


- fee 15 15 - -

- salaries, bonuses and other benefits 330 351 - -

345 366 - -


389 405 - -

Total directors’ remuneration 2,843 2,749 121 165

Other Key Management Personnel

Short-term employee benefits 159 150 - -


Total compensation for other key management personnel 179 165 - -

(b) The number of the Company’s directors with total remuneration falling in bands of RM50,000 are as follows:-

The Company

2016 2015

Number of Directors

Executive Directors

RM300,001 - RM350,000 1 1

RM1,850,001 - RM1,900,000 - 1

RM1,950,001 - RM2,000,000 1 -

Non-executive Directors

Below RM50,000 3 5

5 7



39. RELATED PARTY DISCLOSURES

(a) Identities of Related Parties

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.

in addition to the information detailed elsewhere in the financial statements, the Group has related party relationships with its directors, key management personnel and entities within the same group of companies.

(b) Significant Related Party Transactions and Balances

Other than those disclosed elsewhere in the financial statements, the Group and the Company also carried out the following significant transactions with the related parties during the financial year:-

The Group

2016 2015

Note RM’000 RM’000

Associated company

NES (i)

- Sale of goods 504 1,024

- Loan interest receivable - 120

Related company

UMSC (ii)

- Sale of goods 208 21

- Purchase of goods 2,157 1,819

- Rental receivable 24 17

Related parties

Ming Kee (iii)

- Purchase of goods 195 226

HPC (iii)

- Purchase of goods - 60

Note

(i) the associated company became a wholly-owned subsidiary with effect from 15 September 2016.

(ii) a subsidiary of the immediate holding company.

(iii) a shareholder of the Company and a director of the immediate holding company, Ip Tai Hoi, has substantial financial interests.



cont’d

40. OPERATING SEGMENTS

Operating segments are prepared in a manner consistent with the internal reporting provided to the management as its chief operating decision maker in order to allocate resources to segments and to assess their performance on a quarterly basis. For management purposes, the Group is organised into business units based on their geographical region.

(a) The management assesses the performance of the reportable segments based on their profit before interest expense and taxation. The accounting policies of the reportable segments are the same as the Group’s accounting policies.

Borrowings and investment-related activities are managed on a group basis by the central treasury function and are not allocated to reportable segments.

(b) Each reportable segment assets is measured based on all assets (including goodwill) of the segment other than investments in associates and tax-related assets.

(c) Each reportable segment liabilities is measured based on all liabilities of the segment other than borrowings and tax-related liabilities.

(d) Assets, liabilities and expenses which are common and cannot be meaningfully allocated to the reportable segments are presented under unallocated items. Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters) and head office expenses.

Transactions between reportable segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation.

No segmental analysis by business segment is prepared as the Group operates predominantly in one industry.



40. OPERATING SEGMENTS (cont’d)

40.1 BUSINESS SEGMENTS

Malaysia Vietnam Singapore Group

RM’000 RM’000 RM’000 RM’000

2016

Revenue

External revenue 63,324 94 2,453 65,871

inter-segment revenue 6,211 7,600 - 13,811

69,535 7,694 2,453 79,682

Consolidation adjustments (13,811)

Consolidation revenue 65,871

Results

Segment profit/(loss) before interest and taxation 16,558 844 (349) 17,053

Finance costs (430)

Share of results in an associate 45


Consolidated profit before taxation 13,442

Segment profit/(loss) before interest and taxation includes the followings:-

Depreciation of investment properties 43 - 46 89

Depreciation of property, plant and equipment 1,557 317 93 1,967

impairment losses on trade receivables 69 - - 69

interest expenses 264 - 63 327

inventories written down 697 32 397 1,126

Gain from bargain purchase (571) - - (571)

Gain on remeasuring to fair value the pre-existing interests of an associate as disclosed in Note 35 (972) - - (972)

Gain on disposal of plant and equipment (156) - - (156)

interest income (609) (1) - (610)

Realised foreign exchange gain (795) (31) 5 (821)

Reversal of:

