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Annual Report 2016 • 1
CONTENTS
Page
Corporate Information 2
Corporate Structure 3
Financial Highlights 4
Profile of Directors 5
Notice of Annual General Meeting 10
Statement Accompanying Notice of Annual General Meeting 15
Chairman’s Statement 16
Statement on Corporate Governance 19
Statement on Risk Management and Internal Control 28
Audit Committee’s Report 30
Statement on Directors’ Responsibility 32
Corporate Social Responsibility 32
Other Corporate Disclosure 33
Financial Statements
Directors’ Report 34
Directors’ Statement 39
Statutory Declaration 39
Independent Auditors’ Report to the Members 40
Statements of Financial Position 42
Income Statements 43
Statements of Comprehensive Income 44
Consolidated Statement of Changes in Equity 45
Statement of Changes in Equity 46
Statements of Cash Flows 47
Notes to the Financial Statements 49
Supplementary Information 101
List of Properties owned by the Group 102
Thirty Largest Securities Account Holders 104
Substantial Shareholders 105
Directors’ Shareholdings 105
Key Management’s Shareholdings 106
Analysis of Shareholdings 106
Proxy Form
Annual Report 2016 • 2
Corporate Information
Board of Directors
Executive Chairman Tan Sri Dato’ Seri Tan Kok Ping
Managing Director Tan Poay Seng
Executive Director Tan Kok Aun
Non-Independent Non-Executive Directors H’ng Cheok Seng
Dato’ Rosely Bin Samsuri
Independent Non-Executive Directors Mawan Noor Aini Binti Md. Ismail
Tan Poh Heng
Alternate Directors Chang Chuen Hwa
(Alternate Director to Tan Poay Seng)
Dato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki
Shahabudin
(Alternate Director to Dato’ Rosely Bin Samsuri)
Company Secretaries Lee Peng Loon (MACS 01258)
P’ng Chiew Keem (MAICSA 7026443)
Auditors Grant Thornton
51-8-A, Menara BHL Bank, Jalan Sultan Ahmad Shah,
10500 Penang.
Tel: 04-2287828 Fax: 04-2279828
Registered Office 51-21-A, Menara BHL Bank, Jalan Sultan Ahmad Shah,
10050 Penang.
Tel: 04-2108833 Fax: 04-2108831
Share Registrar Plantation Agencies Sdn. Berhad
3rd Floor, Standard Chartered Bank Chambers,
Beach Street, 10300 Penang.
Tel: 04-2625333 Fax: 04-2622018
Bankers CIMB Bank Berhad
Malayan Banking Berhad
AmBank (M) Berhad
Stock Exchange Listing Main Board, Bursa Malaysia
Sector : Consumer Products
Stock Short Name : Magni
Stock Number : 7087
Date and Place of Incorporation Incorporated in Malaysia on 12 March 1997
Annual Report 2016 • 3
Corporate Structure
Revenue by Segment
Subsidiaries as at 15 August 2016
for the financial year ended 30 April 2016
100%
South Island Garment
Sdn Bhd
(No. 24114-U)
Garment Manufacturing
100%
South Island Plastics
Sdn Bhd
(No. 89385-D)
Flexible Plastic Packaging
100%
Inter-Pacific Packaging
Sdn Bhd
(No. 186388-V)
Co
ugated Packaging
99.64%
South Island Packaging
(Penang) Sdn Bhd
(No. 23225-D)
Inner Packaging
Magni-Tech
Industries Berhad
Investment Holding
Related Index:
Details of subsidiaries : Note 6 of the Financial Statements
Further Segment information : Note 28 of the Financial Statements
Garment
RM731.585 million
85.7%
Packaging
RM122.481 million
14.3%
Annual Report 2016 • 4
Operating Results (RM000) 30-4-2012 30-4-2013 30-4-2014 30-4-2015 30-4-2016
Revenue 534,123 565,817 651,273 716,380 854,066
Profit before Tax 40,818 48,014 55,412 69,406 107,273
EBITDA 46,498 51,410 67,724 75,182 112,841
Profit after Tax 30,582 35,832 41,951 52,204 82,114
Key Financial Position 30-4-2012 30-4-2013 30-4-2014 30-4-2015 30-4-2016
Highlights (RM000)
Total Assets 240,504 271,661 305,098 337,187 398,687
Investment Securities 21,397 22,795 24,348 63,134 53,659
Cash and Cash Equivalents 40,377 49,279 70,987 69,039 64,113
Paid Up Share Capital 108,488 108,488 108,488 108,488 162,732
Reserves
Retained Profits 73,921 94,563 122,410 160,510 160,142
Share Premium and
Other Reserves 3,881 3,880 3,986 3,767 77
Shareholders’ Equity 186,290 206,931 234,884 272,765 322,951
Key Financial Indicators 30-4-2012 30-4-2013 30-4-2014 30-4-2015 30-4-2016
Return on Shareholders’ Equity 16.4% 17.3% 17.9% 19.1% 25.4%
Return on Total Assets 12.7% 13.2% 13.8% 15.5% 20.6%
Net Assets Per Share (RM) 1.14 1.27 1.44 1.68 1.98
Basic Earnings Per Share (Sen) 18.8 22.0 25.8 32.1 50.5
Net Dividend Per Share (Sen) 6 8.7 8.7 10 18
Dividend Amount (RM’000) 9,764 14,103 14,103 16,273 29,292
Dividend Payout Ratio 31.9% 39.4% 33.6% 31.2% 35.7%
1) Net assets per share, basic earnings per share and net dividend per share (FYR 2012 – 2015) were restated due to bonus issue
2) Dividends for FYR 2016 includes the proposed dividend as per Resolution 5 of the Notice of AGM on page 10
3) The Company has zero gearing as at the end of the past 5 financial years
Financial Highlights
Annual Report 2016 • 5
Profile of Directors
Tan Sri Dato’ Seri Tan Kok Ping
Executive Chairman
Appointed to the Board of Directors (Board) on 18-2-2000
Malaysian, Aged 69, Male
Bachelor Degree in Commerce, Nanyang University Singapore
Occupation : Company Directo
He has more than 40 years of experience in various business sectors which include property development,
manufacturing of consumer electronics, garment, co
ugated and plastic packaging products.
He also sits on the Board of a subsidiary of Berjaya Land Berhad as well as in several private limited companies.
He was previously Managing Director and Deputy Chairman of Berjaya Sports Toto Berhad, Non-Executive
Chairman of Berjaya Retail Berhad, Chairman of Penang Joint Chambers of Commerce and Deputy President
of The Associated Chinese Chambers of Commerce and Industry of Malaysia.
He is the Executive Adviser and former President of Penang Chinese Chamber of Commerce.
He attended 3 out of the 5 Board Meetings held during the FYR.
Tan Poay Seng
Managing Director
Member of the Remuneration Committee
Appointed to the Board on 18-2-2000
Malaysian, Aged 49, Male
Diploma in Hotel Management, Switzerland
Occupation : Company Directo
He is the Managing Director of Magni-Tech Industries Berhad since 2000. He has more than 20 years of
experience in various business sectors which include manufacturing, housing development, marketing, retailing
and healthcare services.
