Visionary furtherance · Wong Engineering Corporation Berhad (“WEC”) is inspired by the...

(409959-W)

2017

Visionary furtherance

a n n u a lr e p o r t

Wong Engineering Corporation Berhad (“WEC”) is inspired by the satisfaction of its customers, the dedication of its employees, the confidence of its shareholders and the support of its suppliers and the community it proudly serves. As a result, the Group constantly enhances its product and service excellence through the creation of value added products and innovative breakthroughs in processes. Just like the torch that represents one’s greatness being passed on from one team to another, the leaders in WEC continues to harness their visions, strengths and knowledge to ensure the Group’s spirit of excellence will flourish.

are LimitlessIn scaling new heights and going beyond

expectations.

are CourageousIn undertaking new business ventures and

persevering in facing challenges.

are InnovativeIn creating opportunities for performance

and value enhancement through innovation.

are AgileIn responding to dynamic environments

and adapting to best deliver our promise of quality.

The way arebuild tomorrow

Visionary furtherance

want... to be one step ahead in all technologies

we are in.

view... ourselves as a diversified corporate entity that creates value, wealth and technological

advancement for our Customers, Shareholders, Business Partners, Employees and the Community in general wherever we

operate, locally, regionally and globally.

Corporate VISION

Corporate MISSION

CONTENTSNotice of Annual General Meeting 2

Notice of Dividend Entitlement 6

Corporate Information 7

Five-Year Financial Highlights 8

Group Structure and Activities 9

Profile of Directors 10

Profile of Key Senior Management 13

Chairman’s Statement 14

Management Discussion and Analysis 15

Statement on Corporate Governance 19

Audit Committee Report 33

Statement on Risk Management and Internal Control 35

Statement of Proposed Renewal of Authority to Purchase Its Own Shares 37

Additional Compliance Information 40

Statement of Directors’ Responsibilities 41

Statement on Corporate Social Responsibilities 42

Directors’ Report 43

Statements of Financial Position 47

Statements of Profit or Loss and Other Comprehensive Income 48

Statements of Changes in Equity 49

Statements of Cash Flows 51

Notes to the Financial Statements 53

Statement by Directors and Statutory Declaration 98

Independent Auditors’ Report 99

List of Group Properties 102

Shareholdings Statistics 103

Proxy Form

2 WONG ENGINEERING CORPORATION BERHAD (409959-W)

NOTICE IS HEREBY GIVEN that the Twenty-First Annual General Meeting of Wong Engineering Corporation Berhad (“Company” or “WEC”) will be held at Auditorium Room, Level 1, Lot 204, Jalan Bukit Belimbing 26/38, Off Persiaran Tengku Ampuan, Lion Industrial Park Seksyen 26, 40400 Shah Alam, Selangor on Friday, 23 March 2018 at 9.30 am for the following purposes:-

AGENDA

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 October 2017 together with the Reports of Directors and Auditors thereon.

Please refer to Note 1

2. To approve a final single tier dividend of 2 sen per ordinary share for the financial year ended 31 October 2017.

Ordinary Resolution 1

3. To approve the payment of Directors’ Fees totaling RM165,000 for the financial year ended 31 October 2017.


4. To approve the payment of Directors’ Fees totaling RM247,000 for the period from 1 November 2017 until the next Annual General Meeting.


5. To approve payment of benefits of up to RM50,000 for the period from this Annual General Meeting until the next Annual General Meeting.


6. To re-elect the following Directors retiring pursuant to Article 82 of the Company’s Constitution (Memorandum and Articles of Association) and who, being eligible, offer themselves for re-election:(a) Yong Loy Huat Ordinary Resolution 5(b) Eng Teik Hiang Ordinary Resolution 6

7. To re-appoint Messrs KPMG PLT as Auditors of the Company until the next Annual General Meeting of the Company and to authorise the Directors to fix their remuneration.


As Special BusinessTo consider and if thought fit, to pass, with or without modifications, the following Ordinary Resolutions:

8. Authority to issue shares pursuant to Section 76 of The Companies Act 2016

“THAT, subject always to the Companies Act 2016 (“the Act”), the Constitution (Memorandum and Articles of Association) of the Company and the approvals of the relevant government/regulatory authorities, the Directors be and are hereby authorised, pursuant to Section 76 of the Act, to allot and issue shares in the Company at any time until the conclusion of the next Annual General Meeting and to such person or persons, 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 total number of issued shares/total number of voting shares of the Company for the time being and that the Directors are also empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing and quotation for the additional shares to be issued.”


9. Proposed renewal of authority to buy-back its own shares by the Company“THAT, subject always to the Companies Act 2016 (“the Act”), rules, regulations and orders made pursuant to the Act, provisions of the Constitution (Memorandum and Articles of Association) of the Company and the Listing Requirements of the Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, the Directors of the Company be hereby unconditionally and generally authorised to make purchases of ordinary shares in the Company’s total number of issued shares through the Bursa Securities at any time and upon such terms and conditions and for such purposes as the Directors may, in their discretion deem fit, subject to the following:-


NOTICE OF ANNUAL GENERAL MEETING

3ANNUAL REPORT 2017

NOTICE OF ANNUAL GENERAL MEETING (Cont’d)

9. Proposed renewal of authority to buy-back its own shares by the Company (Cont’d)

i) the aggregate number of ordinary shares which may be purchased and/or held by the Company shall be ten per centum (10%) of the total number of issued shares of the Company for the time being (“WEC Shares”);

ii) the amount of fund to be allocated by the Company for the purpose of purchasing the WEC Shares shall not exceed the aggregate of the retained profits of RM4,629,480 of the Company as at 31 October 2017;

iii) the authority conferred by this Resolution will be effective immediately upon the passing of this Resolution and will continue in force until:-

a) the conclusion of the next Annual General Meeting (“AGM”) of the Company, unless by ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions;

b) the expiration of the period within which the next AGM is required by law to be held (unless earlier revoked or varied by ordinary resolution of the shareholders of the Company in general meeting) but not so as to prejudice the completion of purchase(s) by the Company made before the aforesaid expiry date and, in any event, in accordance with the Listing Requirements of the Bursa Securities or any other relevant authorities;

iv) upon completion of the purchase(s) of the WEC Shares by the Company, the Directors of the Company be hereby authorised to deal with the WEC Shares in the following manner:-

a) to cancel the WEC Shares so purchased; or

b) to retain the WEC Shares so purchased as treasury shares for distribution as dividend to the shareholders and/or resale on the market of Bursa Securities and/or for cancellation subsequently; or

c) to retain part of the WEC Shares so purchased as treasury shares and cancel the remainder; or

d) in such other manner as the Bursa Securities and such other relevant authorities may allow from time to time.

AND THAT the Directors of the Company be and are hereby authorised to take all such actions and steps as are necessary or expedient to implement or to effect the purchase of WEC shares.”

10. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ Mandate”)“THAT subject always to the provisions of the Companies Act 2016 (“Act”), the Constitution (Memorandum and Articles of Association) of the Company, the Main Market Listing Requirements of Bursa Securities or other regulatory authorities, approval be and is hereby given to the Company and/or its subsidiaries to enter into related party transactions with the Mandated Related Party, particulars of which are set out in Section 2.5 of the Circular dated 28 February 2018, provided that such transactions are:-


a) recurrent transaction of a revenue or trading nature;

b) necessary for the day-to-day operations of the Company and/or its subsidiaries;

c) carried out in the ordinary course of business of the Company and/or its subsidiaries, made on an arm’s length basis and on normal commercial terms with those generally available to the public; and

d) not detrimental to the interests of the minority shareholders of the Company;

AND THAT such authority shall continue to be in force until:-

a) the conclusion of the next annual general meeting (“AGM”) of the Company following this annual general meeting where the authority is approved, at which time the authority will lapse unless renewed by a resolution passed at the meeting; or

b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 340(2) of the Act (but shall not extend to such extensions as may be allowed pursuant to Section 340(4) of the Act); or


10. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ Mandate”) (Cont’d)

c) revoked or varied by a resolution passed by the shareholders of the Company at a general meeting;

whichever is earlier;

AND THAT the Directors of the Company be authorised to do, carry out and complete all such acts, things and arrangements (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the transactions as contemplated/authorised by the Proposed Shareholders’ Mandate.”

11. To transact any other business of which due notice shall have been given.

By Order of the Board

TAI YIT CHAN (MAICSA 7009143)ONG TZE-EN (MAICSA 7026537)LAU YOKE LENG (MAICSA 7034778)Joint Company Secretaries

Penang, 28 February 2018

Notes:Appointment of Proxy

1. AproxymaybutneednotbeamemberoftheCompanyandamembershallbeentitledtoappointuptotwo(2)proxiestoattendandvoteatthesamemeeting.Whereamemberappointsmorethanone(1)proxy,theappointmentshallbeinvalidunlesshespecifiestheproportionsofhisshareholdingtoberepresentedbyeachproxy.

2. WhereamemberoftheCompanyisanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act,1991(“SICDA”),itmayappointuptotwo(2)proxiesinrespectofeachsecuritiesaccountitholdswithordinarysharesoftheCompanystandingtothecreditofthesaidsecuritiesaccount.

3. WhereaMemberof theCompany isanexemptauthorisednomineewhichholdsordinary shares in theCompany formultiplebeneficialownersinone(1)securitiesaccount(“omnibusaccount”),thereisnolimittothenumberofproxieswhichtheexemptauthorisednomineemayappointinrespectofeachomnibusaccountitholds.

AnexemptauthorisednomineereferstoanauthorisednomineedefinedundertheSecuritiesIndustry(CentralDepositories)Act1991(“SICDA”)whichisexemptedfromcompliancewiththeprovisionsofsubsection25A(1)ofSICDA.

4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororofhisattorneydulyauthorisedinwritingor,iftheappointorisacorporation,theProxyFormmustbeexecutedunderthecorporation’ssealorunderthehandofanofficerorattorneydulyauthorised.

5. Foraproxytobevalid,theProxyFormdulycompletedmustbedepositedattheRegisteredOfficeoftheCompany,Suite16-1(PenthouseUpper),MenaraPenangGarden,42AJalanSultanAhmadShah,10050Penang,Malaysianotlessthanforty-eight(48)hoursbeforethetimeappointedforholdingthemeetingoratanyadjournmentthereof.

6. Forpurposeofdeterminingwhoshallbeentitledtoattendthismeeting,theCompanyshallberequestingBursaMalaysiaDepositorySdn.Bhd.tomakeavailabletotheCompany,aRecordofDepositors(“ROD”)asat16March2018andonlyaDepositorwhosenameappearsonsuchRODshallbeentitledtoattendthismeetingorappointproxytoattendand/orvoteinhis/herbehalf.


5ANNUAL REPORT 2017

Explanatory Notes on Ordinary Business:

1. Agenda1ismeantfordiscussiononlyastheprovisionofSection340(1)(a)oftheCompaniesAct2016doesnotrequireaformalapprovalofshareholdersoftheCompanyandhence,Agenda1isnotputforwardforvoting.

2. ForOrdinaryResolution4,thebenefitspayabletotheDirectorshasbeenreviewedbytheRemunerationCommitteeandtheBoardofDirectorsoftheCompany,whichrecognisesthatthebenefitspayableisinthebestinterestoftheCompany.ThebenefitscomprisedmeetingallowanceandBoardCommitteeallowances.

Explanatory Notes on Special Business:

1. TheOrdinaryResolution8,ifpassed,willgivetheDirectorsoftheCompanyauthoritytoissuesharesintheCompanyuptoanamountnotexceeding10%ofthetotalnumberofissuedshares/totalnumberofvotingsharesoftheCompanyforthetimebeingforsuchpurposesastheDirectorsconsiderwouldbeinthebestinterestoftheCompany.Thisauthority,unlessrevokedorvariedbytheshareholdersoftheCompanyingeneralmeetingwillexpireattheconclusionofthenextAnnualGeneralMeeting.

AsatthedateofthisNotice,nonewsharesintheCompanyhavebeenissuedpursuanttothemandategrantedtotheDirectorsatthelastAnnualGeneralMeetingheldon25March2017andwhichwilllapseattheconclusionoftheTwenty-FirstAnnualGeneralMeeting.

TherenewalofGeneralMandatewillprovideflexibilitytotheCompanyforanypossiblefundraisingactivities,includingbut not limited to further placing of shares, for purpose of funding future investment project(s),working capital and/oracquisitions.

2. TheOrdinaryResolution9, ifpassed,willallow theCompany topurchase itsownshares.The totalnumberofsharespurchasedshallnotexceed10%ofthetotalnumberofissuedsharesoftheCompany.Thisauthoritywill,unlessrevokedorvariedbytheCompanyingeneralmeeting,expireatthenextAnnualGeneralMeetingoftheCompany.