- impairment loss of other receivables - (20) - (20)

- impairment loss of trade receivables (61) - - (61)

- inventories written down (27) - - (27)

Share of results in an associate (45) - - (45)

Unrealised gain on foreign exchange (364) 10 - (354)



cont’d


40.1 BUSINESS SEGMENTS (cont’d)

Malaysia Vietnam Singapore Group

RM’000 RM’000 RM’000 RM’000

2016

Assets

Segment assets 134,360 8,556 17,083 159,999

Unallocated assets:

- deferred tax assets 106

- current tax assets 335


Consolidated total assets 109,194

Additions to non-current assets other than financial instruments are:

Property, plant and equipment 2,748 9 - 2,757

Liabilities

Segment liabilities 11,620 5,550 1,636 18,806

Unallocated liabilities:

- deferred tax liabilities 1,108

- current tax liabilities 600

- term loans 10,555

- hire purchase payable 33


Consolidated total liabilities 21,353





Malaysia Vietnam Group

RM’000 RM’000 RM’000

2015

Revenue

External revenue 60,025 73 60,098

inter-segment revenue 13,521 7,883 21,404

73,546 7,956 81,502


Consolidated revenue 60,098

Results

Segment profit before interest and taxation 13,902 447 14,349

Finance costs (487)

Share of results in associate 15


Consolidated profit before taxation 11,901

Segment profit before interest and taxation includes the followings:-

Amortisation of prepaid lease payments - 13 13

Bad debts written off 221 - 221

Depreciation of investment property 43 - 43

Depreciation of property, plant and equipment 1,343 268 1,611


- receivables 122 129 251

- investment in an associate * - *

interest expenses 317 - 317

inventories written down 343 - 343

Realised foreign exchange gain (758) 100 (658)

Gain on disposal of plant and equipment (115) - (115)

interest income (584) (1) (585)

Reversal of:

- inventories written down (354) - (354)

- impairment loss on receivables (320) - (320)

Share of results in an associate (15) - (15)

Unrealised gain on foreign exchange (2,176) 145 (2,031)




cont’d



Malaysia Vietnam Group

RM’000 RM’000 RM’000

2015

Assets

Segment assets 127,083 8,852 135,935

Unallocated assets:

- deferred tax assets 101

- current tax assets 361

- investments in associates 1,200


Consolidated total assets 95,450

Additions to non-current assets other than financial instruments are:-

investment property 63 - 63

Property, plant and equipment 2,680 1,020 3,700

Liabilities

Segment liabilities 12,850 6,793 19,643

Unallocated liabilities:

- hire purchase payable 33

- deferred tax liabilities 1,133

- term loans 5,494

- current tax liabilities 659


Consolidated total liabilities 15,489

40.2 MAJOR CUSTOMERS

There is no single customer that contributed 10% or more to the Group’s revenue.



41. OPERATING LEASE COMMITMENTS

(a) Leases as Lessee

The Group leases office property and equipment under non-cancellable operating leases. The lease periods range from 1 to 5 years (2015 - Nil). The Group is restricted from sub-leasing the leased assets to third parties.

The future minimum lease payments under the non-cancellable operating leases are as follows:-

The Group

2016 2015

RM’000 RM’000

Not more than 1 year 172 -

Later than 1 year and not later than 5 years 65 -

237 -

(b) Leases as Lessor

The Group leases out its investment property under non-cancellable operating leases. The leases have remaining lease periods of between 1 to 2 years (2015 - Nil).