He also sits on the Board of several private limited companies.
He attended all the 5 Board Meetings held during the FYR.
Tan Kok Aun
Executive Director
Appointed to the Board on 18-2-2000
Malaysian, Aged 67, Male
Bachelor of Mechanical Engineering Degree, Trinity College, Ireland
Occupation : Company Directo
He was one of the pioneers responsible for the initial setup and operations of South Island Packaging (Penang)
Sdn Bhd, a 99.64% owned subsidiary of the Company. He has gathered over 40 years of experience and
knowledge in the printing and packaging industry. He also sits on the Board of several private limited companies.
He attended 3 out of the 5 Board Meetings held during the FYR.
Annual Report 2016 • 6
Profile of Directors (cont’d)
H’ng Cheok Seng
Non-Independent Non-Executive Director
Member of Audit Committee and Nominating Committee
Appointed to the Board on 18-2-2000
Malaysian, Aged 57, Male
Fellow Member, Association of Chartered Certified Accountants, UK
Occupation : Company Directo
He has over 28 years’ experience in financial, corporate and accounting related positions with investment
holding, garment manufacturing, local and multi-national electronic manufacturing companies. Prior to his
Pre-U studies, he had 6 years of audit and taxation working experience with a local public accounting firm.
He attended all the 5 Board Meetings held during the FYR.
Mawan Noor Aini Binti Md. Ismail
Independent Non-Executive Directo
Member of Audit Committee, Nominating Committee and Remuneration Committee
Appointed to the Board on 8-2-2010
Malaysian, Aged 68, Female
Master in Public Administration (Finance) from University of Southern California. and Associate member of the
Malaysian Institute of Chartered Secretaries and Administrators
Occupation : Company Directo
She began her career at Standard Chartered Bank after graduating from Institut Teknologi Mara with a
professional qualification in ICSA (The Institute of Chartered Secretaries and Administrators, United Kingdom).
Subsequently, she joined Universiti Sains Malaysia, Penang as a Administrative Office
Assistant Bursar until
she retired in 2008 as Bursar of the University.
She attended all the 5 Board Meetings held during the FYR.
Tan Poh Heng
Independent Non-Executive Directo
Chairman/Member of Audit Committee, Nominating and Remuneration Committees
Appointed to the Board on 20-11-2014
Malaysian, Aged 59, Male
Member of both the Malaysian Institute of Certified Public Accountants and Malaysian Institute of Accountants
Occupation : Company Directo
He joined Messrs. Price Waterhouse & Co. as an Audit Assistant in May 1978 until March 1983 when he
completed his professional examination and qualified as an accountant. He joined Messrs. Peat, Marwick,
Mitchell & Co. as a Qualified Assistant. In January 1985, he left the accounting firm as an Audit Supervisor to
join South Island Garment Sdn Bhd as a Chief Accountant. He left South Island Garment Sdn Bhd in March
2002 when he held the position of Senior General Manager.
Annual Report 2016 • 7
Profile of Directors (cont’d)
Tan Poh Heng (cont’d)
He was attached to Messrs. JB Lau & Associates as the Senior Audit Manager from June 2002 to September
2003. He was the Chief Financial Officer of GPS Tech Solutions Sdn Bhd from December 2004 to August 2012.
Cu
ently he is the Financial Controller of Punch Industry Malaysia Sdn Bhd, a 100% subsidiary company of
Punch Industry Co., Ltd which is a listed company in Japan.
He has also been an Independent Non-Executive Director and Chairman of the Audit Committee, Nomination
Committee and Remuneration Committee of Scope Industries Berhad since 13 May 2008.
He attended all the 5 Board Meetings held during the FYR.
Dato’ Rosely Bin Samsuri
Non-Independent Non-Executive Directo
Appointed to the Board on 16-2-2016
Malaysian, Aged 63, Male
Master in Business Administration (International Business) from the University of
New Haven, Connecticut, USA, Bachelor of Science (Finance) from the Indiana State University,
Indiana, USA, and Diploma in Accountancy from University Technology Mara, Malaysia.
Occupation : Company Directo
He has been appointed as the Director of Pe
adanan Nasional Berhad (PNS) since 12th May 2011. He is
the Chairman of the Directors Investment Committee of PNS and a member of the Board Nomination &
Remuneration Committee of PNS.
He started his career with Negara Properties Sdn. Bhd. after which he moved on to a banking and Co-Operative
industry and had a vast experience in banking and finance throughout his 24 years stint with Bank Kerjasama
Rakyat Malaysia Berhad (Bank Rakyat), whereby his last position with Bank Rakyat was as the General Manager
of Corporate Services & Bank Secretary as well as the member of various Board Committees and Board
Subsidiaries of Bank Rakyat. He is also a Director in Bioalpha Holdings Berhad, Ikhtiar Factoring Sdn Bhd and
Neigu Engineering & Shipyard Sdn Bhd.
He attended 1 Board Meeting held from the date of his appointment to the end of the FYR.
Chang Chuen Hwa
Alternate Director to Tan Poay Seng
Appointed to the Board on 18-2-2000 and re-designated as the Alternate Director on 23-8-2008
Malaysian, Aged 59, Male
Bachelor of Business Studies Degree, Massey University, New Zealand
Occupation : Company Directo
He is the Managing Director of South Island Plastics Sdn Bhd (SIP), a wholly owned subsidiary of the Company
and was attached to SIP since 1982. During his 32 years of service with SIP, he has gained extensive knowledge
of the plastic film packaging industry.
Annual Report 2016 • 8
Profile of Directors (cont’d)
Dato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin
Alternate Director to Dato’ Rosely Bin Samsuri
Appointed to the Board on 16-2-2016
Malaysian, Aged 51, Male
Master in Science and Corporate Communication from School of Modern Languages & Communication,
Universiti Putra Malaysia (UPM), a Bachelor in Business Administration from School of Business, Royal Melbourne
Institute of Technology (RMIT), and Diploma in Business Studies from Mara Institute of Technology, Malaysia.
Occupation : Managing Directo
He has been appointed as the Managing Director of Pe
adanan Nasional Berhad (PNS) since 1st December
2007.
He is a member of Directors Investment Committee of PNS. He was previously the Managing Director of
Yayasan Tekun Nasional.
Prior to joining Yayasan Tekun Nasional, he had accumulated over 20 years of experience in banking operations,
corporate management, property and information technology with a last attachment at Bank Muamalat
Malaysia Berhad as a Branch Manager whereas he began his career at Bank Bumiputera Malaysia Berhad.
He had also served as a Lecturer at Universiti Tenaga Nasional (UNITEN).
Family Relationship - Directors
None of the Directors has any family relationship with the other Directors and/or major shareholders of the
Company except for Tan Sri Dato’ Seri Tan Kok Ping (“TKP”) and Tan Kok Aun (“TKA”), who are
others ; Tan
Poay Seng (“TPS”) is the son of TKP ; and Chang Chuen Hwa (Alternate Director to TPS) is the
other-in-law
of TKP and TKA.