3. TheproposedOrdinaryResolution10,ifpassed,willapprovetheProposedShareholders’MandateandallowtheCompanyanditssubsidiariestoenterintotherecurrentrelatedpartytransactionsassetoutintheCirculardated28February2018.ThisapprovalshallcontinuetobeinforceuntiltheconclusionofthenextAGMoftheCompanyatwhichtimeitwilllapseunlesstheauthorityisrenewedbyaresolutionpassedatthemeeting;ortheexpirationoftheperiodwithinwhichthenextAGMafterthedateitisrequiredtobeheldpursuanttoSection340(2)oftheAct(butshallnotextendtosuchextensionasmaybeallowedpursuanttoSection340(4)oftheAct);orrevokedorvariedbyresolutionspassedbytheshareholdersoftheCompanyinageneralmeeting;whicheveristheearliest.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING(PursuanttoParagraph8.27(2)oftheListingRequirementsofBursaMalaysiaSecuritiesBerhad)

1. NoindividualisstandingforelectionasaDirectorattheforthcomingTwenty-FirstAnnualGeneralMeetingoftheCompany.



NOTICE IS HEREBY GIVEN THAT, subject to the approval of the shareholders at the Twenty-First Annual General Meeting of the Company, the final single tier dividend of 2 sen per ordinary share in respect of the financial year ended 31 October 2017 will be payable on 8 May 2018 to depositors registered in the Record of Depositors at the close of business on 18 April 2018.

A depositor shall qualify for entitlement to the dividend only in respect of:-

(a) shares transferred into the depositor’s securities account before 4.00 p.m. on 18 April 2018 in respect of transfers; and

(b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

By Order of the Board

TAI YIT CHAN (MAICSA 7009143)ONG TZE-EN (MAICSA 7026537)LAU YOKE LENG (MAICSA 7034778)Joint Company Secretaries

Penang, 28 February 2018

NOTICE OF DIVIDEND ENTITLEMENT

7ANNUAL REPORT 2017

CORPORATE INFORMATION

Board of Directors

Datuk Haji Muhamad Shapiae Bin Mat Ali IndependentNon-ExecutiveChairman

Yong Loy Huat ChiefExecutiveOfficer

Chang Joo Huat ExecutiveDirector

Low Seong Chuan ExecutiveDirector

Eng Teik Hiang Non-IndependentNon-ExecutiveDirector

Lau Chia En IndependentNon-ExecutiveDirector

Company Secretaries:

Tai Yit Chan (MAICSA 7009143)Ong Tze-En (MAICSA 7026537)Lau Yoke Leng (MAICSA 7034778)

Audit Committee:

Lau Chia En (Chairman)Datuk Haji Muhamad Shapiae

Bin Mat AliEng Teik Hiang

Remuneration Committee:

Lau Chia En (Chairman)Datuk Haji Muhamad Shapiae

Bin Mat AliChang Joo Huat

Nomination Committee:

Datuk Haji Muhamad Shapiae Bin Mat Ali (Chairman)

Eng Teik HiangLau Chia En

Risk Management Committee:

Chang Joo Huat (Chairman)Low Seong ChuanEng Teik Hiang

Registered Office:

Suite 16-1 (Penthouse Upper)Menara Penang Garden42A Jalan Sultan Ahmad Shah10050 PenangTel: 04-2294390Fax: 04-2265860

Business Address:

Lot 24, Jalan Hi-Tech 4, Kulim Hi-Tech Park (Phase 1)09000 Kulim, KedahTel: 04-4271788Fax: 04-4271799E-mail: [email protected]: www.wec.com.my

Share Registrar:

Tricor Investor & Issuing House Services Sdn Bhd

Unit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3, Bangsar SouthNo.8, Jalan Kerinchi, 59200 Kuala Lumpur Wilayah Persekutuan, MalaysiaTel: 03-27839299 Fax: 03-27839222

Auditors:

KPMG PLT, PenangChartered Accountants

Principal Bankers:

CIMB Bank BerhadMalayan Banking BerhadUnited Overseas Bank (Malaysia)

Berhad

Stock Exchange Listing:

Main Market of Bursa Malaysia Securities Berhad

Legal Form and Domicile:

Public Limited CompanyIncorporated and domiciled in

Malaysia

mailto:[email protected]

http://www.wec.com.my


FIVE-YEAR FINANCIAL HIGHLIGHTS

2017 2016 2015 2014 2013

Revenue RM’000 42,707 33,087 29,623 26,670 30,049

Profit/(Loss) from Operating Activities RM’000 6,334 (344) (3,046) (4,684) (2,919)

Profit/(Loss) Before Tax RM’000 5,996 (641) (3,384) (5,126) (3,368)

Profit/(Loss) After Tax RM’000 6,140 725 (3,419) (5,147) (3,349)

Profit/(Loss) attributable to onwers of the Company RM’000 6,114 715 (3,435) (5,147) (3,349)

Paid up capital RM’000 57,909 45,844 45,844 45,844 45,844

Total Equity attributable to owners of the Company RM’000 59,729 53,615 52,902 56,346 60,144

Total Assets RM’000 72,213 65,115 67,906 66,649 72,859

Total Liabilities RM’000 12,408 11,450 14,963 10,303 12,715

Cash & Cash Equivalents (CCE) RM’000 4,589 2,113 661 2,465 6,768

Basic earnings/(losses) per share SEN 6.68 0.79 (3.78) (5.65) (3.73)

Net assets per share RM 0.65 0.59 0.58 0.62 0.67

Profit/(Loss) Margin Before Tax % 14.0% -1.9% -11.4% -19.2% -11.2%

Return on Equity (ROE) % 10.2% 1.3% -6.5% -9.1% -5.6%

Return on Assets (ROA) % 8.5% 1.1% -5.0% -7.7% -4.6%

Debt to Equity (D/E) 0.07 0.09 0.09 0.10 0.13

Revenue(RM’000)

Net Assets(RM’000)

Profit/(Loss) Before Tax(RM’000)

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2013 2014 2015 2016 2017

30,0

4960

,144

26,6

7056

,346

(3,3

68)29

,623

52,9

02

(5,1

26)33

,087

53,6

15

(3,3

84)

42,7

0759

,729

5,99

6

(641

)

Basic Earnings/(Losses) per share(SEN)

2013 2014 2015 2016 2017

(3.7

3)

(5.6

5)

(3.7

8)

6.68

0.79

9ANNUAL REPORT 2017

GROUP STRUCTURE AND ACTIVITIES

WEE

MANUFACTURING

WONG ENGINEERING ELECTRONICS SDN.BHD. (192707-U)Manufacturing of high precision turned metal components.

WEIWONG ENGINEERING INDUSTRIES SDN.BHD. (91267-P)Design and manufacture of high precision metal stamped parts and sheet metals.

WEXWONG EXERION PRECISION TECHNOLOGY SDN.BHD. (733458-X)Design, manufacture and supply of complex welded frames structure, related modules and system.

FWE (51%)FWE GLOBAL SDN.BHD. (1117625-X) Design, manufacture and supply of complex welded frames structure, related modules and system.

WECM

ENVIRONMENTAL &

HEALTH PRODUCTS

WEC MARKETING SDN.BHD. (120881-P)Trading, marketing and retailing of industrial and consumer products.

WEMWONG ENGINEERING METALS (M) SDN.BHD. (196012-W)Manufacture of high precision metal stamped parts.(Currently dormant)

WECC

GENERAL CONSTRUCTION & PROPERTY DEVELOPMENT

WEC CONSTRUCTION SDN.BHD. (1218221-D)General building construction & infrastructure work.

WECDWEC DEVELOPMENT SDN.BHD. (1218245-W)Property development and related businesses.

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Datuk Haji Muhamad Shapiae Bin Mat Ali IndependentandNon-ExecutiveDirector,Chairman

PROFILE OF DIRECTORS

The Board of Directors of Wong Engineering Corporation Berhad (“WEC”) comprises a Chief Executive Officer, two Executive Directors, a Non-Independent Non-Executive Director and two Independent Non-Executive Directors. The profile of each of the Directors of the Company is as described below.

Datuk Haji Muhamad Shapiae, aged 71, a Malaysian, male, was appointed to the Board of the Company on 18 January 2017.

Datuk has many years of working experience in property development, lorry transportation, shipping line, advertising as well as life and general insurance.

He was the Chairman of Mahajaya Berhad and was an Executive Director of Ganad Media Sdn. Bhd. an advertising company. He was also the Chairman of a few NGOs.

He is currently the Executive Chairman of a few companies such as Iconic Paragon Sdn. Bhd., Havana Solaris Sdn. Bhd. which are developers of hotels and service apartments in Bukit Bintang area and affordable homes in Kuala Lumpur.

He does not hold any directorship in other public companies and listed issuers.

Datuk Haji Muhamad Shapiae is the Chairman of the Nomination Committee and a member of the Audit and Remuneration Committees. He attended four Board Meetings held following his appointment during the financial year ended 31 October 2017.

Yong Loy HuatChiefExecutiveOfficer

Mr Yong Loy Huat, aged 64, a Malaysian, male, was appointed to the Board of the Company as Group Managing Director on 16 November 2016. On 25 March 2017, he was re-designated as the Chief Executive Officer.

Mr Yong graduated from Tunku Abdul Rahman College in 1978 with a Diploma in Technology (Building).

Mr Yong has more than 37 years of experience in general construction and property development. As Managing Director of Tajukan Sdn. Bhd., he has lead projects for the industrial, commercial and residential markets throughout Malaysia. Amongst his notable projects is a RM100 million project involving the conversion and addition of an existing 23-storey Plaza Artium into 163 units of serviced apartment in Kuala Lumpur.


Mr Yong attended six Board Meetings held following his appointment during the financial year ended 31 October 2017.

11ANNUAL REPORT 2017

Low Seong ChuanExecutiveDirector

Mr Low Seong Chuan, aged 42, a Malaysian, male, was appointed to the Board of the Company on 16 November 2016. Mr Low graduated from Hertfordshire University with a B. Eng (Hons) Civil Engineering.

He has been involved in the civil engineering industry for nearly 20 years, inclusive of 16 years in professional consulting environment.


Mr Low is a member of the Risk Management Committee. He attended five Board Meetings held following his appointment during the financial year ended 31 October 2017.

PROFILE OF DIRECTORS (Cont’d)

Eng Teik HiangNon-IndependentandNon-ExecutiveDirector

Mr Eng Teik Hiang, aged 54, a Malaysian, male, was appointed to the Board of the Company on 16 November 2016.

Mr Eng graduated from Tunku Abdul Rahman College with a Diploma in Financial Accounting. He commenced his career in audit and left after 5 years as Audit Manager to work in internal audit with a listed issuer for 4 years. He then joined a construction company as Finance Manager and spent the next 18 years assuming greater responsibilities and wider scope of duties before assuming his current role as Chief Operating Officer.

Mr Eng does not hold any directorship in other public companies and listed issuers.

Mr Eng is a member of the Audit Committee, Nomination Committee and Risk Management Committee. He attended six Board Meetings held following his appointment during the financial year ended 31 October 2017.

Chang Joo HuatExecutiveDirector

Mr Chang Joo Huat, aged 53, a Malaysian, male, joined the Board of WEC on 1 October 2010 as Executive Director.

He holds a Master in Business Administration from the Southern Pacific University, USA as well as a Bachelor of Engineering (Mechanical System) from University of Putra Malaysia and a Diploma in Engineering (Mechanical) from University of Technology, Malaysia.

Mr Chang started his career as an Assistant Engineer at Matsushita Electric Motor, Singapore in 1987 and has accumulated more than 30 years of experience in manufacturing industry specializing in automation, research & development and project engineering. He was appointed as a Director of a subsidiary company on 1 August 1996 and promoted to Group Technical Director on 1 November 2004.


Mr Chang is the Chairman of the Risk Management Committee and a member of the Remuneration Committee. He attended all seven Board Meetings held during the financial year ended 31 October 2017.


*Notes:

1.

#MrOngYoongNyockandMsYongKweeLianaremajorshareholdersoftheCompany.

2. Otherthanasdisclosedinthefinancialstatements,thereisnootherconflictofinterestthattheDirectorshavewiththeGroup.

3. Therewerenoconvictionsforoffenceswithinthepast5yearsotherthantrafficoffences(ifany).4. Therewerenopublicsanctionorpenaltyimposedbyrelevantregulatorybodiesduringthefinancialyear.

PROFILE OF DIRECTORS (Cont’d)

Lau Chia EnIndependentandNon-ExecutiveDirector

Mr Lau Chia En, aged 46, a Malaysian, male, was appointed to the Board of the Company on 16 November 2016.

Mr Lau graduated from Michigan Technological University with a B. Sc. in Electrical Engineering in 1993 and obtained his M. Sc. in Business Administration from the University of Wisconsin in 1995.

Mr Lau has been involved in the corporate sector for the past 22 years, of which he practiced corporate finance for at least 18 years in investment banks and stock broking environment in Malaysia. His longest stint in investment banks was in MIMB Investment Bank Berhad and Aseambankers Malaysia Bhd. (currently known as Maybank Investment Bank Berhad). His area of expertise is mergers & acquisition (M&A), initial public offerings, reverse takeover, and general offer. The last position he held in a formal outfit was the Head of Corporate Finance at SJ Securities Sdn. Bhd., a securities firm in Malaysia.

Currently, he continues his trade in a boutique investment advisory firm. He is also a Non-Independent Non-Executive Director of B.I.G. Industries Berhad, a company listed on the Bursa Securities. Other than as stated, he does not hold any directorships in other public companies and listed issuers.

Mr Lau is the Chairman of the Audit and Remuneration Committees. He is also a member of the Nomination Committee. He attended all six Board Meetings held following his appointment during the financial year ended 31 October 2017.