The future minimum lease payments under the non-cancellable operating leases are as follows:-

The Group

2016 2015

RM’000 RM’000

Not more than 1 year 192 -

Later than 1 year and not later than 5 years 168 -

360 -

42. CONTINGENT LIABILITY

No provisions are recognised on the following matters as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement:-

The Company

2016 2015

RM’000 RM’000

Unsecured

Corporate guarantee given to licensed banks for credit facilities granted to subsidiaries 37,537 37,364



cont’d

43. FOREIGN EXCHANGE RATES

The principal closing foreign exchange rates used (expressed on the basis of one unit of foreign currency to RM equivalent) for the translation of the foreign currency balances at the end of reporting period are as follows:-

The Group

2016 2015

RM RM

United States Dollar 4.49 4.29

Singapore Dollar 3.10 3.04

Hong Kong Dollar 0.58 0.55

Chinese Renminbi 0.65 0.66

44. FINANCIAL INSTRUMENTS

The Group’s activities are exposed to a variety of market risk (including foreign currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. The Group’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

44.1 FINANCIAL RISK MANAGEMENT POLICIES The Group’s policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than the respective functional currencies of entities within the Group. The currencies giving rise to this risk are primarily United States Dollar (“USD”), Chinese Renminbi (“RMB”) and Singapore Dollar (“SGD”). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level. The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes.



44. FINANCIAL INSTRUMENTS (cont’d)

44.1 FINANCIAL RISK MANAGEMENT POLICIES (cont’d)

(a) Market Risk (cont’d)

(i) Foreign Currency Risk (cont’d)

The Group’s exposure to foreign currency risk (a currency which is other than the functional currency of the entities within the Group) based on the carrying amounts of the financial instruments at the end of the reporting period is summarised below:-

Foreign Currency Exposure

United StatesDollar

ChineseRenminbi

SingaporeDollar Others

RinggitMalaysia Total

The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016

Financial Assets

Other investment - - 564 - - 564

Trade receivables 4,415 - 2,391 31 13,977 20,814

Other receivables and deposits 198 - 23 - 368 589

Amount owing by a related party - - - - 7 7

Deposits with licensed banks 449 - - - 16,687 17,136

Cash and bank balances 3,324 18 2,463 5 2,425 8,235

8,386 18 5,441 36 33,464 47,345

Financial Liabilities

Trade payables 734 - 1,323 - 2,062 4,119

Other payables and accruals 296 - 179 - 2,114 2,589

Amount owing to a related party 349 - 26 - 342 717

Amount owing to directors - - 9 - 341 350

Term loans - - 5,608 - 4,947 10,555

Hire purchase payable - - - - 33 33

1,379 - 7,145 - 9,839 18,363

Net financial assets/(liabililities) 7,007 18 (1,704) 36 23,625 28,982

Less: Net financial (assets)/liabilities denominated in the respective entities’ functional currencies (3,355) - 2,353 - (23,625) (24,627)

Currency Exposure 3,652 18 649 36 - 4,355



cont’d





Foreign Currency Exposure (cont’d)

United StatesDollar

ChineseRenminbi

SingaporeDollar Others

RinggitMalaysia Total

The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2015

Financial Assets

Other investments - - 553 - - 553

Trade receivables 3,877 - - 37 13,012 16,926

Other receivables and deposits 407 - 510 - 446 1,363

Amount owing by an associate - - 3,392 - - 3,392

Amount owing by a related party - - - - 11 11

Deposits with licensed banks 429 - - - 15,158 15,587

Cash and bank balances 4,186 278 243 21 4,122 8,850

8,899 278 4,698 58 32,749 46,682

Financial Liabilities

Trade payables 1,683 - - - 2,079 3,762

Other payables and accruals 268 - - - 2,153 2,421

Amount owing to a related party 295 - - - 247 542

Amount owing to directors - - - - 351 351

Term loan - - - - 5,494 5,494

Dividend payable - - - - 5 5

Hire purchase payable - - - - 33 33

2,246 - - - 10,362 12,608

Net financial assets 6,653 278 4,698 58 22,387 34,074

Less: Net financial liabilities/(assets) denominated in the respective entities’ functional currencies 1,868 - - - (22,387) (20,519)

Currency Exposure 8,521 278 4,698 58 - 13,555







Foreign Currency Risk Sensitivity Analysis

The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies at the end of the reporting period, with all other variables held constant:-

The Group

2016 2015

RM’000 RM’000

Effects on Profit After Taxation

SGD/RM - strengthened by 5% +25 +176

- weakened by 5% -25 -176

USD/RM - strengthened by 5% +139 +320

- weakened by 5% -139 -320

RMB/RM - strengthened by 5% +1 +10


Others/RM - strengthened by 5% +1 +2


(ii) Interest Rate Risk

interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises mainly from long-term borrowings with variable rates. The Group’s policy is to obtain the most favourable interest rates available by maintaining a balanced portfolio mix of fixed and floating rate borrowings.

