Corporate Governance Statement

STATEMENT OF CORPORATE GOVERNANCE

THE CODE OF CORPORATE GOVERNANCE

The Board of Directors of Superlon (“the Board”) is committed to practising good corporate governance to focus the Company and its subsidiaries (“the Group”) towards enhancing business value and long term value for its stakeholders as the underlying principle in discharging its responsibilities. The following details how the Group has applied the principles and complied with the recommendations as outlined in the Malaysian Code of Corporate Governance 2012 (“Code”).

The Board is satisfied that the Company has complied with the principles and recommendations of the Code except otherwise stated and in such circumstances, the rationale have been duly included herein.

  1. 1. Establish Clear Roles and Responsibilities

1.1 Clear functions of the Board and the management

The Board has clear functions established for the Board vis-à-vis the management respectively.

The Board’s responsibilities are in setting the strategic direction of the Group, establishing visions and goals for the management and continuously monitoring and improving its performance so as to protect and enhance shareholders’ value. They are hence responsible for the overall standards of strategic planning, conduct, risk management, succession planning, investor relations programme as well as the system of internal controls within the Group.

The Board delegates some of its authorities and discretion to the Managing Director, Executive Directors and management as well as the Board Committees.

The Managing Director and Executive Directors are primarily responsible for the implementation of the strategies set by the Board and manages the day-to-day operation and administrative functions. The role of Management is to support the Executive Directors and implement the running of the financial and general operations of the Company, in accordance with the delegated authority of the Board. Through the periodic budgets and capital expansion plans prepared, the Board develops and agrees with the Managing Director the corporate objectives and strategic plans, including the long-term goals and performance targets of the Company.

The Independent Non-Executive Directors provide objective and independent judgement to the decision making of the Board and as such, provide an effective check and balance to the Board’s decision-making process.

To assist the Board in fulfilling its roles, the board has three (3) committees, namely Audit Committee, Nomination Committee and Remuneration Committee, to support and assist in discharging its fiduciary duties and responsibilities. The respective functions and terms of reference of the board committees as well as authority delegated to these board committees have been defined by the Board. The committees report and make recommendations to the Board on matters delegated to them for deliberation. The ultimate responsibility for the final decisions on all matters lies with the Board.

As and when necessary, the Board conducts a review of the delegation of responsibilities for the Company to adapt dynamically to the changing circumstances.

With their different backgrounds and specialisation, the directors bring along a wide range of experience, expertise and perspective in discharging their responsibilities and duties in managing the business affairs of the Group.

1.2 Clear roles and responsibilities in discharging its fiduciary and leadership functions

The Board assumes the following responsibilities, amongst others:-

(a) Reviewing and adopting the Company’s strategic plans – The Board has in place a strategy planning process, wherein financials and strategies are presented for discussion quarterly and the Management reports on the results and challenges met. The Board objectively reviews and monitors the implementation of the plan by management and provides input and feedback to the management. Budgets are prepared periodically for the Board to assess the anticipation by the Management. Deliberations are made by the Board to head towards the best outcome.

(b) Overseeing the conduct of the Company’s business – The Board oversees the performance of the Management by reviewing the actual performance and financial ratios of the Group, and provides guidance to the Management on measures to be undertaken to improve business performance and minimise risk areas.

(c) Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures – The Audit Committee, external auditors and internal auditors assist the Board to oversee the risk management and internal control framework of the Group. High risk areas are highlighted and the adequacy of compliance and internal controls throughout the organisation are reported to the Audit Committee and the Board.

(d) Succession planning – The Nomination Committee review potential candidates for the Board. The organisation chart is periodically reviewed to ensure that candidates of sufficient calibre are in place to manage the business and that there is orderly succession of senior management.

(e) Overseeing the development and implementation of a shareholder communication policy for the Company – The Board acknowledges the importance of timely dissemination of information to its shareholders. Announcements on the major events of the Company and financial releases provide the shareholders and potential investors with update of the Group’s activities and financial performances.

