Professional Documents
Culture Documents
Excellence Excellence: Together Together
Excellence Excellence: Together Together
Excellence Excellence: Together Together
10 Years of
Excellence
Together
10 Years of
Excellence
Continue to bear good fruits Together
2018
2009 2014
SAM ENGINEERING & EQUIPMENT (M) BERHAD (298188-A)
SAM ENGINEERING & EQUIPMENT (M) BERHAD (298188-A)
10 Years of
Excellence
Together
ANNUAL REPORT 2019
2019
OUR
SEVEN
PILLARS
VALUE
CREATION
We embrace a
continuous
improvement culture
and formulate solutions
COURAGE through collective
efforts to achieve
We will accept extraordinary results.
change to take up INTEGRITY
challenges and seize Our pillar of
opportunities that long-term success
may arise. that encompasses COMMITMENT
honesty, dedication We will go the extra mile to
and responsibility. achieve our objectives and strive
for higher standards in our
endeavours.
COMPASSION
RIGHTEOUSNESS We care for others and offer
Righteousness is characterised support in times of difficulty
by accepted standards of morality, in the community.
justice, virtue or uprightness.
Our every action will
be consistent with
these standards.
SERVING OTHERS
This demands that we are not only
fulfilled and enriched by what we do
but also that others benefit from it.
002 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
AS WE SOW
WE REAP
003
OUR LEAVES
ARE ALWAYS GREEN
AND WE BEAR
GOOD FRUITS
004 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
ALL THINGS
ARE POSSIBLE
TO THOSE WHO BELIEVE
005
C O N T E N T S
CORPORATE
INFORMATION
008
007
STEWARDSHIP
GROUP
STRUCTURE AND
ACTIVITIES
009
OUR
MANAGEMENT GROUP
TEAM FINANCIAL
HIGHLIGHTS
018
SUSTAINABILITY
STATEMENT OF PROPERTIES
023 CORPORATE
GOVERNANCE
OVERVIEW
056
STATEMENT
060
AUDIT
COMMITTEE
052
REPORT STATEMENT ON RISK
MANAGEMENT AND OTHER
INTERNAL CONTROL INFORMATION
FINANCIAL
STATEMENTS
167 170
062 ANALYSIS OF
SHAREHOLDINGS
NOTICE OF
ANNUAL GENERAL
MEETING
176
STATEMENT
ACCOMPANYING PROXY FORM
NOTICE OF AGM
175 ADMINISTRATIVE
GUIDE
ENCLOSED
006 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE INFORMATION
B N R
BOARD OF NOMINATING & REGISTRARS
DIRECTORS REMUNERATION Plantation Agencies Sdn. Bhd.
Non-Independent Non-Executive Chairman
COMMITTEE (2603-D)
3rd Floor,
2 Lebuh Pantai,
Mr. Tan Kai Hoe Chairman 10300 George Town,
Executive Director and Chief Executive Officer Dato’ Seri Wong Siew Hai Penang.
Tel: 604 - 262 5333
Mr. Goh Wee Keng, Jeffrey Members
Fax: 604 - 262 2018
A
Non-Independent Non-Executive Director Mr. Tan Kai Hoe
Mr. Shum Sze Keong Mr. Lee Hock Chye
Datuk Dr. Wong Lai Sum
C
Independent Non-Executive Directors
Dato’ Mohamed Salleh Bin Bajuri AUDITORS
Dato’ Seri Wong Siew Hai
KPMG PLT
Dato’ Sri Lee Tuck Fook COMPANY (LLP0010081 - LCA & AF 0758)
Mr. Lee Hock Chye SECRETARIES Level 18, Hunza Tower,
Datuk Dr. Wong Lai Sum 163E, Jalan Kelawai,
Ms. Thum Sook Fun (MIA 24701) 10250 Penang.
A R
Ms. Chew Peck Kheng (LS0009559) Tel: 604 - 238 2288
Fax: 604 - 238 2222
P
AUDIT
COMMITTEE PRINCIPAL
Chairman BANKERS
Mr. Lee Hock Chye REGISTERED Citibank Berhad
Members OFFICE AmBank (M) Berhad
Hong Leong Bank Berhad
Mr. Shum Sze Keong Suite 18.05, MWE Plaza,
Dato’ Mohamed Salleh Bin Bajuri No. 8, Lebuh Farquhar,
R P I
Dato’ Sri Lee Tuck Fook 10200 George Town,
Penang.
Tel: 604 - 263 1966
Fax: 604 - 262 8544
C
Dato’ Mohamed Salleh Bin Bajuri Phase IV, 11900 Bayan Lepas,
Penang.
Dato’ Seri Wong Siew Hai
Tel: 604 - 643 6789
Fax: 604 - 644 1700
COMPANY
WEBSITE
www.sam-malaysia.com
007
GROUP STRUCTURE AND ACTIVITIES
Dormant
008 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STEWARDSHIP
009
OUR MANAGEMENT TEAM
Age 60
Gender Female
Age 51 Age 48
Gender Male Gender Female
Nationality Malaysian Nationality Malaysian
Date Joined 17 Apr 2006 Date Joined 21 Aug 2017
Academic / Professional
YAP HAN LIN Academic / Professional
General Manager, Meerkat Precision,
Qualification(s) SAM Precision & SAM Tooling Qualification(s)
Age 52
* Save as disclosed, the management
Gender Male team has no family relationship with
any Director and/or major shareholder
Nationality Malaysian
of SAM Engineering & Equipment (M)
Date Joined 28 Jun 2010 Berhad (“SAMEE”), has no conflict of
Academic / Professional interest with SAMEE, has not been
Qualification(s) convicted for any offences within
the past five years and has no public
• Bachelor of Electrical & Electronics sanction or penalty imposed by the
Engineering, Imperial College of relevant regulatory bodies during the
Science & Technology, University of financial year ended 31 March 2019.
London, England, UK.
011
OUR BOARD OF DIRECTORS
FROM WISDOM COMES
KNOWLEDGE AND UNDERSTANDING
TAN GOH
KAI HOE WEE KENG,
Non-Independent
JEFFREY
Non-Executive
Executive Director
Chairman
& Chief Executive
Officer
Age 53 Age 60
Gender Male Gender Male
Nationality Singaporean Nationality Singaporean
Date of Appointment 26 August 2015 Date of Appointment 4 March 2008
Board Committee Membership(s)
• Nominating and Remuneration Committee
Academic / Professional Qualification(s)
• Bachelor of Arts (Physics) University of Cambridge, UK • Bachelor of Science (First Class Honours) in Aeronautical
• Masters of Science (Management) Stanford University, Engineering Science, Salford University, UK
USA • Masters of Science (Turbine Technology), Cranfield
University, UK
012 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
OUR BOARD OF DIRECTORS (Cont’d)
Age 57 Age 65
Gender Male Gender Male
Nationality Singaporean Nationality Malaysian
Date of Appointment 4 March 2008 Date of Appointment 8 July 2008
Board Committee Membership(s) Board Committee Membership(s)
• Audit Committee • Audit Committee
Academic / Professional Qualification(s)
• Bachelor of Science in Aeronautical Engineering, • Member, Malaysian Institute of Accountants (MIA)
Embry Riddle Aeronautical University, USA • Member, Malaysian Institute of Certified Public
Accountants
• Masters in Business Administration
Present Directorship(s) and/or Appointment(s)
• General Manager, Shum Enterprises Pte. Ltd. • Independent Non-Executive Chairman, Pesona Metro
• Director, Singapore Aerospace Manufacturing Pte. Ltd. Holdings Berhad
• Managing Director, WCT Holdings Berhad
• Executive Director, Pavilion Reit Management Sdn. Bhd.
• Director for several private limited companies
Past Directorship(s) and/or Appointment(s)
• Head Aerospace, Industry Development Division, • Vice President of Samling Group in Sarawak
Singapore Economic Development Board • Managing Director, Renong Overseas Corporation Sdn.
• Executive Director, Grande Holdings Ltd. Bhd.
• Consultant, Grande Group Limited • Chairman, Executive Committee on the Board of
• Independent Non-Executive Director, Lafe Corporation Peremba-Kentz Ltd
Limited • Managing Director, Cement Industries of Malaysia
Berhad
• Managing Director, Paracorp Berhad
• Managing Director, Malton Berhad
• Director, Landmarks Berhad
013
OUR BOARD OF DIRECTORS (Cont’d)
FROM WISDOM COMES
KNOWLEDGE AND UNDERSTANDING
Age 68 Age 68
Gender Male Gender Male
Nationality Malaysian Nationality Malaysian
Date of Appointment 4 June 2007 Date of Appointment 15 March 2004
Board Committee Membership(s) Board Committee Membership(s)
• Nominating & Remuneration Committee (Chairman) • Audit Committee
• Risk & Sustainability Committee • Risk & Sustainability Committee
Academic / Professional Qualification(s)
• Bachelor of Science in Mechanical Engineering, • Chartered Accountant, Ireland
University of Leeds, UK • Member, Malaysian Institute of Accountants (MIA)
• Masters of Science in Management Science, Imperial
College of Science & Technology, University of London,
UK
Present Directorship(s) and/or Appointment(s)
• Director, Penang Tech Centre Bhd • Group Deputy Chairman, CRSC Holdings Berhad
• Director, Penang Science Cluster Bhd • Non-Independent Non-Executive Director, Milux
• Chairman, Malaysian American Electronics Industry Corporation Berhad
(MAEI), AMCHAM • Senior Independent Non-Executive Director, Eden Inc Berhad
• Honorary Governor, American Malaysian Chamber of • Independent Non-Executive Director, Asian Pac Holdings
Berhad
Commerce (AMCHAM) • Independent Non-Executive Director, Inch Kenneth
• Member, PEMUDAH Kajang Rubber Public Ltd Co
• Chairman, E&E Productivity Nexus Council • Director for several private limited companies
• Vice President for Tan Sri Muhyiddin Charity Golf
• Trustee and Treasurer for Tan Sri Muhyiddin Charity Golf
Foundation
Past Directorship(s) and/or Appointment(s)
• Vice President, Technology and Manufacturing Group • Chairman, Agrobank Bhd (formerly known as Bank
(TMG), Intel Pertanian Malaysia)
• General Manager, Assembly and Test Manufacturing • Managing Director, JB Securities Sdn Bhd
(ATM), Intel • General Manager, Malayan Banking Berhad
• Vice President and Managing Director, Asia Pacific • Trustee, Tabung Melayu Pontian Berhad and Yayasan
Customer Center, Dell Kebajikan SDARA
• Director, Malaysia External Trade Development • Independent Non-Executive Director, Habour Link
Corporation (MATRADE), Ministry of International Trade Group Berhad
and Industry (MITI)
• Director, Nation Gate Group Bhd
• Member, National Productivity Council
014 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
OUR BOARD OF DIRECTORS (Cont’d)
Age 64 Age 59
Gender Female Gender Male
Nationality Malaysian Nationality Malaysian
Date of Appointment 1 October 2016 Date of Appointment 8 July 2008
Board Committee Membership(s) Board Committee Membership(s)
• Risk & Sustainability Committee (Chairman) • Audit Committee (Chairman)
• Nominating & Remuneration Committee • Nominating & Remuneration Committee
Academic / Professional Qualification(s)
• PhD Business, University Malaya • Bachelor of Laws (Hons), National University of
• Masters in Public Administration (MPA), University Malaya Singapore, Singapore
• Bachelor of Science (Hons) Biochemistry, University
Malaya
Present Directorship(s) and/or Appointment(s)
• Director, PRG Holdings Berhad
• Director, Tasco Berhad
• Adviser, Faculty of Business and Accountancy,
University Malaya
Past Directorship(s) and/or Appointment(s)
• Chief Executive Officer of Malaysia External Trade
Development Corporation (MATRADE)
• Director, Malaysia Petroleum Resources Council (MPRC)
• Director & Trustee, Malaysia Furniture Promotion Council
(MFPC)
• Director, MyCEB (Tourism)
• Co-Chairman, Professional Services Development Council, * “Save as disclosed, the above Directors have no
Malaysia (PSDC) family relationship with any Director and/or major
• Adviser, National Export Council (MATRADE) shareholder of SAM Engineering & Equipment (M)
• Director, Port Klang Authority Berhad (“SAMEE”), have no conflict of interest with
• Economic Adviser, Minister of Transport, Ministry of SAMEE, have not been convicted for any offences
Transport Malaysia within the past five years and have no public sanction
• Conjoint Professor (Practice), Faculty of Business, University or penalty imposed by the relevant regulatory bodies
of Newcastle, Australia during the financial year ended 31 March 2019.
• Associate Professor, Faculty of Business, TAR University
College Details of the Directors’ attendance at Board Meetings
• Singapore Business Advisory Group, University of Newcastle for the financial year ended 31 March 2019 are set out
• Research Fellow, TAR University College in the Corporate Governance Overview Statement on
page 039 of this Annual Report.”
015
GROUP FINANCIAL HIGHLIGHTS
for the financial year ended 31 March 2019
800,000 100,000
700,000 90,000
80,000
600,000
70,000
500,000
60,000
400,000 50,000
300,000 40,000
30,000
200,000
20,000
100,000
10,000
0 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
80,000 80
70,000 70
60,000 60
50,000 50
40,000 40
30,000 30
20,000 20
10,000 10
0 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
016 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
GROUP FINANCIAL HIGHLIGHTS (Cont’d)
for the financial year ended 31 March 2019
50 200,000
40
150,000
30
100,000
20
50,000
10
0 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
6 16
14
5
12
4
10
3 8
6
2
4
1
2
0 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
017
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL REVIEW The Group ended the year with a healthy projected order
book of RM2.8 billion.
The SAMEE Group (“Group”) maintained positive growth
momentum, in both the Aerospace and Equipment The Company has announced a first interim single-tier
businesses. The Group recorded a total revenue of RM755m dividend of 17.43 sen per ordinary share and a special
and Profit Before Tax (PBT) of RM94.8m (including net gain single-tier dividend of 11.62 sen per ordinary share in May
from disposal of land and buildings of RM7.3m) in FY2019. 2019.
REVENUE
Aerospace
(RM’ m)
800.0 755.0
Revenue for the Aerospace business increased by 24.0%
700.0 619.0
from the last financial year, to RM459.6m. The increase was
600.0
due to a ramp-up in production for the Airbus A320neo 459.6
500.0
and A350 aerostructure parts as well as Airbus A320neo
400.0 370.6
and Boeing 737max aircraft engine cases. With the higher 295.4
300.0 248.4
revenue, PBT improved 18.3% to RM46.5m compared to
previous year. 200.0
100.0
0
Equipment FY2018 FY2019
80.0 72.6
Group 60.0
46.5 48.3
39.3
The Group’s total revenue of RM755m is 22.0% higher 40.0 33.3
than the previous year. PBT grew 30.7% year-on-year to
20.0
RM 94.8m while Profit After Tax (PAT) grew by 24.8% to
RM78.5m. Excluding the one-off gain from disposal of land 0
and buildings, PBT and PAT still achieved 20.6% and 13.2% FY2018 FY2019
growth respectively.
Aerospace Equipment Total
The Group invested RM102.6m in FY2019, of which RM93.1m
was for capacity expansion in the Aerospace business.
FINANCIAL POSITION
As at 31 March 2019, the Group’s total assets increased RM115.1m or 17.0% to RM790.7m. The increase in total assets
was mainly to support an increase in the on-going operations, in the areas of property, plant & equipment, trade & other
receivables, inventories and contract assets.
Contract Assets
Inventories
FY2018 675.6
Trade Receivables & Other
Receivables
018 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)
CAPITAL EMPLOYED
The average capital employed for FY2019 was RM530.6m, an increase of RM49.9m from RM480.7m for FY2018. The increase
came mainly from the increase in retained earnings from current year profit.
Retained Earnings
Reserves
FY2018 203 198 68 11 480.7
Loans & borrowings
CAPITAL EXPENDITURE
The Group continued to invest for its long-term growth, with capital expenditure of RM102.6m for FY2019.
BANKING FACILITIES
DEBT RATIO
The Group’s interest cover ratio was 35 times in FY2019 and net debt/equity ratio of 0.14 times. The Group’s total borrowings
increased to RM99.8m as at 31 March 2019 (Borrowings as at 31 March 2018: RM18.4m). The increase in borrowings was
mainly used to finance capital expenditure, working capital requirement and dividend payment in FY2019.
CASH FLOWS
Operating Activities
The Group generated net cash from operating activities of RM32.6m as compared to RM64.8m in the previous financial year.
The decrease in net cash from operating activities was due to an increase in the working capital requirements for the Group’s
on-going operations.
Operating Activities
(RM’m) FY2018 FY2019
Operating Activities before changes in Working Capital 92 125
Changes in Working Capital -15 -82
Income Tax -12 -10
Net Cash from Operating Activities 65 33
019
MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)
Investing Activities
Net cash used in investing activities of RM88.2m was due primarily to the investment in plant and equipment for the
Aerospace business, partially offset by proceeds from sales of land and building of RM14.3m.
Financing Activities
Net cash from financing activities of RM47.1m was mainly attributed to drawdown of foreign currency revolving credits and
term loans totalling RM81.4m, offset mainly by payment of FY2018 interim dividends of RM31.6m.
The Group ended the year with cash and cash equivalents of RM24.0m, an increase of RM2.4m from FY2018.
CASH FLOWS
(RM’ m)
Financing Activities
FY2018
Net Cash from Operating
Activities
DIVIDEND
A total dividend of 29.05 sen per ordinary share (interim single-tier dividend of 17.43 sen per ordinary share and special
single-tier dividend of 11.62 sen per ordinary share) was declared in May 2019, representing 50% of our net profit. Based on
the average share price for the month of June 2019 of RM8.09, the dividend per share of 29.05 sen translates to a dividend
yield of 3.59%.
020 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)
HIGHLIGHTS
Aerospace
Demands for the Boeing 787 and business aircraft engine OPERATION INITIATIVES
cases remained strong. In February 2019, Airbus announced
the shutdown of its A380 aircraft production line, but it will Aerospace
have insignificant impact to our Aerospace business.
Keeping abreast with Industry 4.0, we have begun our
We invested in a new facility at the Penang Science Park digitalisation journey in our Singapore facilities since
in FY2017 to expand our product range offerings to the FY2018. To date, all our equipment are fitted with the
Aerospace business. The state-of-the-art facility was officially necessary sensors to replicate the physical manufacturing
opened on 21st February 2019 by Malaysia’s Minister of operations into digital data. This data will be used for
International Trade and Industry, Yang Berhormat Datuk analysis to improve our operations and efficiencies.
Ignatius Darell Leiking. The facility is fully operational and
is currently employed in the series production of the Airbus We will continue with our efforts of implementing automation
A320neo and A350 aerostructure parts. with flexible manufacturing systems in Penang and in
Singapore. We will also implement robotic system to achieve
consistency in producing quality aerospace products. These
initiatives are part of our continuous improvement process
to increase productivity and to remain lean.
Equipment
021
MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)
OUTLOOK Equipment
022 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
SUSTAINABILITY STATEMENT
This statement provides a clear commitment of responsible corporate conduct across all aspects of our business operations
in meeting the expectations of our stakeholders. It outlines details of actions taken to balance our economic imperatives with
environmental practices and social obligations, and elaborates on the value creation activities in raising standards across our
business operations for the financial year ended 31 March, 2019 (“FY2019”).
Our aim is to provide a more balanced, comparable and meaningful account outlining the material risks and opportunities
facing the Group and should be read along with our Annual Report 2019 in order to obtain a comprehensive view of the
Group’s holistic performance.
In producing this statement, we are guided by Bursa Malaysia’s Sustainability Framework and we also support the following
United Nations global initiative of Sustainable Development Goals, as a responsible corporate citizen working towards a
better world for all in 2030.
3 4 5 6 7 8 12 13 15 17
GOOD HEALTH QUALITY GENDER CLEAN WATER AFFORDABLE & DECENT WORK RESPONSIBLE CLIMATE LIFE ON LAND PARTNERSHIPS
& WELL-BEING EDUCATION EQUALITY & SANITARY CLEAN ENERGY & ECONOMIC CONSUMPTION ACTION FOR THE GOALS
GROWTH & PRODUCTION
Reporting Scope
Disclosure in the statement encompasses business operations of SAM Engineering & Equipment (M) Berhad (“SAMEE”) and
its group of companies in Malaysia and Singapore (“Group”), specifically:
During the financial year, we enhanced our efforts to improve our sustainability disclosures using the outcome of the gap
assessment to address areas for improvements. Our materiality assessment for sustainability disclosures have been developed
and aligned to all aspects of our business operations. The Board Risk and Sustainability Committee is tasked by the Board
to oversee the implementation and management of sustainable policies and practices in the Group and supported by the
Management.
The Board has the ultimate responsibility for the Company’s Sustainability Statement in partnership with Management and
other stakeholders to deliver on our strategic goals.
Board of Directors
Sustainability Committee/
Working Group
023
SUSTAINABILITY STATEMENT (Cont’d)
Stakeholder Engagement
In order to have a clear understanding of our stakeholder’s needs and interest, we have undertaken a stakeholder engagement
survey according to their individual influence and organisational relevance in order to strengthen our brand positioning for
sustainable business growth and in ensuring our social license to operate. The survey is also linked to the material matters
for our sustainability themes, crucial for our continuous sustainable development and to generate positive long-term value
to meet our stakeholder expectations. We also reviewed and enhanced our engagement channels to focus on the primary
concerns of the company’s stakeholders and allows the management to respond to them.
Employees
Inverstors and
Community
Shareholders
OUR
Directors Customers
STAKEHOLDER
Vendors/
Media
Suppliers
Management
024 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
SUSTAINABILITY STATEMENT (Cont’d)
Sustainability Themes
This year, the top 15 principal risks remain the same as previously-identified material matters, based on the comprehensive
materiality assessment conducted in 2018. They were further categorised into four core sustainability themes as follows:
Our
Our Business Our Our
Environmental
Performance People Outreach
Management
Product and Service Quality Waste and Hazardous Employee Learning and Local Communities
Material Management Development
Technology, Innovation and Indirect Economic Impact
Development Energy Management Employee Well-Being,
Health and Safety
Economic Performance
Labour Practices
Customer Satisfaction and
Relationship Diversity and inclusion
Cybersecurity and IT
Resource Management
The next section provides details on how we manage all of our identified material matters, including policies and procedures
we implemented, key practices we exercise and performance indicators we monitor.