Related Index:
Directors’ remuneration : Note 23 of the Financial Statements
Related party disclosures : Note 29 of the Financial Statements
Key Senior Management
Lee Koong Chen @ Lee Kong Chew
Malaysian, Aged 75, Male
Managing Director of Inter-Pacific Packaging Sdn Bhd (IPP),
a wholly owned subsidiary of Magni
Mechanical Engineering Degree from National Taiwan University
He was one of the pioneers in the co
ugated line having more than 40 years of experience in printing and
packaging. He was the Works Manager in Federal Paper Products, Shah Alam for 18 years, General Manager
in Pan Asian Paper Product Sdn Bhd, Penang for 4 years and Federal Printing & Packaging Sdn Bhd for one
year. He set up IPP in early 1990 and was appointed to the Board of IPP on 2 August 1993. He steered IPP to
ecome a leader in the industrial packaging industry. He was the Executive Director of Magni from 18 Fe
uary
2000 to 23 September 2008. He is cu
ently a member of the Board of Engineers Malaysia.
Annual Report 2016 • 9
Profile of Directors (cont’d)
Tang Beng Hong
Malaysian, Aged 56, Male
Group General Manager of South Island Garment Sdn Bhd (SIG),
a wholly owned subsidiary of Magni
Diploma in Accounting
He joined SIG in May 1998 as Senior Operation Manager of Vietnam Operations. He was transfe
ed to Head
Office of SIG as Assistant General Manager of Operation Division in Dec 2001. In Apr 2002, he was promoted
to General Manager to oversee the entire operations and subsequently promoted to Group General Manager
in Oct 2011. Before joining SIG, he worked with Liz Claiborne, Indonesia for 14 years as Quality Team Leader.
Lim Eng Chuan
Malaysian, Aged 48, Male
General Manager of SIG,
a wholly owned subsidiary of Magni
Graduate of the Association of Chartered Certified Accountants (UK)
He joined SIG as an Assistant Accountant in April 1994 and had worked his way up to Finance Manager.
In May 2005, he was promoted to Assistant General Manager with his responsibilities extended to oversee
certain operational aspects of SIG. He was subsequently promoted to General Manager effective October
2011. Prior to this, he had worked with a local audit firm for a period of 2 years.
Poh Seng Chit
Malaysian, Aged 54, Male
General Manager of South Island Plastics Sdn Bhd (SIP),
a wholly owned subsidiary of Magni
Chartered Accountant, Malaysian Institute of Accountants
Associate Member, Chartered Institute of Management Accountants, UK
He joined SIP as an Accountant in January 1991 and was promoted to Administrative Manager in May 1994 to
oversee the finance, administration and personnel aspects of SIP. He was further promoted to Deputy General
Manager in May 1999 and General Manager in May 2000. Prior to joining SIP, he was attached to a local audit
firm for a period of 3 years.
Family Relationship and Other Disclosure – Key Senior Management
None of the Key Senior Management has family relationship with any Director and/or major shareholder of
Magni.
None of the Key Senior Management has any conflict of interest with the Company or been convicted for any
offence within the past 5 years, other than traffic offences if any.
Annual Report 2016 • 10
Notice of Annual General Meeting
Please refer to
Note 7
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8
Notice is hereby given that the 19th Annual General Meeting of the Company will be held at Berjaya 1, 7th
Floor, Georgetown City Hotel, 1-Stop Midlands Park Centre, Jalan Burmah, 10350 Penang on Wednesday, 28
September 2016 at 10.30 a.m. for the following purposes:-
A G E N D A
As Ordinary Business:
1. To receive the Audited Financial Statements for the financial year ended 30 April
2016 together with the Reports of the Directors and Auditors thereon.
2. To consider and if thought fit, to pass with or without modifications, the following
special resolution pursuant to Section 129(6) of the Companies Act, 1965:
“THAT Tan Sri Dato’ Seri Tan Kok Ping, who retires pursuant to Section 129(2) of the
Companies Act, 1965 be and is hereby re-appointed as a director of the Company
to hold office until the next Annual General Meeting of the Company.”
3. To re-elect Mr. Tan Kok Aun, a director who retires by rotation in accordance with
Article 94(1) of the Company’s Articles of Association and who, being eligible,
offers himself for re-election.
4. To re-elect Cik Mawan Noor Aini Binti Md. Ismail, a director who retires by rotation
in accordance with Article 94(1) of the Company’s Articles of Association and who,
eing eligible, offers herself for re-election.
5. To re-elect Dato’ Rosely Bin Samsuri, a director who retires pursuant to Article 101
of the Company’s Articles of Association and who, being eligible, offers himself for
e-election.
6. To approve the payment of a single tier final dividend of 3 Sen per share and a
single tier special dividend of 2 Sen per share for the financial year ended 30 April
2016.
7. To approve the increase and the payment of Directors Fees for the financial year
ended 30 April 2016.
8. To re-appoint Messrs. Grant Thornton as auditors of the Company to hold office
until the conclusion of the next Annual General Meeting of the Company and to
authorise the Directors to fix their remuneration.
As Special Business:
9. Proposed Renewal of General Mandate for the Directors to Allot and Issue
New Shares pursuant to Section 132D of the Companies Act, 1965
“THAT, subject always to provisions of the Companies Act, 1965 (“the Act”),
the Articles of Association of the Company and the approvals of the relevant
government
egulatory authorities, the Directors be and are hereby authorised,
pursuant to Section 132D of the Act, to allot and issue new shares in the
Company at any time until the conclusion of the next Annual General Meeting
and upon such terms and conditions and for such purposes as the Directors may,
in their absolute discretion deemed fit, provided that the aggregate number of
shares to be issued does not exceed 10% of the total issued share capital of the
Company for the time being and that the Directors are also empowered to obtain
the approval from Bursa Malaysia Securities Berhad for the listing of and quotation
for the additional shares to be issued.”
Annual Report 2016 • 11
Resolution 9
Resolution 10
Notice of Annual General Meeting (cont’d)
10. Proposed Renewal of Shareholders’ Mandate for Recu
ent Related Party
Transactions of a Revenue and Trading Nature
“THAT, subject always to the provisions of the Companies Act, 1965 (“the Act”), the
Memorandum & Articles of Association of the Company, the requirements of Bursa
Malaysia Securities Berhad and/or any other regulatory authorities, the approval
e and is hereby given for the Company and its subsidiaries to enter into recu
ent
elated party transactions of a revenue or trading nature in the ordinary course of
usiness which are necessary for the day-to-day operations of the Company and
its subsidiaries as specified in Part A, Section 2.1 of the Company’s Circular to
Shareholders dated 30 August 2016 (“Circular”) on terms not more favourable
to the related parties than those generally available to the public and are not to
the detriment of the minority shareholders and that authority confe
ed by this
esolution shall take effect immediately upon the passing of this resolution and the
shareholders’ mandate shall continue to be in force until:
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company
following the AGM at which the ordinary resolution for the Proposed Renewal
of Shareholders’ Mandate was passed, at which time it will lapse, unless by
a resolution passed at the meeting, the authority is renewed;
(b) the expiration of the period within which the next AGM after that date is
equired to be held pursuant to Section 143(1) of the Act (but shall not
extend to such extension as may be allowed pursuant to Section 143(2) of
the Act); o
(c) revoked or varied by a resolution passed by the shareholders at a general
meeting,
whichever is the earlier;
That, authority be and is hereby given to the Directors of the Company and its
subsidiaries to complete and do all such acts and things (including executing such
documents as may be required) to give effect to such transactions as authorised by
this Ordinary Resolution.