The General Meetings act as the principal forum of dialogue with shareholders. Shareholders are notified of the meeting and provided with a copy of the Company’s Annual Report and Circular to Shareholder prior thereto in accordance with the stipulated period set out in LR and the Companies Act, 1965 (“the Act”) in order to enable shareholders to fully evaluation the resolutions being proposed. At each Annual General Meeting (“AGM”), the Board presents the Group’s results and shareholders are given the opportunities to raise questions pertaining to the Group, the resolutions being proposed and the business of Superlon in general. Members of the Board and the auditors of the Company are available at the AGM to respond to all queries and to provide clarification on issues and concerns raised by the shareholders

The Company has a website where access to its Annual Reports, announcements, quarterly financial results and other relevant.

Superlon has identified Mr Lim Hoon Nam as the Senior Independent Non-Executive Director to whom concerns of the shareholders and other stakeholders may be conveyed.

(f) Reviewing the adequacy and the integrity of the management information and internal controls system of the Company – The Board outsourced the internal audit functions to an external party to ensure the adequacy and integrity of the Company’s internal control functions. Further details of the internal control systems are set out in the Statement of Risk Management and Internal Control.

1.3 Business Ethics

The Board of Directors are committed to practising ethical business values and conduct in all aspects of the Group’s business practice. Employees are encouraged to report any genuine concerns about unethical behaviour to senior management or to the Senior Independent Non-Executive Director and appropriate steps will be taken by the Company.

1.4 Sustainability Strategies

Various steps are undertaken by the Group to play its part in contributing to the environmental, social and governance aspects of business which underpins sustainability, including:-.

Environment

The Group currently:-

(a) uses natural gas in its various heating production processes which is safer and causes less pollution;

(b) engages an accredited laboratory consultant to assist in the monitoring of the quality of its treated water, chimney emissions and factory air to ensure compliance with the regulatory requirements at all times;

(c) implements an energy savings programme by progressively converting the lighting facilities to LED technology, which consumes less energy and has a longer useful life.

Welfare of employees

The Group believes in providing a safe, conducive and comfortable working environment for its employees and works together with its employees, government agencies and suppliers to promote the awareness of safety and health. A safe working environment will benefit everyone and a high level of safety can only be achieved through the co-operation from all parties.

The management are also provided with opportunities to attend internal and external training programmes to enhance one’s knowledge and skills. The Group also conducted visits to and participate in international trade fairs / exhibitions locally and overseas, to broaden the knowledge base of the employees.

Recreational activities are also organised to assist the employees in achieving a balanced work life and in enhancing the rapport between the management and the staff. Group trips are also encouraged to build staff rapport and to incentivise staff for their industrious efforts.

Community

Recognising the importance of contributing to a healthy and balanced community, various donations have been made by the Group during the year to various charitable organisations, schools and others.

Every year, the Group provides opportunities for practical training for undergraduates from local universities to expose them to hands-on experience in the industry.

Governance

The Board promotes good Corporate Governance, the benefits of which should translate into better corporate performance.

1.5 Board access to information and advice

In furtherance of their duties, all Directors have complete and unrestricted access to information pertaining to the Group. Prior to any Board meeting, every Director is given an agenda with the relevant information to be deliberated on. Minutes for every Board meeting are circulated to all Directors for their perusal prior to confirmation of the minutes at the following Board meeting. The Chairman will lead the presentation of Board papers and discussion. Relevant Executive Directors will provide explanation of pertinent issues. All Directors are entitled to call for additional clarification and information to assist them in matters that require their decision-making. Time is also allocated at each meeting for Directors to raise matters not covered by the formal agenda.

All Directors have unrestricted access to the advice of the company secretary and external auditors whether as a full board or in their individual capacity, in the furtherance of their duties. They may obtain independent professional advice (including legal, financial, governance or expert advice) at their discretion at the Company’s expense.