025
SUSTAINABILITY STATEMENT (Cont’d)
Economic Performance
Product and Service Quality
We understand the demand by our stakeholders to show
We pride ourselves in providing quality products and strong economic performance, which is vital for the long-
services to our customers. Quality is earned with robust term success and sustainability of our business. Our
internal controls and practices, experience in the business, performance is guided by our business strategy, which is
continuous improvement in knowledge and technical skills, implemented as part of our 3-year strategic plan and one of
gaining from the in-depth and acute understanding of our the key measures of our economic performance is reflected
customers’ needs. in our sustainable revenue growth.
As a demonstration of our commitment to upholding The Group recorded a full-year revenue of RM755 million
cutting edge quality, our operations are certified under in FY2019, with a group-level revenue growth of 22%
internationally-recognised standards. Our Equipment compared to last financial year. Our Aerospace business
operations are certified under the ISO 9001:2015 and ISO has seen a growth of 24% this financial year, a significant
13485:2016 with zero Non-Conformity (NC). Our aerospace improvement against last year’s performance. This growth
operations are certified under the AS9100 Rev.D. and was supported by the production ramp-up for new products
holds NADCAP Certification on Non Destructive Testing, introduced. Our Equipment business recorded revenue
Chemical Processes, Laboratory, Welding, Heat Treatment, growth of 19% in FY2019, largely due to the new customers
Coating, and Civil Aviation Authority of Singapore (“CAAS”) and programmes secured related to the semiconductor
Singapore Airworthiness Requirements 21 (“SAR21”) industry.
Production Organisation Approval.
For more information on the Group’s economic performance,
Documents from our quality management system such please refer to the Management Discussion & Analysis in
as our quality procedures and work instructions provide this Annual Report.
guidance to employees on processes, practices and
operations procedures. Moreover, regular training is held to CUSTOMER BASE BY REGION – FY2019
brief employees on key areas to maintain the highest quality
standards.
026 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
SUSTAINABILITY STATEMENT (Cont’d)
027
SUSTAINABILITY STATEMENT (Cont’d)
Collaborating with our key suppliers is integral to manage our supply chain and promote good sourcing practices. Our
actions also assist in fostering meaningful long-term relationships with our business partners. Therefore, we place great
importance on our procurement practices and supply chain management.
Our Purchasing Policy, Legal Policy and Approval Authorisation Policy guide procurement practices. We support fair bidding
practices, and have a firm policy on gifts, inducements and rewards. Suppliers are also screened through a set of criteria,
which includes quality of goods, going concern, and availability of certifications, including AS9100, the quality management
standard for the Aerospace industry.
Our position in the supply chain allows us to encourage and assist suppliers in earning and maintaining their certifications.
Some of our main procurement initiatives include requiring suppliers to perform self-assessments against the Vendor Audit
Program, as well as auditing our suppliers. During these audits, suppliers are required to upkeep a minimum score.
Our Aerospace segment has developed 3 major local Aerospace suppliers specialised in the machining of 5 axis complex
parts and hard metal, which must be AS9100 certified. We have continued to provide skills development training to potential
suppliers to meet and achieve the standard we require for total productivity.
The on-going commitment to develop a stable domestic supply chain network is part of the Company’s initiative to contribute
towards nation building in skill enhancement of industry expertise.
We take great care in managing our impact on the environment. We are continuously working to improve our understanding
of how our activities affect the environment both directly and indirectly, by actively protecting the environment by embracing
greener and more eco-friendly practices to reduce as much as possible our environmental footprint.
We recognise that our main impact areas are associated with the waste generated by our operations – both hazardous and
non-hazardous, as well as our energy consumption. In the following sections we outline the approach we adopt to address
these issues, guided by our aspiration to operate sustainably and live harmoniously with nature.
Our manufacturing processes generate hazardous materials which are classified as Scheduled Waste under the Environmental
Quality Act 1974 in Malaysia or listed as Controlled Hazardous Substance under The Environmental Protection and
Management (Hazardous Substances) Regulations in Singapore. The hazardous waste arising from our operations includes
dust, glass beads, sludge, waste oil, spent hydraulic oil, coolant, mix solvent, contaminated resins, contaminated containers,
contaminated rags, waste paint, and spent activated carbon. All of the waste chemical produced during manufacturing are
processed by our waste water treatment plant or recycled through licensed recycling companies in Malaysia in accordance
with scheduled wasted regulatory requirements. During the financial year, we have extended our waste water treatment
plant to ensure sufficient capacity to convert all waste chemical into an effluent that can be returned to the water cycle with
minimum impact on the environment.
0.60
0.6 0.57 This year, we saw an increasing amount of toxic and
hazardous waste being disposed compared to the previous
0.5 0.47
years. This increase was attributable mainly to the increasing
0.4 production in those sites that require a special process and
0.3 chemical treatment, particularly the aerospace segment as
well as additional machines that have a higher usage of
0.2
Coolant & Spent Hydraulic Oil. Nevertheless, in line with the
0.1 4R waste management hierarchy, we continue to actively
0 look for potential avenues to reduce the generation of
FY2017 FY2018 FY2019 waste, reuse, recycle and recover it wherever possible.
028 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
SUSTAINABILITY STATEMENT (Cont’d)
We have continued to replace the conventional wooden crates and pallets with recyclable corrugated boxes for finished
goods packing purposes. The boxes are configured to 1 piece packing and 2 pieces packing, estimated at about 600 to 700
tri-wall boxes per annum.
Energy Management
Due to the nature of our operation, energy consumption is a major sustainability issue that we are keen on addressing in a
comprehensive way. We acknowledge that tackling this issue is important not only to our financial bottom line through the
increased efficiency, but also vital as the resulting carbon emissions contribute negatively to the environment contributing
to climate change.
Our operations consume energy in various forms. While we understand that fuel, steam, heating and cooling are all part of
our total energy use, currently we are only monitoring our electricity consumption.
35
sources.
OUR PEOPLE
We value our workforce as their talent and dedication contribute towards the success of SAM. Therefore, we uphold our
commitment to them to provide a safe and healthy workplace that promotes their career development, provides equal
opportunities and supports their welfare necessities by developing their talents to unlock greater value.
Labour Practices
We strictly uphold human rights and respect the rights of all our employees. This includes the following, but is not limited
to: no forced labour, no unfair discrimination, promoting a safe and healthy workplace, no child labour, adherence to the
minimum wage and freedom of speech. This is reflected in our labour practices, which meet relevant laws and regulations,
including the respective Employment Acts of Malaysia and Singapore.
Furthermore, our Singaporean operations are signatory to the Tripartite Alliance for Fair and Progressive Employment Practices
(“TAFEP”). TAFEP is co-chaired by members of the Singapore National Employers Federation (“SNEF”) and National Trades
Union Congress (“NTUC”), and consists of employer representatives, union leaders and government officials. The aim of the
alliance is to promote the adoption of fair and responsible employment practices.
029
SUSTAINABILITY STATEMENT (Cont’d)
Raising awareness
Internal policies which govern our practices are our Employment Policy, Leave Policy, Grievance Policy, and Salaries Policy.
Our labour practices are communicated in employment contracts and via trainings and briefings, including our Misconduct
Briefing and New Hire Orientation. In addition, we have internal grievance channels for our employees, as shown below:
communications@sam-malaysia.com Employees may provide feedback or report on cases observed through this
channel. Communications received through this channel is managed by the
Human Resource (HR) Department.
Foreign workforce
We employ 100 foreigners in our workforce, especially in unskilled labour roles. We make certain that our employees are
hired in line with relevant laws and regulations, via a structured recruitment process conducted by our Human Resource
department. In addition, we have gone on board the Responsible Business Alliance (RBA) with emphasis on treating migrant
workers with respect and dignity. We provide the workforce with benefits to support their employment experience with us.
This includes bearing annual levy fees required by local governments, providing free housing, medical allowance and food
allowance for our canteens.
This year, we saw a slight improvement in the ratio of women by about 1% (from 17% to 18%). However, at the management
level, we show much greater gender diversity in that about 29% of our Managers are women. The total number of contract
workers has reduced by 10% (from 18% to 8%) from the last financial year. Employees below 30 years of age remain the
same at 45%. It is a common pattern for the heavy machinery equipment manufacturing industry to have a predominantly
male workforce, and this applies to the Group. Nonetheless, this does not reflect a culture of bias or discrimination at the
Group. We promote a diverse workforce, and ensure that our people are hired and rewarded based on merit and talent. This
is reinforced by our Employment Policy and Salaries Policy. Below, we highlight our employment statistics.
As the business grows, we want our employees to grow with us. Thus, we develop our employees’ skills and knowledge for
effective performance, to respond to our client’s needs, and to meet our employees’ career development goals. Year on year,
we invest in our employees’ learning and development, and continuously review our programmes to ensure our training and
development efforts are relevant and of high quality.
030 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
SUSTAINABILITY STATEMENT (Cont’d)
Internal policies and programmes which guide our direction include our Training Policy and Succession Planning Programme.
In line with the abovementioned, we perform our Training Needs Analysis annually. This analysis aims to identify gaps
between current employee training programmes and external factors, such as industry and regulatory changes, employees’
expectations, latest technology, etc.
During the financial year, we had incurred a total of RM1,082,579 in technical and soft skill trainings to ensure our employees
are equipped with the latest knowledge and adequate skillset for their job scope.
Our employees are offered various types of training to ensure career development. Our trainings include structured on-the-
job training (“OJT”), quality, safety and team building activities.
Structured OJT is a highly technical and specific training programme targeted at employees with a more technical scope
of work. Employees are briefed by external trainers on the application of new machinery and technology utilized at SAM.
Furthermore, training on Quality is rolled out annually to educate and refresh employees on our quality management systems
and stringent internal processes. Soft skills and team trainings are also provided to brief employees on leadership qualities,
stress management, and team management. Further information on our safety trainings are discussed below.
We also support our employees to study subjects which are relevant to the Company’s business including those under the
Penang Skills Development Centre (“PSDC”) Meister Programme. This year, the total sponsorship of our own employees,
including those under the Meister Programme, amounts to RM77,220.
031
SUSTAINABILITY STATEMENT (Cont’d)
Workplace safety is our first priority. We continuously endeavour to provide a safe working environment to all employees and
contractors through rigorous internal processes and procedures, and instilling awareness of a safe work culture. Alongside
safe work practices, we provide for our employees’ welfare and benefits to support them.
Our Occupational Safety & Health Policy underlines our safety commitments, which guide the safety culture and practices at
the workplace. In addition to our policy, our Group Environmental Safety & Health (“ESH”) Committee provides leadership.
Key roles and responsibilities of ESH Committee include:
• Assisting in the development of safety & health rules and system of work;
• Reviewing the effectiveness of safety & health programmes;
• Carrying out studies on accident trends, incidents and diseases;
• Meeting bi-monthly to review regulatory and license compliance monitoring programmes; and
• Reviewing safety & health policies, and providing recommendations for any revision.
With systematic reporting lines in place, we monitor and review our safety performance indicators internally and report the
indicators to the relevant authorities in the countries where we operate. In FY2019, there have not been any incidents of
fatalities.
Extensive measures are in place to promote safety awareness and to brief employees on preventive measures and response
actions. The initiatives carried out at each site are reviewed during scheduled EHS meetings respectively, and are aligned to
regulatory requirements in Malaysia and Singapore. Our operations are assessed by external regulators, which includes the
Chemicals Health Risk Assessment (“CHRA”).
We provide safety briefings to all employees in our Employee Orientation Programme. In addition, specific safety trainings
and programmes are rolled out to targeted employees with certain scopes of work. These include a first aider course for
site safety officers, employees who perform signalling overhead crane operations, employees who operate forklifts and
employees who handle chemicals. Employees who work in factories are provided an average of 15 hours of training a year.
Below, we highlight some of our key training activities during the year.
• Roles & Responsibilities of EHS Committee & Supervisors /Acc. Investigation & reporting
• SAM - Annual EHS - Contractors & Sub. Contractors training
• LEAD Awareness
• Hearing Conservation Program
• Safe Storage, Handling & Use of Compressed Gases
• Forklift Safety Handling Certification
• Chemical Spill Training (ERT)
• Hazards Identification, Risk Analysis & Determine Control (HIRADC)
• Shaping Human Behavior through Mindset Alignment in Achieving Safety Goals
• ERT - BOMBA (Fire Certification Training)
• Roles & Responsibilities of EHS Committee & Supervisor/Acc. Investigation & Reporting
• Forklift Safety Handling Certification
• Chemical Safety Handling
• Overhead Crane Safety Handling/Operation
• Emergency Response Team Refresher & Certification Training
To prepare for emergencies, we have an emergency response team that functions 24 hours a day. As shown above, the
team is specifically trained in the areas of fire response, chemical spill response, and first aid. In addition, fire drills and
emergency evacuation drills are conducted regularly, and emergency communication flows are established with the
nearest hospitals. Our factory employees also undergo our annual medical surveillance programme. As such, our safety
practices are consistently reviewed and reported, as we commit ourselves to upholding a safe and healthy workplace.
032 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
SUSTAINABILITY STATEMENT (Cont’d)
Futsal Tourament
Peace Run
033
SUSTAINABILITY STATEMENT (Cont’d)
OUR OUTREACH
Children Protection Society 23rd February 2019
We believe in giving back to the community and investing
in future generations. With the resources available to us
as the business grows, we are better able to support the
communities in which we operate. We do this by facilitating
access to education and providing youth with skills that will
improve their career opportunities.
034 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
SUSTAINABILITY STATEMENT (Cont’d)
Our training and development programmes are integral to our commitment to support our employees realise their full
potential and progress their career capabilities.
Internships
Hiring interns also helps the Group cover sudden spikes in workload where a permanent hire would be inappropriate. It
also gives students an opportunity to experience actual workplace challenges. As can be seen from the table above, a good
number of our interns do eventually join us as employees which suggests that our internships are indeed fulfilling one of its
objectives of being a good pipeline for potential employees.
Managing sustainability will continue to be an integral part of our business activities and decision making framework. We
recognise the benefits of managing sustainability matters related to our business. It will provide greater value not only for
the Group, but also the communities in which we operate. While we expect the coming years to be challenging for our
business, our commitment to sustainability can only be strengthened as we are mindful of the need to balance our economic,
environmental and social responsibilities. We fully understand that such an approach is vital in maintaining a competitive
edge while driving us closer towards realising our vision of becoming a strong and dynamic global player.
We encourage our employees, suppliers, customers and investors to make this commitment towards sustainability a
collaborative effort to influence positive and sustainable change in the world we live in.
FOCUS AREAS
REDUCING GROWING
CO2 WITH
EMISSIONS COMMUNITIES
PROTECTING VALUE
SOURCING
WATER AND
SUSTAINABLY
RESOURCES BEHAVIOURS
035
PARTICULAR OF PROPERTIES
held as at 31 March 2019
Location Tenure Area Build-up Description Approximate Expiry Date of Net Book
(sq. ft.) area age of date revaluation Value at
(sq. ft.) building 31 Mar 2019
(RM’000)
SAM PRECISION (M) SDN. BHD. Leasehold 54,013 33,500 Office & 35 years 22 14 August 2,575
Plots 31-34 Lengkok 60 years Factory November 2009
1
Kampung Jawa 2, 2041
Bayan Lepas Non-Free
Industrial Zone Phase 3,
11900 Penang.
SAM PRECISION (M) SDN. BHD. / SAM Leasehold 131,104 67,500 Office & 19 years 16 June 14 August 7,661
TOOLING TECHNOLOGY SDN. BHD. 60 years Factory 2057 2009
Plot 77 Lintang
2
Bayan Lepas,
Bayan Lepas Non-Free
Industrial Zone Phase 4,
11900 Penang.
MEERKAT PRECISION SDN. BHD. / Leasehold 131,406 92,000 Office & 23 years 14 May 14 August 12,533
CORPORATE OFFICE 60 years Factory 2051 2009
3
Plot 17 Hilir Sungai
Keluang 3, Bayan Lepas
Free Industrial Zone Phase 4,
11900 Penang.
SAM MEERKAT (M) SDN. BHD. Leasehold 176,629 92,500 Office & 13 years 18 17 August 9,918
Plot 103, Hilir Sungai 60 years Factory December 2009
Keluang Lima, 2074
Taman Perindustrian
Bayan Lepas 4,
11900 Penang, Malaysia.
4
Taman Perindustrian
Bayan Lepas 4,
11900 Penang,
Malaysia.
Note:
1. The land area disclosed herein based on the survey conducted by Jabatan Ukur dan Pemetaan Pulau Pinang.
1
SAM PRECISION (M) SDN. BHD.
2
SAM PRECISION (M) SDN. BHD.
3
MEERKAT PRECISION SDN. BHD. /
4
SAM MEERKAT (M) SDN. BHD.
/ SAM TOOLING TECHNOLOGY CORPORATE OFFICE
SDN. BHD.
036 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT
The Board of Directors of SAM Engineering & Equipment (M) Berhad (“Company” or “SAMEE”) is committed to ensure that
the Company meets the principles and applies the practices of corporate governance as set out in the Malaysian Code on
Corporate Governance 2017 (“Code”).
The Board steadfastly believes that such principles and practices of the Code are essential to uphold the business integrity
of the Company and its subsidiaries (collectively, the “Group”) and to enhance shareholder value.
The Group in their conduct of business and management is not just guided by the Code but also by its Core Values which
balances the commercial and financial success with the interests of all stakeholders. A description of these Core Values is
available at the Company’s website.
This corporate governance overview outlines the corporate governance practices which have been applied by the Board
of the Company during the financial year ended 31 March 2019 (“FY2019”), where possible, and applicable laws to be a
dynamic framework within which the Group would conduct its business. Please note that the following statement is to be
read together with the Corporate Governance Report, which is available on the Company’s website at http://www.sam-
malaysia.com.
• Every company is headed by a Board, which assumes responsibility for the company’s leadership and is
collectively responsible for meeting the objectives and goals of the company
The Board plays a pivotal role in the stewardship of the Group’s direction and operations, and ultimately the enhancement
of long-term shareholder value.
The Board is responsible for the leadership, oversight and overall management of the Group. The Board is one that is
effective and is made up of a combination of the Executive Director who has intimate knowledge of the business and
Non-Executive Directors who comes from diversified industries/business backgrounds to bring broad business and
commercial experience to the Group. The Board has the overall responsibility for corporate governance, establishing
goals, strategies and direction, reviewing the Group’s performance and critical business issues and ultimately the
enhancement of long term shareholders’ value. It monitors and delegates the implementation of the strategic direction
to the Management.
The Board reviews the strategic plan of the Group tabled by Management at its meeting. The review would cover the
performance targets and long-term plans of the Group to be met by Management.
If the Board is satisfied with the strategic plan of the Group as presented by the Management, of which shall be
implemented by the Management accordingly. The Board would continue to monitor the plan to ensure its
implementation.
The Board’s role is to oversee the performance of the Management to determine whether the business is properly
managed. The Board gets updates from Management at the quarterly Board meetings when reviewing the unaudited
quarterly results. During such meetings, the Board participates actively in the discussion on the performance of the
Group.
The Board also has a formal schedule of matters reserved solely for its decisions such as approving acquisition and
divestiture, major capital expenditure, projects and budgets, quarterly and annual financial statements as well as
monitoring of financial and operating performance of the Group. The oversight of such matters enshrines the Board’s
control over the Group.
037
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
As part of its efforts to ensure the effective discharge of its duties, the Board has delegated certain functions and
responsibilities to the following respective Board Committees:-
The Chairman of each Board Committee will report to the Board on the outcome of the Committee’s meeting which
also includes the key issues deliberated at the Committee’s meetings.
Each Committee operates within specific Terms of Reference that were drawn up with reference to the Code and the
Board Committees discharge their duties in accordance to its Terms of Reference.
Notwithstanding the delegation of specific powers, the Board retains full responsibility for the direction and control of
the Group. The ultimate responsibility for decision-making on all matters lies with the Board.
The Board has elected a Chairman from amongst the members of the Board who is a Non-Executive Director. Mr. Tan
Kai Hoe as the Company’s Non-Independent Non-Executive Chairman provides leadership and guidance to the Board
and is responsible for ensuring effectiveness of the Board’s performance. Mr. Tan Kai Hoe works closely with the rest
of the Board members in forming policies and strategies to align the business activities driven by the Management.
There is clear division of responsibilities of the Chairman and the Executive Director & CEO. The Board is led by the
Non-Independent Non-Executive Chairman while the executive management is shepherded by the Executive Director
& CEO.
The roles and responsibilities of both the Chairman and the Executive Director & CEO are more particularly set out in
the Board Charter which is available at the Company’s Website.
In compliance with Practice 1.4 of the Code, the Board is supported by suitably qualified and competent Company
Secretaries. The Company Secretaries play an advisory role to the Board in relation to the Company’s Constitution,
Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidelines and
legislations.
In the event that the Company Secretaries fail to fulfil their functions effectively, the terms of appointment permit their
removal and appointment of a successor only by the Board as a whole.
In performing their duties, the Company Secretaries carry out, amongst others, the following tasks:-
• Statutory duties as required under the Companies Act 2016, Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (“Listing Requirements”) and Capital Market and Services Act, 2007;
• Facilitating and attending Board Meetings and Board Committee Meetings, respectively;
• Facilitating and attending the General Meeting(s);
• Ensuring that Board Meetings and Board Committee Meetings, respectively are properly convened and the
proceedings are properly recorded;
• Ensuring timely communication of the Board decisions to the Management for further action;
• Ensuring that all appointments to the Board and/or Board Committees are properly made in accordance with the
relevant regulations and/or legislations;
• Maintaining records for the purpose of meeting statutory obligations of applicable jurisdictions;
038 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
In performing their duties, the Company Secretaries carry out, amongst others, the following tasks:- (Cont’d)
• Facilitating the provision of information as may be requested by the Directors from time to time in an expeditious
manner and ensuring adherence to Board policies and procedures;
• Facilitating the conduct of the assessments to be undertaken by the Board and/or Board Committees as well as to
compile the results of the assessments for the Board and/or Board Committee’s notation;
• Assisting the Company on the lodgements of documents with relevant statutory and regulatory bodies;
• Assisting the Board with the preparation of announcements for release to Bursa Malaysia Securities Berhad (“Bursa
Securities”) and Securities Commission Malaysia; and
• Rendering advice and support to the Board and Management.