And that, the estimates given on the recu
ent related party transactions specified
in Section 2.1 of the Circular being provisional in nature, the Directors and/or any
of them be and are hereby authorised to agree to the actual amount or amounts
thereof provided always that such amount or amounts comply with the review
procedures set out in Part A, Section 2.4 of the Circular.”
11. Proposed Share Buy-Back by the Company of up to 10% of its Issued and
Paid-Up Share Capital of the Company
“That, subject always to the Companies Act, 1965 (“the Act”), Part IIIA of the
Companies Regulations, 1966, the Articles of Association of the Company, the
Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa
Securities”) and/or any other regulatory authorities, approval be and is hereby given
for the Company to purchase such number of ordinary shares of RM1.00 each in
the Company (“MAGNI Shares”), as may be determined by the Directors from time
to time through Bursa Securities upon such terms and conditions as the Directors
deem fit, necessary and expedient in the interest of the Company provided that-
Annual Report 2016 • 12
Notice of Annual General Meeting (cont’d)
(i) the maximum number of MAGNI Shares which may be purchased and held by
the Company shall be equivalent to ten per centum (10%) of the total issued
and paid-up capital of the Company; and
(ii) the maximum funds to be allocated by the Company for the purpose of
purchasing MAGNI Shares shall not exceed the total retained profits or share
premium reserve of the Company or both.
And that, upon completion of the purchase(s) of the MAGNI Shares or any part
thereof by the Company, the Directors of the Company be and are hereby authorised
to deal with the MAGNI Shares so purchased by the Company in the following
manner:-
(a) to cancel all the MAGNI Shares so purchased; o
(b) to retain all the MAGNI Shares so purchased as treasury shares for future resale
on Bursa Securities and/or for distribution as dividend to the Shareholders of
the Company; or
(c) retain part of MAGNI Shares so purchased as treasury shares and subsequently
cancelling the balance; or
(d) in any other manner as prescribed by the Act, rules, regulations and orders
made pursuant to the Act and the requirements of Bursa Securities and/or
any other regulatory authorities for the time being in force.
And that, the Directors of the Company be and are hereby empowered immediately
upon the passing of this ordinary resolution until:-
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company
following the AGM at the Proposed Share Buy-Back was passed, at which
time it will lapse unless by an ordinary resolution passed at that AGM, the
authority is renewed, either unconditionally or subject to conditions; o
(b) the expiration of the period within which the next AGM after that date it is
equired by law to be held; o
(c) revoked or varied by ordinary resolution passed by the shareholders in a
general meeting,
whichever is the earlier.
And that, the Directors of the Company be and are hereby authorised to take
all such steps as are necessary (including the opening and maintaining of central
depositories accounts under the Securities Industry (Central Depositories) Act,
1991) and enter into any agreement, a
angement and guarantee with any party
or parties to implement, finalise and give full effect to the Proposed Share Buy-Back
with full power to assent to any condition, modification, revaluation, variation and
or amendments (if any) as may be imposed by the relevant authorities from time to
time.”
Annual Report 2016 • 13
Notice of Annual General Meeting (cont’d)
12. To transact any other business of which due notice shall have been given in
accordance with the Company’s Articles of Association and the Companies Act,
1965.
FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to
attend the 19th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn.
Bhd. to issue a General Meeting Record of Depositors as at 22 September 2016. Only a depositor whose name
appears on the Record of Depositors as at 22 September 2016 shall be entitled to attend the said meeting or
appoint proxies to attend and/or vote on his/her behalf.
By Order of the Board,
LEE PENG LOON (MACS 01258)
P’NG CHIEW KEEM (MAICSA 7026443)
Company Secretaries
Penang
Date: 30 August 2016
NOTES ON APPOINTMENT OF PROXY
1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and
(b) of the Companies Act, 1965 shall not apply to the Company.
2. For a proxy to be valid, the proxy form duly completed, must be deposited at the registered office of
the Company, 51-21-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-
eight (48) hours before the time appointed for holding the meeting.
3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.
4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies
the proportions of his holdings to be represented by each proxy.
5. Where a member is an Exempt Authorised Nominee which holds ordinary shares in the Company for
multiple beneficial owners in one securities account (“omnibus account”) there is no limit to the number
of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it
holds.
6. If the appointor is a corporation, the proxy form must be executed under its Common Seal or under the
hand of an officer or attorney duly authorised.
EXPLANATORY NOTE ON ORDINARY BUSINESS
7. The Agenda 1 is meant for discussion only as the provision of Section 169(1) of the Companies Act,
1965 does not require a formal approval of shareholders of the Company. Hence, the Agenda 1 is not
put forward for voting.
Annual Report 2016 • 14
Notice of Annual General Meeting (cont’d)
EXPLANATORY NOTES ON SPECIAL BUSINESS
8. The proposed Resolution 8 is to seek a renewal of general mandate for the directors of the Company to
allot and issue new shares in the Company up to an amount not exceeding 10% of the total issued and
paid-up share capital of the Company for the time being for such purposes as the directors consider will
e in the best interest of the Company. This authority, unless revoked or varied by the shareholders of
the Company in general meeting will expire at the conclusion of the next Annual General Meeting.
The proposed renewal of general mandate for issuance of shares will provide flexibility to the Company
for any possible fund raising activities, including but not limited to further placing of shares for the
purpose of funding future investment, working capital and/or acquisition.
As at the date of this notice, no shares has been issued pursuant to the general mandate granted at the
last Annual General Meeting of the Company.
9. The proposed Resolution 9, is to enable the Company and its subsidiaries to enter into recu
ent
transactions involving the interest of related parties, which are of a revenue or trading nature and
necessary for the Group’s day to day operations, subject to the transactions being ca
ied out in the
ordinary course of the business and on terms not to the detriment of minority shareholders of the
Company. Further information on the Proposed Renewal of Shareholders’ Mandate is set out in the
Circular to Shareholders dated 30 August 2016, dispatched together with the Company’s Annual Report
for the financial year ended 30 April 2016.
10. The proposed Resolution 10, is to give the Directors of the Company authority to purchase the Company’s
shares up to 10% of the issued and paid-up share capital of the company by utilising the funds allocated
which shall not exceed the retained profits and share premium of the Company. This authority, unless
evoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion
of the next Annual General Meeting. Further information on the Proposed Share Buy-Back is set out in
Part B of the Circular to Shareholders dated 30 August 2016, dispatched together with the Company’s
2016 Annual Report.
NOTICE OF DIVIDEND ENTITLEMENT
NOTICE IS ALSO HEREBY GIVEN THAT a Single Tier Final Dividend of 3 Sen per share and a Single Tier Special
Dividend of 2 Sen per share for the financial year ended 30 April 2016, if approved, will be paid on 28 October
2016 to shareholders registered in the Record of Depositors of the Company on 13 October 2016.