The Group’s fixed rate receivables and borrowings are carried at amortised cost. Therefore, they are not subject to interest rate risk as defined MFRS 7 since neither the carrying amounts nor the future cash flows will fluctuate because of a change in market interest rates.

The Group’s exposure to interest rate risk based on the carrying amounts of the financial instruments at the end of the reporting period is disclosed in Notes 19 and 23 to the financial statements.

Interest Rate Risk Sensitivity Analysis

Any reasonably possible change in the interest rates of floating rate term loans at the end of the reporting period does not have material impact on the profit after taxation and other comprehensive income of the Group and of the Company and hence, no sensitivity analysis is presented.



cont’d




(iii) Equity Price Risk

The Group’s principal exposure to equity price risk arises mainly from changes in quoted investment prices. The Group manages its exposure to equity price risk by maintaining a portfolio of equities with different risk profiles.

Equity Price Risk Sensitivity Analysis

Any reasonably possible change in the prices of quoted investments at the end of the reporting period does not have material impact on the profit after taxation and other comprehensive income of the Group and of the Company and hence, no sensitivity analysis is presented.

(b) Credit Risk

The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including quoted investments and cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Groups uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 240 days, which are deemed to have higher credit risk, are monitored individually.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified (where applicable). impairment is estimated by management based on prior experience and the current economic environment.

(i) Credit Risk Concentration Profile

The Group does not have any major concentration of credit risk related to any individual customer or counterparty.

in addition, the Group also determines concentration of credit risk by monitoring the geographical region of its trade receivables on an ongoing basis. The credit risk concentration profile of trade receivables (including amount owing by a related party) at the end of the reporting period is as follows:-

The Group

2016 2015

RM’000 RM’000

inside Malaysia 13,984 13,023

Outside Malaysia 6,837 4,222

20,821 17,245





(b) Credit Risk (cont’d)

(ii) Exposure to Credit Risk

At the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position of the Group and of the Company after deducting any allowance for impairment losses (where applicable).

(iii) Ageing Analysis

The ageing analysis of the Group’s trade receivables (including amount owing by a related party) at the end of the reporting period is as follows:-

GrossAmount

IndividualImpairment

CollectiveImpairment

CarryingValue

The Group RM’000 RM’000 RM’000 RM’000

2016

Not past due 18,770 - - 18,770

Past due:

- 121 to 240 days 2,035 - - 2,035

- 241 to 365 days 15 (12) - 3

- over 365 days 317 (304) - 13

21,137 (316) - 20,821

2015

Not past due 16,656 - - 16,656

Past due:

- 121 to 240 days 558 - - 558

- 241 to 365 days 9 (4) - 5

- over 365 days 182 (156) - 26

17,405 (160) - 17,245

At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement.

The Group believes that no additional impairment allowance is necessary in respect of trade receivables that are past due but not impaired because they are companies with good collection track record and no recent history of default.



cont’d



(c) Liquidity Risk

Liquidity risk arises mainly from general funding and business activities. The Group practises prudent risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities.