The Company Secretaries keep the Board abreast with the latest regulatory updates and also ensure that deliberations
at Board and Board Committee meetings are well documented.
The Board is satisfied with the performance and support rendered by the qualified and experienced Company
Secretaries to the Board in discharge of its functions.
The Board recognises that the decision-making process is highly contingent on the quality of information furnished. All
members of the Board have full unrestricted access to any information pertaining to the Group’s business and affairs.
The Board is furnished with information and documents at least 7 days in advance of meetings (or a shorter time period
when unavoidable) to allow them sufficient time to appreciate the issues being deliberated and to expedite the process
of decision making. All information and documents furnished to the Board are comprehensive and encompasses both
quantitative and qualitative factors to increase the quality of the Board’s understanding and knowledge of the matter.
Management may be invited to attend Board meetings to provide the Board detailed explanations and clarifications on
certain matters that are tabled to the Board. The Board has full unrestricted access to any information pertaining to the
Group and its business affairs including verbal explanations from Management on related topics being deliberated, and
the services of the Company Secretaries to ensure procedures are complied with. The Board may seek (upon approval
of the Chairman) independent advice on any related matter at the expense of the Group.
All deliberations and decisions made at the Board meetings are recorded by the Company Secretaries including
whether any Director abstained from voting or deliberating on a particular matter. Minutes of the meeting are circulated
to the Board and the Management for review and comments in a timely manner before the minutes of the last Board
meeting are confirmed at the next Board meeting.
The Board ordinarily meets at least four (4) times a year with additional meetings convened when urgent and important
decisions needed to be taken between the scheduled meetings. During FY2019, the Board met on four (4) occasions
where it deliberated upon and considered various matters. The attendance record of the Directors for FY2019 was
satisfactory. This is evidenced by the attendance record of the Directors at the Board meetings during their tenure in
office as set out in the below table:-
Directors Attendance
Tan Kai Hoe 4/4
Goh Wee Keng, Jeffrey 4/4
Shum Sze Keong 4/4
Dato’ Mohamed Salleh Bin Bajuri 4/4
Dato’ Seri Wong Siew Hai 4/4
Dato’ Sri Lee Tuck Fook 3/4
Lee Hock Chye 4/4
Datuk Dr Wong Lai Sum 4/4
039
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
All the Directors have complied with the minimum 50% attendance requirement in respect of Board Meetings as
stipulated in the Listing Requirements. In the intervals between Board Meetings, for any matters requiring Board’s
decisions, the Board’s approvals are obtained through circular resolutions. The resolutions passed by way of such
circular resolutions are then noted at the next Board Meeting.
It is a policy for Directors to devote sufficient time and efforts to carry out their responsibilities. This commitment is
given to the Board at the time of their appointment as Directors.
The Board is satisfied with the level of time committed by the Directors towards fulfilling their roles and responsibilities
as Directors of the Company.
• There is demarcation of responsibilities between the Board, Board Committees and management.
• There is clarity in the authority of the Board, its committees and individual directors.
The Board Charter, which is available at the Company’s website, establishes the clear and unambiguous functions
and roles of the Board and those delegated to the Chairman, Board Committees, the Executive Director & CEO and
Management as part of initiative to enhance accountability.
The Board reviews the Board Charter from time to time to ensure its relevance in aiding the Board to discharge its
duties and responsibilities in view of current laws and regulations. The Board Charter was last reviewed by the Board on
24 May 2018 for the purpose of re-alignment of the existing governance practices in the Company with the Code and
Listing Requirements, where possible or relevant.
• The Board is committed to promoting good business conduct and maintaining a healthy corporate culture that
engenders integrity, transparency and fairness.
• The Board, management, employees and other stakeholders are clear on what is considered acceptable
behaviour and practice in the company.
The Standard Code of Conduct, Business Ethics, Conflicts of Interest (collectively referred to as “Code of Ethics”) and
Whistle Blowing Policy (“WBP”) of the Group are available on the Company’s website.
The Code of Ethics sets out such standards of ethics and conduct expected from the Board, Management and
employees.
The WBP outlines when, how and to whom a concern could be properly raised about the actual or potential corporate
fraud and or breach of ethics involving employees, Management or Director(s) of the Group.
040 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
• Board decisions are made objectively in the best interests of the company taking into account diverse
perspectives and insights.
The Board composition, as at the date of this statement, comprises of five (5) Independent Non-Executive Directors
out of eight (8) Directors in the Board. Therefore, the following prescribed requirements have been fully complied by
the Board:-
• Paragraph 3.04(1) of the Listing Requirements which stipulates that at least 2 directors or 1/3 of the Board of
Directors, whichever is the higher, are Independent Directors; and
• Practice 4.1 of the Code, where at least half of the Board comprises Independent Directors.
Directors Designation
Tan Kai Hoe Non-Independent Non-Executive Chairman
Goh Wee Keng, Jeffrey Executive Director & CEO
Shum Sze Keong Non-Independent Non-Executive Director
Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Director
Dato’ Seri Wong Siew Hai Independent Non-Executive Director
Dato’ Sri Lee Tuck Fook Independent Non-Executive Director
Lee Hock Chye Independent Non-Executive Director
Datuk Dr Wong Lai Sum Independent Non-Executive Director
The profile of each Director is presented in the relevant section of this Annual Report.
The Directors, with their different background and specialisation, collectively bring with them a wide range of experience
and expertise in areas such as finance, engineering, corporate affairs, legal, marketing and operations.
The Independent Non-Executive Directors bring objective and independent judgment to the decision making of
the Board and provide a capable check and balance to the Executive Director and Management. They contribute
significantly in areas such as policy and strategy development, performance monitoring, allocation of resources as well
as improving governance and controls.
Together with the Executive Director who has intimate knowledge of the business, the Board is constituted by individuals
who are committed to business integrity and professionalism in all its activities and have proper understanding of and
competence to deal with the current and emerging business issues.
The concept of independence adopted by the Board conforms with the definition of an Independent Director under
Paragraph 1.01 and Practice Note 13 of the Listing Requirements. An Independent Director is not a member of
Management and is free from any business or other relationship which could interfere with the exercise of independent
judgment or the ability to act in the best interests of the Group.
On 26 September 2007, Singapore Precision Engineering Limited and Singapore Aerospace Manufacturing Pte Ltd
(“SAM Singapore”), collectively, acquired 44.787% of the entire issued share capital of the Company. Thus making SAM
Singapore effectively the controlling shareholder.
In view of the foregoing, the NRC and the Board had determined that the period of nine (9) years shall commence with
effect from 26 September 2007 or the date of appointment of each Independent Director, whichever shall be the later.
041
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
The Board is mindful of the recommendation in Code, whereby the tenure of an independent director is subject to
a cumulative term limit of nine (9) years. Upon completion of the nine (9) year tenure, an independent director may
continue to serve on the Board as a non-independent director. If the Board intends to retain an independent director
beyond the term limit of nine (9) years, it should justify and seek annual shareholders’ approval. The Board is also
mindful of Practice 4.2 of the Code which requires the Board to seek annual shareholders’ approval through a two-tier
voting process, if the Board continues to retain an independent director after the twelfth (12th) year.
In ascertaining the independent status of the Directors, the Board continues to believe that tenure should not form part
of the assessment criteria. It is of the view that the fiduciary duties of Directors are the primary concern of all Directors,
regardless of their status. In fact, continued tenure brings stability to the Board as the Group benefits from their mix
of skills, professional and commercial experience, technical expertise in their relevant fields and competencies for
informed and balanced decision-making by the Board.
Dato’ Mohamed Salleh Bin Bajuri, Dato’ Seri Wong Siew Hai, Dato’ Sri Lee Tuck Fook and Mr Lee Hock Chye have all
served the Company as Independent Non-Executive Directors for a cumulative term of more than nine (9) years from
26 September 2007.
The NRC had conducted annual performance evaluation and assessment on these Independent Non-Executive
Directors and is of the opinion that the above Independent Directors remain objective and independent in expressing
their views and in participating in deliberation and decision making of the Board and Board Committees. Their length
of service on the Board does not in any way interfere with their exercise of independent judgement and ability to
act in the best interests of the Company. In addition, they have also confirmed and declared in writing that they are
Independent Directors and have satisfied all the criteria of an Independent Director set out in Paragraph 1.01 of the
Listing Requirements.
The Board has accepted the foregoing rationale and has agreed for the re-appointment of Dato’ Mohamed Salleh
Bin Bajuri, Dato’ Seri Wong Siew Hai, Dato’ Sri Lee Tuck Fook and Mr Lee Hock Chye to continue as Independent
Non-Executive Directors of the Company, subject to approval of the shareholders at the forthcoming Annual General
Meeting.
In the Company’s Board Diversity Policy, the Board encourages diversity and there is no discrimination on any basis,
including but not limited to, race, age, ethnicity and gender. The Board is of the opinion that the evaluation of suitability
of candidates should be based on their performance and merit, in the context of skills, time commitment and experience
to bring value and expertise to the Board.
As mentioned above, the Board did not set specific targets on gender diversity for the Company and currently, Datuk
Dr. Wong Lai Sum is the only female Director on the Board. Her profile can be found at the relevant section of this
Annual report.
The Board is responsible for the appointment of new Directors, and the NRC is delegated with the role of screening and
conducting an initial selection, which includes an external search, before making a recommendation to the Board. The
NRC has the authority to obtain the services of professional recruitment firms to source for candidates for directorship
or seek independent professional advice whenever necessary.
As part of the role of the NRC, the NRC also evaluates the suitability of potential candidates for appointment to
the Board based on, amongst others, experience, commitment (including time commitment), competency, and (if
applicable) such relevant regulatory criteria for assessing independence. The NRC will then recommend the successful
candidates for approval and appointment by the Board.
042 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
The NRC of the Company comprises exclusively of Non-Executive Directors, a majority of whom are Independent
Directors.
The Members of the NRC and their meeting attendance during their tenure in office for the financial year under review
are as set out below.
During the year, the NRC carried out the following activities:
(a) Reviewed and assessed the mix of skills, expertise, composition, size and experience of the Board, contribution of
each Director, the effectiveness of the Board Committees and Board as a whole.
(b) Reviewed the Board Evaluation Report for financial year ended 31 March 2018.
(c) Discussed the character, experience, integrity and competency of the Directors and the CFO and ensured all of
them have the time to discharge their roles.
(d) Reviewed the Directors’ retirement by rotation and recommended to the Board, Directors who are due for retirement
at the Annual General Meeting (“AGM”).
(e) Reviewed the independence status of the Independent Non-Executive Directors.
(f) Reviewed and recommended the retention of Independent Non-Executive Directors who have served a cumulative
term of more than nine (9) years to the Board for endorsement and to seek shareholders’ approval at the AGM.
(g) Review the term of office and performance of Audit Committee.
(h) Reviewed and recommended the Directors’ fees and benefit payable to the Directors.
(i) Reviewed list of trainings attended by the Directors during the financial year.
(j) Reviewed the proposed Employees’ Share Grant Scheme (“ESGS”).
The Directors are fully aware of the importance of keeping abreast with the latest changes and developments in the
industries in which the Group operates as well as the economic, financial and governance issues in order to enhance
the effectiveness in discharging their responsibilities as Directors.
All Directors have attended and completed the Mandatory Accreditation Programme (“MAP”). During the year
under review, the Directors attended various briefings, seminars, conferences, trade shows, plant visits, and speaking
engagements covering areas including corporate governance, relevant industrial developments, financial, risk
managements, leadership and global business developments.
Some of the training programmes attended by the Directors during the financial year under review included the
following:
Directors Trainings
Tan Kai Hoe • Handling Press Conferences, Media Interviews & Media Questions
• Formnex 2018, International Exhibition On The Next Generation of Manufacturing
Technologies
Goh Wee Keng • Handling Press Conferences, Media Interviews & Media Questions
Shum Sze Keong • Handling Press Conferences, Media Interviews & Media Questions
Dato’ Mohamed Salleh • Handling Press Conferences, Media Interviews & Media Questions
Bin Bajuri
043
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
Some of the training programmes attended by the Directors during the financial year under review included the
following: (Cont’d)
Directors Trainings
Dato’ Seri Wong Siew Hai • Handling Press Conferences, Media Interviews & Media Questions
• Guest Speaker for Penang International Business and Investment Summit (PIBIS)
2019
• Guest Speaker for NEX Leadership Conference
• Keynote Speaker for MECON 2019 (MMU International Engineering Conference)
• Invest Malaysia Conference 2019
Dato’ Sri Lee Tuck Fook • Sustainability Awareness Briefing Workshop
• Affin Hwang Capital Conference Series 2018 – Rebuilding A New Malaysia
• Invest Malaysia Conference 2019
Lee Hock Chye • Speaker, Ngee Ann Polytechnic Travel & Learn Laos 2018
Datuk Dr. Wong Lai Sum • Handling Press Conference, Media Interviews & Media Questions
• Breakfast Talk on Digital Ethics & Sustainability in a New Economy of Privacy
Upon review, the Board concluded that the Directors’ Trainings for the FY2019 were adequate.
• Stakeholders are able to form an opinion on the overall effectiveness of the Board and individual directors.
5.1 Annual assessment of the Directors, Board as a whole and Board Committees
The Board through the NRC conducts an annual evaluation to appraise the effectiveness of the Board as a whole, the
effectiveness of the Board Committees and the further required mix of skills and experiences to enhance Board efficacy.
The said evaluation on the Board covers board size, mix or composition, conduct of Board meetings and Directors’
skills set matrix.
The Board Committees are assessed based on their roles and scope of work, frequency and length of meetings, supply
of sufficient and timely information to the Board and also overall effectiveness and efficiency in discharging their duties.
The results of the evaluation are then collated, distilled, summarised and reported to the Board by the NRC Chairman
with an aim towards continuous improvement of the Board and Board Committees.
In addition to the foregoing, the NRC also assesses the independence of each of the Independent Non-Executive
Directors annually, taking into account the individual Director’s ability to exercise independent judgment at all times
and to contribute to the effective functioning of the Board. All findings by the NRC will be reported to the Board.
During FY2019, the NRC also conducted an assessment of the Directors who are subject to retirement at the forthcoming
AGM in accordance with the provisions of the Constitution of the Company. Upon recommendation by the NRC of the
proposed re-election of the relevant directors, the Board recommended and supported the re-election of the relevant
Directors to be tabled at the AGM for shareholders’ approval.
044 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
• The level and composition of remuneration of directors and senior management take into account the company’s
desire to attract and retain the right talent in the Board and senior management to drive the company’s long-
term objectives.
• Remuneration policies and decisions are made through a transparent and independent process.
Each Director is paid a Director’s fee of RM50,000 per annum for serving as a member of the Board.
The Director serving as the Chairman of the relevant Board Committee receives an additional annual remuneration as
set out below:
The rest of the Directors who serve as ordinary members to the relevant Board Committee receives an additional annual
remuneration of RM5,000.
The Directors’ fees and remuneration are appropriate to their contribution, taking into consideration effort, commitment
and time spent as well as the responsibilities involved.
All Non-Executive Directors are also paid a meeting allowance of RM2,000 for each meeting attended. The Executive
Director & CEO is not entitled to any meeting allowance.
The Board collectively determined the remuneration for the Non-Executive Directors to ensure the same is appropriately
reflective of experience and the level of responsibilities and contributions including the number of the scheduled
meetings for the Board, and Board Committees; and are competitive compared with the prevailing market practices.
Each of the Non-Executive Directors abstained from deliberating and voting on his or her own remuneration.
For FY2019, the NRC had performed its duty to assess the remuneration package of its Executive Director.
In addition, the NRC had also deliberated on the Directors’ fees for the financial year ending 31 March 2020 (“FY2020”)
which is subject to the shareholders’ approval at the forthcoming AGM. Further to the deliberations, the NRC had
reported to the Board its recommendation.
• Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate
with their individual performance, taking into consideration the company’s performance.
Pursuant to Section 230 of the Companies Act 2016, the fees of the directors and any benefits payable to the directors
of a listed company and its subsidiaries shall be approved by a general meeting. The relevant resolutions in relation to
the Directors’ remuneration payable to the Directors for FY2020 shall be presented to the shareholders for approval at
the forthcoming AGM.
045
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
1
Paid directly to SAM Singapore where he is employed as at the date of this Report.
2
Paid directly to Accuron where he is employed as at the date of this Report.
The Company considers the remuneration of the Senior Management personnel to be sensitive and proprietary in view
of the competitive nature of human resource market. Thus, the Company does not intend to adopt the recommendation
to disclose the detailed remuneration of each member of Senior Management in bands of RM50,000 on a named basis.
Furthermore, this is also to preserve confidentiality, negative impact arising from the disclosure, and the larger need to
maintain a stable work environment to meet long-term strategic goals.
The remuneration package of the employees of the Company has been benchmarked with the industry and is in line
with the industry practice. In addition, their annual increments and bonus payouts are based on performance.
8.1 The Chairman of the Audit Committee is not the Chairman of the Board
The Company complied with the Practice 8.1 of the Code which stipulates that the Chairman of the AC is not the
Chairman of the Board.
The AC is an independent Board Committee, led by an Independent Non-Executive Director, which assists the Board
in the discharge of its responsibilities for corporate governance, internal controls and reporting.
046 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
8.1 The Chairman of the AC is not the Chairman of the Board (Cont’d)
The members of the AC possess vast experience and skills in understanding and attending to matters falling under the
purview of the AC. They are more than qualified to review the accuracy of the Group’s financial statements from various
perspectives in view of each member’s skills and qualifications prior to recommendation of the same to the Board.
Further details pertaining to the AC are set out in the AC Report contained in this Annual Report.
Practice 8.2 of the Code requires the AC to have a policy that requires a former key audit partner to observe a cooling-
off period of at least two years before being appointed as a member of the AC.
In accordance with the Terms of Reference of the AC, the AC, on an annual basis should review and monitor the
suitability and independence of the External Auditors.
The External Auditors have an obligation to bring to the attention of the Board, the AC and the Management any
significant defects in the Group’s systems of reporting, internal control and compliance with approved accounting
standards as well as legal and regulatory requirements. The External Auditors of the Company are invited to attend at
least two meetings of the AC a year without the presence of Management.
The AC annually assesses the External Auditors against a set of assessment criteria that has been approved by the
Board. The scope of assessment which is described in the AC Report in this Annual Report includes, amongst others,
an assessment on the suitability, objectivity and independence of the External Auditors. All findings from the AC are
then reported to the Board for further action, if any.
The Board, through the AC, has assessed and affirmed the independence, objectivity and suitability of the External
Auditors to continue in office.
In compliance with Malaysian Institute of Accountants (“MIA”) by-laws, the Audit Partners are rotated every five (5)
years to ensure objectivity, independence and integrity of the audit opinions. Such assurance was also given by the
External Auditors in the Audit Planning Memorandum and Audit Finding Report presented to the AC.
The AC is satisfied with the competence and independence of the External Auditors and had recommended the re-
appointment of the External Auditors for shareholders’ consideration at the AGM.
The Internal Audit function of the Company works with the External Auditors to ensure as complete an audit coverage
of the Group’s activities as possible. In view of this, the Company has established a seamless arrangement to meet the
professional requirements of the External Auditors.
Details on the audit fees payable to External Auditors; the key features of the relationship between the AC and the
External Auditors; and a summary of the activities of the AC during the financial year are set out in the AC Report in
this Annual Report.
All AC members are financially literate and two of the AC members are members of the MIA thus fulfilling the requirement
under Paragraph 15.09(1)(c)(i) of the Listing Requirements which requires at least one (1) of the AC members to be a
member of the MIA.
AC members acknowledge the need for continuous education and trainings. For the year under review, the Company’s
External Auditors briefed the AC members on the developments in accounting and auditing standards, practices and
rules.
047
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
The AC comprises four (4) Non-Executive Directors, of whom three (3) are Independent Directors.
This is in compliance with Paragraph 15.09(1)(c) of the Listing Requirements, which stipulates that “all the audit
committee members must be non-executive directors, with a majority of them being independent directors”.
In terms of the Step-Up Practice 8.4 of the Code which recommends that the AC should comprise solely of Independent
Directors, the Company does not intend to adopt such step-up practice for the time being.
• Companies make informed decisions about the level of risk they want to take and implement necessary controls
to pursue their objectives.
• The Board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or
situation on the company’s objectives is mitigated and managed.
The Board undertakes overall responsibility for risk oversight and risk management. In view of this, the Board has,
in place, a structured enterprise risk management framework for the Group which is to identify, monitor, control and
report on principal risks faced by the Group on regular basis.
Details of the Group’s enterprise-wide risk management framework are outlined in the Statement on Risk Management
and Internal Control in this Annual Report.
The members of RSC, comprises wholly of Independent Non-Executive Directors. The Members of the RSC and their
meeting attendance during their tenure in office for the financial year under review are as set out below.
Dato’ Mohamed Salleh Bin Bajuri is the representative of the AC to the RSC and serves to keep the AC apprised of any
risk management issues of a financial nature that would require the attention of the AC. During the year under review,
there was no major financial related issue which required reporting to and deliberation by the AC.
In addition, the AC has included, as part of its regular meeting agenda, for the identification of risk areas which should
be brought to the attention of the RSC.
The RSC is tasked pursuant to its Terms of Reference to assist the Board with risk management (i.e., reviewing and
recommending the risk management policies and strategies for the Group in managing overall risk exposure of the
Group); and sustainability (i.e., reviewing and recommending sustainability strategies and performance in advancing
the Group’s sustainability ambition and direction).
048 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
During the year under review, the RSC carried out the following activities:
(a) Identified and monitored the top 5 Group Risks by business segments and on Group-wide basis.
(b) Reviewed the Key Risks Indicators (“KRI”) and worked with management to minimise its impact to the Group.
(c) Received update on Business Continuity Plan from management and monitored developments.
(d) Reviewed Sustainability Statement.
(e) Reviewed update on Group Insurance Coverage.
• Companies have an effective governance, risk management and internal control framework and stakeholders
are able to assess the effectiveness of such a framework.