Name of Director Family Relationships with any Director and/or Major Shareholder

1.DatukHajiMuhamadShapiaeBinMatAli None2.YongLoyHuat Brotherin-lawofMrLowSeongChuanandMrOngYoongNyock#

BrotherofMsYongKweeLian#3.ChangJooHuat None4.EngTeikHiang None5. LowSeongChuan Brotherin-lawtoMrYongLoyHuat6. LauChiaEn None


PROFILE OF KEY SENIOR MANAGEMENT

*Notes:

NoneoftheKeySeniorManagement:1. HaveanyfamilyrelationshipwithanyDirectorand/orMajorShareholderoftheCompany.2. HaveanyconflictofinterestwiththeCompanyandtheGroup.3. Haveanyconvictionforoffenceswithinthepast5yearsotherthantrafficoffences(ifany).4. Haveanypublicsanctionorpenaltyimposedbytherelevantregulatorybodiesduringthefinancialyear.

Wong Seik PinSalesDirector

Mr Wong, aged 42, a Malaysian, male, was appointed as the Company Sales Director in year 2010.

Mr Wong holds a Bachelor of Engineering in Electronics & Telecommunications and a Masters of Engineering in Manufacturing Information System from RMIT University in Melbourne, Australia.

He started his career as an IT Engineer in Eventsmarket Pty. Ltd in Melbourne before returning to join Wong Engineering Corporation Berhad Group (“WEC Group”) in 2005 where he worked his way up to eventually become the Sales Director of the Company.

Mr Wong does not hold any directorships in public companies and listed issuers.

Wong Ai-LeenSeniorManager

Ms Wong, aged 36, a Malaysian, female, joined WEC Group in 2011 as Senior Manager. She is a Certified Internal Auditor (CIA) and is responsible for Business Systems & Compliance and Corporate Governance.

Ms Wong graduated from University of Deakin, Australia, with a Bachelor of Commerce in E-Commerce Management. She has 7 years working experience with KPMG specialising in internal audit, risk and compliance.

Ms Wong does not hold any directorships in public companies and listed issuers.

Mr Nara, aged 39, a Malaysian, male, has been working with WEC Group since 2002 and he was appointed as Production Manager on 1 November 2008.

Mr Nara graduated from TAFE College with a Diploma in Electro Mechanical Engineering. After graduating, he worked in quality assurance with Astec for two (2) years before joining the WEC Group.

Mr Nara does not hold any directorships in public companies and listed issuers.

Narayanamoorthy A/L ArjunanProductionManager


CHAIRMAN’S STATEMENT

Dear Valued Shareholders,

On behalf of the Board of Directors, I am pleased to present the 21st Annual Report and Audited Financial Statements of Wong Engineering Corporation Berhad and its subsidiaries (“Group” or “WEC Group”) for the financial year ended 31 October 2017.

This year has been a momentous year for the Company as we ride on the wave of surging demand in some new and existing markets. Manufacturing revenue grew by 29% this year while bottom line increased significantly by 747%. The increase was driven by strong demand in the semiconductor industry, particularly in the test instruments and print and imaging sectors. In view of the growth opportunity, the Group has invested about RM2 million for an additional laser cutting machine to further enhance its production capacity and capture a bigger market share eventually.

On the economic performance of Malaysia, the Gross Domestic Product (GDP) growth for 2017 is forecasted at 4.3-4.8%, up from 4.2% in 2016. To-date, the Malaysian GDP recorded higher than expected quarter on quarter results at 5.6% in Q1 2017 and 5.8% in Q2 2017. (Source: Bank Negara Malaysia). Given the positive economic outlook, the Company stand to benefit from the growth prospects with better export revenue from its manufacturing activities.

Meanwhile, October 2017 marked another significant milestone for the Group with the award of a pioneer contract of approximately RM87.5million to build two blocks of affordable housing apartments together with related facilities at Kuchai Entrepreneurs Park in Kuala Lumpur. The contract, scheduled to be completed by May 2020, is our first foray into construction and property development and we anticipate many more to come.

With this, the Board would like to take this opportunity to assure all our stakeholders of our commitment to continue to grow and nurture WEC Group into a world class entity that creates value, wealth and technological advancement wherever we operate in, be it locally, regionally or globally.

The success of the Group and the value it creates today is the result of the hard work and dedication of our employees, the support of our customers and business partners, and the loyalty of our shareholders. I sincerely thank you all for your contributions. I would also like to place on record my heartfelt appreciation to our CEO for his leadership and fellow Board members for their wise counsel and guidance. Let’s keep the momentum going!

Datuk Haji Muhammad Shapiae Bin Mat AliIndependentNon-ExecutiveChairman1 February 2018


MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

Established since 1982, Wong Engineering Corporation Berhad and its subsidiaries (“WEC Group” or “the Group”) are principally engaged in the manufacturing of high precision stamped and turned metal parts and components, complex welded frame structure, related modules and systems as well as trading, marketing and retailing of industrial and consumer products.

WEC was listed on the Main Board of Bursa Malaysia Securities Berhad since 1998 and the Group operates out of its own manufacturing facility located at Kulim Hi-Tech Park, Kulim, Kedah. The facility comprises 7 units of industrial factories and 1 unit of office block with a built up area of 245,483 sq ft spanning across a land area of 7.759 acres.

As key player in the local contract manufacturing business, the Group operates a fleet of sheet metal and machining metal fabrication machines with diverse capabilities to design, build, produce and supply a wide range of key components parts and testing machines to serve a wide array of customers from various industries such as oil and gas to printing and imaging, telecommunication, test instrument (all within the electronics and electrical (“E&E”) industry) to medical devices.

The operational restructuring for enhanced production capacity and optimisation of resources and introduction of new products have paid off as the Group consistently grew its top line since financial year ended 31 October 2014 (“FY2014”) and returned to the black this year. This year, the Group delivered record breaking achievements over the past 5 years with RM6.00 million in profits before tax (“PBT”) on the back of revenue of RM42.707 million.

The successful turnaround came as the Group leveraged on its industry experience that spans more than three decades as well as continued focus on reliable quality and competitive pricing to expand its presence locally and build on its presence beyond Malaysia to Europe.

During the year under review, the Group obtained shareholders’ approval at an extraordinary general meeting for diversification of business and operations into property development and construction should an opportunity arose. The diversification is part of the Group’s long term plan to diversify from its present highly competitive business, dependence on the E&E industry (which is subject to the vagaries of boom and bust cycle) and generate new income stream. This diversification strategy has proven to be fruitful as the Group was recently awarded its first project with gross development value (“GDV”) of RM87.5 million to build two blocks of affordable housing apartments together with related facilities at the Kuchai Lama Entrepreneurs Park, Kuala Lumpur. The said project is expected to contribute favourably to the Group’s future earnings.

REVIEW OF FINANCIAL PERFORMANCE

A brief analysis incorporating key financial information and financial performance of the Group for FY2016 and FY2017 is as tabulated:

ItemFY2017

(RM ‘000)FY2016

(RM ‘000) Year-on-Year Changes

(RM ‘000) (%)

Revenue 42,707 33,087 9,620 29%

Gross Profit 12,947 5,263 7,684 146%

Profit/(Loss) Before Tax 5,996 (641) 6,637 1,035%

Profit After Tax 6,140 725 5,415 747%

Profit Attributable to Owners of the Company 6,114 715 5,399 755%

Profit/(Loss) Before Tax Margin 14.0% (1.9%) 825%

Return on Equity 10.2% 1.3% 668%

Return on Total Assets 8.5% 1.1% 664%


FY2017(RM ‘000)

FY2016(RM ‘000)

Year-on-Year Changes(RM ‘000) (%)

Non Current Assets 41,053 45,700 (4,647) (10%)

Inventories 13,197 9,744 3,453 35%

Trade and Other receivables 10,353 7,419 2,934 40%

Current tax asset 255 140 115 82%

Asset Held for Sale 2,766 - 2,766 100%

Cash and cash equivalents 4,589 2,112 2,477 117%

Total Equity 59,729 53,615 6,114 11%

Non controlling interest 77 50 27 54%

Non Current Liabilities 2,650 3,503 (853) (24%)

Trade and Other payables 7,460 6,246 1,214 19%

Loans and borrrowings 2,297 1,701 596 35%

Total Assets/Total Liabilities & Equity 72,213 65,115 7,098 11%

Net Assets per share (RM) 0.65 0.59 0.06 10%

Current ratio 3.19 2.44

Debt/Equity ratio 0.07 0.09

Year-on-year, the Group’s revenue has grown by RM9.6 million (+29%) to RM42.7 million from RM33.1 million in FY2016. This surge is largely contributed by increased demands from customers in the test instrument, telecommunication and print and imaging sectors in line with the cyclical boom seen in the E&E industry recently. The Group remains optimistic that this growth will continue to be robust in the short to medium term.

Domestic sales, at RM28.1 million, continues to dominate the Group’s revenue contribution. Nonetheless, overseas sales has grown by RM2.7 million (+22.7%) as compared to FY2016. The remaining RM14.6 million is driven mostly by sales to Europe (RM8.3 million) and other Asia countries (RM5.0 million). The Group will, by leveraging on its strengths, continue to explore business opportunities to further expand export sales.

The Group posted better than expected PBT, up RM6.6 million (+1035%) as compared to FY2016. The significant improvement in gross profit by RM7.7 million (+146%) year-on-year, was driven by improved operation efficiency and continued cost rationalisation measures. The favourable foreign exchange rates of Ringgit Malaysia against US Dollar has also helped to boost earnings as most of the sales are denominated in US Dollar. However, the Group is cautiously monitoring the trend as Ringgit Malaysia is expected to strengthen in the near term resulting in fluctuation that could result in increased realised losses in foreign exchange for our export sales.

As a result of improved earnings, the Group’s net assets per share increased RM0.06 (+10%) to RM0.65 from RM0.59 in FY2016. Our share price has improved over the comparative period in FY2016, correlating to our improved financial performance.

MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)

Revenue by geographical locationsFY2017 (RM’mil)

Revenue by geographical locationsFY2016 (RM’mil)

Asia (M’sia) Asia (Others)

Europe Others

Asia (M’sia) Asia (Others)

Europe Others

1.3

8.3

5.0 28.1

1.24.7

6.0 21.2



On the overall, the Group’s liquidity has improved. Currents assets grew by RM11.7mil (+60%) while current liabilities increased by only RM1.8mil (+23%) over the same comparative period. Consequently, the Group’s current ratio improved to 3.19 times from 2.44 times in FY2016 aided by strong cash inflows from operations whilst maintaining tight control over receivables and inventory despite growth in revenue. The improvement indicates the Group’s enhanced ability to settle its short term obligations as and when such obligations fall due.

The continued prudent approach in cash management has also helped the Group to reduce borrowings. This is evidenced by the improvement in debt/equity ratio to 0.07 times (FY2016: 0.09 times) in line with the strategy to reduce financial commitments.

The Group invested RM2.8 million during FY2017 with RM1.8 million towards the purchase of a fibre laser machine to modernize and improve production capacity and output. In relation to capital expenditure management, the Group is financially disciplined to deploying capital in an efficient manner. To that end, the Group remain committed to maintaining a strong capital base and to safeguard the Group’s ability to continue as a going concern, maintaining investor, creditor and market confidence and to sustain future growth and development of the business.

DIVIDEND

The Directors of the Company has recommended a final single tier dividend of 2 sen per ordinary share for FY2017. The dividend payment will be subject to shareholders’ approval at the upcoming Annual General Meeting scheduled in March 2018. The Board is of the view that the recommended dividend provides an adequate balance between rewarding its investors with appropriate return and retaining sufficient profits to sustain future growth.

RISKS MANAGEMENT

WEC is primarily an investment holding company while its subsidiaries are involved in the manufacturing of high precision stamped and turned metal parts and components, complex welded frame structure, related modules and systems as well as trading, marketing and retailing of industrial and consumer products. Although the Group and Management have put in place various initiatives to minimise or mitigate some of these risks, it must be acknowledged there are some risks that are beyond the Group’s control. Key Group and industry related risk factors that could affect the Group are as set out below. There is no assurance that changes to the following key risk factors would not have material adverse effect on the Group’s business and financial conditions.

Operational, competition and business risks

Some of generic business risks that are inherent within the industry and may affect the Group include, among others, increased competition over costing and pricing, labour and raw materials shortages, increases in labour and raw materials costs, equipment and electricity tariffs as well as changes in general economic, business, credit and interest rate conditions, fluctuations in exchange rates and changes in the legal and environmental framework within which the industry operates.

Whilst noting that borrowing is essential to finance the Group’s operations and growth, efforts are being made to minimise utilisation. In this manner, the risk of fluctuations of interest rates is also minimised.

Political, economic and regulatory risks

The Group could be affected by changes in political leadership and financial, taxation and monetary policies, onset of war, economic and financial crises, rise of nationalism and nullification or renegotiation of existing contracts in Malaysia or our major market of Europe. The Sales and Marketing and the Board team maintains close overview over the general business environment of these key markets and ensures that the terms of payments are structured in a manner to minimise financial impact to the Group.

Foreign exchange risk

The Group is exposed to fluctuations in foreign currencies as a certain part of its top line and purchases are transacted in US Dollar. As a countermeasure, the Group utilise natural hedging to minimise any impact from sudden fluctuations in foreign currencies.

Dependency on key personnel

The continued success of the Group depends, to a significant extent, on the abilities and continued efforts of the Directors and key management personnel and the Group’s ability to attract and retain these individuals. A loss, without a suitable replacement in a timely manner could affect the Group’s ability to remain competitive in the industry.