A depositor shall qualify for entitlement only in respect of:
a. Shares transfe
ed into the depositor’s securities account before 4.00 p.m. on 13 October 2016 in
espect of ordinary transfers;
. Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules
of the Bursa Malaysia Securities Berhad.
By Order of the Board,
LEE PENG LOON (MACS 01258)
P’NG CHIEW KEEM (MAICSA 7026443)
Company Secretaries
Penang
Date: 30 August 2016
Annual Report 2016 • 15
Statement Accompanying Notice of Annual General Meeting
(Pursuant To Paragraph 8.27(2) of Main Market Listing Requirements of Bursa Securities)
ELECTION OF DIRECTORS
There are no individuals who are standing for election as directors at the forthcoming 19th Annual General
Meeting of the Company.
GENERAL MANDATE FOR ISSUANCE OF SHARES
The Resolution 8 tabled under Special Business as per the Notice of 19th Annual General Meeting of the
Company dated 30 August 2016 is a renewal of general mandate pursuant to Section 132D of the Companies
Act, 1965 granted from shareholders of the Company at the last Annual General Meeting held on 23 October
2015.
The renewal of general mandate for issuance of shares pursuant to Section 132D of the Companies Act,
1965 will provide flexibility to the Company for any possible fund raising activities, including but not limited
to further placing of shares for the purpose of funding future investment, working capital and/or acquisition.
As at the date of notice of meeting, no new shares has been issued pursuant to the general mandate granted
at the last Annual General Meeting of the Company.
Annual Report 2016 • 16
Chairman’s Statement
On behalf of the Board of Directors, I am delighted to present you the Annual Report for the financial year
ended 30 April 2016 (“FYR”).
Business Segment
The Group is primarily engaged in the manufacturing of garments for export, which accounted for 85.7% of
the Group’s revenue for the FYR, and a wide range of flexible plastic packaging, co
ugated and offset printing
packaging products which are primarily for the local market.
Overall Group’s Performance
The Group continued to perform commendably amid continuing uncertainties su
ounding the lackluster local
and global economies. Group revenue and profit before tax (PBT) for the FYR soared 19.2% to RM854.066
million and 54.6% to RM107.273 million respectively vis-à-vis last year. Net profit for the FYR saw a 57.3%
jump to RM82.114 million surpassing its previous year record of RM52.204 million.
To put things into perspective, Group revenue and PBT have increased significantly recording a 5-year compound
annual growth of 14.0% and 35.8% respectively.
Garment Performance
Our garment arm has remained as the key contributor to the Group’s overall performance. This segment
achieved a strong growth in both the revenue and PBT for the FYR by 22.7% to RM731.585 million and by
58.2% to RM100.498 million respectively. The higher garment revenue was mainly due to favourable foreign
exchange differences.
The increase in Group PBT was mainly fueled by higher garment revenue, favourable foreign exchange
differences, positive results from on-going productivity improvements and vigilant cost control.
Packaging Performance
Our packaging operations managed to achieve 2.1% and 14.4% growth of revenue and PBT respectively for
the FYR. The moderate increase in packaging revenue was mainly due to higher sale orders received. The
higher PBT, particularly from flexible plastic packaging business was mainly driven by cost containment efforts
and better productivity.
Earnings and Financial Position
The improved net profit performance for the FYR translated into a net return-on-equity of 25.4% as compared
to 19.1% last year. The basic earnings per share for the FYR was 50.5 Sen versus 32.1 Sen previously.
Based on the closing share price of RM4.08 as at 15 August 2016, the price earnings ratio for the FYR comes
out to be 8.1.
The net assets per share as at the end of the FYR rose as much as 17.9% to RM1.98 from RM1.68 at end
of last year despite larger dividend payments. The Group is in a healthy financial position with cash balances
(before other liquid investment assets) of RM64.113 million as at the end of the FYR.
Annual Report 2016 • 17
Chairman’s Statement (cont’d)
Industry and Operations - Garment
Besides the product demand, labour costs and other operating costs remain to be the key factors that mainly
affect the operating performance of the garment business.
There have been rapid changes in the market demand and customers’ expectation in today’s fashion world.
Hence, skills and talent development for the workforce are of utmost importance, be it in the product
development centre or other operational areas. We aspire to enlarge our pool of star employees who are able
to contribute to the company’s success and growth.
Continuous improvement is most effective when it becomes a natural part of the way in which the daily work is
performed. Through the adoption of lean principles, efforts such as creating a more positive work environment,
improvements in working conditions and work organization, process re-engineering and enhancement have
also been fruitful as evidenced by increased productivity and competitiveness for garment segment.
Over the years, the Group has been blessed with the continued support of its customers in the form of
sustainable sales orders in spite of the weak economic climate. We will continue to work cohesively with
our customers to help them drive value, particularly to focus on more sophisticated and higher value-added
products that satisfy the aesthetic senses of the ultimate buyers. We believe that these positive efforts will go
a long way in strengthening the vitality and depth of our customer relationships.
Industry and Operations - Packaging
Aside from the product demand, the key factors that affect the operating performance of packaging business
include mainly labour costs, other operating costs, and plastic and paper related raw material costs.
The packaging segment continues to focus on consumables, food and beverage, pharmaceuticals and
healthcare related products which enjoy higher value-added, recession proof and may also ride on higher
demand due to population growth.
We are also accelerating cost cuts in the face of competitive environment, coupled with rising costs which have
posed a real challenge to our profitability.
Going Forward
Concerns over a potential global recession, stock market volatility, renewed declines in oil prices, Brexit’s
impact and other uncertainties have induced an air of caution among businesses.
The Group maintains a cautiously positive outlook for the next financial year ending 30 April 2017 amid the
challenging market conditions both domestically and overseas. However, both the garment and packaging
usinesses are expected to remain profitable for the next financial year.
The garment industry is traditionally characterized by high intensity of labour and low intensity of capital. The
implementation of minimum wage of RM1,000 effective 1 July 2016 has added to the burden of price inflation
eing faced by the industry operators. We hope the incremental labour cost will be mitigated by strict cost
control, not discounting the fact that it may be partially passed on to our customers.
Annual Report 2016 • 18
Chairman’s Statement (cont’d)
The labour cost inflation is expected to continue given the excess demand over its supply. In the long run,
we have to move away from over reliance on the manual labour as one of the drivers of growth and intensify
our efforts in seeking innovative solutions such as through using our high-performance sewing machines and
elated labor-saving devices. We will continue to invest in automation, talent and em
ace technology in order
to stay in the forefront of the industry.
The Group will continue to focus on its core business of garment manufacturing and to accelerate sustainable
growth through organic means. With the strong net cash position, we are keeping an eye on strategic
M&A opportunities in the same industry while not ruling out any diversification into other industries should
opportunities arise.
For our packaging business which has been characterised by slim profit margin and potentially high capex for
einvestment, the Management will continue to optimize its packaging operations for resource productivity in
order to achieve sustainable profits but remain open to new growth opportunities.