The key feature s and state of internal control and risk management of the Group are furnished in the Statement on Risk
Management and Internal Control in this Annual Report.
An independent Internal Audit function, which reports directly to the AC, was established in line with the Code and the
Listing Requirements. Detailed information on the Internal Audit function is outlined in the AC Report.
None of the Internal Audit personnel has any relationship or conflict of interest that could impair their objectivity and
independence in conducting their Internal Audit functions.
• There is continuous communication between the company and stakeholders to facilitate mutual understanding
of each other’s objectives and expectations.
• Stakeholders are able to make informed decisions with respect to the business of the company, its policies on
governance, the environment and social responsibility.
The key element of the Company’s dialogue with its shareholders is the opportunity to gather views of, and answer
questions from, individuals and institutional shareholders, on all issues relevant to the Group through the annual general
meetings or the extraordinary general meetings.
At these general meetings, shareholders are provided time to seek clarifications or provide feedback both about the
resolutions being proposed or about the Group’s operations/prospects in general. The Board will respond to all queries
and take note of all suggestions put forth by shareholders. Where it is not possible to provide immediate answers, the
Chairman will undertake to furnish the shareholder with a written answer after the meeting.
The Company also holds briefings for fund managers, institutional investors and investment analysts.
While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, it is
mindful of the legal and regulatory framework governing the release of material and price-sensitive information. Such
material and price-sensitive information are not released unless it has been duly announced or made public through
the proper channels.
049
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
11.1 Effective, transparent and regular communication with its stakeholders (Cont’d)
The Board recognises that the Independent Directors are vital towards protecting the interests of shareholders.
Shareholders and stakeholders could communicate their concern to the Independent Directors through mail to the
Company’s registered address or via e-mail on the company website to independent@sam-malaysia.com.
• Shareholders are able to participate, engage the Board and senior management effectively and make informed
voting decisions at General Meetings.
General meeting serves as the principal platform for the Board and Management to engage with shareholders and
encourage effective shareholders’ communication on the Group’s performance, corporate and business developments
and any other matters affecting shareholder interests. The Company Secretaries, by order of the Board, served a notice
of AGM to all shareholders of the Company at least 28 days prior to its forthcoming AGM to provide the shareholders
sufficient time to consider the proposed resolutions that will be discussed and decided at the AGM. Notice of the
AGM clearly sets out details of the resolutions proposed accompanied by explanatory notes on the rationale of each
resolution to enable the shareholders to make informed decisions in exercising their voting rights.
The notice of AGM also provides information to the shareholders with regard to, amongst others, their entitlement to
attend the AGM, the right to appoint a proxy and also the qualifications of a proxy.
Before the commencement of AGM, the management will give a presentation which include detail of performance, key
developments and financial results for the reporting year. The Board is satisfied with the current programme at AGM
and there have been no major contentious issues noted with shareholders.
To further promote participation of members through proxy(ies), which is in line with the insertion of Paragraph 7.21
of the Listing Requirements, the Company’s Constitution includes the right of proxies to speak at general meetings, to
allow a member who is an exempt authorised nominee to appoint multiple proxies for each omnibus account it holds
and expressly disallows any restriction on proxy’s qualification.
The general meeting also serves as an avenue for the Chairman and the Board members to engage in a two-way
communication with shareholders where the shareholders are encouraged to participate in the question-and-answer
session with the Board and exercise their right to vote on the proposed resolutions. The Board will ensure that all Board
members, particularly the chairperson of each Board Committee will attend general meetings to facilitate engagement
with shareholders and to address any relevant questions and concerns raised by the shareholders. All the Directors
attended the 24th AGM of the Company held on 14 August 2018. The External Auditors will be present at the AGM to
respond to any queries from shareholders on the audit conducted, the preparation and content of the auditors’ report,
the accounting policies adopted by the Group, and the independent audit review of the Group’s financial position.
050 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)
12.3 Voting
The Company’s General Meeting is not held in a remote location. The Board conducts poll voting for all resolutions set
out in the notice of a general meeting and posts a summary of key matters discussed at the AGM on the Company’s
website.
Shareholders are allowed to appoint any person(s) as their proxy(ies) to attend, participate, speak and vote in his/her
stead at a general meeting.
The Board has adopted electronic voting to facilitate greater shareholder participation at general meetings.
COMPLIANCE STATEMENT
The Board is satisfied that to the best of its knowledge, the Company is substantially in compliance with the principles and
practices set out in the Code as well as the relevant Listing Requirements for the FY2019 except for the departures set out in
the Corporate Gorvernance Report. Any practices in the new Code which have not been implemented during the financial
year will be reviewed by the Board and implemented where possible and relevant to the Group’s business.
051
AUDIT COMMITTEE REPORT
The Audit Committee (“AC”) is an independent Board Committee which assists the Board in the discharge of its responsibilities
for corporate governance, internal controls and financial reporting.
OBJECTIVES
The key function of the AC is to assist the Board in fulfilling the following oversight objectives on the activities of SAM
Engineering & Equipment (M) Berhad (“Company” or “SAMEE”) and its subsidiaries (“Group”):
The Board will review the Terms of Reference (“TOR”) of the AC from time to time (if so required) to ensure that the AC
continues to carry out its functions effectively. The last review of the TOR by the Board was conducted on 21 May 2019. The
Company has uploaded the TOR onto the Company’s website at www.sam-malaysia.com.
COMPOSITION
The AC is comprised solely of Non-Executive Directors with a majority being Independent Directors. Their attendance at the
4 Committee meetings held during the financial year under review is tabulated below.
Dato’ Mohamed Salleh Bin Bajuri and Dato’ Sri Lee Tuck Fook are Chartered Accountants registered with the Malaysian
Institute of Accountants. The above composition of the AC meets the requirements of Paragraph 15.09(1)(c) of the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”), which stipulates that at least one member of the
AC must be a qualified accountant.
All members of the AC are financially literate and are able to analyse and interpret financial statements to effectively discharge
their duties and responsibilities as members of the AC.
The Nominating and Remuneration Committee (“NRC”) had on 20 May 2019 reviewed the terms of office and performance
of the AC members. Based on its review, the NRC is satisfied that the AC and its members have discharged their functions,
duties and responsibilities in accordance with the TOR and supported the Board in ensuring the Group upholds appropriate
corporate governance standards.
052 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
AUDIT COMMITTEE REPORT (Cont’d)
In line with the TOR, the AC held four (4) meetings during the financial year and carried out the following activities:
Financial results
(a) Reviewed the quarterly interim unaudited financial statements and the annual audited financial statements of the Group
prior to submission to the Board for its consideration and approval focusing particularly on changes in or implementation
of major accounting policies, significant and unusual events and compliance with applicable accounting standards
approved by the Malaysian Accounting Standards Board (“MASB”).
(b) Received verbal assurance from the CFO that adequate processes and controls were in place for an effective and
efficient financial statements close process in the preparation of the quarterly consolidated financial statements.
External auditors
(a) Reviewed the External Auditors’ scope of work, proposed audit fee and audit plan for the year under review.
(b) Approved and adopted policies and procedures to assess the suitability and independence of External Auditors.
(c) Met with the External Auditors twice, in the absence of management, to review the adequacy and effectiveness of the
system of internal control and any other areas of concern arising from their interim and final audit. No major concerns
were raised by the External Auditors.
(d) Reviewed and assessed the performance of the existing External Auditors for the Group.
(e) Reviewed with External Auditors any significant findings in relation to audit.
(f) Discussed reservation arising from audit and any other matters the External Auditors had wished to discuss.
(g) Reviewed the assistance provided by the Group to the External Auditors and the overall conduct of the audit.
(h) Reviewed and evaluated the independence of the External Auditors, obtained assurance of independence from the
External Auditors and recommended the re-appointment of the Group’s External Auditors.
Internal auditors
(a) Reviewed the adequacy and relevance of the scope, function, competency and resources of Internal Audit function and
that it has the necessary authority to carry out its work.
(b) Reviewed the internal audit plan adopted by the Internal Audit function.
(c) Reviewed the internal audit reports, audit recommendations made and Management’s responses to these
recommendations and actions taken to improve the system of internal control and procedures. Where appropriate, the
AC has directed Management to rectify and improve control procedures and workflow processes based on the Internal
Auditors’ recommendations and suggestions for improvement.
(d) Reviewed the implementation of these recommendations through follow up audit reports from the Internal Auditors.
(e) Reported to the Board on its activities and significant findings and results.
(f) Reviewed any appraisal or assessment of the performance of the Internal Audit Manager and outsourced service
providers.
(g) Reviewed the circular to shareholders on recurrent related party transactions (“RPPT”) of a revenue nature and trading
nature.
(h) Reviewed related party transactions (“RPT”) entered into by the Group.
(i) Reviewed the RRPT and ensured that these RRPT comply with approved procedures and policies and the mandate from
the shareholders.
(j) Reviewed the Statement on Risk Management and Internal Control which provides an overview of the state of internal
controls and risk management within the Group and also the AC’s Report prior to the Board’s approval for inclusion in
the Annual Report.
(a) Reviewed the reports of RPT and RRPT to ensure the actual transacted amounts were within the prescribed approved
limit.
(b) Reviewed and ensured that proper records are maintained to identify and capture all the RPT and RRPT.
(c) Reviewed the proposed renewal of existing and new shareholders’ mandate for RRPT of a revenue and/or trading nature
before recommending to the Board.
053
AUDIT COMMITTEE REPORT (Cont’d)
The AC is assisted by an in house Internal Audit function together with outsourced internal audit service providers in
discharging its duties and responsibilities. The in house Internal Audit function is headed by Internal Audit Manager, Mr. Lim
Aik Luen. He is the holder of a degree in accounting and a member of Institute of Internal Auditors Malaysia. The Internal
Audit plan is approved by the AC covering three main areas namely internal control, risk management and governance
process. Based on the audit plan proposed by the Internal Audit Manager and approved by the AC, audit work is conducted
by outsourced internal audit service providers. The Group’s Internal Audit function reports directly to the AC.
As part of the audit work, the Internal Audit function would review the adequacy and effectiveness of the internal control
system, compliance with rules, regulations, policies and procedures and also evaluates efficiency of key business processes.
These processes provide reasonable assurance that such internal control system would continue to operate satisfactorily
and effectively in the Group. The Internal Audit function also conducts investigations and interviews when required or at the
request of the AC.
The Internal Audit function submits the internal audit report with audit findings and recommendations on areas of concern
to the AC for its review and deliberation on a quarterly basis.
During the financial year, internal audit was conducted in the following areas:
The AC is pleased to confirm that the results of each of these audits are satisfactory.
The Risk & Sustainability Committee (“RSC”) invites the Internal Audit Manager to attend its meetings. If the Internal Audit
Manager is of the opinion that an audit should be conducted on any area, the Internal Audit Manager will, and if requested
by the RSC, shall propose to AC that an audit be conducted on the relevant area.
During the financial year, the total costs incurred for the Internal Audit Function was RM253,037.
Financial reporting
The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and
prospects, primarily through the annual financial statements and quarterly announcements of results to shareholders as well
as the Management Discussion and Analysis and the Sustainability Reporting section of the Annual Report. The Board is
assisted by the AC to oversee the Group’s financial reporting processes and the quality of its financial reporting.
The Board undertakes overall responsibility for risk oversight and risk management. In view of this, the Board has in place a
structured enterprise risk management framework for the Group which is to identify, monitor, control and report on principal
risks faced by the Group on a regular basis.
The RSC reviews and recommends risk management policies and strategies for the Group as well as assist the Board to
discharge its risk management and statutory responsibilities in managing the overall risk exposure of the Group.
The key features and state of internal control and risk management of the Group is furnished in the Statement on Risk
Management and Internal Control in this Annual Report.
054 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
AUDIT COMMITTEE REPORT (Cont’d)
The External Auditors of the Company fulfil an essential role on behalf of Company in giving an assurance to the shareholders
and others, of the reliability of the financial statements of the Group. The External Auditors have an obligation to bring
to the attention of the Board of Directors, the AC and Management any significant defects in the Group’s systems of
reporting, deficiencies in internal control and failure to comply with approved accounting standards and legal and regulatory
requirements.
The audit fees payable by the Company and by the Group to the External Auditors amounted to RM80,000 and RM254,000
respectively. The non-audit fees payable by the Company and by the Group to the External Auditors and a company affiliated
to the External Auditors amounted to RM20,000.
The details of non-audit fees for the Group are stated below;
Details RM
The Internal Auditors co-ordinate with the External Auditors to ensure the completeness of the audit coverage of the Group
activities. Thus, the Company has established a seamless arrangement to meet the professional requirements of the External
Auditors.
The Board, through the AC, has assessed and affirmed the independence and suitability of the External Auditors to continue
in office annually. The scope of the assessment covered calibre of the audit firm, team, fees, scope and planning as well as
quality of processes and performance, independence and objectivity and client communication. The Board has formalised a
set of criteria on assessment on the independence and suitability of External Auditors as well as to govern circumstances and
threshold under which contracts for provision of non-audit services could be entered into by the External Auditors.
The Board is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the
Company and of the Group as at the end of the financial year and of their profit or loss and cash flows for the year then
ended. In preparing the financial statements, the Directors have ensured compliance with applicable approved accounting
standards in Malaysia and the provisions of the Companies Act 2016.
In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and
made reasonable and prudent judgments and estimates.
The Directors also have a general responsibility for taking steps to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
055
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL
BOARD RESPONSIBILITY
The Board of Directors (“Board”) of SAM Engineering & Equipment (M) Berhad (“Company” or “SAMEE”) affirms its overall
responsibility for the system of internal control and risk management of the Company and its subsidiaries (“Group”) and for
reviewing the adequacy and integrity of the said system. The system of internal control covers governance, risk management,
financial strategy and organisational, operational, regulatory and compliance control. However, the Board recognises that
this system is designed to manage, rather than eliminate, the risk of not adhering to the Group’s policies and achieving its
goals and objectives. Therefore, the system provides reasonable, but not absolute, assurance against the occurrence of any
material misstatement, loss or fraud.
The adequacy and effectiveness of risk management and internal controls are reviewed by the Audit Committee (“AC”)
through internal audits conducted. The internal audits are mainly outsourced to external independence service providers.
Internal control issues as well as actions taken by Management to address these issues are tabled by the Internal Audit
Manager and outsourced service providers for deliberation during the AC meetings.
Each business unit and their supporting departments have implemented its own control processes under the leadership of
the Chief Executive Officer (“CEO”), who is responsible for business and regulatory governance.
RISK MANAGEMENT
The Group has in place an Enterprise Risk Management Framework in accordance with the principles and guidelines outlined
under the Committee of Sponsoring Organisation of the Treadway Commission’s Enterprise Risk Management Integrated
Framework and is embedded in the Group’s management systems. In order to manage risks in our activities and ensure
they are aligned with the Group’s strategic objectives and regulatory requirements, we implemented a risk management
framework to identify, measure, assess and manage risks faced by the Group.
The Board has delegated authority to the Risk and Sustainability Committee (“RSC”) to undertake the review of the existing
risk management framework and risk dashboards, which detail the likelihood and impact of the significant risks and their
corresponding action plans.
The functioning of the RSC is supported by the Chief Risk Officer, key management staff and the risk management section
of the business units led by the head of each such unit.
The Group’s overall risk management framework is as illustrated in the diagram below:
Internal Environment
• Management sets a philosophy regarding risk and establishes risk appetite.
• Management sets organisational tone at the top for risk management.
Objective Setting
• Management sets objectives that support and align with the entity’s mission consistent with its risk appetite.
• Management identifies the risk appetite and parameters.
Event Identification
• Process to identify potential events from internal/external sources affecting achievement of objectives.
• Potential industry risks.
• Identification of preliminary risks.
Risk Assessment, Response and Control Activities
• Risks are associated with objectives that may be affected and are assessed on both an inherent and a residual basis
considering both likelihood and impact.
• Evaluate possible responses including avoid, accept, reduce and sharing risk.
• Align response with risk tolerances and appetite.
• Policies and procedures are established and executed to help enable risk response.
• Discussions to scrutinise and validate preliminary risks identified as well as new potential risks.
056 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL (Cont’d)
The Group’s overall risk management framework is as illustrated in the diagram below: (Cont’d)
The framework is reviewed and revised as and when necessary to ensure it remains relevant and adequate to manage SAM
Group’s risks, which continue to evolve along with the changing business environment.
(a) Responsibilities are delegated to Board Committees through clearly defined Terms of Reference which are reviewed
and revised when necessary.
(b) The Group has a clear organisation structure with well-defined lines of reporting and appropriate levels of
responsibility.
(c) The Authority Limits Document is reviewed and revised when necessary to reflect the authorisation limits of
Management.
(a) An annual planning and budgetary exercise is undertaken, deliberated and approved by the Board before
implementation.
(b) Updates on the Group’s business and operations are provided to the Board at every meeting together with the
financial performance variances.
(c) The Chief Financial Officer (“CFO”) is required to assure the AC that adequate processes and controls are in place
for an effective and efficient financial close process in the preparation of each quarterly consolidated financial
statements.
Clear, formalised and documented internal policies, standards and procedures are in place to ensure compliance with
internal controls and relevant laws and regulations. Reviews are performed to ensure that documents remain current and
relevant. The policies and procedures are documented in the Corporate Manual and Quality Manual and are reviewed
and updated when applicable. Common Group policies are available on intranet for easy access by employees.
4. Audits
The AC assesses compliance with policies and procedures as well as relevant laws and regulations through internal audits
performed. The Internal Audit Manager and outsourced service providers report directly to the AC to assist the AC in
discharging their duties and responsibilities.
The details of the activities carried out by the AC are reported in the AC Report in the Annual Report.
057
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL (Cont’d)
5. Conduct of Staff
(a) A Standard of Conduct, Business Ethics and Conflicts of Interest is established for all employees and defines the
ethical standards and conduct of work required.
(b) A Whistleblower Policy is also established to provide an avenue for staff or any external party to report any breach
or suspected breach of any law or regulation in a safe and confidential manner.
(c) A Personnel Data Protection Policy is established for the management, control and protection of confidential
information used by the Group to avoid leakage and improper use of such information.
(d) Segregation of duties is practised whereby conflicting tasks are distributed amongst different employees to reduce
the possibility of error and fraud.
The Company and its major subsidiaries have established the Business Continuity Management (“BCM”) Policy which
sets out the objectives, scope, strategies and emergency response procedures as well as the line of authority and
responsibility for effective implementation of business continuity management throughout the Group. In addition,
Business Continuity Plans are established for critical business functions and critical application systems. These plans were
reviewed and updated and table top mock runs were also conducted. In addition, a disaster recovery mock run was also
carried out on the core information technology systems to ascertain the preparedness in response to business disruption
situations. Findings and feedbacks were gathered and analysed for continual improvement.
* Note: Sam Precision (Thailand) Limited was excluded from the BCM.
The security and resiliency of the Group’s information and technology infrastructure is crucial to maintaining its business
operations to meet customers’ and stakeholders’ expectations and in safeguarding its reputation. The Information
Technology Cybersecurity and Incident Response Policy together with Information Technology Disaster Recovery
Procedure were established to ensure that the Group’s information systems and data are properly safeguarded and
adequately protected from major threats such as errors, frauds, privacy violations, service disruptions and natural
disasters.
Continuous and systematic reviews are conducted by Group Information Technology Department to identify potential
threats including cyber threats and to enhance the technology infrastructure, processes and controls to strengthen the
Group’s ability to prevent, detect and respond to any potential business disruptions and systems failures. In addition,
external consultants are engaged to carry out targeted assessments on IT core risks such as cyber security and resilience
assessments to benchmark the existing IT capabilities against international standards and best practices.
058 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL (Cont’d)
Audit Committee
While the AC has reviewed this Statement and addressed individual lapses in internal controls and risk management via the
Internal Audit Manager during the course of internal audits carried throughout the year, it has not identified any circumstances
which suggest any fundamental deficiencies in the Group’s internal control system and risk management.
External Auditors
The External Auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set
out in Audit and Assurance Practice Guide (“AAPG”) 3, Guidance for Auditors on Engagements to Report on the Statement
on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants
(“MIA”) for inclusion in the annual report of the Group for the financial year ended 31 March 2019 (“FY2019”), and reported
to the Board that nothing has come to their attention that causes them to believe that the statement intended to be included
in the annual report of the Group, in all material respects:
a) has not been prepared in accordance with the disclosures required by Paragraphs 41 and 42 of the Statement on Risk
Management and Internal Control: Guidelines for Directors of Listed Issuers, or
b) is factually inaccurate.
AAPG 3 does not require the External Auditors to consider whether the Directors’ Statement on Risk Management and
Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk
management and internal control system including the assessment and opinion by the Board of Directors and management
thereon. The auditors are also not required to consider whether the processes described to deal with material internal control
aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems.
CONCLUSION
Notwithstanding the fact that the Group’s system of risk management and internal controls do not eliminate the possibility
of collusion, deliberate circumvention of procedures by employees, fraud or other unforeseen circumstances, the Board has
received assurance from the CEO and CFO that the Group’s risk management and internal control system are operating
adequately and effectively, in all material aspects.
The Board is of the view that the system of internal control and risk management which are in place for the year under review,
and up to the date of approval of this Statement, is sound and sufficient to safeguard shareholders’ investment, the interest
of customers, regulators, employees and other stakeholders, and the Group’s assets.
The Statement on Risk Management and Internal Control was approved by the Board of Directors on 21 May 2019.
059
OTHER INFORMATION
Recurrent Related Party Transactions (RRPT) of revenue or trading nature for the year ended 31
March 2019
Details of RRPT made during the financial year ended 31 March 2019 pursuant to the shareholders’ mandate obtained by the
Company at the Annual General Meeting held on 14 August 2018 are as follows:-
SAM Singapore Sales of aerospace SAMEE Group 98,782 Tan Kai Hoe, Tan Kai Hoe is the Non-
Group parts and other Goh Wee Keng, Independent Non-Executive
precision tools Shum Sze Keong, Chairman of SAMEE, Director
Teo Siew Geok, and Deputy Chairman of SAM
Tan Guan Thong, Singapore and Director and
Sales of fabrication/ 15,331 Ng Boon Keat, President & CEO of Accuron.
machining services/ Temasek,
special process Accuron, Goh Wee Keng is the Executive
SAM Singapore Director and CEO of SAMEE,
the Director/President and
Provision of 700 CEO of SAM Singapore. He
engineering and is also a Director of certain
administrative subsidiaries of SAMEE and
services SAM Singapore, Aviatron and
SAM Suzhou.