OUTLOOK

Referencing the world economic outlook update published by IMF (International Monetary Fund), global growth for 2018 and 2019 has been revised upwards to 3.9%. Specifically, growth rates for euro area economies such as Germany, Italy and the Netherlands have been marked up as a result of stronger momentum in both domestic and external demands while the outlook for Malaysia remains resilient and positive with gross domestic product (“GDP”) growth expected to be within 5% to 5.5%.

In a report issued in January 2018, the MIER (Malaysian Institute of Economic Research) noted the exceptional performance of the local economy last year driven by strong domestic demand underpinned by improvements in both investment and consumption and reinforced by a sturdy global demand. The Malaysian economy grew by about 5.6% in 2017 with sustained manufacturing activities supported by double digit growth in exports. The upbeat consumer spending is attributable to a stable job market, contained core inflation and strengthening Ringgit Malaysia, as well as several government measures to boost disposable income as announced in the 2018 Budget. Nonetheless, there are signs of consumers being more pragmatic and cautious in their spending.

The Malaysian economy is expected to grow at 5.4% this year, again driven by domestic demand particularly from the private sector, which in turn is projected to grow at 5.2% as well as buoyant external demand. The external sector is expected to remain strong.

Amidst the economic growth forecasted worldwide, there is caution with developed economies such as the US and Europe initiating tighter monetary policies to manage growth. Other downside risks included geopolitical and policy uncertainties. The rise of protectionism among some major developed economies is a concern as this will hamper trade and immigration flows and this in turn will have implications on production and income growth for some major economies. Protectionism policy will also invite retaliation from other countries. Nonetheless, demand from Malaysia’ top trading partners, including Europe continue to be strong as their economies are growing healthily.

The growth momentum of the Malaysian E&E industry too is expected to strengthen in 2018 on the back of overall demand for E&E products worldwide. The Group will enhance operational efficiency and technical capabilities in its present core business in manufacturing and sales of high precision stamped metal parts and turned metal components to capitalise on the E&E industry growth momentum to meet the increasing demands from our customers. At the same time, the Group will assess and expand its presence into medical devices and other industries to diversify revenue streams and customers base as well as to minimise dependence on the E&E industry which is more prone to cyclical volatility. Investment in capital expenditure would be considered on needs basis.

As for our venture into the property development industry, we are cautiously optimistic. The current property overhang is for properties above RM1 million while the tight lending regime as imposed by Bank Negara Malaysia remains. Our target is the affordable market for which there is still a strong demand particularly in or nearby major cities as we believe Malaysians would want to own their properties. As the product is right and situated in a fairly developed locality, we are confident that the project in Kuchai Lama, Kuala Lumpur will be well received. In all ventures that we intend to undertake, we will carry out the necessary due diligence and ensure the outlook and sustainability of each project.

The Board is optimistic that the prospects of our Group would be favourable and the expansion plans of our Group will be able to yield positive effects and contribute to the financial performance of our Group in the future, and deliver greater value to the shareholders of WEC.


STATEMENT ON CORPORATE GOVERNANCE

Wong Engineering Corporation Berhad (“WEC” or “The Company”) and its group of companies (“WEC Group” or “Group”) is cognisant of the importance of operating within a strong governance framework towards enhancing business success and corporate accountability to protect the interests of its shareholders and stakeholders. This commitment is evidenced by the ongoing formulation of policies and processes that adopt the substance behind good governance practices for embedment in the operating procedures of the Group and the establishment of the relevant Board Committees.

WEC Group has complied substantially with the relevant principles and recommendation of Malaysian Code on Corporate Governance 2012 (“the Code”) so far as applicable and described herein.

1. Establish Clear Roles And Responsibilities

1.1 Clear functions of the Board and Management

The current Board comprised six (6) members; one (1) Chief Executive Officer, two (2) Executive Directors, one (1) Non-Independent Non-Executive Director and two (2) Independent Non-Executive Directors.

The Board leads and takes full responsibilities for the overall performance of the Group. The Board assumes the following responsibilities for the Group: determining strategic direction, overseeing the proper conduct of the Group’s business, identifying principal risk and ensuring the implementation of systems to manage risks, succession planning, developing investor relations programme, reviewing the adequacy and integrity of the Group’s internal control systems and management information systems, establishing goals for management and monitoring the achievement of these goals.

As part of its initiative for effective discharge of its leadership role and enhancement of accountability, the Board has delegated specific powers to the Chairman, Board Committees and Chief Executive Officer (“CEO”).

There is presently a Board Charter which sets out briefly the role, structure and functions as well as responsibilities of the Board. There is division of responsibilities amongst the Directors to ensure a balance of authority and power as well as to enhance accountability of each Director.

The demarcation of roles established in the Board Charter is the reference point (in relation to Chairman and CEO and Board’s roles, powers, duties and functions) to guide Board activities and help to reinforce the supervisory role of the Board. The Board is led by an Independent Non-Executive Chairman.

The Chief Executive Officer, with the assistance and support from the Executive Directors and key senior management, is responsible for the day to day operational management of the Group, implementing the policies and decisions of the Board, overseeing business operations as well as coordinating the development and implementation of business and corporate strategies.

The complementary role of Non-Executive Directors with a mix of industry-specific knowledge and financial experience as well as independent opinion enhance the effectiveness of the Board’s deliberation.

The Board has established the following Board Committees:

(a) Audit Committee(b) Remuneration Committee(c) Nomination Committee(d) Risk Management Committee

These Committees operate within specific terms of reference that were drawn up in accordance with best practices in the Code and function principally to assist the Board in the execution of its duties and responsibilities.

All decisions and deliberations at Board Committee level are documented in the minutes of the respective Committee meetings. The respective Chairman of the Board Committees reports on the outcome and recommendations of the Board Committee meetings to the Board for further deliberation and approval. Such reporting is included in the minutes of Board meetings.

The Board retains full responsibility for the direction and control of the Group as the ultimate responsibility for decision making lies with the Board notwithstanding the delegation of specific powers.


STATEMENT ON CORPORATE GOVERNANCE (Cont’d)

1. Establish Clear Roles And Responsibilities (Cont’d)

1.2 Clear roles and responsibilities of the Board

The Board collectively is responsible for the oversight and overall management of the Group inclusive of setting strategic direction, establishing goals for management and monitoring the achievement of these goals.

The Board, at its meetings, reviews business financial results, risk management initiatives, oversees the implementation and effectiveness of internal control systems as well as enforces the compliance of legal and statutory requirements within the Group.

The Chairman takes a leading role in the conduct of the Board and its relation with the shareholders and other stakeholders. He is primarily responsible for, among others, leading the Board in the oversight of management, ensuring adequacy and integrity of the governance processes and issues and representing the Board to the shareholders and stakeholders. The Chairman is also responsible, among others, for guiding Board activities and participation of all Directors as well as maintain balance of membership and ensuring discussion of relevant issues.

On the other hand, the Executive Directors are responsible for the day-to-day operational management of the Group and leads the senior management team to ensure high level of work efficiency and production activities. Other key roles assumed by the Executive Directors included formulation and implementation of the Group’s policy, objectives, strategies and plans towards profitable growth and operation of the Group; putting in place adequate operational planning and financial control systems and working with other Executive Directors and management, closely monitoring their actions, the operation and financial results against plans and budgets.

The management is responsible for the execution of activities to meet corporate plans as well as instituting various measures to ensure due compliance with various governing legislations.

The Independent Non-Executive Directors (“INEDs”) do not participate in the daily management of the Group and are not engaged in any business or other relationship with the Group. Board balance is also assured by way of active and unrestricted participation of the INEDs in deliberations and decision making. The Board has full and unrestricted access to the background information on matters placed before them to make an informed decision. The INEDs take on a crucial role in corporate accountability as all matters discussed take into account the long term interests of shareholders, employees, customers and the community at large.

The principal responsibilities of the Board include the following:

(a) Reviewing existing or proposed share option schemes, in conjunction with the Employee’s Share Option Scheme Committee, if one has already been set up;

(b) Reviewing superannuation benefits, if deemed relevant and applicable;(c) Reviewing retirement and termination systems;(d) Considering fringe benefit issues, including benefits-in-kind;(e) Reviewing indemnity and liability insurance policies; (f) Evaluating and proposing contractual terms in the service contracts of executive directors; and(g) Evaluating different remuneration methods and philosophies as well as conducting studies of current industry

practice.

1.3 Formalise Ethical Standards through a Code of Conduct

The Board has put in place Code of Conduct, encompassing Ethics, Whistle Blowing and Fraud Policies, for all management and employees of Group. The Ethics Policy serves as guidance to ensure that the conduct of the Group’s business and operations are aligned with best ethical practices as well as applicable laws and regulations. All employees are also encouraged to raise genuine concerns about possible improprieties in the Group at the earliest opportunity and in an appropriate, transparent and yet confidential manner without fear of reprisal as outlined in the Whistle Blowing Policy.




1.4 Strategies promoting sustainability

The Board is conscious of the need for business sustainability within the environmental, social and governance context.

The Group strives to continue its effort to improve energy efficiency and to reduce harmful emission or discharge into the air, land and water. Operational progress and strategic development are reviewed regularly with the aim of making timely corrective actions following review of the changing business environment and risk factors such as raw material pricing, consumer demand, competition, fluctuations in foreign reserve and changes to governmental policies.

WEC is committed to maintaining a healthy and safe workplace; its Social, Safety, Health and Environmental Policy ensures the welfare and safety of its workers are placed in high priority.

The Board will formalise a Sustainability Policy in the next financial year, with the aim of integrating the principles of sustainability into the Company’s strategies, policies and procedures and ensure that the Board and senior management are involved in implementation of this policy, review the sustainability performance and create a culture of sustainability within the Group, with an emphasis on integrating the environmental, social and governance considerations into decision making and the delivery of outcomes.

A report on activities demonstrating the Group’s commitment to the environment, social, governance and sustainability are disclosed under the Group’s Corporate Social Activities as contained in this Annual Report.

1.5 Access to information and advice

All Directors are supplied with full and timely information with Board papers distributed in advance of meetings in order for the Directors to be properly briefed and to allow the Directors sufficient time to deliberate on issues to be raised and discussed at each meeting. Information given is inclusive of agenda and reports relevant to the issues of the meeting covering areas of financial, operational and regulatory compliance.

The Board holds regular meetings of not less than four (4) times a year. Special Board meetings may be convened as and when necessary to consider urgent proposals and matters that require the Board’s urgent review or consideration.

The Board meeting papers are prepared in a concise and comprehensive manner so that the Directors have an accurate depiction of the issue at hand to facilitate informed decisions. Verbal explanations and briefings are also provided by the Executive Directors and management to enhance understanding of matters in relation to the Group’s business and operations.

The minutes of the Board meetings together with its notice and papers are circulated to all Directors prior to commencement of each Board meeting. The Directors may raise comments before the minutes are tabled for confirmation at the following Board meeting.

At the Board meetings, respective Chairman of the Board Committees will report, advise and recommend to the Board, salient views and conclusions from their respective meeting agendas.

The CEO and Senior Management are invited to the Board meetings to table and report on matters relating to their respective areas of responsibility and to provide detailed explanation to the Board.

In addition, the Board is notified of any corporate announcements released to Bursa Malaysia Securities Berhad (“Bursa Securities”) and is also kept informed of the requirements and updates issued by the various regulatory authorities.

The Board has access to reports, papers, information on financial and operational matters. The Directors may also interact directly with Management and may seek advice or further explanation on issues under their respective purview. As such, the Board has full excess to all information on the Company’s affairs to enable proper discharge of duties.

The Board and Board Committees have right of access to senior management and to seek advice of the Company Secretaries and/or external independent professional advice if required and with approval from the Board or the respective Board Committees, in furtherance of their duties, at the Company’s expense.




1.6 Company Secretaries

The current Company Secretaries are suitably qualified, competent and capable of providing the needful support to the Board in carrying out its roles and responsibilities. The Company Secretaries are Associate and Fellow members of the Malaysian Association of the Institute of Chartered Secretaries and Administrators. They have attended regular trainings and seminars to keep abreast of relevant statutory and regulatory requirements under the Main Market Listing Requirements (“MMLR”) of Bursa Securities, the Companies Act 2016, Capital Markets and Services Act 2012 and the Code.

The Board has full access to the Joint Company Secretaries who are available to provide the Directors appropriate advice and services and also to ensure relevant policies and procedures are followed and the rules and regulations are complied with. Among others, the Company Secretaries oversee adherence with Board policies and procedures, brief the Board on proposed contents and timing of material announcements to be made to regulators. The Company Secretaries keep timely and proper records of the proceedings and resolutions passed by the Board and Board Committees.

WEC’s Constitution determines that the appointment and removal of the Company Secretaries are subject to approval of the Board.

The Company Secretaries or their representative is present at meetings to record deliberations, issues discussed and conclusions in discharging their duties and responsibilities and also advises on issues relating to the relevant rules and regulations that govern the Company.

Other roles of the Company Secretary included coordinating the preparation of Board papers with management, ensure Board procedures and applicable rules are observed and maintaining records of the Board as well as provide timely dissemination of information relevant to the Directors’ roles and functions and keeping them updated on evolving regulatory requirements.

1.7 Board Charter

The roles and functions of the Board, as well as the differing roles of the Chairman and CEO are stated in the present Board Charter which is available for reference on the corporate website at www.wec.com.my.