1.6 Suitably qualified and competent Company Secretary

The Company Secretary attends and ensures that all Board meetings are properly convened and that accurate and proper records of the proceedings and resolutions passed are taken and maintained in the statutory registers of the Company. The Board is regularly updated by the Company Secretary on new regulations issued by the regulatory authorities, particularly on the Act and the LR.

1.7 Board Charter

The Board Charter, which will be reviewed by the Board as and when required, is published on the corporate website.

  1. 2. Strength Composition

2.1 Nominating Committee

The Nomination Committee comprises exclusively of Non-Executive Directors, a majority of whom is independent. The members of the Nomination Committee are as follows:-

Chun Kwong Pong as Chairman
Lim E @ Lim Hoon Nam as Member
Lim Wee Keong as Member

The Chairman for the Nominating Committee continues to be retained by Mr Chun Kwong Pong whois is not related to any of the Executive Directors and/or Substantial Shareholders of Superlon.

During the financial year ended 30 April 2014, the Nomination Committee met twice with all members present.

2.2 Develop, maintain and review the criteria to be used in the recruitment process and annual assessment of Directors

The objectives and responsibilities of the Nomination Committee are :-

  • Formulate the methodology for the assessment of the effectiveness of the Board as a whole;
  • Formulate the nomination, selection and succession policies for the members of the Board, Board Committees, Senior Independent Non-Executive Director and key management as may be required from time to time, taking into consideration the Gender Diversity Policy encouraged by Bursa Securities;
  • Make recommendations to the Board on new candidates for appointment and re-election to the Board;
  • To review the succession planning for the Executive Directors and senior management of the Board;
  • Review and recommend to the Board the appointment of members of Board Committees established by the Board;
  • Conduct review to determine whether a director can continue to be independent in character and judgement, and also to take into account the need for progressive refreshing of the Board;
  • Develop and recommend to the Board action plan for improvement on areas identified in the Board effectiveness evaluation, where applicable;
  • Conduct performance evaluation on the existing Directors based on the annual performance evaluations conducted by the Board collectively;
  • To annual assess the independence of the Independent Directors;
  • Review the required mix of skills, experience and other qualities of the Board annually;
  • Review the directors’ continuing education programmes; and
  • any other matters which may be referred to the Nominating Committee by the Board.

In view that Superlon consists of a lean management team and the principal activities are in a specialised industry, no pre-fixed criteria for recruitment is viewed necessary to be established. This creates flexibility for the Nomination Committee to seek different candidates who would have the skill matrix to support the long term strategic direction and needs of the Company The Nominating Committee evaluates the qualification and experience of the candidates vis-a-vis the company’s requirements and where appropriate recommends to the Board for appointment. Due consideration is given to the Board mix, the experience, expertise and personal qualities of the candidates as well as the gender diversity policy.

All new Director(s) duly appointed by the Board are subsequently recommended for re-election at the next AGM. All new Directors attend the mandatory programme by Bursa Securities to familiarise themselves with the additional requirements for a listed company.

The Company has a transparent and formal procedure for the appointment of new directors to the Board. Assessment and recommendation to the Board of new candidates for the appointment as directors is to be made by the Nomination Committee. The newly appointed directors will retire at the first AGM and are eligible for re-appointment.

The Company’s Articles of Association provides that all Directors are to retire by rotation at intervals of not less than three years at each AGM. The directors to retire in each year are the directors who have been longest in office since their appointment or re-appointment. A retiring director is eligible for re-appointment.

The Nomination Committee has reviewed the performance of the Board based on performance evaluations conducted by the Board collectively during the financial year which assessed various areas including board composition, strategy, board meeting attendance, corporate/management reporting, human capital, risk management and investor relations, and was of the view that the Board has discharged their responsibilities in a commendable manner. The Nomination Committee had also discussed and recommended the director nomination policy and independent director’s assessment policy for the Board’s approval. The assessment of retiring Directors eligible for re-election, continuing independence of Independent Directors and continuing education programmes was undertaken.