060 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
OTHER INFORMATION (Cont’d)
Recurrent Related Party Transactions (RRPT) of revenue or trading nature for the year ended 31
March 2019 (Cont’d)
Notes
There were no material contracts of the Company and its subsidiaries involving interests of directors and major shareholders
for the financial year under review.
061
FINANCIAL
STATEMENTS
063. Directors’ Report
062 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
DIRECTORS’ REPORT
for the year ended 31 March 2019
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company
for the financial year ended 31 March 2019.
Principal activities
The principal activities of the Company are investment holding and provision of corporate management services.
There has been no significant change in the nature of these activities during the financial year.
The Company is a subsidiary of Temasek Holdings (Private) Limited, of which is incorporated in the Republic of Singapore
and regarded by the Directors as the Company’s ultimate holding company, during the financial year and until the date of
this report.
Subsidiaries
The details of the Company’s subsidiaries are disclosed in Note 5 to the financial statements.
Results
Group Company
RM’000 RM’000
Profit for the year attributable to owners of the Company 78,513 46,353
There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed
in the financial statements.
Dividends
Since the end of the previous financial year, the amount of dividends declared and paid by the Company were as follows:
i) In respect of the financial year ended 31 March 2018 as reported in the Directors’ Report of that year:
• a first interim single tier dividend of 14.01 sen per ordinary share totalling RM18,936,893 was declared on 7 June
2018 and paid on 10 August 2018; and
• a special single tier dividend of 9.35 sen per ordinary share totalling RM12,638,112 was declared on 7 June 2018 and
paid on 10 August 2018.
• a first interim single tier dividend of 17.43 sen per ordinary share was declared on 28 May 2019 and to be paid on 13
August 2019; and
• a special single tier dividend of 11.62 sen per ordinary share was declared on 28 May 2019 and to be paid on 13
August 2019.
The Directors did not propose any other dividend to be paid for the current financial year.
063
DIRECTORS’ REPORT (Cont’d)
for the year ended 31 March 2019
Directors who served during the financial year until the date of this report are:
Directors of subsidiaries
Pursuant to Section 253(2) of the Companies Act 2016, the Directors who served in the Company’s subsidiaries during the
financial year until the date of this report are as follows:
The interests and deemed interests in the ordinary shares of the Company and of its related corporations of those who were
Directors at financial year end (including the interests of the spouses and/or children of the Directors who themselves are not
Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:
Direct interests:
- own 1,702,523 - 1,702,523
Indirect interests:
- others* 11,800 - 11,800
None of the other Directors holding office at 31 March 2019 had any interest in the ordinary shares of the Company and of
its related corporations during the financial year.
064 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
DIRECTORS’ REPORT (Cont’d)
for the year ended 31 March 2019
Directors’ benefits
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any
benefit (other than those fees and other benefits included in the aggregate amount of remuneration received or due and
receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related
corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has
a substantial financial interest.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the
Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body
corporate.
There were no other changes in the issued and paid-up share capital of the Company and no debentures were issued during
the financial year.
No options were granted to any person to take up unissued shares of the Company during the financial year.
At an extraordinary general meeting held on 14 August 2018, the Company’s shareholders approved the establishment of
the Employees’ Share Grant Scheme (“ESGS”) of up to 5% of the total number of issued shares of the Company to eligible
employees of the Group. The ESGS will be administered by the ESGS Committee in accordance with the By-Laws of the
ESGS.
(a) The ESGS shall be in force for a period of 5 years from 30 November 2018 (“ESGS Period”) and may be extended at the
discretion of the Board upon the recommendation of the ESGS Committee provided that the ESGS Period shall not in
aggregate exceed the duration of 10 years from 30 November 2018 or such longer duration as may from time to time
be permitted by the relevant authorities.
(b) The total number of shares which may be made available under the ESGS shall not exceed in aggregate 5% of the total
number of issued shares of the Company (excluding treasury shares, if any) at any point in time during the ESGS Period.
(c) Eligible employees are employees employed by and are on the payroll of any company in the Group (excluding dormant
subsidiaries) and his/her employment has been confirmed by the company who are at least 18 years of age and is not
undischarged bankrupt. The Directors and senior management of the Group will not participate in the ESGS;
(d) Not more than 10% of the aggregate number of shares to be issued under the ESGS shall be allocated to any individual
eligible employee who, either singly or collectively through persons connected with the eligible employee, holds 20%
or more of the total number of issued shares of the Company (excluding treasury shares, if any); and
(e) The shares issued pursuant to the ESGS shall rank pari passu in all respects with the existing shares of the Company.
During the financial year, the total cost of insurance amounting to RM48,000 was incurred by the Company to cover the
Directors and officers of the Group and of the Company for a total sum insured of RM40 million. There were no indemnity
given to or insurance effected for the auditors of the Group and of the Company.
065
DIRECTORS’ REPORT (Cont’d)
for the year ended 31 March 2019
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that:
i) all known bad debts have been written off and adequate provision made for doubtful debts, and
ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an
amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group
and in the Company inadequate to any substantial extent, or
ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company
misleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial
statements of the Group and of the Company misleading.
i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which
secures the liabilities of any other person, or
ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become
enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will
or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, other than the impairment loss on investments in subsidiaries and gain on disposal of
property, plant and equipment as disclosed in Note 19 to the financial statements, the financial performance of the Group
and of the Company for the financial year ended 31 March 2019 have not been substantially affected by any item, transaction
or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the
end of that financial year and the date of this report.
The details of such events are disclosed in Note 32 to the financial statements.
Subsequent event
066 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
DIRECTORS’ REPORT (Cont’d)
for the year ended 31 March 2019
Auditors
The auditors, KPMG PLT, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Penang,
067
STATEMENTS OF FINANCIAL POSITION
as at 31 March 2019
Group
31.3.2019 31.3.2018 1.4.2017
Note RM’000 RM’000 RM’000
Restated Restated
Assets
Equity
068 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STATEMENTS OF FINANCIAL POSITION (Cont’d)
as at 31 March 2019
Group
31.3.2019 31.3.2018 1.4.2017
Note RM’000 RM’000 RM’000
Restated Restated
Liabilities
The notes on pages 080 to 161 are an integral part of these financial statements.
069
STATEMENTS OF FINANCIAL POSITION (Cont’d)
as at 31 March 2019
Company
2019 2018
Note RM’000 RM’000
Assets
Equity
Liabilities
The notes on pages 080 to 161 are an integral part of these financial statements.
070 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
for the year ended 31 March 2019
Group Company
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000
Restated
071
STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME (Cont’d)
for the year ended 31 March 2019
Group Company
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000
Restated
The notes on pages 080 to 161 are an integral part of these financial statements.
072 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
At 1 April 2017,
as previously reported 193,250 15,628 (1,776) 80,168 167,762 455,032
Adjustment on initial
application of MFRS 15,
net of tax (Note 34.1) - - - 62 11,965 12,027
Total comprehensive
income/(expense)
for the year - - 4,348 (40,753) 62,916 26,511
073
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Cont’d)
for the year ended 31 March 2019
The notes on pages 080 to 161 are an integral part of these financial statements.
074 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Total transactions with owners of the Company 19,481 (15,628) (25,547) (21,694)
The notes on pages 080 to 161 are an integral part of these financial statements.
075
STATEMENTS OF CASH FLOWS
for the year ended 31 March 2019
Group Company
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000
Restated
Adjustments for:
Property, plant and equipment
- depreciation 3 34,212 20,571 240 299
- gain on disposal 19 (9,060) - - -
- written off (8) - - -
Intangible assets
- amortisation 4 2,322 2,013 25 6
- written off 12 - - -
Amortisation of government grant 14 (180) (92) - -
Fair value loss/(gain) on derivatives 19 248 (1,991) - -
Interest income (97) (164) (24) (457)
Interest expense 18 2,754 70 - 28
Dividend income 17 - - (55,870) (39,610)
Impairment loss on
- amount due from a subsidiary - - 15 10
- investments in subsidiaries 19 - - 6,237 4,630
- plant and equipment 3 - 254 - -
- intangible assets 4 - 254 - -
Provision for
- warranties 15 2,416 2,349 - -
- onerous contract 15 45 961 - -
- warranty written off 15 (168) - - -
Reversal of provision for warranties 15 (1,964) (4,273) - -
076 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STATEMENTS OF CASH FLOWS (Cont’d)
for the year ended 31 March 2019
Group Company
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000
Restated
077
STATEMENTS OF CASH FLOWS (Cont’d)
for the year ended 31 March 2019
Group Company
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000
Restated
NOTES
A. During the previous financial year, amount due from subsidiaries of RM50,000,000 was capitalised into equity via the
issuance of 50,000,000 new ordinary shares to the Company.
During the financial year, the Company received dividends by way of the following:
2019 2018
RM’000 RM’000
55,870 39,610
During the financial year, the Group and the Company acquired plant and equipment by way of the following:
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
078 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
STATEMENTS OF CASH FLOWS (Cont’d)
for the year ended 31 March 2019
NOTES (Cont’d)
D. During the financial year, the Group and the Company acquired intangible assets with an aggregate amount of
RM2,091,000 and RM308,000 (2018 : RM13,218,000 and RM22,000) respectively by way of the following:
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
Cash and cash equivalents included in the statements of cash flows comprise cash and bank balances as shown on the
statements of financial position.
The notes on pages 080 to 161 are an integral part of these financial statements.
079
NOTES TO THE FINANCIAL STATEMENTS
SAM Engineering & Equipment (M) Berhad is a public limited liability company, incorporated and domiciled in Malaysia
and listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and
registered office of the Company are as follows:
Registered office
The consolidated financial statements of the Company as at and for the financial year ended 31 March 2019 comprise the
Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”).
The principal activities of the Company are investment holding and provision of corporate management services. The
principal activities of the subsidiaries are stated in Note 5 to the financial statements.
The immediate holding company is Singapore Aerospace Manufacturing Pte. Ltd. and the penultimate holding company is
Accuron Technologies Limited. The ultimate holding company is Temasek Holdings (Private) Limited. All the above companies
are incorporated in the Republic of Singapore.
These financial statements were authorised for issue by the Board of Directors on 18 June 2019.
1. Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the
Companies Act 2016 in Malaysia.
The following are accounting standards, amendments and interpretations that have been issued by the Malaysian
Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019
• MFRS 16, Leases
• IC Interpretation 23, Uncertainty over Income Tax Treatments
• Amendments to MFRS 3, Business Combinations (Annual Improvements to MFRS Standards 2015-2017 Cycle)
• Amendments to MFRS 9, Financial Instruments – Prepayment Features with Negative Compensation
• Amendments to MFRS 11, Joint Arrangements (Annual Improvements to MFRS Standards 2015-2017 Cycle)
• Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRS Standards 2015-2017 Cycle)
• Amendments to MFRS 119, Employee Benefits – Plan Amendment, Curtailment or Settlement
• Amendments to MFRS 123, Borrowing Costs (Annual Improvements to MFRS Standards 2015-2017 Cycle)
• Amendments to MFRS 128, Investments in Associates and Joint Ventures – Long-term Interests in Associates
and Joint Ventures
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2020
• Amendments to MFRS 3, Business Combinations – Definition of a Business
• Amendments to MFRS 101, Presentation of Financial Statements and MFRS 108, Accounting Policies, Changes
in Accounting Estimates and Errors – Definition of Material
080 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The following are accounting standards, amendments and interpretations that have been issued by the Malaysian
Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company: (Cont’d)
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021
• MFRS 17, Insurance Contracts
MFRSs, Interpretations and amendments effective for annual periods beginning on or after a date yet to be
confirmed
• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and
Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The Group and the Company plan to apply the abovementioned accounting standards, amendments and
interpretations, where applicable, in the respective financial years when the above mentioned accounting standards,
amendments or interpretations become effective.
The initial application of the accounting standards, amendments and interpretations are not expected to have
any material financial impacts to the current period and prior period financial statements of the Group and the
Company except as mentioned below:
MFRS 16 Leases
MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, Determining whether an Arrangement
contains a Lease, IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the
Substance of Transactions Involving the Legal Form of a Lease.
MFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-
of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to
make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor
accounting remains similar to the current standard which continues to be classified as finance or operating lease.
The Group has performed a preliminary impact assessment of MFRS 16. The assessment is based on currently
available information and may be subject to changes arising from further reasonable and supportable information
being made available to the Group in financial year ending 31 March 2020 when the Group will adopt MFRS 16.
Overall, the Group expects to recognise an estimated lease liabilities of RM29 million with a corresponding right-
of-use assets of RM28 million, with the difference to be recognised in retained earnings as at 1 April 2019 in the
year of adoption of MFRS 16.
The financial statements have been prepared on the historical cost basis other than as disclosed in the financial
statements.
These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All
financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.
The preparation of the financial statements in conformity with MFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
081
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have significant effect on the amounts recognised in the financial statements other than those disclosed in the
following notes:
The accounting policies set out below have been applied consistently to the periods presented in these financial
statements and have been applied consistently by Group entities, unless otherwise stated.
Arising from the adoption of MFRS 15, Revenue from Contracts with Customers and MFRS 9, Financial Instruments,
there are changes to the accounting policies of:
i) financial instruments;
ii) revenue recognition; and
iii) impairment losses of financial instruments
as compared to those adopted in previous financial statements. The impacts arising from the changes are disclosed in
Note 34.
(i) Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases.
The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. Potential voting rights are
considered when assessing control only when such rights are substantive. The Group also considers it has de
facto power over an investee when, despite not having the majority of voting rights, it has the current ability to
direct the activities of the investee that significantly affect the investee’s return.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any
impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment
includes transaction costs.
Business combinations are accounted for using the acquisition method from the acquisition date, which is the
date on which control is transferred to the Group.
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:
082 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the
acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the
acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs
in connection with a business combination are expensed as incurred.
The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control
as equity transactions between the Group and its non-controlling interest holders. Any difference between the
Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to
or against Group reserves.
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary,
any non-controlling interests and the other components of equity related to the former subsidiary from the
consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised
in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair
value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an
available-for-sale financial asset depending on the level of influence retained.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the
reporting date, except for those that are measured at fair value are retranslated to the functional currency at
the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of a financial instrument designated as a hedge of currency risk, which are recognised
in other comprehensive income.
083
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill
and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the
reporting period. The income and expenses of foreign operations are translated to RM at exchange rates at
the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in
equity. However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of
the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of
such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that
foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the
relevant proportion of the cumulative amount is reattributed to non-controlling interests.
Unless specifically disclosed below, the Group and the Company generally applied the following accounting
policies retrospectively. Nevertheless, as permitted by MFRS 9, Financial Instruments, the Group and the Company
have elected not to restate the comparatives.
A financial asset or a financial liability is recognised in the statement of financial position when, and only when,
the Group or the Company becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without significant financing component) or a financial liability is
initially measured at fair value plus or minus, for an item not at fair value through profit or loss, transaction costs
that are directly attributable to its acquisition or issuance. A trade receivable without a significant financing
component is initially measured at the transaction price.
An embedded derivative is recognised separately from the host contract where the host contract is not a
financial asset, and accounted for separately if, and only if, the derivative is not closely related to the economic
characteristics and risks of the host contract and the host contract is not measured at fair value through profit
or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in
accordance with policy applicable to the nature of the host contract.
Financial instrument was recognised initially, at its fair value plus or minus, in the case of a financial instrument
not at fair value through profit or loss, transaction costs that were directly attributable to the acquisition or issue
of the financial instrument.
An embedded derivative was recognised separately from the host contract and accounted for as a derivative if,
and only if, it was not closely related to the economic characteristics and risks of the host contract and the host
contract was not recognised as fair value through profit or loss. The host contract, in the event an embedded
derivative was recognised separately, was accounted for in accordance with policy applicable to the nature of
the host contract.
084 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Financial assets
Categories of financial assets are determined on initial recognition and are not reclassified subsequent to their
initial recognition unless the Group or the Company changes its business model for managing financial assets
in which case all affected financial assets are reclassified on the first day of the first reporting period following
the change of the business model.
Amortised cost category comprises financial assets that are held within a business model whose objective
is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding. The
financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition,
these financial assets are measured at amortised cost using the effective interest method. The amortised
cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment
are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Interest income is recognised by applying effective interest rate to the gross carrying amount except
for credit impaired financial assets (see Note 2(g)(i)) where the effective interest rate is applied to the
amortised cost.
All financial assets not measured at amortised cost or fair value through other comprehensive income as
described above are measured at fair value through profit or loss. This includes derivative financial assets
(except for a derivative that is a designated and effective hedging instrument). On initial recognition, the
Group or the Company may irrevocably designate a financial asset that otherwise meets the requirements
to be measured at amortised cost or at fair value through other comprehensive income as at fair value
through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would
otherwise arise.
Financial assets categorised as fair value through profit or loss are subsequently measured at their fair
value. Net gains or losses, including any interest or dividend income, are recognised in the profit or loss.
All financial assets, except for those measured at fair value through profit or loss, are subject to impairment
assessment (see Note 2(g)(i)).
In the previous financial year, financial assets of the Group and the Company were classified and measured
under MFRS 139, Financial Instruments: Recognition and Measurement as follows:
Fair value through profit or loss category comprised financial assets that were held for trading, including
derivatives (except for a derivative that was a financial guarantee contract or a designated and effective
hedging instrument) or financial assets that were specifically designated into this category upon initial
recognition.
Derivatives that were linked to and must be settled by delivery of unquoted equity instruments whose fair
values could not be reliably measured were measured at cost.
Other financial assets categorised as fair value through profit or loss were subsequently measured at their
fair values with the gain or loss recognised in profit or loss.
085
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Loans and receivables category comprised debt instruments that were not quoted in an active market,
trade and other receivables and cash and cash equivalents.
Financial assets categorised as loans and receivables were subsequently measured at amortised cost using
the effective interest method.
All financial assets, except for those measured at fair value through profit or loss, were subject to impairment
assessment (see Note 2(g)(i)).
Financial liabilities
Amortised cost
Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at
amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses
on derecognition are also recognised in the profit or loss.
In the previous financial year, financial liabilities of the Group and the Company were subsequently measured
at amortised cost other than those categorised as fair value through profit or loss.
Fair value through profit or loss category comprised financial liabilities that were derivatives or financial liabilities
that were specifically designated into this category upon initial recognition.
Derivatives that were linked to and must be settled by delivery of unquoted equity instruments that did not
have a quoted price in an active market for identical instruments whose fair values otherwise could not be
reliably measured were measured at cost.
Financial liabilities categorised as fair value through profit or loss were subsequently measured at their fair
values with the gain or loss recognised in profit or loss.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with
the original or modified terms of a debt instrument.
086 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Financial guarantees issued are initially measured at fair value. Subsequently, they are measured at higher of:
Liabilities arising from financial guarantees are presented together with other provisions.
In the previous financial year, fair value arising from financial guarantee contracts were classified as deferred
income and was amortised to profit or loss using a straight-line method over the contractual period or, when
there was no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When
settlement of a financial guarantee contract was probable, an estimate of the obligation was made. If the
carrying value of the financial guarantee contract was lower than the obligation, the carrying value was adjusted
to the obligation amount and accounted for as a provision.
At inception of a designated hedging relationship, the Group and the Company document the risk management
objective and strategy for undertaking the hedge. The Group and the Company also document the economic
relationship between the hedged item and the hedging instrument, including whether the changes in cash
flows of the hedged item and hedging instrument are expected to offset each other.
A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk
associated with all, or a component of, a recognised asset or liability or a highly probable forecast transaction
and could affect the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument
that is determined to be an effective hedge is recognised in other comprehensive income and accumulated
in equity and the ineffective portion is recognised in profit or loss. The effective portion of changes in the fair
value of the derivative that is recognised in other comprehensive income is limited to the cumulative change in
fair value of the hedged item, determined on a present value basis, from inception of the hedge.
Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity
into profit or loss in the same period or periods during which the hedged forecast cash flows affect profit
or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other
comprehensive income is removed from equity and included in the initial amount of the asset or liability.
However, loss recognised in other comprehensive income that will not be recovered in one or more future
periods is reclassified from equity into profit or loss immediately.
The Group designates only the change in fair value of the spot element of forward contracts as the hedging
instrument in cash flow hedging relationships. The change in fair value of the forward element of forward
exchange contracts (“forward points”) and/or the foreign currency basis spread are separately accounted for
as cost of hedging and recognised in a cost of hedging reserve within equity.
087
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold,
terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected
to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or
loss on the hedging instrument remains in equity until the forecast transaction occurs. When hedge accounting
for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve and
the cost of hedging reserve remains in equity until, for a hedge of a transaction resulting in recognition of a
non-financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow
hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash
flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated
in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.
In the previous financial year, cost of hedging was expensed to profit or loss.
(v) Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from
the financial asset expire or transferred, or control of the asset is not retained or substantially all of the risks
and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial
asset, the difference between the carrying amount of the financial asset and the sum of consideration received
(including any new asset obtained less any new liability assumed) is recognised in the profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract
is discharged, cancelled or expires. A financial liability is also derecognised when its terms are modified and
the cash flows of the modified liability are substantially different, in which case, a new financial liability based
on modified terms is recognised at fair value. On derecognition of a financial liability, the difference between
the carrying amount of the financial liability extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in the profit or loss.
(vi) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group or the Company currently has a legally enforceable right to set off the
amounts and it intends either to settle them on a net basis or to realise the asset and liability simultaneously.
Items of property, plant and equipment are measured at cost less any accumulated depreciation and any
accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs
directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling
and removing the items and restoring the site on which they are located. The cost of self-constructed assets
also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in
accordance with the accounting policy on borrowing costs. Costs also may include transfers from equity of any
gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
088 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
When significant parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net
within “other operating income” and “other operating expenses” respectively in profit or loss.