2. Strengthen Composition

As at the date of this statement, the Board comprises six (6) members as depicted below:

Directors Designation

Datuk Haji Muhamad Shapiae Bin Mat Ali Independent Non-Executive Chairman

Mr Yong Loy Huat Chief Executive Officer

Mr Chang Joo Huat Executive Director

Mr Low Seong Chuan Executive Director

Mr Eng Teik Hiang Non-Independent Non-Executive Director

Mr Lau Chia En Independent Non-Executive Director

A brief profile of each Director is presented in the corresponding section of this Annual Report.

The Directors, with their different background and specialisation, collectively bring with them a wide range of experience and expertise in areas such as finance, corporate affairs, marketing and operations.

The Independent Non-Executive Directors bring objectivity and independent judgement to the Board decision-making process and provide a capable check and balance for the executive Board members and management. They contribute significantly in areas such as policy and strategy development, performance monitoring, allocation of resources as well as improving governance and controls. The executive Board members are intimately knowledgeable about the business. Together, the Board comprised persons who are committed to business integrity and growth, professionalism in all its activities and have proper understanding and competence to deal with current and emerging business issues.



2. Strengthen Composition (Cont’d)

2.1 Nomination Committee

The present composition of the Nomination Committee comprised all Non-Executive Directors, of whom, majority are independent:

Nomination Committee Designation

Datuk Haji Muhamad Shapiae Bin Mat Ali Chairman

Mr Lau Chia En Member

Mr Eng Teik Hiang Member

The duties and responsibilities of the Nomination Committee include the following:

(a) To consider and make recommendations to the Board on the suitability of candidates nominated for appointment on the Board.

(b) To consider and make recommendations to the Board, Directors to fill the seats on Board Committee.

(c) To review and make recommendations to the Board, the required mix of skills and experience including core competency which Non-Executive Directors should bring to the Board.

(d) To make recommendations to the Board for the implementation of a process for the annual assessment of the effectiveness of the Board as a whole, the Committee of the Board and for assessing the contribution of each individual Director.

(e) To review and plan for succession to the position of Chief Executive Officer as well as Senior Management positions in the Group. In this regard, the Chief Executive Officer shall provide the Committee with an assessment of Senior Management and their potential for purposes of recommending the appointments and promotions of Senior Management and appointments to Senior Management positions.

(f) To review and make recommendations to the Board on matters relating to the recruitment of Senior Management personnel of the Group.

(g) To review and make recommendations to the Board the required mix of skills and experience including core competency for key management personnel in the Group.

The Board is satisfied that the Nomination Committee is able to discharge its duties and responsibilities effectively. The Terms of Reference of the Nomination Committee is available on the Company’s website.

Two (2) meetings were held during the financial year under review with full attendance from the members of the Nomination Committee. At those meetings, the Committee deliberated over the following:

(a) reviewed the Terms of Reference of the Nomination Committee;

(b) assessed the effectiveness of the Board, the Board Committees and the contribution of each Director;

(c) reviewed the level of independence of Independent Directors;

(d) reviewed the size and composition of the Board of Directors as well as the Audit, Nomination and Remuneration Committees;

(e) discussed the character, experience, integrity and competence of the directors, chief executive or chief financial officer and to ensure they have the time to discharge their respective roles;

(f) discussed the annual retirement by rotation and re-election of Directors at the forthcoming annual general meeting (“AGM”) and recommended the same for re-election by the shareholders; and

(g) reviewed the term of office and performance of the Audit Committee and its members pursuant to paragraph 15.20 of the MMLR.




2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors

The Nomination Committee is empowered by the Board to amongst others, identify and recommend to the Board suitable candidates for appointment to the Board and Board Committees, re-election and re-appointment of Directors, and review the independence of Independent Directors as well as considering the Board’s succession planning and training programmes.

The Nomination Committee is also tasked to assess the effectiveness of the Board, the Committees of the Board and contribution of each individual Director on an annual basis. Additionally, the Committee is also tasked to review the required mix skills, experience and other qualities, including core competences of the members of the Board.

During the Committee meetings held during the financial year, an evaluation was carried out through a set of questionnaires with the answers collated, summarised and reported to the Board by the Chairman with the aim towards continuous improvement. Both the Committee and the Board were satisfied with the Board size and composition. Further, the Board had the right mix of skills and balance as well as core competencies to discharge its duties effectively.

The Committee endorsed changes to its Terms of Reference during the year. The Committee would also look into the development of a set of criteria for use in the recruitment process of new Directors.

The current criteria for annual assessment of Directors is as enshrined in the assessment forms. The effectiveness of the Board is assessed in the areas of Board size, mix of composition, conduct of Board meeting, Boardroom activities and Directors’ skills set matrix. The Board Committees are assessed based on their roles and scope of work, supply of sufficient and timely information to the Board and also overall effectiveness and efficiency in discharging their duties.

In the case of individual Directors, self-assessment is carried out to evaluate their performance on contribution and competencies, such as ability to give constructive suggestions, demonstrate objectivity and integrity in decision making process and provide realistic advice to the Board and Board Committees. In the case of Independent Non-Executive Directors, they are also assessed on the level of their independence.

The Constitution provides that at the first AGM of the Company, all the Directors shall retire from office, and at the AGM in every subsequent year, one third of the Directors for the time being, or if their number is not three (3) or a multiple of three (3), then the number nearest one third shall retire from the office. An election of Directors shall take place each year and all the Directors shall retire from the office at least once in every three (3) years but shall be eligible for re-election. The Directors to retire each year are those who have been longest in the office since their appointment or re-appointment. This provides an opportunity for the shareholders to renew their mandates.

The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meeting attendance and the shareholdings in the Group of each Director standing for election are disclosed in various sections of the Annual Report.

The Company Secretaries will ensure that all necessary information is obtained, as well as all legal and regulatory obligations are met before the re-appointments are made.

2.3 Remuneration Committee

The present composition of the Remuneration Committee, comprised predominantly Non-Executive Directors, following the replacement of Mr Low Seong Chuan with Datuk Haji Muhamad Shapiae Bin Mat Ali on 16 August 2017 in tandem with the re-designation of Mr Low Seong Chuan as Executive Director of the Company:

Remuneration Committee Members Designation

Mr Lau Chia En Chairman

Datuk Haji Muhamad Shapiae Bin Mat Ali Member

Mr. Chang Joo Huat Member




2.3 Remuneration Committee (Cont’d)

The duties and responsibilities of the Remuneration Committee include the following:

(a) The Committee is authorized by the Board to consider and review from time-to-time the remuneration package of the Executive Directors, Non-Executive Directors and Senior Management in all its forms and also review Directors’ Fees of the Company and the Group periodically.

(b) The recommendations of remuneration shall be based on the following considerations:• Level of remuneration structure is sufficient to attract and retain the individuals needed to run the Company

successfully at the Board as well as the Senior Management levels;• Links rewards to both the Company and individual’s responsibilities and performance;• Aligns the interest of Directors, Senior Management and stakeholders in promoting the Company’s progress;

and• Is based on information obtained from independent remuneration sources within similar industry.

(c) Level of remuneration structure is sufficient to attract and retain the individuals needed to run the Company successfully at the Board as well as the Senior Management levels;

(d) Links rewards to both the Company and individual’s responsibilities and performance;

(e) Aligns the interest of Directors, Senior Management and stakeholders in promoting the Company’s progress; and

(f) Is based on information obtained from independent remuneration sources within similar industry.

Two (2) meetings were held during the financial year under review with full attendance from the members of the Remuneration Committee. At that meetings, the Committee deliberated over the following:

(a) reviewed the Terms of Reference of Remuneration Committee;

(b) the remuneration package of Executive Directors to ensure that rewards are linked to corporate and individual performance, experience and level of responsibilities undertaken by each Executive Director, and that it is sufficient to attract, motivate and retain the Executive Directors.

The Executive Directors did not participate in any way in determining their individual remuneration. The Board, as a whole, determines the remuneration of Non-Executive Directors with individual Directors abstaining from decisions in respect of their individual remuneration.

In line with Section 230 of the Companies Act 2016, the fees of Directors and any benefits payable to the Directors of the Company and its subsidiaries shall be approved by the shareholders at a general meeting. The benefits payable to the Directors has been reviewed by the Remuneration Committee and the Board of Directors of the Company, which recognises that the benefits payable is in the best interest of the Company. The benefits comprised meeting allowance and Board Committee allowances.

The details of remuneration for Directors of WEC comprised remuneration received or receivable from the Company and the Group for the financial year ended 31 October 2017. Aggregate remuneration of Directors, categorised into appropriate components, is as follows:




2.3 Remuneration Committee (Cont’d)

Received from the Company

DirectorateFees (RM)

Salaries (RM)

Other emoluments

(RM)Total(RM)

Current Executive Directors 60,000 - 8,500 68,500

Current Non-Executive Directors 105,000 - 8,000 113,000

Former Non-Executive Directors - - 1,000 1,000

Total 165,000 - 17,500 182,500

Received on Group Basis

DirectorateFees (RM)

Salaries (RM)

Other emoluments

(RM)Total(RM)

Current Executive Directors 60,000 460,197 17,461 537,658

Former Executive Directors - 83,520 354,830 438,350

Current Non-Executive Directors 105,000 - 8,000 113,000

Former Non-Executive Directors - - 1,000 1,000

Total 165,000 543,717 381,291 1,090,008

* Other emoluments comprise bonuses, incentives, provisions for leave and allowances

The number of Directors of the Company who served during the financial year and whose total remuneration from the Group falling within the respective bands is as follows:

Range of Remuneration (RM)

Number of DirectorsCurrent Former

Executive Non-Executive Executive Non-Executive

Below 50,000 1 2 - 3

50,001 to 100,000 - 1 - -

200,001 to 250,000 1 - 2 -

300,001 to 350,000 1 - - -

Total 3 3 2 3

The Board chose to disclose the remuneration bands pursuant to the MMLR of Bursa Securities and is of the opinion that detailed disclosure of individual Director’s remuneration will not add significantly to the understanding and evaluation of the Group’s governance.

The Committee endorsed changes to its Terms of Reference during the year. The Committee also affirmed the remuneration package for the executive Board members, which included maintaining the salary structure of the then newly appointed Chief Executive Officer at the same level as the previous management, as the Group was still in the process of turning around.




2.4 Gender Diversity Policy

The Board has no immediate plans to implement gender diversity policy. In considering Board appointment, the Board believes in and provides equal opportunity to candidates who have the necessary skills, experience, commitment (including time commitment), core competencies and other qualities regardless of gender, ethnicity and age. Nevertheless, the Board shall endeavour to support gender diversity in the boardroom as recommended by the Code as and when the opportunity arises.

3. Reinforce Independence

The Board is in compliance with paragraph 15.02 of the MMLR, which requires that at least two Directors or one-third of the Board of Directors of the Company, whichever is the higher, are Independent Directors.

3.1 Assessment of Independent Directors

The Board, through the Nomination Committee, assesses the Independent Directors annually where the evaluation took into account the individual Director’s ability to exercise independent judgement at all times and to contribute to the effective functioning of the Board and Board Committees. The Board, through an assessment carried out by the Nomination Committee, is satisfied with the level of independence demonstrated by the Independent Non-Executive Directors.

3.2 Tenure of Independent Directors

The tenure of an Independent Directors should not exceed a cumulative term of nine (9) years. However, an Independent Director may continue to serve the Board upon reaching the 9-year limit subject to his re-designation as a Non-Independent Director. In the event the Board intends to retain such Director to be Independent Non-Executive Director, the Board shall justify the decision and seek shareholders’ approval.

As at to-date, none of the Independent Non-Executive Directors has exceeded the cumulative term of nine (9) years.

3.3 Division of roles and responsibilities between Chairman and Chief Executive Officer

The positions of Chairman and Chief Executive Officer are held by two different individuals in line with the recommendation of the Code. The distinct and separate roles of the Chairman and Chief Executive Officer promote accountability and facilitate division of responsibilities between them. The Chief Executive Officer focuses on the day-to-day operations and management of the Group while the Independent Non-Executive Chairman leads the Board in the oversight of management, ensuring Board effectiveness and implementation of Board policies and decisions.

3.4 Composition of the Board

The present Board composition is in compliance with Recommendation 3.5 of the Code in that the Chairman is an Independent Non-Executive Director. The Independent Non-Executive Directors provide check and balance for the effective and efficient functioning of the Board.



4. Foster Commitment

4.1 Time commitment and directorship in other companies

The Board is scheduled to meet at least four (4) times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings with sufficient notice.

During the financial year ended 31 October 2017, the Board held seven (7) meetings to deliberate and decide on various issues including the Group’s financial results, strategic decisions, remuneration of the Executive Directors, recommendation for re-election/re-appointment of Directors at AGM and the direction of the Group. The deliberations in terms of issues discussed and conclusion arrived by the Board were duly recorded with the Minutes signed by the Chairman of the meetings. Each Director’s attendance at the meetings were as follows:

Directors Attendance

Datuk Haji Muhamad Shapiae Bin Mat Ali 4/41

Mr Yong Loy Huat 6/61

Mr Chang Joo Huat 7/72

Mr Low Seong Chuan 5/61

Mr Eng Teik Hiang 6/61

Mr Lau Chia En 6/61

Note:1 The attendance is calculated from the date of appointment as Director.2 Mr Chang Joo Huat’s attendance is for the full financial year.

All Board members met the minimum percentage required for Board meeting attendance during the year under review as prescribed under the MMLR. The Directors are in compliance with the provision of the MMLR on the restriction of not holding more than five directorships in listed issuers and are able to discharge their duties effectively.