2.3 Formal and transparent remuneration policies and procedures

The Remuneration Committee comprises non-executive directors, namely the following:-

Chun Kwong Pong as Chairman
Lim Wee Keong as Member
Yee Wei Meng as Member

The objective of the remuneration policies is to attract and retain suitable directors to lead and control the Group effectively. Generally, the remuneration of directors reflects the level of responsibility and commitment that goes with the Board’s membership.

During the financial year ended 30 April 2014, one meeting was held for the Remuneration Committee for revision in remuneration.

Directors’ Remuneration

The remuneration of the Executive Directors is recommended to the Board by the Remuneration Committee so as to attract, retain, motivate and incentivise Directors of the necessary calibre needed to lead the Superlon Group successfully.

For executive directors, the component parts of the remuneration are structured so as to incentivise the individual according to the performance of the Group. The Remuneration Committee is to recommend to the Board the framework and remuneration package for each Executive Director. The Remuneration Committee meets periodically to consider all aspects of the executive directors’ performance for recommendation of remuneration, drawing external advice when necessary.

In the case of Non-Executive Directors, the level of remuneration is based on their level of responsibilities. The determination of remuneration packages of Non-Executive Directors, including the Non-Executive Chairman, is decided by the Board as a whole.

The respective Directors abstain from discussing and deliberating on their own remuneration and Directors’ fees must be approved by shareholders at the AGM.

The aggregate Directors’ remuneration for the financial year under review is as follows:-

Executive Directors

Non-Executive Directors

Total

RM RM RM
Directors’ salaries 790,911 - 790,911
Employee Provident Fund 325,100 - 325,100
Directors’ fees - 132,000 132,000
Meeting allowance 8,750 11,250 20,000
Bonus 918,160 - 918,160
Benefits in kind 51,250 - 51,250
TOTAL 2,094,171 143,250 2,237,421

The directors’ remuneration for the financial year under review analysed in bands is as follows:-

Executive Directors

Non-Executive Directors

Total

RM50,000 and below - 4 4
RM400,001 to RM450,000 1 - 1
RM450,001 to RM500,000 1 - 1
RM1,100,00 to RM1,150,000 1 - 1
TOTAL 3 4 7
  1. 3. Reinforce Independence

3.1       Annual Assessment of Independence

The Nomination Committee will review the independence of the Independent Directors annually. The considerations include the relationship between the Independent Director and the Superlon Group and his involvement in any significant transaction with the Superlon Group.

Based on the assessment for the financial year ended 30 April 2014, the Board is satisfied that the Independent Directors have been able to discharge their responsibilities in an independent manner.

3.2       Tenure of Independent Directors

The Board will include the tenure of Independent Directors as an assessment criteria of the independence factor.

3.3       Shareholders’ approval for the Independent Directors exceeding nine (9) years

In the event any Independent Directors are proposed by the Board to be retained after 9 years, the Board shall seek the shareholders’ approval with justification to be provided.

3.4       Segregation of duties between Chairman and Managing Director

There is a clear and distinction of roles and responsibilities between the Chairman and the Managing Director. The Chairman of the Board is independent and non-executive. The Chairman is primarily responsible for Board effectiveness and conduct whilst the Managing Director is responsible for the day-to-day business affairs overseeing the operating units, organisational effectiveness and implementation of Board policies and decisions.

3.5       Composition of the Board

The Chairman of Superlon is an Independent Non-Executive Director. Currently of the seven memebers of the Board, two Directors are independent, fulfilling the criteria of one third of the Board being independent.

The Board currently consists of seven (7) members comprising three (3) Executive Directors, two (2) Non-Independent Non-Executive Directors and two (2) Independent Non-Executive Directors. The Board has a good balance of members who are executive, non-executive and independent directors such that no one individual or a small group of individuals can dominate the Board’s decision-making process.

With one-third of the Board independent, the minority shareholders in the Company are fairly represented by the independent non-executive directors. The independent directors fulfill a pivotal role in corporate accountability and provide unbiased, objective participation and independent judgment by taking into account the interests of all stakeholders. A senior independent director is available to whom concerns of stakeholders may be conveyed.