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will
flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced
component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets
are assessed, and if a component has a useful life that is different from the remainder of that asset, then that
component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each
component of an item of property, plant and equipment from the date that they are available for use. Leased
assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain
that the Group will obtain ownership by the end of the lease term. Property, plant and equipment under
construction are not depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
Years
Buildings 30
Electrical installation and fittings 3 - 50
Factory equipment 5 - 10
Motor vehicles 5
Office equipment, furniture and fittings 3 - 10
Plant and machinery 5 - 10
The leasehold land of the Group are amortised over the lease period of 60 years. Leasehold land which in
substance is a finance lease is classified as property, plant and equipment.
Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and
adjusted as appropriate.
089
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Operating lease
Leases, where the Group or the Company does not assume substantially all the risks and rewards of the ownership
are classified as operating leases and, except for property interest held under operating lease, the leased assets
are not recognised on the statement of financial position. Property interest held under an operating lease, which
is held to earn rental income or for capital appreciation or both, is classified as investment property and measured
using fair value model.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of
the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense,
over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they
are incurred.
Computer software are measured at cost less any accumulated amortisation and any accumulated impairment
losses.
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in profit or loss as incurred.
Expenditure on development activities, whereby the application of research findings are applied to a plan
or design for the production of new or substantially improved products and processes, is capitalised only if
development costs can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable and the Group intends to and has sufficient resources to complete
development and to use or sell the asset.
The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly
attributable to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised
in accordance with the accounting policy on borrowing costs. Other development expenditure is recognised
in profit or loss as incurred.
Capitalised development expenditure is measured at cost less any accumulated amortisation and any
accumulated impairment losses.
(iii) Amortisation
Amortisation is based on the cost of the asset less its residual value. Computer software are amortised on a
straight-line basis over a period of 3 to 6 years while development expenditure are amortised on a straight-line
basis over a period of 10 years. Amortisation methods, useful lives and residual values are reviewed at the end
of each reporting period and adjusted, if appropriate.
090 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
(g) Impairment
Unless specifically disclosed below, the Group and the Company generally applied the following accounting
policies retrospectively. Nevertheless, as permitted by MFRS 9, Financial Instruments, the Group and the
Company elected not to restate the comparatives.
The Group and the Company recognise loss allowances for expected credit losses on financial assets measured
at amortised cost, contract assets and lease receivables. Expected credit losses are a probability-weighted
estimate of credit losses.
The Group and the Company measure loss allowances at an amount equal to lifetime expected credit loss,
except for cash and bank balance for which credit risk has not increased significantly since initial recognition,
which are measured at 12-month expected credit loss. Loss allowances for trade receivables, contract assets
and lease receivables are always measured at an amount equal to lifetime expected credit loss.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating expected credit loss, the Group and the Company consider reasonable and supportable
information that is relevant and available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Group’s historical experience and informed credit assessment
and including forward-looking information, where available.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over
the expected life of the asset, while 12-month expected credit losses are the portion of expected credit losses
that result from default events that are possible within the 12 months after the reporting date. The maximum
period considered when estimating expected credit losses is the maximum contractual period over which the
Group and the Company are exposed to credit risk.
The Group and the Company estimate the expected credit losses on trade receivables using a provision matrix
with reference to historical credit loss experience.
An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and
the carrying amount of the asset is reduced through the use of an allowance account.
At each reporting date, the Group and the Company assess whether financial assets carried at amortised
cost are credit-impaired. A financial asset is credit impaired when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have occurred.
The gross carrying amount of a financial asset is written off (either partially or full) to the extent that there
is no realistic prospect of recovery. This is generally the case when the Group or the Company determines
that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off. However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group’s or the Company’s procedures for recovery amounts
due.
All financial assets (except for financial assets categorised as fair value through profit or loss and investments
in subsidiaries) were assessed at each reporting date whether there was any objective evidence of impairment
as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses
expected as a result of future events, no matter how likely, were not recognised.
An impairment loss in respect of loans and receivables was recognised in profit or loss and was measured
as the difference between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the asset’s original effective interest rate. The carrying amount of the asset was reduced through
the use of an allowance account.
091
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
If, in a subsequent period, the fair value of a debt instrument increases and the increase could be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss
was reversed, to the extent that the asset’s carrying amount did not exceed what the carrying amount would
have been had the impairment not been recognised at the date the impairment was reversed. The amount of
the reversal was recognised in profit or loss.
The carrying amounts of other assets (except for inventories, contract assets and deferred tax assets) are
reviewed at the end of each reporting period to determine whether there is any indication of impairment. If
any such indication exists, then the asset’s recoverable amount is estimated.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or
cash-generating units.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds
its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating
units are allocated to reduce the carrying amounts of the assets in the cash-generating unit (groups of cash-
generating units) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at the end of each reporting period for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount since the last impairment loss was
recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in
which the reversals are recognised.
(h) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is calculated using the first-in, first-out method and includes expenditure incurred in
acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing
location and condition. In the case of work-in-progress and manufactured inventories, cost includes an appropriate
share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
092 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
A contract asset is recognised when the Group’s or the Company’s right to consideration is conditional on something
other than the passage of time. A contract asset is subject to impairment in accordance to MFRS 9, Financial
Instruments (see Note 2(g)(i)).
A contract liability is stated at cost and represents the obligation of the Group or the Company to transfer goods
or services to a customer for which consideration has been received (or the amount is due) from the customers.
Cash and cash equivalents consist of cash on hand, balances with banks and highly liquid investments which have
an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the
Group and the Company in the management of their short term commitments.
(k) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The unwinding of the
discount is recognised as finance cost.
(i) Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is
based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from
a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is
measured at the present value of the lower of the expected cost of terminating the contract and the expected
net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment
loss on the assets associated with that contract.
(i) Revenue
Revenue is measured based on the consideration specified in a contract with a customer in exchange for
transferring goods or services to a customer, excluding amounts collected on behalf of third parties. The Group
or the Company recognises revenue when (or as) it transfers control over a product or service to customer. An
asset is transferred when (or as) the customer obtains control of the asset.
The Group or the Company transfers control of a good or service at a point in time unless one of the following
over time criteria is met:
(a) the customer simultaneously receives and consumes the benefits provided as the Group or the Company
performs;
(b) the Group’s or the Company’s performance creates or enhances an asset that the customer controls as the
asset is created or enhanced; or
(c) the Group’s or the Company’s performance does not create an asset with an alternative use and the Group
or the Company has an enforceable right to payment for performance completed to date.
093
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive
payment is established, which in the case of quoted securities is the ex-dividend date.
Interest income is recognised as it accrues using the effective interest method in profit or loss.
Government grants are recognised initially as deferred income at fair value when there is reasonable assurance
that they will be received and that the Group will comply with the conditions associated with the grant; they are
then recognised in profit or loss as other income on a systematic basis over the useful life of the asset.
Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a
systematic basis in the same periods in which the expenses are recognised.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset
are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised
as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the
asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for
its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially
all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect
of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not
recognised for the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected
to be applied to the temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted by the end of the reporting period.
The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of
the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting
date. Deferred tax assets and liabilities are not discounted.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities
will be realised simultaneously.
094 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting
period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Unutilised reinvestment allowance, being a tax incentive that is not a tax base of an asset, is recognised as a
deferred tax asset to the extent that it is probable that the future taxable profits will be available against the
unutilised tax incentive can be utilised.
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick
leave are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which
they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. Operating segment results are reviewed regularly by the chief operating decision maker, which
in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the
segment and to assess its performance, and for which discrete financial information is available.
Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from
equity.
095
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity
component.
Compound financial instruments issued by the Company comprise Irredeemable Convertible Unsecured Loan
Stocks that can be converted to share capital at the option of the holder, when the number of shares to be issued
does not vary with changes in their fair value.
The proceeds are first allocated to the liability component, determined based on the fair value of a similar liability
that does not have a conversion feature or similar associated equity component. The residual amount is allocated
as the equity component. Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial instrument is
not remeasured subsequent to initial recognition.
Interest and losses and gains relating to the financial liability are recognised in profit or loss. On conversion, the
financial liability is reclassified to equity; no gain or loss is recognised on conversion.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence
will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as
contingent liabilities unless the probability of outflow of economic benefits is remote.
Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in
the principal market or in the absence of a principal market, in the most advantageous market.
For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.
Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation
technique as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at
the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3: unobservable inputs for the asset or liability.
The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in
circumstances that caused the transfers.
096 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
3. Property, plant and equipment
Effect of
At movements At
1 April in exchange 31 March
2018 Additions Disposals Written off Reclassification rates 2019
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost
2019
097
098
3. Property, plant and equipment (Cont’d)
Effect of
At movements At
1 April in exchange 31 March
2017 Additions Written off Reclassification rates 2018
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost
2018
Group
Depreciation and
impairment loss
2019
099
100
3. Property, plant and equipment (Cont’d)
Group
Depreciation and
impairment loss
2018
At At At
31 March 31 March 1 April
2019 2018 2017
RM’000 RM’000 RM’000
Group
Carrying amounts
At At
1 April Additions Written off 31 March
RM’000 RM’000 RM’000 RM’000
Company
Cost
2019
2018
101
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
At Depreciation At
1 April for the year Written off 31 March
RM’000 RM’000 RM’000 RM’000
Company
Depreciation
2019
2018
At At At
31 March 31 March 1 April
2019 2018 2017
RM’000 RM’000 RM’000
Carrying amounts
102 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
4. Intangible assets
Group
Effect of
At movements At
1 April in exchange 31 March
2018 Additions Written off rates 2019
RM’000 RM’000 RM’000 RM’000 RM’000
2019
Cost
Effect of
At movements At
1 April in exchange 31 March
2017 Additions Written off rates 2018
RM’000 RM’000 RM’000 RM’000 RM’000
2018
Cost
103
104
4. Intangible assets (Cont’d)
2019
2018
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Accumulated amortisation
and impairment loss
At At At
31 March 31 March 1 April
2019 2018 2017
RM’000 RM’000 RM’000
Group
Carrying amounts
Company
Computer
software
RM’000
Cost
Additions 22
Written off (68)
Additions 308
Amortisation
Carrying amount
At 1 April 2017 11
At 31 March 2018 27
105
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
2019 2018
RM’000 RM’000
At cost
266,692 272,929
During the current financial year, the Company recorded an impairment loss of RM6,237,000 (2018 : RM4,630,000) on
its investment cost on certain subsidiaries after having assessed the recoverable amount of the said subsidiaries.
During the previous financial year, the Company subscribed for 50,000,000 ordinary shares in a subsidiary for
RM50,000,000 through the capitalisation of an equivalent amount due from the said subsidiary.
SAM Meerkat (M) Sdn. Bhd. Malaysia 100 100 Design and assembly of modular or
complete machine and equipment
SAM Precision (M) Malaysia 100 100 Fabrication of precision tools and
Sdn. Bhd. (“SAMPM”) machinery parts and manufacture
of aircraft and other equipment
parts, spares, components and
precision engineering parts
Meerkat Precision Sdn. Bhd. Malaysia 100 100 Manufacture of aircraft and other
related equipment parts, spares,
components and precision
engineering parts
106 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Held by SAMTT
SAM Precision (Thailand) Thailand 100 100 Manufacture of dies, jigs and parts
Limited* and cutting tools for disk drives,
electronics, semiconductor and
other industries
Held by SAMPM
107
108
6. Deferred tax assets/(liabilities)
Group
Property, plant and equipment - capital allowance 385 44 (7,928) (6,446) (7,543) (6,402)
Provisions 4,185 2,466 (1,529) (1,461) 2,656 1,005
Tax loss carry-forwards 908 2,340 - - 908 2,340
Net deferred tax assets/(liabilities) 2,504 2,326 (6,970) (5,083) (4,466) (2,757)
Deferred tax assets and liabilities are offset when the entity has a legally enforceable right to set off current tax assets against current tax liabilities and when the
deferred taxes relate to the same authority. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against
which the Group can utilise the benefits therefrom.
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
6. Deferred tax assets/(liabilities) (Cont’d)
At Recognised in At 31 Recognised in At
1 April profit or loss Exchange March 2018/ profit or loss Exchange 31 March
2017 (Note 21) difference 1 April 2018 (Note 21) difference 2019
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Company
109
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Deferred tax assets have not been recognised in respect of the following items (stated at gross):
2019 2018
RM’000 RM’000
Group
62,484 61,635
Company
9,964 7,584
Following the enactment of the Finance Bill 2018, tax loss carry-forward up to year of assessment 2018 shall be
deductible against aggregate of statutory income until year of assessment 2025. Any amount not deducted at the end
of year of assessment 2025 shall be disregarded. The capital allowance carry-forward and provisions and others do not
expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because
it is not probable that future taxable profits will be available against which the Group entities can utilise the benefits
therefrom.
2019
2018
Forward exchange contracts are used to manage the foreign currency exposures arising from the Group’s receivables
and payables denominated in currencies other than the functional currencies of Group entities. The majority of the
forward exchange contracts have maturities of less than one year after the end of the reporting period save for certain
ones used to hedge the purchase of plant and machinery.
110 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
2019 2018
Note RM’000 RM’000
Group
Non-current
Current
Trade
179,228 133,955
Non-trade
20,560 33,337
199,788 167,292
225,305 189,549
Company
Non-trade
15,520 9,754
111
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
8.1 Prepayments
Included in prepayments of the Group is RM25,517,000 (2018: RM22,257,000) paid for the purchase of plant
and machinery and intangible assets.
8.2 Amounts due from immediate holding company, subsidiaries and related companies
The trade amounts due from immediate holding company and related companies are subject to normal trade
terms.
The non-trade amounts due from immediate holding company, subsidiaries and related companies are
unsecured, interest-free and repayable on demand other than an amount due from subsidiaries of Nil (2018:
RM273,000) which carries interest at Nil (2018: 2.745%) per annum.
9. Inventories - Group
In determining the amount of inventories to be written down or reversed, the Directors took into consideration
the age of the inventories, likelihood of future consumption, rework and customer acceptance.
Group
The contract assets primarily relate to the Group’s rights to consideration for work completed mainly for manufacture of
aircraft components, design and assembly of modular or complete machine and equipment and related components,
spares and precision engineering parts but not yet billed at the reporting date.
112 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The contract liabilities primarily relate to advance consideration received from a customer, which revenue is recognised
over time.
Significant changes to contract assets and contract liabilities balances during the year are as follows:
2019 2018
RM’000 RM’000
Restated
Group
^ conversion of 19,481,184 units of 5-year 4% Irredeemable Convertible Unsecured Loans Stocks (“ICULS”) into
9,276,691 ordinary shares on the basis of one ICULS for approximately 0.476 ordinary shares in the Company.
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one
vote per share at meetings of the Company.
113
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
12. Reserves
Group
Non-distributable
Capital reserve
- ICULS (equity component) 12.1 - - 15,628
Hedging reserve 12.2 (1,393) 2,572 (1,776)
Translation reserve 12.3 61,591 39,477 80,230
Distributable
2019 2018
Note RM’000 RM’000
Company
Distributable
The movements in the reserves are disclosed in the statements of changes in equity.
The capital reserve comprises the residual amount of the ICULS after deducting the fair value of the liability
component from the fair value of the instrument as a whole.
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedges related to hedged transactions that have not yet occurred.
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
The entire retained earnings of the Company is eligible to be paid out as dividends under the single-tier company
income tax systems in accordance with the Finance Act, 2007.
114 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
2019 2018
RM’000 RM’000
Current
Unsecured
73,850 6,292
Non-current
Unsecured
99,808 18,412
The loans and borrowings are granted to certain subsidiaries with corporate guarantee given by the Company.
13.1 Reconciliation of movements of liabilities to cash flows arising from financing activities
At At At
1 April 31 March Drawdown/ 31 March
2017 Drawdown 2018 (Repayment) 2019
RM’000 RM’000 RM’000 RM’000 RM’000
115
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
2019 2018
RM’000 RM’000
Non-current
Current
1,530 979
Government grant
The Group received a government grant for the purchase of plant and machinery. The grant is amortised on a systematic
basis over the useful life of the plant and machinery. During the financial year, RM179,960 (2018: RM91,712) was
amortised and recognised as other income in profit or loss.
Provision
Provision for onerous
for warranty contract Total
RM’000 RM’000 RM’000
Restated
116 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Provision
Provision for onerous
for warranty contract Total
RM’000 RM’000 RM’000
Restated
Presented as:
Warranties
Warranties represent estimated liabilities for defects arising from products sold under warranty. The provision is based
on management’s estimate made from historical warranty data associated with the products and judgement on the
probability of a defect arising from products sold.
Onerous contracts
A provision for onerous contracts is recognised when the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be derived. The provision is measured at the present value of the
lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
117
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group
Trade
Non-trade
2019 2018
Note RM’000 RM’000
Company
Non-trade
16,209 30,908
16.1 Amounts due to immediate holding company, subsidiaries and related companies
The trade amounts due to immediate holding company and related companies are subject to normal trade
terms.
The non-trade amounts due to immediate holding company, related companies and subsidiaries are unsecured,
interest-free and payable on demand.
118 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
17. Revenue
2019 2018
RM’000 RM’000
Restated
Group
2019 2018
RM’000 RM’000
Company
Other revenue
- Dividend income from subsidiaries 55,870 39,610
- Interest income 24 457
67,510 50,149
119
120
17. Revenue (Cont’d)
Reportable segments
Equipment
Aerospace manufacturing Total
2019 2018 2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Reportable segments
Equipment
Aerospace manufacturing Total
2019 2018 2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Total revenue from contracts with customers 459,568 370,626 295,398 248,333 754,966 618,959
2019 2018
RM’000 RM’000
Company
11,616 10,082
121
122
17. Revenue (Cont’d)
Timing of recognition or
method used to recognised Significant Variable element Obligation for
Nature of goods or services revenue payment terms in consideration returns or refunds Warranty
Manufacture of aircraft Revenue is recognised Credit period Discounts may Returns only Product warranties are
components and other over time as costs are within the be offered for applicable for assurance type warranty
aircraft related equipment incurred. Control of goods industry standard certain contracts products that and do not form a
parts, spares and precision are transferred over time determined on a do not meet separate performance
engineering parts as the goods have no case to case basis. customer’s obligation.
alternative use and there is an specifications.
enforceable right to payment
Design and assembly of Revenue is recognised over Credit period Not applicable. Returns only Product warranties are
modular or complete time as costs are incurred. within the applicable for assurance type warranty
machine and equipment; These contracts would meet industry standard products that and do not form a
manufacture of components the no alternative use and the do not meet separate performance
and precision engineering Group has rights to payment customer’s obligation.
parts for modular or complete for work performed. specifications.
machine and equipment
Manufacture of components, Revenue is recognised at a Credit period Not applicable. Returns only Product warranties are
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
spares and precision point in time when the parts within the applicable for assurance type warranty
engineering parts, design or machine are delivered and industry standard products that and does not form a
and assembly of modular accepted by the customers. do not meet separate performance
or complete machine and customer’s obligation.
equipment, manufacture specifications.
of trim and form dies and
suspension tooling
Support services and Revenue is recognised at a Credit period Not applicable. Not applicable. Not applicable.
management services point in time when the within the
service is rendered. industry standard
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The following table shows revenue from performance obligations that are unsatisfied (or partially unsatisfied) at
the reporting date. The disclosure is only providing information for contracts that have excepted durations of
more than one year.
Group
Manufacture of aircraft
components and other
aircraft related equipment
parts, spares and precision
engineering parts 161,173 172,868 167,161 85,331 72,044 658,577
• exemption on disclosure of information on remaining performance obligations that have original expected
durations of one year or less.
2019 2018
RM’000 RM’000
Group
Interest expense of financial liabilities that are not at fair value through
profit or loss 2,754 42
Interest expense on ICULS (Note 23) - 28
2,754 70
Company
123
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group Company
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000
Auditors’ remuneration
- Audit fees
- KPMG PLT 254 218 80 49
- Other auditors 217 198 - -
- Non-audit fees
- KPMG PLT 5 17 5 17
- Affiliate of KPMG PLT 15 40 15 40
Material expenses/(income)
Impairment loss on investments
in subsidiaries 5 - - 6,237 4,630
Inventories written off - 1,147 - -
Realised loss on foreign
exchange, net - 2,049 - 66
Fair value loss on derivatives 248 - - -
Personnel expenses
- Wages, salaries and
others (including Directors’
emoluments) 105,766 95,241 8,981 9,682
- Employees’ Provident Fund
contributions 10,575 9,872 825 933
- Termination benefits 286 2,786 257 -
Rental expense 9,709 7,049 76 38
Gain on disposal of property,
plant and equipment (9,060) - - -
Foreign exchange gain, net:
- Unrealised (834) (2,835) (24) (95)
- Realised (126) - (5) -
Fair value gain on derivatives - (1,991) - -
124 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group Company
2019 2018 2019 2018
1,822 2,334 - -
The estimated monetary value of benefits-in-kind receivable by Directors of the Group and of the Company amounted
to Nil (2018 : RM8,000).
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
Restated
Malaysia
9,598 2,380 - -
Overseas
4,672 4,377 - -
125
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
Restated
- origination/(reversal) of temporary
differences 1,832 3,536 - (84)
- prior year 182 (659) - -
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
Restated
126 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The calculation of basic earnings per ordinary share is based on the profit attributable to ordinary shareholders of
RM78,513,000 (2018 : RM62,916,000) and the weighted average number of ordinary shares outstanding, calculated as
follows:
2019 2018
Restated
On 25 September 2012, the Company issued 135,000,000 units of 5-year 4% ICULS at RM135,000,000 as part of
the purchase consideration for the acquisition of the entire equity interest in Avitron Private Limited from Singapore
Aerospace Manufacturing Pte. Ltd. (“SAM Singapore”). Of the total RM135,000,000 ICULS issued, RM101,250,000
ICULS were issued to SAM Singapore while the remaining RM33,750,000 ICULS were issued to other eligible
shareholders of the Company. The ICULS matured on 25 September 2017.
i) The ICULS were constituted by a Trust Deed dated 25 September 2012 made between the Company and the
Trustee for the holders of the ICULS;
ii) The ICULS were convertible into new ordinary shares in the Company at any time from the date of issue of the
ICULS until the maturity date on 25 September 2017 on the basis of one ICULS for approximately 0.476 number of
ordinary shares;
iii) The ICULS shall rank pari passu in all respects, without priority amongst the respective holders and with all other
present and future unsecured and unsubordinated obligations of the Company from time to time outstanding but
shall be subordinated to all other obligations and liabilities of the Company which are preferred solely by the laws
of Malaysia; and
iv) The interest on the ICULS at the rate of 4% per annum was payable semi-annually in arrears.