Maturity Analysis

The following table sets out the maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):-

ContractualInterest

RateCarryingAmount

ContractualUndiscounted

Cash FlowsWithin1 Year

1 – 5Years

Over 5Years

The Group % RM’000 RM’000 RM’000 RM’000 RM’000

2016

Non-derivative Financial Liabilities

Hire purchase payable 6.22 33 34 34 - -Term loans 2.30 - 4.42 10,555 12,159 1,455 5,821 4,883Trade payables - 4,119 4,119 4,119 - -Other payables and

accruals - 2,589 2,589 2,589 - -Amount owing to a

related party - 717 717 717 - -Amount owing to

directors - 350 350 350 - -

18,363 19,968 9,264 5,821 4,883

2015


Hire purchase payable 4.80 33 34 34 - -Term loan 4.55 5,494 6,604 797 3,188 2,619Trade payables - 3,762 3,762 3,762 - -Other payables and

accruals - 2,421 2,421 2,421 - -Amount owing to a

related party - 542 542 542 - -Amount owing to

directors - 351 351 351 - -Dividend payable - 5 5 5 - -

12,608 13,719 7,912 3,188 2,619





(c) Liquidity Risk (cont’d)

Maturity Analysis (cont’d)

The following table sets out the maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):- (cont’d)

ContractualInterest

RateCarryingAmount

ContractualUndiscounted

Cash FlowsWithin1 Year

1 – 5Years

The Company % RM’000 RM’000 RM’000 RM’000

2016


Other payables and accruals - 24 24 24 -

Amount owing to directors - 121 121 121 -

145 145 145 -

2015


Other payables and accruals - 26 26 26 -

Amount owing to directors - 91 91 91 -

117 117 117 -

44.2 CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support its businesses and maximise shareholders value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on debt-to-equity ratio that complies with the debt covenants and regulatory, if any. The debt-to-equity ratio is calculated as net debt divided by total equity. The Group includes within net debt, loans and borrowings from financial institutions less cash and cash equivalents. Capital includes equity attributable to the owners of the parent and non-controlling interest.

The debt-to-equity ratio of the Group at the end of the reporting period is not presented as its cash and cash equivalents exceeded the total borrowings from financial institutions.



cont’d


44.3 CLASSIFICATION OF FINANCIAL INSTRUMENTS


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Financial Assets

Loan and Receivables Financial Assets

Trade receivables 20,814 16,926 - -

Other receivables and deposits 589 1,363 - -

Amount owing by an associate - 3,392 - -

Amount owing by a related party 7 11 - -

Dividend receivable - - 2,400 2,045

Deposits with licensed banks 17,136 15,587 12,545 12,767


46,781 46,129 15,063 14,891

Fair Value through Profit or Loss: Held-for-trading

Other investment 564 553 - -

Financial Liability

Other Financial Liabilities

Hire purchase payable 33 33 - -

Term loans 10,555 5,494 - -

Trade payables 4,119 3,762 - -

Other payables and accruals 2,589 2,421 24 26

Amount owing to a related company 717 542 - -

Amount owing to directors 350 351 121 91

Dividend payable - 5 - -

18,363 12,608 145 117




44.4 FAIR VALUE INFORMATION

The fair values of the financial assets and financial liabilities of the Group and of the Company which are maturing within the next 12 months approximated their carrying amounts due to the relatively short-term maturity of the financial instruments or repayable on demand terms.

The following table sets out the fair value profile of financial instruments that are carried at fair value and those not carried at fair value at the end of the reporting period:-

Fair Value of Financial Instruments Carried at

Fair Value

Fair Value of Financial Instruments Not Carried at

Fair ValueTotal Fair

ValueCarryingAmountLevel 1 Level 2 Level 3 Level 1 Level 2 Level 3

The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016

Financial Assets

Other investments:

– quoted shares 564 - - - - - 564 564

2015

Financial Assets

Other investments:

– quoted shares 553 - - - - - 553 553

45. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

On 15 September 2016, the Group acquired an additional 50% equity interests in Neiken Electric (S) Pte. Ltd. (“NES”) (formerly known as Neiken Switchgear (S) Pte. Ltd.) for a consideration of SGD1,405,381. Consequently, NES became a wholly-owned subsidiary of the Group.

46. SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD

The Companies Act 2016 came into effect on 31 January 2017 (except for Section 241 and Division 8 of Part iii of the said Act) and replaces the existing Companies Act 1965.

Amongst the key changes introduced under the Companies Act 2016 that will affect the financial statements of the Group and of the Company upon its initial adoption are:-

(i) Removal of the authorised share capital; (ii) Ordinary shares will cease to have par value; and (iii) Share premium account will become part of the share capital.