The Directors must notify the Board in a timely fashion before accepting an invitation to serve on the board of another listed issuer taking into consideration any actual or apparent conflicts of interest and impairments to independence as well as time and energy necessary to satisfy the requirements of Board and Committees memberships in the other listed issuer.

4.2 Directors’ training

All the Directors of the Company have attended the Mandatory Accreditation Programme (“MAP”) prescribed by Bursa Securities for directors of public listed companies. All the Directors save for Datuk chairman, have attended trainings during the financial year ended 31 October 2017 as part of their continuous training in compliance with Paragraph 15.08 of MMLR.

The trainings/programmes attended by the Directors during the financial year ended 31 October 2017 are as tabulated:

Directors Training Date

Yong Loy Huat MAP for Directors of Public Listed Companies

Corporate Governance and Listing Requirements Market Talk

NI Technical Symposium 2017 - Malaysia

30-31 March 2017

15 May 2017

05 October 2017



4. Foster Commitment (Cont’d)

4.2 Directors’ training (Cont’d)

Directors Training Date

Chang Joo Huat Transition - Transition ISO 14000 : 2015 (EMS)

Transition - Transition ISO 9001 : 2015 (QMS)

ISO : Risk Based Thinking

Geometric, Dimensioning, & Tolerancing (GD&T)

Corporate Governance and Listing Requirements Market Talk

Basic Understanding of HIRARC

06 February 2017

14 February 2017

28 February 2017

19 April 2017

15 May 2017

15 June 2017

Low Seong Chuan MAP for Directors of Public Listed Companies

Technical Forum on Latest Development in Fire Protection Practices

Evening Talk on Geotechnical Finite Element Analysis

Talk on “Power Conversion Systems for Battery Energy Storage and Utility-Scale Photovoltaic (PV) Generation

Talk on Application of Probabilistic Analysis For Schedule and Cost Estimation

30-31 March 2017

14 September 2017

14 September 2017

28 October 2017

28 October 2017

Eng Teik Hiang MAP for Directors of Public Listed Companies 30-31 March 2017

Lau Chia En MAP for Directors of Public Listed Companies

Rethinking - Independent Directors : A New Frontier

30-31 March 2017

16 October 2017

The Company Secretaries, together with management, have circulated appropriate trainings, briefing, seminars and conferences, covering topics on governance, risk management, accounting, general management and investor relations, for consideration by Board members to keep themselves updated on changes to the legislations and regulations affecting the Group.

In addition, the Directors are updated by the Company Secretaries on any changes to the statutory, corporate and regulatory requirement relating to Directors’ duties and responsibilities or the discharge of their duties as Directors. The external auditors also have briefed the Board on the changes to the Malaysian Financial Reporting Standards that affect the Group’s financial statements.

5. Uphold Integrity In Financial Reporting

5.1 Compliance with applicable financial reporting standards

The Board aims to provide and present a clear, balanced and comprehensive assessment of the Group’s financial performance and prospects, primarily through the annual and quarterly financial statements to shareholders as well as the Statement by the Chairman in the Annual Report and Management Discussion & Analysis. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes, ensures its compliance with applicable financial reporting standards and regulatory requirements as well as the quality of its financial reporting.



5. Uphold Integrity In Financial Reporting (Cont’d)

5.1 Compliance with applicable financial reporting standards (Cont’d)

The Board is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of the results of their operations and cash flows for the year ended on that date. The Directors have ensured that the financial statements of the Group and of the Company are drawn up in accordance with the requirements of the applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standard Board and the provisions of the Companies Act 2016.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and appropriate judgement and estimates. The Directors also have a general responsibility for taking reasonable steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

5.2 Assessment of suitability and independence of external auditors

Key features underlying the relationship of the Audit Committee with the internal and external auditors are outlined in the Audit Committee’s terms of reference.

The Group maintains a close and transparent relationship with its external auditors in seeking professional advice and ensuring compliance with the relevant accounting standards.

The external auditors of the Company fulfil an essential role on behalf of the Company in giving a reasonable assurance to the shareholders and others, of the reliability of the financial statements of the Company.

The external auditors will bring to the attention of the Board, the Audit Committee and the Company management any significant deficiencies in the Company’s systems of reporting, internal control and compliance with approved accounting standards arising from findings during the course of audit. The external auditors of the Company are invited to attend at least one (1) meeting of the Audit Committee a year in the absence of the Executive Directors and management.

A summary of the works of the Audit Committee during the financial year is set out under the Audit Committee Report in this Annual Report.

The Audit Committee discusses the nature and scope of audit and reporting obligations with the external auditors before commencement of audit engagement. It is also the practice of the Audit Committee to respond to auditors’ enquiries and recommendations, if any, to ensure compliance with the various approved accounting standards in the preparation of the Group’s financial statements.

The Audit Committee is empowered by the Board to review all issues in relation to the appointment and re-appointment, resignation or dismissal of external auditors. The Board, via the Audit Committee, had assessed and affirmed the independence and suitability of the external auditors to continue in office until close of the upcoming AGM.

The Audit Committee undertook an assessment of suitability and independence of the external auditors through a performance and independence checklist. The checklist includes, inter-alia, the external auditors’ quality of service, audit team, independence and objectivity, audit scope and planning, audit fees, non-audit services provided by external auditors to the Group and audit communications. The Management team shared their views and issues in respect of the performance of the external auditors.

The external auditors have confirmed, at an Audit Committee meeting that, they are, and have been, independent throughout the conduct of audit engagement in accordance with the terms of relevant professional and regulatory requirements.

The Board, vide the Audit Committee, is satisfied with the technical competency, suitability and independence of the external auditors during the financial year ended 31 October 2017 and will recommend their re-appointment to the shareholders at the coming AGM.

The Audit Committee and the Board will look into policy governing the circumstances under which contracts for provision of non-audit services could be entered into by the external auditors.



6. Recognise And Manage Risks

6.1 Sound framework to manage risks

An overview of the state of internal controls and risk management within the Group is spelled out in this Annual Report under the Statement on Risk Management and Internal Control (“SORMIC”).

The Board has an overall responsibility in maintaining a sound internal control and risk management system that provide reasonable assurance of effective and efficient operations and compliance with the internal procedures and guidelines.

The Group has outsourced the activities and function of the internal audit to an independent professional firm that reports directly to the Audit Committee. The internal audit plan outlining audit coverage and scope of work is presented to the Audit Committee for consideration and approval annually. Upon completion of each cycle of audit, Internal Audit Reports encompassing audit findings together with recommendations and management response are presented at the meetings of the Audit Committee. Senior and functional line management are tasked to ensure management action plans are implemented within the agreed time frame with the internal auditors undertaking regular follow-up audits to monitor the status of compliance.

7. Ensure Timely And High Quality Disclosure

7.1 Corporate disclosure policy

The Board acknowledges the importance of ensuring prompt dissemination of information to shareholders and regulatory bodies with the intention of giving as clear and complete information of the Group’s position and financial performance as possible within the bounds of practicality and legal and regulatory framework governing release of material and price sensitive information.

The Board will take reasonable steps to ensure that all investors will enjoy equal access to such information to avoid an individual or selective disclosure.

The Board has not formalised a corporate disclosure policy but has referred to the MMLR to ensure comprehensive, timely and accurate disclosure of the relevant Group’s business affairs to the regulators, shareholders and other stakeholders.

7.2 Leverage on information technology for effective dissemination of information

WEC’s corporate website at www.wec.com.my continues to provide information relating to its businesses, financial performance, operations and corporate development through annual reports, quarterly reports, circulars and various announcements.

8. Strengthen Relationship Between WEC And Shareholders

8.1 Encourage Shareholders’ Participation at General Meetings

The Board encourages shareholders’ participation and as such, the AGM is an important event as the Board is given the opportunity to have a dialogue with the shareholders following presentation of the annual audited financial results and to address any questions that may arise. The notice of Meeting is sent at least twenty-one (21) days before the meeting date. All suggestions and comments put forth by shareholders will be noted by the Board for consideration.

At the same time, this Annual Report provides comprehensive source of information on the Group’s financial and operational performance. The Board members readily avail themselves to answer any questions that may arise as shareholders may seek more information than what is available in the Annual Report and/or circulars.

The Company recognises the importance of accountability to its shareholders and investors through proper communication. The Board acknowledges that shareholders should be informed of all material business matters which influence the Group. The Board will ensure timely release of quarterly financial results to Bursa Securities, other information and corporate actions taken by the Group that warrant announcements to Bursa Securities under the MMLR to provide shareholders with a current overview of the Group’s performance and development of other corporate affairs.


8. Strengthen Relationship Between WEC And Shareholders (Cont’d)

8.2 Encourage Poll voting

Pursuant to the Listing Requirements, all listed companies are required to conduct poll voting for the resolutions put up at its general meeting effective 1 July 2016. All resolutions to be voted at this AGM will be voted on by poll, instead of by show of hands.

Poll voting will more accurately and fairly reflects shareholders’ views by ensuring that every vote is recognised, in accordance with the principle that every share carries one vote. This practice thus enforces greater shareholders’ rights representation.

8.3 Effective Communication and Pro-active Engagement with Shareholders

The Board is committed under its corporate governance obligation to have an effective channel of communication with shareholders and the investing public. Its primary channel and forum for dialogue, engagement and communication with its shareholders is during the general meetings.

The general meetings, coupled with the Annual Reports, communicate comprehensive information of the financial results and activities undertaken by the Group during the year under review.

Shareholders are encouraged to attend the general meetings and are given sufficient time and opportunity to participate in the proceedings, ask questions about the resolutions being proposed and the operations of the Group, and communicate their expectations and possible concerns.

In addition, the Board and Management welcome visits by investors and interested parties as the Board believes that this will give them a better appreciation and understanding of the Group’s performance and for the Board to have awareness of the expectations and concerns of investors and such interested parties. Besides, the Group also maintains an official website at www.wec.com.my that provides an easy and convenient avenue for public to gain access to more information of the Group.

However, in any circumstances, while the Group endeavours to provide as much information as possible to its shareholders and stakeholders, it is mindful of the legal and regulatory framework governing the release of material and price-sensitive information. The Directors are cautious not to provide undisclosed material information about the Group and frequently stressed the importance of timely and equal dissemination of information to all shareholders and stakeholders.



AUDIT COMMITTEE REPORT

Members of the Committee

Lau Chia En - Chairman, Independent Non-Executive Director Datuk Haji Muhamad Shapiae Bin Mat Ali - Independent Non-Executive Director Eng Teik Hiang - Non-Independent Non-Executive Director

The Audit Committee was established on 11 November 1997 to act as a Committee of the Board of Directors, in carrying out its responsibilities and meeting the corporate governance requirements.

Meeting Attendance

During the financial year, a total of 4 Audit Committee Meetings were held and the details of attendance are as follows:

Attendance

Lau Chia En 4

Datuk Haji Muhamad Shapiae Bin Mat Ali 4

Eng Teik Hiang 4

Summary of Works of the Audit Committee

During the financial year under review, the Audit Committee had discharged its functions and carried out its duties as set out in its terms of reference:

(a) Reviewed the financial and operational performance as well as corporate development of the Group on quarterly basis; (b) Reviewed the quarterly financial results and recommended to the Board for approval;(c) Reviewed and recommended the re-appointment of Messrs. KPMG PLT as Auditors for the financial year under review;(d) Reviewed the audited financial statements. This was to ensure that the audited financial statements were drawn up in

accordance with the provisions of the Companies Act 2016, and the applicable Malaysian Financial Reporting Standards (“MFRS”);

(e) Reviewed and considered with the external auditors, the statutory audit plan for the financial year under review and updates on the development of applicable MFRS and all other related statutory requirements in Malaysia;

(f) Met with the external auditors without the presence of the Executive Directors and senior management staff to discuss issues of concern to the auditors;

(g) Reviewed and accepted the audit findings in respect of the financial statements of the Group for the financial year ended 31 October 2017 as presented by the external auditors;

(h) Reviewed the external auditors’ report on the Statement on Risk Management and Internal Control after review by the internal auditors for inclusion in the Annual Report;

(i) Reviewed and recommended to the Board for approval the audit fees payable to the external auditors in respect of the financial year ended 31 October 2017;

(j) Reviewed the internal audit function and record;(k) Accepted the internal audit reports and follow-up reports on the Group’s operations to ensure compliance with internal

controls and procedures set up within the Group;(l) Reviewed and approved the Audit Committee Report for inclusion in the Annual Report;(m) Reviewed and confirmed the minutes of the Audit Committee Meetings; and(n) Reviewed the related party transactions of a revenue or trading nature, and conflict of interest situation that may arise

within the Group, including any transaction, procedure, material litigation or course of conduct that raises the question on management integrity.

Internal Audit Function

The Group has appointed an independent professional firm to carry out the internal audit activities.

The Internal Audit function has been discharging its duties in monitoring the effectiveness of the existing internal control systems of the Group. The independent internal audit function and activities were carried out according to the annual internal audit plan and schedule, which had been approved by the Audit Committee. The objectives of the internal audit are to assess the adequacy and integrity of the system of internal control and to ensure that the Group’s policies and procedures are complied with.


AUDIT COMMITTEE REPORT (Cont’d)

Internal Audit Function (Cont’d)

It is the responsibility of the internal auditor to provide the Audit Committee with independent and objective reports on the state of internal control of the various operating units within the Group and the extent of compliance of the units with the Group’s established policies and procedures as well as relevant statutory requirements.