  1. 4. Foster Commitment

4.1 Time Commitment

Board meetings are scheduled for every quarter with additional meetings to be convened as and when required. During the financial year under review, the Board met a total of 5 times. The attendance of the Directors who held office during the financial year is set out below:-

Name of Director Attendance at meetings
Lim E @ Lim Hoon Nam 5/5
Liu-Lee, Hsiu Lin @ Jessica Liu 5/5
Liu Han Chao 5/5
Ongi Cheng San 5/5
Chun Kwong Pong 5/5
Lim Wee Keong 5/5
Yee Wai Meng 5/5

Based on the above attendance record, the Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of Superlon.

The Directors would notify the Chairman and/or the Company prior to accepting any new directorship in a public listed company.

4.2 Training

All the Directors have completed the Mandatory Accreditation Programme prescribed by Bursa Malaysia Securities Berhad (“Bursa Securities”). The Directors have from time to time during the financial year attended various relevant training programmes, seminars and trades shows organised by the relevant regulatory authorities and professional bodies to broaden their knowledge and to keep abreast with the relevant changes in law, regulations and the business environment, including the following:-

Liu Lee, Hsiu-Lin @ Jessica Liu Lim E @ Lim Hoon Nam
Acrex India 2014, New Delhi, India 2014 Budget Seminar
Product knowledge seminar, Hanoi, Vietnam National Tax Conference 2013
Liu Han Chao Lim Wee Keong
Product knowledge seminar, Ho Chi Minh, Vietnam International Greentech & Eco Products Exhibition & Conference Malaysia
CIVAR 2013, Phnom Penh, Cambodia Asia Water
Acrex India 2014, New Delhi, India
MYANBUILD 2013, Yangon, Myanmar Chun Kwong Pong
Product knowledge seminar, Hanoi, Vietnam Behavioural Corporate Finance on Capital Structure, Dividend Policy and M&A
Yee Wei Meng Ongi Cheng San
Malaysia Steel and Metal Distribution Association MSMDA GST seminar Accounting for Deferred Taxation –

A Comprehensive and Practical Approach

Intrade Malaysia 2013
China Import & Export Exibition 2013

5    Uphold Integrity in Financial Reporting

5.1       Compliance with financial reporting standards

The Board is responsible for ensuring that the Company’s and Group’s financial statements are in accordance with the provisions of Act and the applicable approved accounting standards in Malaysia. The Board aims to present a true and fair assessment of the Group’s financial performance, position and prospects to the shareholders of the Company. The Board is also responsible for providing a high level of disclosure to ensure integrity and consistency of the financial reports.

The Audit Committee assists the Board in its responsibility to oversee and scrutinise the financial reporting and the effectiveness of the internal controls of the Group. The Audit Committee comprises three (3) directors, all of whom are non-executive and the majority of whom are independent. Details of the composition, terms of reference and summary of activities of the Audit Committee are set out in the Audit Committee Report.

5.2       Suitability and independence of external auditors

The Board has established a formal and transparent arrangement with the external auditors of the Company through the Audit Committee. The Audit Committee communicated directly and independently with the auditors and without the presence of the executive directors at least twice a year.

The Audit Committee is responsible for reviewing the scope of services provided by the external auditors. The audit planning memorandum was reviewed by the Audit Committee prior to submission to the Board for approval.

No non-audit fees were paid to the external auditors by the Group in respect of the financial year ended 30 April 2014 save for the fees of RM3,500 for the review of the Statement of Risk Management & Internal Control contained in the Annual Report 2013.
The Audit Committee is satisfied that the provision of these services did not compromise the external auditors’ independence and objectivity. The External Auditors have also provided a written confirmation from the external auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

6.   Recognise and Manage Risks

6.1       A sound framework to manage risks

The Directors acknowledge their responsibility to maintain a sound system of risk management and internal controls to safeguard the shareholders’ investment and the Company’s assets. The Audit Committee has been empowered to assist the Board in fulfilling the continuous review of the internal controls and risk management matters as contained in its terms of reference.