The residual value, after deducting the liability component from the fair value of the instrument as a whole, was
attributed to the equity component as follows:
Equity Liability
component component
of ICULS of ICULS Total
RM’000 RM’000 RM’000
127
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Liability
Equity component
component of ICULS
of ICULS (Note 12) Total
RM’000 RM’000 RM’000
At 31 March 2018 - - -
2019
A first interim single tier dividend of 14.01 sen and a special single tier dividend of 9.35 sen per ordinary share totalling
RM31,575,005 for the financial year ended 31 March 2018 was declared on 7 June 2018 and paid on 10 August 2018.
Subsequent to the end of the financial year, the Company declared a first interim single tier dividend of 17.43 sen and
a special single tier dividend of 11.62 sen per ordinary share in respect of the financial year ended 31 March 2019 to
be paid on 13 August 2019.
2018
A first interim single tier dividend of 10.28 sen and a special single tier dividend of 6.95 sen per ordinary share totalling
RM21,694,713 for the financial year ended 31 March 2017 was declared on 9 June 2017 and paid on 15 August 2017.
For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the
Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over
the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party
are subject to common control. Related parties may be individuals or other entities.
The Group has related party relationship with its holding companies and subsidiaries as disclosed in the financial
statements and the subsidiaries and associates of the holding companies.
Related parties also include key management personnel defined as those persons having authority and responsibility
for planning, directing and controlling the activities of the Group either directly or indirectly. The key management
personnel include all the Directors of the Group.
128 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The significant related party transactions of the Group and the Company are shown below. The balances related to the
below transactions are shown in Note 8 and Note 16.
i) Subsidiaries:
2019 2018
RM’000 RM’000
Company
2019 2018
RM’000 RM’000
Group
Company
129
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The significant related party transactions of the Group and the Company are shown below. The balances related to the
below transactions are shown in Note 8 and Note 16. (Cont’d)
2019 2018
RM’000 RM’000
Group
iv) There were no transactions with key management personnel other than the remuneration package paid to them in
accordance with the terms and conditions of their appointment as disclosed in Note 20 to the financial statements.
The Group has two reportable segments, as described below, which are the Group’s strategic business units. The
strategic business units offer different products and services, and are managed separately because they require
different technology and marketing strategies. For each of the strategic business units, the Chief Operating Decision
Maker (“CODM”) (i.e. the Group’s Chief Executive Officer) reviews internal management reports at least on a quarterly
basis. The following summary describes the operations in each of the Group’s reportable segments:
Aerospace Provides a dedicated end-to-end manufacturing solutions on critical engine parts and
other related equipment parts
Equipment manufacturing Provides an array of equipment engineering and solutions for commercial, semiconductor
and other industries
Performance is measured based on segment profit before tax as included in the internal management reports that
are reviewed by the CODM. Segment profit is used to measure performance as management believes that such
information is the most relevant in evaluating the results of certain segments relative to other entities that operate
within these industries.
Other non-reportable segment comprise investment holding activities and provision of intra-group management
services which did not meet the quantitative thresholds for reportable segments.
130 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Segment assets
The total of segment asset is measured on all assets of a segment, as included in the internal management reports that
are reviewed by the CODM. Segment total asset is used to measure the return on assets of each segment.
Segment liabilities
Segment liabilities information is neither included in the internal management reports nor provided regularly to the
CODM. Hence, no disclosure is made on segment liabilities.
Equipment
Aerospace manufacturing Elimination Total
RM’000 RM’000 RM’000 RM’000
2019
131
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Equipment
Aerospace manufacturing Elimination Total
RM’000 RM’000 RM’000 RM’000
Restated Restated Restated
2018 (Restated)
Geographical segments
In presenting information on the basis of geographical segments, segment revenue is based on geographical location
of the customers. Segment assets are based on the geographical location of the assets.
Non-current
Revenue assets
RM’000 RM’000
Geographical information
2019
754,966 320,195
132 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Non-current
Revenue assets
RM’000 RM’000
Restated Restated
2018
618,959 280,318
Major customers
The following are major customers with revenue equal to or more than 10% of the Group’s total revenue:
Revenue
2018
2019
Customer RM’000 Segment
RM’000
Restated
414,409 390,186
2019 2018
RM’000 RM’000
133
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The table below provides an analysis of financial instruments as at 31 March 2019 categorised as amortised cost
(“AC”).
Derivatives
Carrying used for
amount AC hedging
RM’000 RM’000 RM’000
Financial assets
2019
Group
Carrying
amount AC
RM’000 RM’000
Company
16,062 16,062
Derivatives
Carrying used for
amount AC hedging
RM’000 RM’000 RM’000
Financial liabilities
2019
Group
134 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Carrying
amount AC
RM’000 RM’000
Company
The table below provides an analysis of financial instruments as at 31 March 2018 categorised as follows:
Derivatives
Carrying used for
amount L&R hedging
RM’000 RM’000 RM’000
Financial assets
2018
Group
Carrying
amount L&R
RM’000 RM’000
Financial assets
2018
Company
9,601 9,601
135
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The table below provides an analysis of financial instruments as at 31 March 2018 categorised as follows: (Cont’d)
Derivatives
Carrying used for
amount FL hedging
RM’000 RM’000 RM’000
Restated Restated
Financial liabilities
2018
Group
181,715 181,634 81
Carrying
amount FL
RM’000 RM’000
Company
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
136 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. The Group’s exposure to credit risk arises principally from the individual
characteristics of each customer. The Company’s exposure to credit risk arises principally from advances to
subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries.
Risk management objectives, policies and processes for managing the risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
Normally, credit evaluations are performed on customers requiring credit over a certain amount.
At each reporting date, the Group or the Company assesses whether any of the trade receivables and contract
assets are credit impaired.
The gross carrying amounts of credit impaired trade receivables and contract assets are written off (either
partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the
Company determines that the debtor does not have assets or sources of income that could generate sufficient
cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables and contract assets that
are written off could still be subject to enforcement activities.
As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables and
contract assets are represented by the carrying amounts in the statements of financial position.
The exposure to credit risk for trade receivables and contract assets as at the end of the reporting period by
geographical region was:
Group
2019 2018
RM’000 RM’000
Restated
305,658 241,512
137
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Loss rates are based on actual credit loss experience over the past three years. The Group also considers
differences between (a) economic conditions during the period over which the historic data has been collected,
(b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables.
The following table provides information about the exposure to credit risk and ECLs for trade receivables and
contract assets as at 31 March 2019 which are grouped together as they are expected to have similar risk nature.
Loss Net
Gross allowance balance
RM’000 RM’000 RM’000
Group
2019
Credit impaired
The movements in the allowance for impairment in respect of trade receivables and contract assets during the
year are shown below.
Trade
receivables Contract
Lifetime ECL assets Total
RM’000 RM’000 RM’000
Group
2019
138 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Comparative information under MFRS 139, Financial Instruments: Recognition and Measurement
Individual Collective
Gross Impairment impairment Net
RM’000 RM’000 RM’000 RM’000
Group
2018 (Restated)
241,512 - - 241,512
The movements in the allowance for impairment losses of trade receivables during the financial year were:
Group
2018
RM’000
At end of year -
The cash and bank balances are held with banks and financial institutions. As at the end of the reporting period,
the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial
position.
Other receivables
Credit risk on other receivables is mainly arising from indirect tax due from local authorities.
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statements of financial position.
As at the end of the reporting period, the Company did not recognise any allowance for impairment losses.
139
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Inter-company advances
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured advances mainly to subsidiaries. The Company monitors the ability of the
subsidiaries to repay the advances on an individual basis.
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statement of financial position.
Advances provided are not secured by any collateral or supported by any other credit enhancements.
Generally, the Company considers advances to subsidiaries and related companies have low credit risk. The
Company assumes that there is a significant increase in credit risk when a subsidiary’s or a related company’s
financial position deteriorates significantly. As the Company is able to determine the timing of payments of the
subsidiaries’ advances when they are payable, the Company considers the advances to be in default when the
subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s advance to be credit
impaired when:
• The subsidiary or related company is unlikely to repay its advance to the Company in full; or
• The subsidiary or related company is continuously loss making and is having a deficit shareholders’ fund.
The Company determines the probability of default for these advances individually using internal information
available.
The following table provides information about the exposure to credit risk and ECLs for subsidiaries’ advances
as at 31 March 2019.
Company
2019
140 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The movements in the allowance for impairment in respect of subsidiaries’ advances during the year are as
follows:
Lifetime ECL
RM’000
Company
Comparative information under MFRS 139, Financial Instruments: Recognition and Measurement
The movements in the allowance for impairment losses of inter-company advances during the financial year
were:
RM’000
Company
At 1 April 2017 -
Impairment loss recognised 10
At 31 March 2018 10
Financial guarantees
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain
subsidiaries. The Company monitors the ability of the subsidiaries to service their loans on an individual basis.
The maximum exposure to credit risk amounts to RM84.7 million (2018: RM18.4 million) representing the
outstanding banking facilities of the subsidiaries as at the end of the reporting period.
The financial guarantees are provided as credit enhancements to the subsidiaries’ loans and borrowings.
141
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position
deteriorates significantly. The Company considers a financial guarantee to be credit impaired when:
• The subsidiary is unlikely to repay its credit obligation to the bank in full; or
• The subsidiary is continuously loss making and is having a deficit shareholders’ fund.
The Company determines the probability of default of the guaranteed loans and borrowings individually using
internal information available.
As the end of the reporting period, the Company did not recognise any allowance for impairment in respect of
financial guarantees.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.
The Group maintains a level of cash and bank balances and bank facilities deemed adequate by the management
to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at
significantly different amounts.
142 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
28. Financial instruments (Cont’d)
Maturity analysis
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on
undiscounted contractual payments:
2019
Group
Non-derivative financial
liabilities
143
144
28. Financial instruments (Cont’d)
2019
Company
Non-derivative financial
liabilities
2018
Group
145
146
28. Financial instruments (Cont’d)
2018
Company
Non-derivative financial
liabilities
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates that will
affect the Group’s financial position or cash flows.
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other
than the respective functional currencies of the Group entities. The currencies giving rise to this risk are primarily
U.S. Dollar (“USD”), Singapore Dollar (“SGD”), Euro Dollar (“EURO”) and Ringgit Malaysia (“RM”).
Risk management objectives, policies and processes for managing the risk
The Group uses forward exchange contracts to hedge its foreign currency risk arising from sales and purchases
denominated in foreign currency. Most of the forward exchange contracts have maturities of less than two
years after the end of the reporting period. Where necessary, the forward exchange contracts are rolled over at
maturity.
The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group
entities) risk, based on carrying amounts as at the end of the reporting period are as follows:
Denominated in
USD SGD EURO RM
RM’000 RM’000 RM’000 RM’000
Group
2019
2018
147
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
A 5% (2018 : 5%) strengthening of the functional currency of Group entities against the following currencies at
the end of the reporting period would have increased/(decreased) post-tax profit or loss by the amounts shown
below. This analysis is based on foreign currency exchange rate variances that the Group considered to be
reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular
interest rates, remained constant and ignores any impact on forecasted sales and purchases. There is no impact
to equity arising from exposure to currency risk.
Profit or loss
2019 2018
RM’000 RM’000
Restated
Group
865 1,876
A 5% (2018 : 5%) weakening of the functional currency of Group entities against the above currencies at the end
of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown
above, on the basis that all other variables remained constant.
The Group’s fixed rate deposits and borrowings are exposed to a risk of change in their fair value due to changes
in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.
Risk management objectives, policies and processes for managing the risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will
fluctuate due to changes in market interest rates. The Group’s income and operating cash flows are substantially
independent of changes in market interest rates.
148 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The interest rate profile of the Group’s significant interest earning and interest-bearing financial instruments,
based on carrying amounts as at the end of the reporting period are as follows:
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
Financial asset
- Amount due from subsidiaries - - - 273
Financial liabilities
- Term loan 31,905 12,120 - -
- Revolving credit 67,903 - - -
- Onshore foreign currency loans - 6,292 - -
99,808 18,412 - -
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit
or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge
accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect
profit or loss.
At the reporting date, if interest rates had been 50 basis points lower/higher, with all other variables held
constant, the Group’s post-tax profit or loss would have been RM379,270 (2018 : RM69,966) higher/lower,
arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The
assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable
market environment.
149
150
28. Financial instruments (Cont’d)
The carrying amounts of cash and bank balances, short term receivables and payables and short term borrowings reasonably approximate their fair values
due to the relatively short term nature of these financial instruments.
2019
Financial assets
Financial liabilities
2018
Group
Financial assets
Financial liabilities
151
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The fair value of an asset to be transferred between levels is determined as of the date of the event or change
in circumstances that caused the transfer.
There has been no transfer between the levels in fair value during the financial year (2018 : no transfer in either
direction).
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.
The carrying amount of floating rate loans and borrowings approximate fair value as their effective interest rates
change accordingly to movements in the market interest rate.
Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability
to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future
development of the business.
There was no change in the Group’s approach to capital management during the financial year.
Leases as lessee
Group Company
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000
40,162 37,163 14 28
The Group and the Company leased floor space, factory and office premises and equipment under operating leases.
The leases typically run for a period of 1 to 5 years, with an option to renew the lease upon the expiry of the initial lease
period.
152 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The Company has issued corporate guarantees to financial institutions for borrowings granted to certain subsidiaries
for RM243,211,000 (2018: RM134,465,000) of which, RM84,673,000 (2018 : RM18,412,000) were utilised at the end of
the reporting period.
32.1 At an extraordinary general meeting held on 14 August 2018, the Company’s shareholders approved the
establishment of the Employees’ Share Grant Scheme (“ESGS”) of up to 5% of the total number of issued shares
of the Company to eligible employees of the Group.
32.2 LKT Automation Sdn. Bhd., a wholly owned subsidiary of the Company has entered into a Sale and Purchase
Agreement to dispose of a land and industrial building for a total consideration of RM14.3 million. The Group
recorded a gain of RM9 million arising from the said disposal.
Subsequent to year end, SAM Precision (M) Sdn. Bhd., a wholly owned subsidiary of the Company has issued and allotted
10,000,000 new ordinary shares to the Company for a total consideration of RM10,000,000 by way of capitalisation of
the amount due from SAM Precision (M) Sdn. Bhd..
During the year, the Group and the Company adopted MFRS 15, Revenue from Contracts with Customers and MFRS
9, Financial Instruments on their financial statements. The Group and the Company generally applied the requirements
of these accounting standards retrospectively with practical expedients and transitional exemptions as allowed by
the standards. Nevertheless, as permitted by MFRS 9, the Group and the Company have elected not to restate the
comparatives.
The following tables summarise the impacts arising from the adoption of MFRS 15 and MFRS 9 on the Group’s
financial statements.
153
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group
As previously MFRS 15 As
reported adjustments restated
RM’000 RM’000 RM’000
1 April 2017
154 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group
Assets
155
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group
As previously MFRS 15 As
reported adjustments restated
RM’000 RM’000 RM’000
156 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
Group
As previously MFRS 15 As
reported adjustments restated
RM’000 RM’000 RM’000
Group
As previously MFRS 15 As
reported adjustments restated
RM’000 RM’000 RM’000
The adoption of MFRS 15 did not have any material financial impacts to the Company’s financial statements.
157
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
a. Transition
In the adoption of MFRS 9, the following transitional exemptions as permitted by the standard have been
adopted:
i) The Group and the Company have not restated comparative information for prior periods with respect
to classification and measurement (including impairment) requirements. Differences in the carrying
amounts of financial assets and financial liabilities resulting from the adoption of MFRS 9 are recognised
in retained earnings and reserves as at 1 April 2018. Accordingly, the information presented for 2018 does
not generally reflect the requirements of MFRS 9, but rather those of MFRS 139, Financial Instruments:
Recognition and Measurement.
ii) The following assessments have been made based on the facts and circumstances that existed at the
date of initial application:
- the determination of the business model within which a financial asset is held;
- the designation and revocation of previous designations of certain financial assets and financial
liabilities as measured at FVTPL; if any.
iii) Loss allowance for receivables (other than trade receivables) is recognised at an amount equal to lifetime
expected credit losses until the receivable is derecognised.
b. Classification of financial assets and financial liabilities on the date of initial application of MFRS 9:
The following table shows the measurement categories under MFRS 139 and the new measurement
categories under MFRS 9 for each class of the Group’s and the Company’s financial assets and financial
liabilities as at 1 April 2018:
1 April 2018
Reclassification to new
MFRS 9 category
Derivatives
31 March Amortised used for
Category under 2018 Remeasurement cost (“AC”) hedging
MFRS 139 RM’000 RM’000 RM’000 RM’000 Note
Group
Financial assets
158 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
b. Classification of financial assets and financial liabilities on the date of initial application of MFRS 9:
(Cont’d)
1 April 2018
Reclassification to new
MFRS 9 category
31 March Amortised
Category under 2018 Remeasurement cost (“AC”)
MFRS 139 RM’000 RM’000 RM’000 Note
Company
Financial assets
9,601 - 9,601
1 April 2018
Reclassification to new
MFRS 9 category
Derivatives
31 March Amortised used for
Category under 2018 Remeasurement cost (“AC”) hedging
MFRS 139 RM’000 RM’000 RM’000 RM’000
Group
Financial liabilities
181,715 - 181,634 81
159
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
b. Classification of financial assets and financial liabilities on the date of initial application of MFRS 9:
(Cont’d)
1 April 2018
Reclassification to new
MFRS 9 category
31 March Amortised
2018 Remeasurement cost (“AC”)
RM’000 RM’000 RM’000
Company
Financial liabilities
1 April 2018
31 March
2018 Remeasurement Carrying amount
RM’000 RM’000 RM’000
Others
Financial guarantees 18,412 - 18,412
Trade and other receivables and cash and bank balances that were classified as loans and receivables
under MFRS 139 are now reclassified at amortised cost. An increase of RM866,000 and Nil in allowance
for impairment was recognised in opening retained earnings of the Group and of the Company at 1
April 2018 respectively on transition to MFRS 9.
In the adoption of MFRS 15, the following practical expedients as permitted by the standard have been adopted:
(a) for completed contracts, the Group does not restate contracts that:
(i) begin and end within the same annual reporting period; or
(ii) are completed contracts at the beginning of the earliest period presented.
(b) for comparatives, the Group does not disclose the amount of consideration allocated to the remaining
performance obligations and an explanation of when the Group expects to recognise revenue.
160 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
The following are the changes in revenue recognition from the adoption of MFRS 15:
Design and assembly of The Group previously recognised revenue Revenue is recognised
modular or complete machine when the goods were delivered to the sooner under MFRS 15
and equipment; manufacture customer’s premises, which was taken to because it is recognised
of components and precision be the point in time at which the customer over time.
engineering parts for modular accepted the goods and the related risks and
or complete machine and rewards of ownership transferred. Revenue
equipment was recognised at the point provided that the
revenue and costs could be measured reliably,
the recovery of the consideration was probable
and there was no continuing managerial
involvement with the goods.
161
STATEMENT BY DIRECTORS
pursuant to Section 251(2) of the Companies Act 2016
In the opinion of the Directors, the financial statements set out on pages 068 to 161 are drawn up in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016
in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2019
and of their financial performance and cash flows for the financial year then ended.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Penang,
STATUTORY DECLARATION
pursuant to Section 251(1)(b) of the Companies Act 2016
I, Teh Mun Ling, the officer primarily responsible for the financial management of SAM Engineering & Equipment (M)
Berhad, do solemnly and sincerely declare that the financial statements set out on pages 068 to 161 are, to the best of my
knowledge and belief, correct and I make this solemn declaration conscientiously believing the declaration to be true, and
by virtue of the Statutory Declarations Act 1960.
Subscribed and solemnly declared by the above named Teh Mun Ling, MIA CA16317, at George Town in the State of
Penang on 18 June 2019.
Before me:
162 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
INDEPENDENT AUDITORS’ REPORT
to the members of SAM ENGINEERING & EQUIPMENT (M) BERHAD
(Company No. 298188 - A) (Incorporated in Malaysia)
Opinion
We have audited the financial statements of SAM Engineering & Equipment (M) Berhad, which comprise the statements
of financial position as at 31 March 2019 of the Group and of the Company, and the statements of profit or loss and other
comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for
the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out
on pages 068 to 161.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and
of the Company as at 31 March 2019, and of their financial performance and their cash flows for the year then ended in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements
of the Companies Act 2016 in Malaysia.
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on
Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of
the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and
Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’
Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in
accordance with the By-Laws and the IESBA Code.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the Group and of the Company for the current financial year. These matters were addressed in the context of
our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Valuation of inventories-Group
Refer to the accounting policy in Note 2(h) – Inventories, Note 1(d) – Use of estimates and judgements and
Note 9 - Inventories to the financial statements.
The key audit matter How the matter was addressed in our audit
The Group’s inventories amounted to RM117 million We have performed the following audit procedures, among others:
as at 31 March 2019 in the statement of financial • Attended the year end physical inventory counts to identify
position which represented 15% of the Group’s total whether any inventories were damaged;
assets.
• Assessed whether items in the system generated inventory
ageing reports were classified within the appropriate ageing
The inventories are measured at the lower of cost
bracket;
and net realisable value. Identifying and determining
the appropriate write down of the inventories to net • Checked the inventory impairment calculations prepared by
realisable value required judgement by the Group. the Group that they appropriately took into account the ageing
profile of the inventories;
We have identified the valuation of inventories as a key • Compared the inventory provision made to the Group’s Materials
audit matter because judgements made by the Group Review Board reports;
are affected by external and market considerations • Tested samples of inventories-in-progress and manufactured
which are inherently uncertain. inventories to sales subsequent to the year end and checked
that they were sold at prices higher than the carrying amount;
and
• Evaluated the historical accuracy of the Group’s inventories
written down by comparing prior year’s estimate to actual results.