The adoption of the Companies Act 2016 is to be applied prospectively. Therefore, the changes in the accounting policies and the possible impacts on the financial statements upon its initial adoption will be disclosed in the financial statements of the Group and of the Company for the financial year ending 31 December 2017.



cont’d

47. SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES

The breakdown of the retained profits of the Group and of the Company as at the end of the reporting period into realised and unrealised profits/(losses) are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian institute of Accountants, as follows:-


2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Total retained profits of the Company and its subsidiaries:

- realised 62,531 51,193 4,754 4,633

- unrealised (1,142) 999 - -

61,389 52,192 4,754 4,633

Total share of retained profits of an associate:

- realised - 2,050 - -

61,389 54,242 4,754 4,633

Less: Consolidation adjustments (14,918) (15,318) - -

At 31 December 46,471 38,924 4,754 4,633


LocationDescription of property

Tenure/ Expiry on

leaseYear of

Acquisition

Land area (square

feet)

Net Book Value(RM)

Approximate Age of

Building (Years)

Lot 5, Batu 17½ Jalan ipohRawang industrial Estate48000 RawangSelangor Darul Ehsan

Single-storey detached factory with a 4-storey front office annex

Freehold 1991 58,017 4,536,533 22

B2-08 Taman OrchidRawang Perdana 248000 RawangSelangor Darul Ehsan

Five-storey medium cost apartment for workers’ accommodation

Freehold 2002 668 - 15

Lot 48, Jalan industri 2/1 Rawang integrated industrial Park48000 RawangSelangor Darul Ehsan

Single-storey factory and three-storey office building

Freehold 2013 132,800 11,843,994 4

No. PT 4661, TempatBatu 17 ½Jalan Rawang Bandar Rawang TambahanDaerah GombakSelangor Darul Ehsan

Vacant land Leasehold 2011 92,558 2,252,604 -

Lot P2 Viet Huongindustrial Park Thuan Gio VillageThuan An DistrictBinh Duong ProvinceVietnam

Two-storey detached factory

Leasehold 2004 51,648 809,849 11

2B#05-01 The Canary HeightsThuan An TownBinh Duong provinceVietnam

Serviced Apartment Leasehold 2015 1,647 633,839 2

No. 9 Tagore Lane #01-16, 9 @ Tagore Singapore 787472

One-storey factory Freehold 2012 3,131 5,896,343 5

421 Tagore industrial Avenue #01-29, Tagore 8 Singapore 787805

One-storey factory Freehold 2015 5,014 8,304,625 2

* The applicable closing foreign exchange rate used (expressed on the basis of US$1.00 = RM4.4860 and SGD1 = RM3.1006 as at the balance sheet date).

List of Propertiesas at 31 December 2016


Analysis of Shareholdingsas at 31 March 2017

issued Share Capital : RM40,000,000.00 comprising 80,000,000 ordinary shares (including 1,404,200 treasury shares)

Class of Shares : Ordinary sharesVoting Rights : One (1) vote for each ordinary shareNumber of Shareholders : 743

ANALYSIS OF SHAREHOLDINGS

Size of Shareholdings No. of

Shareholders % No. of Shares %

Less than 100 7 0.942 154 0.000

100 to 1,000 163 21.938 120,211 0.152

1,001 to 10,000 371 49.932 1,921,410 2.444

10,001 to 100,000 163 21.938 5,581,900 7.102

100,001 to 3,929,789 36 4.845 17,911,962 22.789

3,929,790 and above 3 0.403 53,060,163 67.510

Total 743 100.00 78,595,800 100.00

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS

Names

Direct Interest Indirect Interest

No. of shares %* No. of shares %*

1. United MS Holdings Sdn Bhd 40,025,520 50.93 - -

2. Ker Min Choo 9,469,100 12.05 2,791,800(1) 3.55

3. ip Tai Hoi Paul 6,234,643 7.93 40,025,520(2) 50.93

4. Cheng Wong - - 40,025,520(2) 50.93

5. Chengco Enterprise Sdn Bhd - - 40,025,520(3) 50.93

6. Dee Kim Huay - - 40,025,520(4) 50.93

Notes:

* Excluding a total of 1,404,200 shares purchased by the Company and retained as treasury shares as at 31 March 2017.(1) Deemed interested by virtue of shares held by his family members.(2) Deemed interested by virtue of his direct interest in United MS Holdings Sdn Bhd (“UMSH”) and indirect interest in UMSH held

via Chengco Enterprise Sdn Bhd (“CESB”) pursuant to Section 8 of the Act.(3) Deemed interested by virtue of its direct interest in UMSH pursuant to Section 8 of the Act.(4) Deemed interested by virtue of her indirect interest in UMSH held via CESB pursuant to Section 8 of the Act.


Analysis of Shareholdingsas at 31 March 2017cont’d

DIRECTORS’ SHAREHOLDINGS

Names

Direct Interest Indirect Interest

No. of shares %* No. of shares %*

1. Cheng Wong - - 40,053,520** 50.96

2. Dee Kok Yong 37,000 0.05 - -

3. Yau Ming Teck - - - -

4. Amirul Azhar Bin Baharom - - - -

5. Cheng Siow Chun - - - -

* Excluding a total of 1,404,200 shares purchased by the Company and retained as treasury shares as at 31 March 2017.** Deemed interested by virtue of his: (i) Direct shareholding in UMSH and indirect shareholding in UMSH held via CESB pursuant to Section 8 of the Act =

40,025,520 (ii) Indirect interest by virtue of the shares held by his daughter pursuant to Section 59(11)(c) of the Act = 28,000

LIST OF THIRTY (30) LARGEST SHAREHOLDERS

No. Names No. of Shares %*

1. United MS Holdings Sdn Bhd 40,025,520 50.925

2. Alliancegroup Nominees (Tempatan) Sdn BhdPledged Securities Account for Ker Min Choo (8109400)

6,800,000 8.651

3. ip Tai Hoi Paul 6,234,643 7.93

4. Ker Min Choo 2,183,400 2.778

5. HSBC Nominees (Tempatan) Sdn Bhd HSBC (M) Trustee Bhd for RHB Smart Treasure Fund

1,500,000 1.908

6. HSBC Nominees (Tempatan) Sdn BhdHSBC (M)Trustee Bhd for RHB Smart Balance Fund

1,500,000 1.908

7. Ker Yan Ling 1,453,800 1.849

8. Lawrence Lee 1,072,549 1.364

9. Pang Chun Yue Andrew 1,072,549 1.364

10. HSBC Nominees (Tempatan) Sdn BhdHSBC (M) Trustee Bhd for RHB Smart income Fund

1,000,000 1.272

11. Public Nominees (Tempatan) Sdn BhdPledged Securities Account for Tan Mary (JBU/UOB)

759,600 0.966

12. Ker Yun 712,100 0.906

13. Kek Kok Swee 704,000 0.895

14. Hii Kuong Jing 700,000 0.890

15. CiMSEC Nominees (Tempatan) Sdn BhdCiMB Bank for Ker Min Choo (MY1335)

485,700 0.617

16. JAG Capital Equity Sdn Bhd 429,200 0.546

17. Yeo Chin Kiang 395,600 0.503

18. Mah Chin Heng 321,764 0.409


LIST OF THIRTY (30) LARGEST SHAREHOLDERS (cont’d)

No. Names No. of Shares %*

19. HSBC Nominees (Tempatan) Sdn BhdHSBC (M) Trustee Bhd for RHB Small Cap Opportunity Unit Trust

300,000 0.381

20. Alliancegroup Nominees (Tempatan) Sdn BhdPledged Securities Account for Ker Yan Ling (6000927)

292,300 0.371

21. P.H.G. Enterprise Sdn Bhd 237,000 0.301

22. TA Nominees (Tempatan) Sdn BhdPledged Securities Account for Leow Siew Yong

211,600 0.269

23. RHB Nominees (Asing) Sdn BhdMing Kee Manufactory Limited

200,000 0.254

24. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account for Liew Yoon Peck