6.2       Internal Audit Function

The internal audit functions are outsourced to an independent professional services firm and the internal auditors has an independent reporting channel direct to the Audit Committee.

The Statement of Risk Management & Internal Control in this Annual Report herein details the overview of the risk management framework and the state of internal controls within the Company.

7.   Ensure Timely and High Quality Disclosure

7.1       Appropriate corporate disclosure policies and procedures

As a public company listed on Bursa Securities, the Company has in place procedures to abide by the corporate disclosure requirements set out by Bursa Securities.

The Board is mindful that material information is to be announced timely and that the confidential information should be sensitively handled to avoid leakages leading to improper use of such information.

7.2       Leverage on Information Technology

Superlon’s website consists of the relevant corporation information including the board charter, annual report, etc.

8.   Strengthen Relationship between Company and Shareholders

8.1       Encourage shareholder participation at general meetings

In an effort to encourage greater shareholders’ participation at AGMs, the Board will serve notices for meetings earlier than the minimum notice period, whenever possible.

At the tabling of the agenda, opportunity is given to the shareholders to raise queries and seek clarification from the Board. The Company Secretary is present to assist in providing shareholders on their rights.

8.2       Encourage poll voting

At the commencement of all general meetings, the Chairman will inform the shareholders of their rights to a poll vote. The Company appointed a registrar which employs an electronic means for poll voting. Where voting by poll is implemented, the detailed results showing the number of votes cast for and against each resolution will be announced.

8.3       Effective Communication and Proactive Engagements with shareholders

All Directors were present at the last AGM to engage directly with and be accountable to the shareholders for their stewardship of the Company. The Directors and external auditors were in attendance to respond to the shareholders’ queries. The AGM (and any other general meetings) also serves as a forum for the Board to engage with the shareholders personally to obtain their views and feedback.

Additional Compliance Information

Disclosure of Related Party Transactions

The Group has taken all necessary steps to ensure that transactions which were deemed to be related party transactions were appropriately disclosed in accordance with the LR and good corporate governance.

Utilisation of proceeds

No fundraising was made from the equity market in the financial year under review.

Share Buy-back

The renewal of the approval of the shareholders for a share buy-back of up to 10% of the issued and paid-up share capital of the Company was obtained on 23 September 2011. During the financial year under review, the Company bought back the following shares:-

Month No. of shares Lowest price (RM) Highest price (RM) Average price* (RM) Total consideration* (RM)
September 2013 30,000 0.405 0.410 0.413 12,390.49
October 2013 20,000 0.420 0.430 0.433 8,663.18
November 2013 20,000 0.470 0.475 0.478 9,569.85
April 2014 200,000 0.635 0.680 0.663 132,571.15

Note*:             Including transaction costs

The total number of treasury shares held as at 30 April 2014 was 574,079. The Company did not dispose or cancel any treasury shares during the financial year under review.

Options, warrants or convertible securities

During the financial year under review, there were no options, warrants or convertible securities exercised.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) programmes

The Company did not sponsor any ADR or GDR programmes during the financial year.

Sanctions / Penalties

There were no sanctions and/or penalties imposed on the Company or its subsidiaries, directors or management by any relevant regulatory bodies during the financial year.

Cost of Outsourced Internal Auditing

The costs paid to the outsourced internal auditors by the Group amounted to RM25,000 for the financial year ended 30 April 2014.

Variation in results

No profit forecast was made for the financial year under review.

Profit guarantee

No profit guarantee was given for the financial year.

Material Contracts

There were no contracts involving the interest of the Directors and/or major shareholders of the Company other than those disclosed in Note 29 of the audited accounts in this Annual Report.

Revaluation of Landed Properties

The Group did not adopt any revaluation policy on landed properties during the financial year under review.

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