Dividends
A single tier final dividend of 3 Sen per share and a single tier special dividend of 2 Sen per share for the FYR
(2015 : 5.33 Sen) has been recommended by the Board for shareholders’ approval at the forthcoming 19th
Annual General Meeting. Total dividends paid and proposed for the FYR amount to RM29.292 mil (2015 :
RM16.273 mil), representing a 35.7% (2015 : 31.2%) payout ratio.
The net dividend per share for the FYR being 18 Sen (2015 : 10 Sen net per share – restated due to bonus
issue), translating into a decent dividend yield of 4.4% p.a. based on the closing share price of RM4.08 as at
15 August 2016.
Corporate Development
The one-for-two bonus issue which increased the paid up share capital of the Company from RM108,487,900
to RM162,731,842 was completed on 12 November 2015. As at 15 August 2016, the market capitalisation of
the Company appreciated sharply by 88.3% to RM663.946 million from RM352.586 million at the last financial
year end.
Appreciation
It gives me great pleasure, on behalf of the Board of Directors, to express our sincere gratitude and appreciation
to all shareholders, valued customers, business associates and partners for their support and co-operation
throughout the year. My appreciation is also extended to fellow Directors for their invaluable advice and
guidance and the Management and staff for their commitment towards ensuring success of the Group. I look
forward to continued support from all stakeholders in the coming years.
I would also like to take this opportunity to extend my appreciation to Mr Tan Thiam Chai who had resigned as
a Director, for his contributions to the Group and welcome Dato’ Rosely Bin Samsuri and his alternate Dato’
Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin to the Board.
Tan Sri Dato’ Seri Tan Kok Ping
Chairman
Annual Report 2016 • 19
Statement on Corporate Governance
The Board is committed in ensuring the practice of good corporate governance in the conduct of the business
and affairs of the Group. This statement explains how the Group has applied the recommended principles of
the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”).
A. Establish Clear Roles and Responsibilities
Clear Functions of the Board and Management
The Board has the responsibility for the oversight and overall management of the Group and ultimately
creating shareholders’ value in the long run.
The duties and responsibilities of the Board include:
(a) Formulating the Group’s strategic plans;
(b) Ca
ying out periodic review of the Group’s financial and operating results;
(c) Identifying principal risks and ensure the implementation of appropriate systems to manage
those risks;
(d) Overseeing the conduct of the Group’s business; and
(e) Ensuring that the Group’s management information and internal controls system are in place and
properly implemented.
The Board delegates to the relevant Board Committees and Managing Director (MD) specific powers of
the Board to ensure the effective discharge of its functions and responsibilities.
Significant matters reserved for the Board’s consideration include:
(a) Approval of financial results;
(b) Declaration of dividends;
(c) Approval of directors’ fees;
(d) Major capital commitments; and
(e) Material corporate or financial exercises.
The Chairman leads the Board and is responsible for the effective performance of the Board.
Supported by the Heads of the operating units, the MD is responsible for the day-to-day management
of the business and operations of the Group within the policies, strategies and decisions adopted by the
Board, and is accountable to the Board.
Formalized Ethical Standards through Code of Conduct
The Company’s Code of Ethics (COE) provides the standard of conduct required for directors and
employees regarding ethical and behavioral considerations or actions in discharging their duties and
esponsibilities.
The COE promotes integrity and ethical conduct in all aspects of the Group operations. The areas
covered in the COE include dealings in securities, confidentiality of information, conflict of interest,
ibery and co
uption, gifts and dealings with business partners.
The COE can be accessed on the Company’s corporate website at http:
www.magni-tech.com.my.
Annual Report 2016 • 20
Statement on Corporate Governance (cont’d)
Whistleblowing Channel
The whistleblowing channel is enable employees and others to seek advice and without fear of retaliation
aise concerns or report instances of improper activities or misconduct, potential non-compliance with
our COE, other corporate policies, laws and regulations.
Employees are encouraged to first discuss any compliance matters internally with their immediate
superior. If such measures are not deemed to be sufficient, advice may be sought or incidents may be
eported to the Managing Director office via email no.
[email protected] or csh@magni-tech.
com.my.
Strategies Promoting Sustainability
The Board seeks to implement sustainability strategies which yield environmental economic and social
enefits. For further information, please refer to our Corporate Social Responsibility report on page 32
of this Annual Report.
Directors’ Access to Information and Advice
The Board is supplied with, on a timely basis, information in a form and of quality appropriate to enable
it to discharge its duties.
Board papers with sufficient notice are distributed to Directors before Board meetings to enable the
Directors to peruse and seek additional information or obtained further explanation on matters to be
deliberated.
Every Director has also access to the advice and services of the Company Secretaries and may obtain
independent professional advice at the Company’s expense in furtherance of their duties.
Company Secretaries
The Board is supported by two competent company secretaries who are qualified to act as company
secretary under Section 139A of the Companies Act 1965. The Company Secretaries are responsible for
advising the Board, particularly with regard to governance matters, the Company’s Memorandum and
Articles of Association, Board policies and procedures, and applicable rules and regulations.
The Company Secretaries also perform other routine company secretarial duties, such as maintenance
of the relevant statutory records and lodgement of forms and returns to the Companies Commission of
Malaysia.
Board Charte
The Company’s Board Charter sets out the duties, responsibilities and functions of the Board in
accordance with the principles of good corporate governance. The Board Charter will be periodically
eviewed and published on the Company’s corporate website http:
www.magni-tech.com.my.
B. Strengthen Composition
The Board has delegated the specific responsibilities to 3 Board Committees, namely the Audit
Committee, Nominating Committee and Remuneration Committee, all of which have terms of reference
to govern their responsibilities. The Board Committees will deliberate on and examine issues within their
terms of reference and report to the Board.
Annual Report 2016 • 21
Statement on Corporate Governance (cont’d)
Audit Committee
The Audit Committee Report is set out on pages 30 and 31 of this Annual Report.
Nominating Committee (“NC”)
The NC comprises entirely on Non-Executive Directors with the majority being Independent Non-
Executive Directors.
The NC leads the process for board appointments and the annual assessment of directors and makes
ecommendation to the Board.
The NC reviews candidates for directorship based on criteria such as their qualifications, skills, experience,
wisdom and competency. The ultimate goal is to ensure that the Board as a whole has the appropriate
alance of skills, experience, independence and knowledge of the Company to enable them to discharge
their respective duties and responsibilities effectively.
The composition of NC during the FYR was:
1) Chairman - Tan Poh Heng (Independent Non-Executive Director)
2) Member - Mawan Noor Aini Binti Md. Ismail (Independent Non-Executive Director)
3) Member - H’ng Cheok Seng (Non-Independent Non-Executive Director)
The NC met twice during the FYR. All the members of the NC were present at the said meeting. NC
assessed and made recommendations to the Board for re-appointments/appointment with regards to
the followings:
(a) The re-election of 2 directors, namely Tan Poay Seng and Tan Thiam Chai retiring by rotation, and
1 director Mr Tan Poh Heng retiring in accordance with Article 101 of the Company’s Articles of
Association.
(b) The appointment of Dato’ Rosely Bin Samsuri as Non-Independent Non-Executive Director and
Dato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin as his alternate.
NC also ca
ied out the annual assessment as follows:
(a) On effectiveness of the Board as a whole based on criteria covering area such as Board
esponsibilities and composition, meeting process, conduct, time commitment and Board
management relationship.