During the financial year, the internal audit function presented two reports to the Audit Committee covering various processes. The internal auditors also followed up on audit recommendations of prior audits to ensure that an adequate action plan has been put in place to improve the internal controls. The audit ascertains that the risks are effectively mitigated by the controls.

The internal auditors carried out audit on the following areas:

(a) Supply Chain Management(b) Purchasing and sub-contractors(c) Accounts payable(d) Customer relationship management(e) Sales transactions(f) Accounts receivable and credit control

The Internal Audit Function is elaborated further under the Statement on Risk Management and Internal Control in this Annual Report.


The Board of Directors of Wong Engineering Corporation Berhad (“WEC” or “The Company”) is pleased to present herewith the Statement on Risk Management and Internal Control (“SORMIC”) which outlines the nature and scope of internal controls and risk management of the Group during the financial year ended 31 October 2017. This Statement is prepared pursuant to paragraph 15.26 (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Board Responsibility

The Board recognises the importance of a sound system of internal control and an effective risk management framework for good corporate governance. The Board further affirms its overall responsibility for the Group’s system of internal control and risk management and for reviewing the adequacy and integrity of these systems.

However, in view of the limitations underlying any system of risk management and internal controls which covers financial, operational and compliance controls, the system is designed mainly to manage, rather than to eliminate risks that may impede the achievement of the Group’s objectives. Accordingly, it can only provide reasonable but not absolute assurance against any material misstatement, loss or fraud.

Following the publication of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (the “Internal Control Guidance”), the Board confirms that there is an on-going process for identifying, evaluating and managing significant risks faced by the Group.

Risk Management Framework

The Risk Management Committee (“RMC”) was established by the Board to undertake the responsibility of reviewing the development of risk management framework, align with business and operations requirements which supports the maintenance of a strong control environment. The Group has established an on-going process for identifying, and documenting major risks, evaluating the potential impact and likelihood of occurrence and mitigating controls through the adoption of risk management methodology and approach. This process is reviewed by RMC and the Audit Committee (“AC”) and report to the Board directly.

Operational wise, a Risk Management Unit (“RMU”) has been established. The members of RMU consist of all Heads of Department within the Group. The RMU meets from time-to-time to review and update the risk register, and assess status of risk mitigation action plan. The risk governance structure is aligned across business units and subsidiaries of the Group through the streamlining of the risk framework, policies and organisational structures in order to embed and enhance the risk management and risk culture based on the Group’s growth and expansion plan.

In general, the risk management process encompasses the process for the identification, assessment, management and monitoring risks which could impact the objectives of the Group. Existing controls to mitigate and to manage risks are then re-assessed and strengthened. The Board believes that the Group’s risk management framework are integral to maintaining a sound risk management and internal control system through the establishment of RMC with the responsibility of identifying, communicating the key risks to the Board, formalization of policy and procedures to outline the risk management framework for the Group, to identify principal risk faced by operating units, to articulate Group’s risk appetite and parameters, both qualitative and quantitative and to appoint risk committee to coordinate the risk management activities within the Group, to supervise the policy implementation and documentation at Group level. In short, the RMC is overall responsible for maintaining, monitoring and evaluating the effectiveness of the risk management system on an on-going basis.

Internal Audit Function

The Group’s internal audit function, which is outsourced to a firm of professionals, assists the Board and the AC in providing independent assessment of the adequacy, efficiency and effectiveness of the Group’s internal control system. To ensure independence from Management, the internal auditor has direct reporting lines to the AC.

The internal audit plan is approved by the AC and audit reports and the status of the audit plan are presented to the AC. Audits are carried out on a risk based approach, in cognisance with the Group’s objectives and policies in the context of its evolving business and regulatory environment, taking into consideration input of the senior management and the Board. Significant findings and recommendations for improvements are highlighted to the AC, with periodic follow-up and reviews of action plans.

During the financial year under review, two cycles of internal audit were being carried out for WEC. The costs incurred for the internal audit function for the financial year ended 31 October 2017 amounted to approximately RM 15,900.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (Cont’d)

Other Risk And Control Processes

Apart from risk management and internal audit, the Board has initiated the following processes to provide assurance to the Board on the proper conduct of the Group’s business operations:

• A process of hierarchical reporting has been established to ensure appropriate segregation of duties and to provide for proper documentation and an auditable trail of accountability.

• A formal and well defined scope of responsibility and delegation of authority has been established through the Board Charter/terms of reference and organizational structures.

• Board and AC meetings are carried out to access the overall performance and internal controls of the Group.• The Audit Committee reviews the financial results and evaluates explanations and reasons for any significant unusual

variances.• The RMU comprising senior management from each subsidiary who review operationally their respective business units and

report to RMC in order to assist RMC in discharging their oversight role on the Group’s activities.• The professionalism and competency of staff are being emphasized through continuous training and regular performance

evaluation.• Regular operation and management meetings were held to discuss the financial and operational matters to ensure proper

control in all facets.• The Group uses the SAP system in its operations and financial reporting. The control features embedded in the system

enhance the control environment of the Group.

Effectiveness of Internal Control and Risk Management

The review and assurance of the system of internal control is an ongoing process. It is continuously reviewed by the Internal Audit and Audit Committee and weaknesses and incidents of non-compliance with policies and procedures are highlighted to the management for improvement actions to achieve business objectives.

Weaknesses In Risk Management and Internal Controls That Result In Material Losses

The Board remains committed towards establishing a robust system of risk management and internal control and is of the opinion that there were no material losses, contingencies or uncertainties that would require disclosure in the Group’s Annual Report during the year resulting from weaknesses in risk management and internal control. Management continues to take measures to strengthen the control environment.

Assurance from Management

The Board has received assurance from the Executive Director that the Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects, during the financial year under review and up to the date of this Statement.

The Board is of the view that the system of risk management and internal controls in place are satisfactory to protect the Group’s interest and that of its stakeholders, particularly on enhancing shareholder value.

Review of the Statement by External Auditors

The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in Recommended Practice Guide (“RPG”) 5 (Revised 2015), Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the year ended 31 October 2017, and reported to the Board that nothing has come to their attention that cause them to believe that the statement intended to be included the annual report of the Group, in all material respects:

(a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or

(b) is factually inaccurate.

RPG 5 (Revised 2015) does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and management thereon. The auditors are also not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems.


STATEMENT OF PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN SHARES

1. INTRODUCTION

1.1 Renewal of Authority For Wong Engineering Corporation Berhad (“WEC” or “the Company”) To Purchase Its Own Shares

At the Company’s last Annual General Meeting held on 25 March 2017, the Board of Directors had obtained shareholders’ approval for the Directors to purchase shares on Bursa Malaysia Securities Berhad (“Bursa Securities”) not exceeding ten (10%) per centum of the total number of issued shares of the Company.

The authority obtained by the Board of Directors for purchasing the Company’s own shares in accordance with Bursa Securities Listing Requirements governing share buy-back by listed companies, lapses at the conclusion on the forthcoming Annual General Meeting (“AGM”) unless a new mandate is obtained from shareholders to authorise Directors of the Company to purchase its own shares.

It is the intention of WEC to renew the authority to purchase its own shares in the aggregate up to ten (10%) per centum of its total number of issued shares and the ten (10%) per centum shall always take into account any shares bought back and retained as treasury shares in accordance with Section 127 of the Companies Act 2016 and the requirements of Bursa Securities and/or any other relevant authorities (“Proposed Share Buy-Back” or “the Proposal”). Consequently, on 12 February 2018, the Company announced that the Board of Directors proposes to seek a fresh mandate from the shareholders for the Company to purchase its own shares on Bursa Securities through its appointed stockbroker previously approved by Bursa Securities. Such authority, if so approved, commences immediately upon obtaining the shareholders’ approval in this forthcoming AGM until the conclusion of the next AGM (“Proposed Authorised Period”). As at 23 January 2018 the issued share capital of the Company is RM45,844,000 comprising 91,688,000 ordinary shares which is inclusive of 146,900 treasury shares held by the Company.

Upon purchase by the Company of its own shares, the purchased shares will be retained as treasury shares. The Company would have the opportunity to distribute those shares as share dividends, thus benefiting the shareholders. The treasury shares may also be resold on the open market of Bursa Securities at a price higher than the purchase price, thereby realizing a potential gain for WEC without affecting the Company’s issued share capital.

1.2 Purpose of Statement

The purpose of this Statement is to provide relevant information on the Proposed Share Buy-Back and to seek your approval for the ordinary resolution which is to give effect to the Proposed Share Buy-Back to be tabled at the forthcoming AGM. A notice of the AGM together with the Proxy Form are set out in this Annual Report respectively.

2. RATIONALE FOR THE PROPOSED RENEWAL OF AUTHORITY FOR WEC TO PURCHASE ITS OWN SHARES

The Directors of the Company are of the opinion that empowering the Company to undertake the Proposed Share Buy-Back is to help stabilize the stock market and in the best interest of the Company. It is to be carried out when the share price is transacted at level which does not reflect the potential earning capability of the Group. The Proposed Share Buy-Back is expected to have the effect of stabilising the supply and demand as well as the price of the shares of the Company on Bursa Securities which may in turn have a favourable impact on the share price of the Company.

3. EVALUATION OF THE PROPOSED RENEWAL OF AUTHORITY FOR WEC TO PURCHASE ITS OWN SHARES

3.1 Advantages

The potential advantages of the Proposed Share Buy-Back are as follows:-• Allows the Company to take preventive measures against excessive speculation in particular, when the Company’s

shares are undervalued;• Allows the Company more flexibility in fine-tuning its capital structure;• To stabilise a downward trend of the market price of the Company’s shares;• Treasury shares can be treated as long term investments. It makes business sense to invest in our own Company

as the Board of Directors are confident of WEC’s future prospects and performance in the long term;• Resale of treasury shares at prices higher than the purchase prices when the market price picks up will be

realized and as a result increase the working capital and net assets of the Company; and• In the event that the treasury shares are distributed as dividend by the Company, it may then serve to reward the

shareholders of the Company.


STATEMENT OF PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN SHARES (Cont’d)

3. EVALUATION OF THE PROPOSED RENEWAL OF AUTHORITY FOR WEC TO PURCHASE ITS OWN SHARES (CONT’D)

3.2 Disadvantages

The potential disadvantages of the Proposed Share Buy-Back are as follows:-• The purchase can only be made out of distributable reserves, resulting in a reduction of the amount available for

distribution as dividends and bonus issues to shareholders; and • The purchases of existing shares involve cash outflow from the Company which may otherwise be retained in the

business to generate further profits.

4. PARTICULARS OF THE PROPOSED RENEWAL OF AUTHORITY FOR WEC TO PURCHASE ITS OWN SHARES

Funding

The Proposed Share Buy-Back will allow the Directors to purchase WEC’s shares at any time within the Proposed Authorised Period. The proposed purchase by the Company of its own shares must be made wholly out of its retained profits. There are no restrictions on the types of funds which can be utilized so long as the buy-back is backed by an equivalent amount of retained profits. Based on the audited financial statements as at 31 October 2017, the Company’s retained profits is RM4,629,480.

The Proposed Share Buy-Back shall be financed from internally generated funds and/or bank borrowings. The amount of bank borrowings to be used for the Proposed Share Buy-Back would depend on the prevailing interest rates and the repayment capabilities.

5. EFFECTS OF PROPOSED RENEWAL OF AUTHORITY FOR WEC TO PURCHASE ITS OWN SHARES

5.1. Share Capital

There will be no effect on the current issued share capital of WEC if the shares so purchased are retained in treasury but the rights attaching to the treasury shares as to voting, dividends and participation in other distribution or otherwise will be suspended. While the WEC’s shares purchased remain as treasury shares, the Companies Act 2016 prohibits the taking into account of such shares in calculating the number or percentage of shares in the Company for any purpose whatsoever including substantial shareholdings, takeovers, notices, requisitioning of meetings and the result of votes on resolutions.

5.2. Net Assets (“NA”)

The Proposed Share Buy-Back is likely to reduce the NA per share of the Company and the Group if the purchase price exceeds the audited NA per share of the Group at the time of purchase and will increase the NA per share of the Group of the purchase price is less than the audited NA per shares of the Company and the Group at the time of purchase.

For shares bought back which are kept as treasury shares, upon resale of such shares, the NA of the Group will increase assuming that a gain has been realized. The quantum of the increase in NA will depend on the actual selling price of the treasury shares and the number of treasury shares resold.

5.3 Working Capital

The Proposed Share Buy-Back will reduce the working capital of the Group, the quantum of which is dependent on actual number of shares bought back and actual purchase prices of the WEC’s shares. However, in the opinion of the Directors, the Proposed Shares Buy-Back whether cancelled or kept as treasury is not expected to have a significant effect on the working capital of the Company.

5.4. Earnings

The effect of the Proposed Share Buy-Back on the earnings of the Group will depend on the actual purchase prices of WEC’s shares, the number of shares purchased and the effective funding cost of the purchases. Generally, a lesser share capital subsequent to the cancellation of the shares bought-back or either kept as treasury shares will have a positive impact, all else being equal, on the Group’s Earnings Per Share (“EPS”).


STATEMENT OF PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN SHARES (Cont’d)

6. OTHER DISCLOSURES IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY FOR WEC TO PURCHASE ITS OWN SHARES

6.1 Public Shareholding Spread

WEC’s public shareholding spread as at 23 January 2018 being the latest practicable date is approximately 41.63%.