163
INDEPENDENT AUDITORS’ REPORT (Cont’d)
to the members of SAM ENGINEERING & EQUIPMENT (M) BERHAD
(Company No. 298188 - A) (Incorporated in Malaysia)
MFRS 15, Revenue from Contracts with Customers We performed the following audit procedures, among others:
became effective on 1 April 2018. Arising from the • Compared the accounting policies adopted with the
adoption of MFRS 15, the Group was required to requirements of MFRS 15;
revise its accounting policy on revenue recognition.
• Reviewed and gained an understanding of the Group’s processes,
Judgements were required to evaluate contracts systems and controls implemented over the adoption of MFRS
with customers, identify the number of performance 15;
obligations, the allocation of transaction price to each • Obtained an understanding of the key judgements made by the
performance obligation and to determine whether Group over revenue recognition and compared them with the
revenue for each contract is to be recognised over requirements of the accounting standard;
time or at a point in time. MFRS 15 also brought • Tested the inputs (for example, selling price and the percentage
about new disclosures that were made in the financial of completion of inventories) used by the Group in the calculation
statements. of revenue recognised over time to customer contracts and
inventory records; and
The accounting policy changes arising from the • Assessed the completeness, accuracy and appropriateness of
adoption of MFRS 15 is a key audit matter because it: disclosures required by MFRS 15.
• required involvement of our more senior personnel
to assess the evaluation of customer contracts
performed by the Group; and
• required us to exercise judgement to assess the
allocation of transaction price to each performance
obligation and the timing of revenue recognition.
We have determined that there are no key audit matters to be communicated for the Company in our report.
Information Other than the Financial Statements and Auditors’ Report Thereon
The Directors of the Company are responsible for the other information. The other information comprises the information
included in the annual report, but does not include the financial statements of the Group and of the Company and our
auditors’ report thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the annual report and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the
annual report and, in doing so, consider whether the annual report is materially inconsistent with the financial statements of
the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the annual report, we are
required to report that fact. We have nothing to report in this regard.
The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company
that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal
control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the
Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability
of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company
or to cease operations, or have no realistic alternative but to do so.
164 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
INDEPENDENT AUDITORS’ REPORT (Cont’d)
to the members of SAM ENGINEERING & EQUIPMENT (M) BERHAD
(Company No. 298188 - A) (Incorporated in Malaysia)
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing,
we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the
Group and of the Company.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of
the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause
the Group or the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company,
including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying
transactions and events in a manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit
of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters.
We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
165
INDEPENDENT AUDITORS’ REPORT (Cont’d)
to the members of SAM ENGINEERING & EQUIPMENT (M) BERHAD
(Company No. 298188 - A) (Incorporated in Malaysia)
In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have
not acted as auditors are disclosed in Note 5 to the financial statements.
Other Matter
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies
Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this
report.
Penang
166 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
ANALYSIS OF SHAREHOLDINGS
as at 1 July 2019
Notes:
(a)
Deemed interested via Singapore Aerospace Manufacturing Pte Ltd pursuant to Section 8(4) of the Companies Act, 2016.
(b)
Deemed interested via Accuron Technologies Limited pursuant to Section 8(4) of the Companies Act, 2016.
Notes:
Deemed interest via children pursuant to Section 59(11)(c) of the Companies Act, 2016.
(a)
167
ANALYSIS OF SHAREHOLDINGS (Cont’d)
Thirty (30) Largest Securities Account Holders (Ordinary Shares) According to the Record of
Depositors as at 1 July 2019
Name Shareholdings %
168 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
ANALYSIS OF SHAREHOLDINGS (Cont’d)
Thirty (30) Largest Securities Account Holders (Ordinary Shares) According to the Record of
Depositors as at 1 July 2019 (Cont’d)
Name Shareholdings %
117,359,080 86.82
169
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Twenty-Fifth (25th) Annual General Meeting (“AGM”) of SAM Engineering & Equipment
(M) Berhad (“SAMEE” or the “Company”) will be held at First Floor, SAM Meerkat (M) Sdn. Bhd., Plot 103, Hilir Sungai
Keluang Lima, Taman Perindustrian Bayan Lepas 4, 11900 Penang on Wednesday, 28 August 2019 at 10.00 a.m. for the
following purposes:-
AGENDA
AS ORDINARY BUSINESS:-
1. To receive the Audited Financial Statements for the financial year ended 31 March 2019 together (Please refer to
with the Reports of the Directors and Auditors thereon. Note 1)
2. To re-elect the following Directors who are retiring pursuant to Article 91 of the Company’s
Constitution and being eligible, offer themselves for re-election:-
Resolution 1
(i) Mr. Goh Wee Keng
(ii) Mr. Tan Kai Hoe Resolution 2
(iii) Mr. Shum Sze Keong Resolution 3
3. To re-appoint Messrs. KPMG PLT as Auditors of the Company, to hold office until the conclusion of
the next AGM, at a remuneration to be determined by the Directors. Resolution 4
AS SPECIAL BUSINESS:-
To consider and if thought fit, to pass the following as resolutions, with or without any modifications:-
4. Special Resolution
Proposed adoption of the New Constitution of the Company
“THAT approval be and is hereby given to revoke the existing Constitution of the Company and in
place thereof, the proposed new Constitution, as set out in the Appendix I of the Circular dated 29
July 2019 dispatched together with the Company’s Annual Report be and is hereby adopted as the
Constitution of the Company (“Proposed Adoption”).
THAT the adoption of new Constitution shall be effective from 1 September 2019.
AND THAT the Directors of the Company be and are hereby authorised to assent to any modification,
variation and/or amendment in any manner as may be required or imposed by the relevant authorities
(if any) and to take all steps and do all acts and things as may be considered necessary or expedient
in order to implement, finalise and give full effect to the Proposed Adoption.” Resolution 5
5. Ordinary Resolution
Proposed payment of Directors’ fee for the period from 29 August 2019 until the next AGM
“THAT the Directors’ fee as tabulated below payable to each Director, as applicable, for the period
from 29 August 2019 until the next AGM of the Company pursuant to Section 230(1)(b) of the
Companies Act, 2016, be and are hereby approved:-
170 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
6. Ordinary Resolution
Proposed payment of the following benefits to Directors for the period from 29 August 2019
until next AGM of the Company
“THAT the following benefits payable to each Director, as applicable, for the period from 29 August
2019 until the next AGM of the Company pursuant to Section 230(1)(b) of the Companies Act, 2016,
be and are hereby approved:-
7. Ordinary Resolution
Authority to issue and allot shares
“THAT subject always to the Companies Act, 2016 (“Act”), the Constitution of the Company and
approvals of the relevant governmental and/or regulatory authorities, if applicable, the Directors be
and are hereby empowered to issue and allot shares in the Company, pursuant to Section 75 and
Section 76 of the Act, at any time to such persons and upon such terms and conditions and for such
purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate
number of shares issued pursuant to this Resolution does not exceed ten per centum (10%) of the
issued and paid-up share capital (excluding treasury shares) of the Company for the time being and
the Directors be and are also empowered to obtain the approval for the listing of and quotation for
the additional shares so issued on Bursa Malaysia Securities Berhad;
AND THAT such authority shall commence immediately upon the passing of this Resolution and
continue to be in force until:-
(a) the conclusion of the Company’s next AGM, at which time it will lapse, unless the authority is
renewed by a resolution passed at the general meeting;
(b) the expiration of the period within which the next AGM after that date is required to be held
pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed
pursuant to Section 340(4) of the Act); or
(c) revoked or varied by resolution passed by the Company’s shareholders in a general meeting,
8. Ordinary Resolution
Proposed New and Renewal of Existing Shareholders’ Mandate for Recurrent Related Party
Transactions (“RRPT”)
“THAT subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad, approval be and is hereby given to the Company and/or its subsidiaries (“SAMEE Group”) to
enter into recurrent related party transactions of a revenue or trading nature as specified in Section
2.5(a) and Section 2.5(b) of the Circular to Shareholders dated 29 July 2019 which transactions are
necessary for the day-to-day operations in the ordinary course of business of SAMEE Group on
terms not more favourable to the related parties than those generally available to the public or
unrelated third parties and are not to the detriment of the minority shareholders of the Company
and the shareholders mandate is subject to annual renewal and disclosure being made in the Annual
Report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate
during the financial year and that such approval shall continue to be in force until:-
(a) the conclusion of the Company’s next AGM, at which time it will lapse, unless the authority is
renewed by a resolution passed at the general meeting;
(b) the expiration of the period within which the next AGM after that date is required to be held
pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed
pursuant to Section 340(4) of the Act); or
171
NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
(c) revoked or varied by resolution passed by the Company’s shareholders in a general meeting,
whichever is earlier.
AND THAT the Directors of the Company be and are hereby authorised to complete and do all such
acts and things (including executing all such documents as may be required) as they may consider
expedient or necessary to give effect to the RRPT.” Resolution 9
9. Ordinary Resolution
Mandate for the Directors who has served as Independent Non-Executive Directors of
the Company for a cumulative term of more than nine (9) years, to continue to act as an
Independent Non-Executive Director of the Company
“THAT approval be and is hereby given to the following Directors who have served as Independent
Non-Executive Directors of the Company for a cumulative term of more than nine (9) years to
continue to act as Independent Non-Executive Directors of the Company:-
Notes:-
1. The first agenda of this meeting is meant for discussion only, as the provision of Section 340(1)(a) of the Act, does not
require a formal approval for the Audited Financial Statements from the shareholders. Hence, this Agenda is not put
forward to shareholders for voting.
Pursuant to Section 271(3)(b) of the Act, shareholders shall appoint auditors who shall hold office until the conclusion of
the next AGM in year 2020. The current auditors, Messrs. KPMG PLT has expressed their willingness to continue in office.
The Board and Audit Committee of the Company have considered the re-appointment of Messrs. KPMG PLT as auditors
of the Company and collectively agreed that Messrs. KPMG PLT has met the relevant criteria prescribed by Paragraph
15.21 of Main Market Listing Requirements of Bursa Securities (“Listing Requirements”).
The Board of Directors recommends the re-appointment of Messrs. KPMG PLT as External Auditors of the Company to
hold the office until the conclusion of the next AGM.
172 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
Notes:- (Cont’d)
i) Resolution 5 – Proposed Adoption of the new Constitution of the Company (“Proposed Adoption”)
The Resolution 5, if passed, will streamline the Company’s Constitution with the new provisions of the Act,
amendments made to Listing Requirements and to enhance administrative efficiency. The proposed adoption of
new Company’s Constitution is set out in the Part B of the Circular dated 29 July 2019, which is dispatched together
with the Company’s Annual Report 2019. The Proposed Adoption shall take effect once it has been passed by a
majority of not less than 75% of such members who are entitled to vote and do vote in person or by proxy at the
25th AGM of the Company.
ii) Resolution 6 and 7 – Proposed payment of Directors’ Remuneration and other benefits
Section 230(1) of the Act provides amongst others, that the “fee” of the Directors and “any benefits” payable to the
Directors of a listed company shall be approved at the general meeting. Pursuant thereto, shareholders’ approval is
sought for the payment of fees and benefits payable to Directors, in two separate resolutions as follows:-
Resolution 6 – On payment of Directors’ fees in respect of the period from 29 August 2019 until the next AGM; and
Resolution 7 – On payment of Benefit to Directors for the period from 29 August 2019 until the next AGM.
The Board of Directors at its meeting held on 21 May 2019 approved the Nominating & Remuneration Committee’s
(“NRC”) recommendation for the proposed Directors’ fees for the period from 29 August 2019 until the next AGM.
There is no revision to the proposed Directors’ fees as compared to the previous 24th AGM of the Company.
The benefits payable to each Director pursuant to Section 230(1)(b) of the Act have been reviewed by the Board of
Directors of the Company based on the current Board size, all of whom have recognised that the benefits payable
are in the best interest of the Company. As for the meeting allowance it will be accorded based on the attendance
of the Director at meetings.
In the event, the proposed amount is insufficient, e.g. due to enlarged Board size, approval will be sought at the
next AGM for the shortfall.
The Ordinary Resolution proposed herein is primarily to seek for the renewal of the Previous Mandate (as defined
herein) to give flexibility to the Board of Directors to issue and allot shares up to 10% of the total number of issued
share (excluding treasury shares) of the Company for the time being, at any time in their absolute discretion for such
purposes as the Board of Directors considers to be in the best interests of the Company (hereinafter referred to as
the “General Mandate”). This General Mandate is sought to avoid any delays and costs involved with the convening
of a general meeting. This General Mandate, unless revoked or varied by the Company in a general meeting, will
expire at the conclusion of the next AGM of the Company.
The Company had been granted a general mandate by its shareholders at the last AGM held on 14 August 2018 of
which will lapse at the conclusion of the 25th AGM (hereinafter referred to as the “Previous Mandate”).
As at the date of this Notice, the Previous Mandate granted by the shareholders had not been utilised and hence,
no proceeds were raised therefrom.
The General Mandate, upon renewal, will provide flexibility to the Company for any possible fund-raising activities,
including but not limited to placing of shares for the purpose of funding future investment project(s), working capital
and/or acquisitions.
173
NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
Notes:- (Cont’d)
The proposed Ordinary Resolution 9, if approved by shareholders, will authorise the Proposed New and Renewal of
Existing Shareholders’ Mandate for RRPT of a revenue or trading nature and allow the Company and its subsidiaries
to enter into RRPT of a revenue or trading nature as set out in Section 2.5 of the Circular dated 29 July 2019, with
the related parties in the ordinary course of business which are necessary for the day-to-day operations based on
terms which are not more favourable to the related parties than those generally available to the public and are not
to the detriment of the minority shareholders of the Company. This approval shall continue to be in force until the
conclusion of the next AGM of the Company at which time it will lapse unless the authority is renewed by a resolution
passed at the meeting; or the expiration of the period within which the next AGM after the date it is required to be
held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to
Section 340(4) of the Act); or revoked/varied by resolutions passed by the shareholders of the Company in general
meeting; whichever is the earlier. Further information on the Proposed New and Renewal of Existing Shareholders’
Mandate is set out in the Circular dated 29 July 2019.
v) Resolution 10 to 13 – Mandate for the Directors who has served as Independent Non-Executive Directors of
the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-
Executive Director of the Company
Pursuant to Malaysian Code on Corporate Governance 2017 (“MCCG”), the Company is required to seek
shareholders’ approval if intends to retain an independent director who has served the Company for a cumulative
term of nine (9) years.
The proposed Ordinary Resolutions 10, 11, 12, and 13, if passed, will retain Dato’ Mohamed Salleh Bin Bajuri, Dato’
Seri Wong Siew Hai, Dato’ Sri Lee Tuck Fook and Mr. Lee Hock Chye (“Independent Non- Executive Directors”) who
have served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9)
years, to continue to act as Independent Non-Executive Directors of the Company.
Both the NRC and the Board have at the annual assessment assessed the independence of Independent Non-
Executive Directors, and recommended them to continue to serve as an Independent Non-Executive Director of the
Company based on the justifications that the above Independent Directors remain objective and independent in
expressing their views and in participating in deliberation and decision making of the Board and Board Committees.
Their length of service on the Board does not in any way interfere with their exercise of independent judgement and
ability to act in the best interests of the company. In addition, they have also confirmed and declared in writing that
they are Independent Directors and have satisfied all the criteria of an Independent Director set out in Paragraph
1.01 of the Listing Requirements.
4. Appointment of Proxy
a) A member may appoint up to two (2) proxies to attend on the same occasion. A proxy may but need not be a
member of the Company. If a member appoints more than one (1) proxy, the appointments shall be invalid unless
he/she specifies the proportions of his/her holdings to be represented by each proxy.
b) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central
Depository) Act, 1991 (“SICDA”), it may appoint up to two (2) proxies in respect of each securities account it holds
with ordinary shares of the Company standing to the credit of the said securities account.
c) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company
for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of
proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt
authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance
with the provisions of subsection 25A(1) of SICDA.
d) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly
authorised in writing or, if the appointor is a corporation, either under the corporation’s seal or under the hand of an
officer or attorney duly authorised.
174 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
Notes:- (Cont’d)
e) To be valid, the form of proxy must be deposited at the Company’s Registered Office at Suite 18.05, MWE Plaza,
No. 8, Lebuh Farquhar, 10200 George Town, Pulau Pinang, Malaysia at least forty-eight (48) hours before the time
appointed for holding the meeting or any adjournments thereof.
f) In respect of deposited securities, only members whose names appear on the Record of Depositors on 21 August
2019 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at the meeting or appoint
proxy(ies) to attend, speak and vote on his/her behalf.
5. Poll Voting
Pursuant to Paragraph 8.29A(1) of the Listing Requirements, all resolutions set out in this notice will be put to vote by
way of a poll.
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/
or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s
personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its
agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and
compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof),
and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines
(collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies)
and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or
representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies)
and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any
penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above
Directors who are standing for re-election or re-appointment) at this forthcoming 25th AGM.
2. General mandate for issue of securities in accordance with Paragraph 6.03(3) of the Listing Requirements
Details of the general mandate to issue securities in the Company pursuant to Section 75 and Section 76 of the Act are
set out in Explanatory Note (iii) of the Notice of the 25th AGM.
175
ADMINISTRATIVE GUIDE
25th Annual General Meeting (“AGM”)
REGISTRATION
1. Registration will commence at 9:00 a.m. and will end at the time as may be determined by the Chairman of the meeting.
2. Please present your original Identity Card (IC) or Passport to the registration staff for verification. Please make sure your
IC is returned to you after registration.
3. Upon verification, you are required to write your name and sign on the attendance list.
4. You will be given a wristband with bar code (“Wristband”) together with a keypad voting device upon registration for
electronic voting (“e-voting”) purposes.
5. Registration must be done in person. No person will be allowed to register on behalf of another person even with the
original IC of that other person.
6. You may proceed to attend the meeting after registration.
7. The registration counter will handle only verification of identity, registration and revocation of proxy/proxies.
BUSINESS PRESENTATION
8. A business presentation will commence at 9.30 a.m. at the meeting venue and will end at 10.00 a.m. sharp.
PROXY
9. A member entitled to attend and vote in the meeting is allowed to appoint proxy. Please submit your Proxy Form in
accordance with the notes and instructions as stated in the Proxy Form.
10. If you wish to attend the meeting yourself, please do not submit any Proxy Form. You will not be allowed to attend the
meeting together with a proxy appointed by you.
11. If you have submitted your Proxy Form prior to the meeting and subsequently decided to attend the meeting in person,
please proceed to the registration counter to revoke the appointment of your proxy.
12. Please ensure that the original Proxy Form is deposited at the Company’s Registered Office at Suite 18.05, MWE Plaza,
No. 8, Lebuh Farquhar, 10200 George Town, Penang not less than forty-eight (48) hours before the meeting time. No
proof of despatch of Proxy Form will be entertained.
CORPORATE MEMBER
13. Any corporate member who wishes to appoint a representative instead of a proxy to attend the AGM should submit the
original certificate of appointment under the seal of the corporation to the Company’s Registered Office before the AGM
or to the registration staff on the AGM day for the Company’s records.
14. Only Depositor whose name appears on the Record of Depositors as at 21 August 2019 or the appointed proxy holder/
representative shall be entitled to attend, speak and vote at the 25th AGM.
176 SAM Engineering & Equipment (M) Berhad . Annual Report 2019
ADMINISTRATIVE GUIDE (Cont’d)
25th Annual General Meeting (“AGM”)
VOTING PROCEDURE
15. The voting at the 25th AGM will be conducted on a poll in accordance with Paragraph 8.29A of Bursa Malaysia Securities
Berhad Main Market Listing Requirements.
16. The Company has appointed Securities Services (Holdings) Sdn Bhd as Poll Administrator to conduct the poll by way of
e-voting and Commercial Quest Sdn Bhd as Scrutineer to verify the poll results.
17. The presentation slides to guide the shareholders/proxy to cast the votes electronically will be available prior to the
commencement of the poll.
18. The keypad voting device is not allowed to be brought out of the meeting hall and is required to be returned to the
Company at the conclusion of the 25th AGM. Shareholders/proxy holders who wish to leave the meeting hall during the
meeting, are required to return the said device to the Company at the exit door of the meeting hall.
LUNCH
20. The Company Annual Report 2019 is available on the Company website at www.sam-malaysia.com and Bursa Malaysia
Securities Berhad’ website at www.bursamalaysia.com.
ENQUIRY
21. For any enquiry prior to the 25th AGM, please contact the following during office hours:
(a) SAM Engineering & Equipment (M) Bhd. (Tel: 04-643 6789)
(b) Securities Services (Holdings) Sdn Bhd (Tel: 04-263 1966)
177
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FORM OF PROXY NUMBER OF SHARES HELD
of SAM ENGINEERING & EQUIPMENT (M) BERHAD (“Company”), hereby appoint the following person(s):-
First Proxy
No. of shares or % of
Name/NRIC No. Address shares to be presented
Second Proxy
No. of shares or % of
Name/NRIC No. Address shares to be presented
or failing him/her, the Chairman of the meeting as *my/our proxy to vote in *my/our name(s) on my/our behalf at the Twenty-
Fifth Annual General Meeting (“AGM”) of the Company to be held at First Floor, SAM Meerkat (M) Sdn. Bhd., Plot 103, Hilir
Sungai Keluang Lima, Taman Perindustrian Bayan Lepas 4, 11900 Penang, Malaysia on Wednesday, 28 August 2019 at 10:00
a.m. and at any adjournment thereof.
*My/Our proxy is to vote on the resolution referred to in the Notice of AGM as indicated below:-
(Please indicate with an “X” in the appropriate box how you wish your proxy to vote. If no instruction is given, the proxy will
vote or abstain at his/her discretion).
1. A member may appoint up to two (2) proxies to attend on the same occasion. A proxy may but need not be a Member of the Company. If a member
appoints more than one (1) proxy, the appointments shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each
proxy.
2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depository) Act, 1991 (“SICDA”), it may
appoint up to two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities
account.
3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1)
securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each
omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance
with the provisions of subsection 25A(1) of SICDA.
4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor
is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised.
5. To be valid, the form of proxy must be deposited at the Company’s Registered Office at Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 George
Town, Pulau Pinang, Malaysia at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournments thereof.
6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 21 August 2019 (General Meeting Record of
Depositors) shall be eligible to attend, speak and vote at the meeting or appoint proxy(ies) to attend, speak and vote on his/her behalf.
STAMP
To,
www.sam-malaysia.com