(b) On effectiveness of the Board Committees in terms of their responsibilities, composition, process
and time commitment.
(c) On contribution of individual Directors based on criteria which include responsibilities, strength,
and ability to act in the best interests of the Company in decision making and the training needs.
(d) On independence of all Independence Directors based on criteria including the criteria of
independence as per the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
NC was satisfied with results of the above assessments.
Annual Report 2016 • 22
Statement on Corporate Governance (cont’d)
Remuneration Committee (“RC”)
The RC comprises 2 Independent Non-Executive Directors and one Executive Director.
The remuneration for Directors should be determined so as to ensure the Company attracts and retains
the Directors to run the Company efficiently. The remuneration for Executive Directors is structured so
as to link reward to corporate and individual performance.
The composition of RC during the FYR was:
1) Chairman - Tan Poh Heng (Independent Non-Executive Director)
2) Member - Mawan Noor Aini Binti Md. Ismail (Independent Non-Executive Director)
3) Member - Tan Poay Seng (Managing Director)
The RC met once during the FYR. All the members of the RC were present at the said meeting.
The category, amount of directors’ remuneration and the number of Directors whose total remunerations
falls into each successive band of RM50,000 are disclosed in Note 23 of the financial statements.
The Board Diversity
The Board acknowledges the need to enhance board diversity, as it is essential to the efficient functioning
of the Board and indicates good governance practices.
The Board endeavour diversification in terms of experience, skills, expertise, competencies, gender and
age to enable the Group to enhance its business and governance performance. The Board encourages
female candidates to take up board position in order to promote gender equality. In the event a vacancy
arises, the Board will consider gender diversity in its nomination process.
Cu
ently, there is one woman Director on the Board, namely Puan Mawan Noor Aini Binti Md. Ismail
holding 14.3% of the Board’s seats.
Appointment and Re-election of Directors
During the FYR, Dato’ Rosely Bin Samsuri was appointed as a new Director of the Company on 16
Fe
uary 2016 to replace Mr Tan Thiam Chai who resigned on 1 Fe
uary 2016. On the same date, Dato’
Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin was appointed the alternate Director to
Dato’ Rosely Bin Samsuri.
Appointments of Director to the Board shall be made and ca
ied out based on the recommendation of
the NC. The Board shall comprise members who collectively have the right mix of qualifications, skills,
competencies and other complimentary attributes that will best serve the needs of the Company. Time
commitment will also be obtained from a Director at the time of appointment. Additionally, All Board
members should notify the Chairman of the Board before accepting any new directorship outside the
Group.
In accordance with the Company’s Articles of Association, at least one-third (1/3) of the Directors shall
etire from office every year provided always that all Directors shall retire from office at least once in
every three (3) years but shall be eligible for re-election at the Annual General Meeting (“AGM”). No
Director stays in office for more than three (3) years without being subject to re-election by shareholders.
Annual Report 2016 • 23
Statement on Corporate Governance (cont’d)
Eligible directors may seek re-election at the AGM. The NC is responsible for recommending to the
Board those Directors who are eligible to stand for re-election. The recommendation is based on the
eviews of their performance taking into consideration their contribution to the Board through their
skills, experience, qualities and ability to act in the best interests of the Company in decision making.
Directors who are above the age of seventy (70) are statutorily required to seek re-appointment at each
AGM in accordance with Section 129(2) of the Companies Act, 1965.
In July 2016, the Board approved the recommendation of the NC that the following Directors who are
due to retire at the forthcoming AGM be eligible to stand for re-election :
No. Name of Director Type of retirement
1. Tan Sri Dato’ Seri Tan Kok Ping Section 129(2) of Companies Act 1965
2. Tan Kok Aun By Rotation as per Article 94(1)
3. Mawan Noor Aini Binti Md. Ismail By Rotation as per Article 94(1)
4. Dato’ Rosely Bin Samsuri As per Article 101
All the said four Directors have expressed their intention to seek re-election.
C. Reinforce Independence
Annual Assessment of Independent Directors
The Board cu
ently has 7 members, 3 of whom are Executive Directors, 2 of whom are Independent
Non-Executive Directors whilst the remaining 2 are Non-Independent Non-Executive Directors.
The Board has 2 Independent Non-Executive Directors and comply with the Main Market Listing
Requirement of Bursa Malaysia Securities Berhad that at least 1/3 of the Board are Independent
Directors.
The Board through NC ca
ies out an annual assessment of the Independent Directors with the aim of
strengthening the role of independent directors to facilitate independent and objective decision making
in the Company, free from undue influence and bias.
Criteria have been set to assess the independence of independent Directors which are in line with the
Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
Shareholders’ Approval for Independent Directo
MCCG 2012 recommends that the tenure of an Independent Director should not exceed a cumulative
term of nine years. Upon completion of the nine years, an Independent Director may continue to serve
on the Board subject to his re-designation as a non-independent director if it is so determined that the
expertise and experience of a non-independent director is still relevant to the Company.
As at 15 August 2016, none of the Independent Director has served more than a cumulative term of
nine years, or for which the Independent Director would be designated as an Non-Independent Director
after the said 9 years of service, or to be officially re-elected by shareholders in general meetings.
Annual Report 2016 • 24
Statement on Corporate Governance (cont’d)
Chairman and Managing Director to be held by different individuals
These top two positions are held by two different individuals. There is a clear division of responsibility
etween the Executive Chairman and the Managing Director to ensure that there is a balance of power
and authority so that no one individual has unfettered powers of decision.
The Chairman leads the board of directors in providing governance and oversight as well as guidance
on strategic matters. The Chairman presides at the Board meetings and general meetings.
The Managing Director’s responsibility is to focus on the business and operations of the Group, ensuring
that it is run efficiently and effectively and in accordance with the strategic decisions of the Board.
Chairman to be a Non-Executive Directo
MCCG 2012 recommends that the Chairman of the Board to be a non-executive member of the Board
and in the event, the Chairman is not an independent director, the Board must comprise a majority of
independent directors. The Company’s Chairman is an executive member of the Board and is not an
independent director by virtue of his substantial interest in the Group.
The Board is of the view that the Chairman will remain objective in expressing his views and will allow
all Board Members the opportunity to participate and express their views in deliberations and decision
making in the Board.
The presence of the Independent Directors, though not forming a majority of the Board members, is
sufficient to provide the necessary checks and balances on the decision making process of the Board as
evidenced in their contribution and participation as members of the various Board Committees.
Hence the Board believes that the Chairman is capable of acting in the best interest of the shareholders
and hence does not see the necessity of nominating an independent non-executive chairman at this
juncture.
D. Foster Commitment
Time Commitment
The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their
oles and responsibilities as Directors of the Company. The Board meets at least 4 times a year. During
the FYR, the Board held 5 meetings and the details of each Director’s attendance are set out on pages
5 to 7 of this Annual Report.
Directors’ Training
All Directors have completed their Mandatory Accreditation Programme as required by the Main Market
Listing Requirements of Bursa Malaysia Securities Berhad. The Board through the NC has assessed the
training needs of each director and recommended the types of training programs that the Directors may
attend in order to enhance their knowledge and contribution to the Board.