193,400 0.246

25. Ho Li Hua 189,200 0.240

26. Lim Lee Huang 186,000 0.236

27. Ker Soo Ha 173,500 0.220

28. Alliancegroup Nominees (Tempatan) Sdn BhdKer Jing (6000853)

173,000 0.220

29. Koh Lian Sim 162,500 0.206

30. Hiang Yong Lee 154,900 0.197

* Excluding a total of 1,404,200 shares purchased by the Company and retained as treasury shares as at 31 March 2017.

Analysis of Shareholdingsas at 31 March 2017

cont’d


This page has been intentionally left blank.

UMS-NEIKEN GROUP BERHAD(Company No. 650473-V)(incorporated in Malaysia under the Companies Act, 1965)

i/We NRiC No./Co. No. (full name in block letters)

of (full address)

Tel No. being a member/members of UMS-NEIKEN GROUP BERHAD hereby

appoint the *THE CHAiRMAN OF THE MEETiNG or failing him/her

Name Address NRIC/Passport No. Proportion of Shareholdings (%)

1.

*And/or (delete as appropriate)

2.

as my/our proxy/proxies, to vote for me/us on my/our behalf at the Thirteenth Annual General Meeting of UMS-Neiken Group Berhad to be held at Tasik Puteri Golf & Country Club, Bandar Tasik Puteri, 48000 Rawang, Selangor Darul Ehsan on Tuesday, 23 May 2017 at 9.30 a.m., or at any adjournment thereof.

* If you wish to appoint other person(s) to be your proxy(ies), kindly delete the words “The Chairman of the Meeting or failing him/her” and insert the name(s) of the person(s) desired.

My/our proxy/proxies is/are to vote as indicated below:

Resolutions For Against

Ordinary Business

1. To re-elect Encik Amirul Azhar Bin Baharom as Director

2. To re-elect Mr Yau Ming Teck as Director

3. To approve the payment of Directors’ Fees amounting to RM108,500 for the financial year ending 31 December 2017

4. To approve the payment of Directors’ benefits payable to the Board of the Company and its subsidiaries amounting to RM21,000 for the financial period from 1 January 2017 until the next Annual General Meeting

5. To re-appoint Messrs Crowe Horwath as Auditors of the Company and to authorise the Directors to fix their remuneration

Special Business

6. Authority to Directors to issue shares pursuant to Section 75 of the Companies Act, 2016

7. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

8. Proposed New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

9. Proposed Renewal of Authority for the Company to Purchase its Own Shares of up to 10% of the issued and Paid-Up Share Capital of the Company

(Please indicate with a cross (X) in the space provided, how you wish your vote to be cast in respect of the above resolutions. If you do not do so, the proxy may vote or abstain at his/her discretion.)

Signed this day of 2017

Notes:

(1) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company. A member may appoint any person to be his proxy without limitation. If the proxy is not a member, he need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.

(2) A member shall be entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.

(3) Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one 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.

(4) If no name is inserted in the space provided for the name of your proxy, the Chairman of the meeting will act as your proxy. (5) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 10th Floor Menara Hap Seng, No. 1 & 3 Jalan

P. Ramlee, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. (6) If the appointer is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney.(7) The Date of the Record of Depositors for the purpose of determining Members’ entitlement to attend, vote and speak at the Meeting is 16 May

2017.

No. of ordinary shares held CDS Account No.

PROXY FORM

Signature/Common Seal of Shareholder

AFFixSTAMPHERE

1st fold here

Fold this flap for sealing

Then fold here

The Company Secretary

UMS-NEIKEN GROUP BERHAD (650473-V)

10th Floor Menara Hap SengNo. 1 & 3 Jalan P. Ramlee50250 Kuala Lumpur

www.ums-neiken.com

The Better Connections to Your WorldThe Better … UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 2016 1 Corporate Information Notice of Annual General Meeting Statement

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