Annual Report 2016 • 25
Statement on Corporate Governance (cont’d)
Details of the training programmes attended by the Directors during the FYR are as follows:
No. Name of Director Seminar / Training Programmes attended
1. Tan Sri Dato’ Seri Tan Kok Ping (i) Tax Seminar on Malaysia Budget 2016 on 5
November 2015
2. Tan Poay Seng (i) Directors’ CSR Seminar on Integrating
Sustainability for Greater Business Value on 27
Aug 2015
(ii) Tax Seminar on Malaysia Budget 2016 on 5
November 2015
3. Tan Kok Aun (i) Tax Seminar on Malaysia Budget 2016 on 5
November 2015
4. H’ng Cheok Seng (i) Building Resilience on 12 November 2015
(ii) Finance Professionals’ Role on 7 April 2016
(iii) Assessing the Risk of Social Media on 27 April
2016
5. Mawan Noor Aini Binti Md. Ismail (i) Tax Seminar on Malaysia Budget 2016 on 5
November 2015
6. Tan Poh Heng (i) Tax Seminar on Malaysia Budget 2016 on 5
November 2015
Save as disclosed above, Dato’ Rosely Bin Samsuri was not able to attend any seminars and/or training
programmes during the FYR due to his overseas travelling and busy work schedule. However, he has
kept himself a
east of new regulatory requirements, economic and business developments through
eadings and business interactions to enable him to contribute to the Board effectively.
E. Uphold Integrity in Financial Reporting
Compliance with Applicable Financial Reporting Standards
The financial statements of the Company and of the Group were prepared in accordance with the
applicable accounting standards in Malaysia and the provisions of the Companies Act, 1965.
The Board is committed to provide a fair assessment of the Group’s performance, position and prospects
primarily through the annual reports, quarterly financial reports and corporate announcements on
significant developments to the shareholders.
The Audit Committee, which assists the Board in discharging its duties on financial reporting is to
ensure that the financial statements of the Company and of the Group comply with applicable financial
eporting standards in Malaysia.
Assessment of Suitability and Independence of External Auditors
The Audit Committee assesses the suitability and independence of the external auditors on an annual
asis. The External Auditors have provided written assurance that they have complied with the relevant
ethical requirements regarding professional independence.
Annual Report 2016 • 26
Statement on Corporate Governance (cont’d)
The Audit Committee is satisfied with the performance, competence and independence of the
external auditors and has recommended to the Board for their re-appointment as external auditor for
shareholders’ approval at the forthcoming AGM.
F. Recognize and Manage Risks
Framework
The Board has established an appropriate framework to manage risks. An overview of the Group’s risk
management and internal control is set out on pages 28 to 29 of this Annual Report.
Internal Audit Function
The Internal Audit Function of the Group is outsourced to a professional internal audit service provider
firm. Further details of the activities of the internal audit function are set out on page 31 of this Annual
Report.
G. Ensure Timely and High Quality Disclosure
The Board is committed to use its best endeavour to provide accurate and complete information on a
timely and even basis to enable shareholders to make informed investment decision.
The Board has established the Corporate Disclosure Policy which applies to all Directors, management and
employees of the Group. It outlines the Group’s approach toward the determination and dissemination
of material information, the circumstances under which the confidentiality of information will be
maintained, and restrictions on insider trading. It also provide guidelines to facilitate implementation
and consistent disclosure practice across the Group.
The Corporate Disclosure Policy and Procedures is made available on the Company’s website at http:
www.magni-tech.com.my.
H. Strengthen Relationship between Company and Shareholders
Shareholder Participation at General Meetings
Effective Communication and Proactive Engagement
The Company welcomes active participation and feedback from the shareholders at the Company’s
AGM during which shareholders are encouraged to raise questions or offer constructive criticism
pertaining to the operations and financial matters of the Group.
Company information, annual and quarterly financial results are published in the Company’s website as
public information.
Annual Report 2016 • 27
Statement on Corporate Governance (cont’d)
Poll Voting
In line with the recent amendments to the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad, the Company will implement poll voting for all the resolutions set out in the Notice of AGM at
the AGM. In addition, the Company will appoint at least 1 scrutineer to validate the votes cast at the
AGM.
In previous general meetings held, the Chairman had informed the shareholders on their rights to
demand a poll for any resolutions in accordance with the Company’s Articles of Association before the
commencement of any general meetings.
Compliance Statement
Save as disclosed above, the Board considers that the Company has complied with the Principles and
Recommendations set out in MCCG 2012.
This statement was made in accordance with a resolution of the Board of Directors dated 29 July 2016.
Annual Report 2016 • 28
Statement on Risk Management and Internal Control
Responsibility
The Board affirms its overall responsibility for the Group’s system of risk management and internal control.
This responsibility includes reviewing the adequacy and integrity of this system which covers enterprise risk
management, financial, organisational, operational and compliance controls matters. However, in view of
the inherent limitations in any system, such system of internal control can only provide reasonable and not
absolute assurance against material misstatements, frauds or losses and unforeseen emerging risks.
The Board regards risk management as an integral part of business operations and confirms that the
Management will continue to undertake the process of identifying, evaluating and managing significant risks.
The Board has received assurance from the Managing Director and Heads of operating units that the risk
management and internal control system of the Group is operating adequately and effectively.
The Management is responsible for implementing the framework, policies and procedures on risk and internal
control approved by the Board.
Risk Management
The Keys Aspects of the risk management are :
1) The Risk Management Teams are charged with the responsibilities of continuous and management of
the risks of the Group.
2) Risk assessment review are performed at least annually to identify, assess and manage the risks faced.
The risk management processes are reviewed to ensure that on-going measures taken were adequate
to manage, address or mitigate the identified risks and the status is reported to the Audit Committee.
3) The Audit Committee upon receiving the risk assessment report shall review it and would inform the
Directors, of any salient matters noted by the Audit Committee and which required the Board’s notice
or direction.
Internal Controls
The key processes of the internal control functions include the following:
1) Defined delegation of responsibilities to Board Committees, Managing Director and heads of operating
units, as set out in the Company organizational structure.
2) Budgets process is established requiring all operating units to prepare budget are reviewed by the heads
of the respective operating units to prepare budget on an annual basis for the Management approval.
Reports on results and variance analysis are reviewed by the Management on a monthly basis and by
the Board at least on a quarterly basis.
3) Credit control review within each of the operating units.
Annual Report 2016 • 29
Statement on Risk Management and Internal Control (cont’d)
4) Quality control section within the respective operating units, the functions of which include minimizing
wastage and improving productivity and quality of the products and customers’ service.
Our garment subsidiary has been accredited to ISO9001:2015 Quality Management System and
ISO14001:2015 Environmental Management System while the rest of the subsidiaries have been
accredited to ISO9001 : 2008.
5) Ongoing reviews on the system of internal controls are ca
ied out by the internal auditors and the Audit
Committee holds periodical meetings to deliberate on findings and recommendations for improvement
y the internal auditors.
6) In house or outsourced training and development programmes which co
espond to the needs of staff...