6.2 Malaysian Code On Take-Overs And Mergers 2016 (“the Code”)

The Proposed Share Buy-Back if carried out in full (whether shares are cancelled or treated as treasury shares), may result in a substantial shareholder and/or parties acting in concert with it incurring a mandatory general offer obligation. In this respect, the Board is mindful of the provision under the Code.

6.3 Purchase of Shares

There was no purchase of shares made during the financial year ended 31 October 2017.

7. DIRECTORS’, SUBSTANTIAL SHAREHOLDERS, PERSONS CONNECTED WITH DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST

None of the Directors, Substantial Shareholders, persons connected with Directors and Substantial Shareholders have any interest, direct or indirect, in the Proposed Share Buy-Back and resale of treasury shares of the Company.

8. DIRECTORS’ RECOMMENDATION

The Directors, having considered all aspects of the Proposed Share Buy-Back, are of the opinion that the Proposed Share Buy-Back is in the best interest of the Group. Accordingly, they recommended that you vote in favour of the ordinary resolution for the Proposed Share Buy-Back to be tabled at the forthcoming AGM.

9. BURSA SECURITIES

Bursa Securities has not perused this statement prior to its issuance. Bursa Securities takes no responsibility for the contents of this statement, makes no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or reliance upon the whole or any part of the contents of this statement.

10. DIRECTORS’ RESPONSIBILITY STATEMENT

This Statement has been seen and approved by the Board and they collectively and individually accept full responsibility for the accuracy of the information given and confirm that after making all reasonable enquiries to the best of their knowledge and belief, there are no other facts the omission of which would make any statement misleading.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the Registered Office of the Company during normal office hours on Mondays to Fridays (except public holidays) from the date of this Annual Report up to and including the date of AGM:

11.1 the Constitution (Memorandum and Articles of Association) of the Company;

11.2 the Audited Financial Statements of the Group for the past two financial years ended 31 October 2016 and 2017.


The following information is presented in compliance with the Main Market Listing Requirement (“MMLR”) of Bursa Securities:

1. Utilisation of ProceedsNo proceeds were raised from any corporate exercise during the financial year.

2. Audit Fees and Non-Audit FeesThe amount of audit fees and non-audit fees paid to the external auditors of the Group during the financial year ended 31 October 2017 are as follows:

Paid By Audit Fees (RM) Non-Audit Fees (RM)

Company 29,000 7,000

Group 114,000 7,000

3. Material Contracts involving Directors and Substantial Shareholders There were no material contracts entered into by the Company and its subsidiaries, involving the Directors’ and substantial shareholders’ interests during the financial year ended 31 October 2017.

ADDITIONAL COMPLIANCE INFORMATION


STATEMENT OF DIRECTORS’ RESPONSIBILITIES

Statement of Directors’ Responsibilities in relation to the preparation of audited financial statements pursuant to Paragraph 15.26(a) of the MMLR of Bursa Securities

The Directors are responsible for ensuring that the audited financial statements of the Group and of the Company are prepared in accordance with the requirements of the applicable Financial Reporting Standards in Malaysia, the provisions of the Companies Act 2016 and the MMLR of Bursa Securities.

The Directors are also responsible for ensuring that the audited financial statements of the Group and of the Company are prepared with reasonable accuracy from the accounting records which give a true and fair view of the state of affairs of the Group and of the Company as at 31 October 2017 and of the results and the cash flows of the Group and of the Company for the financial year ended on that date.

The Directors are satisfied that in preparing the financial statements of the Group for the financial year ended 31 October 2017, the Group has used appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group and of the Company to prevent and detect fraud and other irregularities.


STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY

Wong Engineering Corporation Berhad (“WEC”) is a responsible corporate citizen and we aspire to operate our business in an ethical manner where we will respect and enhance the value of our environment, community, employees, customers, suppliers and all other stakeholders wherever we operate.

We shall communicate and inculcate a culture of Corporate Social Responsibility (“CSR”) in our employees and our stakeholders on the 4 main areas that we are operating in: the workplace; the marketplace; the community and the environment.

The Workplace

We recognise that our employees are important assets with regards to the growth of the business and in maintaining a harmonious working environment. We take good care of the welfare of our employees and employ them under fair and equitable terms and we are committed to ensure fairness in career opportunity, and give priority to the safety and well-being of our employees in the workplace. In regards to the occupational safety and health (OSHA), the Group has established a “Safety and Health Policy” and set up the Safety Committee and an Emergency Response Team to meet the safety standard of OSHA. During the year under review, the Group organised numerous activities to build esprit de corps of the employees and create a harmonious working environment such as trainings, seminars and workshops to upgrade and enhance the skills and knowledge of employees, appreciation token for the best exam result of employees’ children for UPSR, PT3 and SPM.

The Marketplace

The Group believes that effective CSR can deliver benefits to our business and, in turn, to our customers and vendors:

• By inculcating integrity and professionalism in procurement and supply chain management and to comply with a standard procedure in qualification of vendors.

• By continuously upgrading the technical skills of the supplier quality team to ensure consistency in achieving quality levels beyond customers’ expectations.

• By adhering to the International Organisation for Standardisation (ISO) requirements in relation to our Quality Management System.

• By adhering to the occupational safety and health requirements at international standard to assure the safety of the workers and uninterrupted supply of our products to our customers.

• By practising good corporate governance and accountability.

The Community

We recognise our responsibilities as a good neighbour in the community where we work and live in and also to be an active partner in the community service. As part of the community where WEC is located, WEC is a member of Kulim Industrial Tenants’ Association (“KITA”) whose vision is to make “Kulim, the ideal community to live and work in”. WEC is also a member of the KHTP Human Resource Sub-Committee to look after the welfare and safety of employee/employer in the industrial park. During the year, WEC had organised and participated in community service and social activities such as blood donation campaign, community recycling exercise, and charity donation to welfare home.

During the financial year, the Group has made financial contributions and other benefits in kind to governmental agency annual events for development and promotion of sports and recreation, and to community at large of various non-profitable organisations.

The Environment

We are highly conscious of the global warming and climatic changes in the global environment due to industrial activities. In this respect, the Group is ISO 14001 certified to ensure that the Group complies with the global requirement in eliminating the usage of hazardous substance and mitigate the climatic or environmental changes through environmental management.

We are adopting and complying with the requirements of using environmental friendly products in relation to Chlorofluorocarbon (CFC) compliance and Restriction of Hazardous Substances (ROHS) compliance with the ultimate aim of safeguarding our environment.

We have our own waste treatment plant for our plating line and we ensure compliance with the waste management requirements.


DIRECTORS’ REPORTfortheyearended31October2017

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 October 2017.

Principal activities

The Company is principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are as stated in Note 5 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

Subsidiaries

The details of the Company’s subsidiaries are disclosed in Note 5 to the financial statements.

Results

Group CompanyRM RM

Profit for the year attributable to:

Owners of the Company 6,113,982 1,310,394

Non-controlling interest 26,163 -

6,140,145 1,310,394

Reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year under review other than as disclosed in the financial statements.

Dividend

No dividend was paid since the end of the previous financial year. A final single tier dividend of 2 sen per ordinary share totalling RM1,830,822 have been recommended by the Directors in respect of the financial year ended 31 October 2017, subject to approval of the shareholders at the forthcoming Annual General Meeting.

Directors of the Company

Directors who served during the financial year until the date of this report are:

Datuk Haji Muhamad Shapiae Bin Mat Ali - Independent Non-Executive ChairmanYong Loy Huat - Chief Executive OfficerChang Joo Huat - Executive DirectorEng Teik Hiang - Non-Independent Non-Executive DirectorLow Seong Chuan - Redesignate as Executive Director from Non-Independent Non-Executive

Director on 16 August 2017Lau Chia En - Independent Non-Executive Director


Directors’ interests in shares

The interests and deemed interests in the ordinary shares of the Company and of its related corporations (other than wholly owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares At

01.11.2016/* Bought (Sold)At

31.10.2017

Eng Teik Hiang

Deemed interests in the Company:

- others** 199,000 - - 199,000

Yong Loy Huat

Interests in the Company:

- own 12,519,000 1,200,000 - 13,719,000Deemed interests in the Company:

- others*** 4,500,000 - - 4,500,000

Low Seong Chuan


- others 10,000 - - 10,000

Chang Joo Huat


- own 60,000 - - 60,000

* At date of appointment

** Madam Tan Allis is the spouse of Mr. Eng Teik Hiang. In accordance with Companies Act, the interests of Madam Tan Allis in the shares of the Company and of its related corporations shall be regarded as the interests of Mr. Eng Teik Hiang.

*** Madam Low Ah Lin is the spouse of Mr. Yong Loy Huat. In accordance with Companies Act, the interests of Madam Low Ah Lin in the shares of the Company and of its related corporations shall be regarded as the interests of Mr. Yong Loy Huat.

None of the other Directors holding office at 31 October 2017 had any interest in the ordinary shares of the Company and of its related corporations during the financial year.

Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than those fees and other benefits included in the aggregate amount of remuneration received or due and receivable by Directors as shown in the financial statements of the Company or related corporations or the fixed salary of a full time employee of related corporation) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

DIRECTORS’ REPORT (Cont’d)fortheyearended31October2017



Issue of shares and debentures

There were no changes in the issued and paid-up capital of the Company and no debentures were issued during the financial year.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the financial year.

Indemnity and insurance costs

During the financial year, the total amount of insurance cost effected for Directors or officers of the Company is RM11,500.

There was no indemnity given to Directors or officers of the Company during the financial year.

Other statutory information

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.

At the date of this report, there does not exist:

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

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 October 2017 has not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.


Significant event

The details of such event are disclosed in Note 28 to the financial statement.

Auditors

The auditors, KPMG PLT, have indicated their willingness to accept re-appointment.

The auditors’ remuneration is disclosed in Note 16 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Yong Loy HuatDirector

Eng Teik HiangDirector

Penang,

Date : 6 February 2018



STATEMENTS OF FINANCIAL POSITION asat31October2017

Group Company Note 2017 2016 2017 2016

RM RM RM RM

Assets

Property, plant and equipment 3 38,993,398 40,999,103 - -

Investment properties 4 512,250 3,329,537 - -

Investment in subsidiaries 5 - - 63,024,853 62,274,851

Deferred tax assets 6 1,547,315 1,371,000 - -

Total non-current assets 41,052,963 45,699,640 63,024,853 62,274,851

Inventories 7 13,197,528 9,744,293 - -

Trade and other receivables 8 10,352,711 7,418,556 37,093 19,624

Current tax assets 255,135 140,032 - -

Cash and cash equivalents 9 4,588,707 2,112,583 544,393 20,820

Assets classified as held for sale 10 2,765,611 - - -

Total current assets 31,159,692 19,415,464 581,486 40,444

Total assets 72,212,655 65,115,104 63,606,339 62,315,295

Equity

Share capital 11 57,909,068 45,844,000 57,909,068 45,844,000

Reserves 12 1,819,542 7,770,628 4,559,101 15,313,775

Total equity attributable to owners of the Company 59,728,610 53,614,628 62,468,169 61,157,775

Non-controlling interest 76,541 50,378 - -

Total equity 59,805,151 53,665,006 62,468,169 61,157,775

Liabilities

Loans and borrowings 13 1,723,847 2,895,813 - -

Other payable 14 926,547 606,907 936,909 -

Total non-current liabilities 2,650,394 3,502,720 936,909 -

Loans and borrowings 13 2,296,976 1,701,105 - -

Current tax liabilities 365 - - -

Trade and other payables 14 7,459,769 6,246,273 201,261 1,157,520

Total current liabilities 9,757,110 7,947,378 201,261 1,157,520

Total liabilities 12,407,504 11,450,098 1,138,170 1,157,520

Total equity and liabilities 72,212,655 65,115,104 63,606,339 62,315,295

The notes on pages 53 to 97 are an integral part of these financial statements.


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


RM RM RM RM

Revenue 15 42,707,471 33,086,522 1,732,500 167,200

Cost of sales (29,760,839) (27,823,472) - -

Gross profit 12,946,632 5,263,050 1,732,500 167,200

Other income 432,304 1,091,316 8 -

Distribution expenses (703,001) (543,056) - -

Administrative expenses (5,671,170) (6,098,388) (422,114) (583,660)

Other expenses (670,487) (56,900) - -

Results from operating activities 16 6,334,278 (343,978) 1,310,394 (416,460)

Finance costs 18 (338,654) (297,014) - -

Profit/(Loss) before tax 5,995,624 (640,992) 1,310,394 (416,460)

Tax expense 19 144,521 1,365,518 - -

Profit/(Loss) for the year representing total comprehensive income/(expense) for the year 6,140,145 724,526 1,310,394 (416,460)

Profit/(Loss) for the year representing total comprehensive income/(expense) for the year attributable to:

Owners of the Company 6,113,982 714,851 1,310,394 (416,460)

Non-controlling interest 26,163 9,675 - -

Profit/(Loss) for the year representing total comprehensive income/(expense) for the year 6,140,145 724,526 1,310,394 (416,460)

Basic earnings per ordinary share (sen) 20 6.68 0.79


fortheyearended31October2017


STATEMENTS OF CHANGES IN EQUITYfortheyearended31October2017

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STATEMENTS OF CHANGES IN EQUITY (Cont’d)fortheyearended31October2017


STATEMENTS OF CASH FLOWS fortheyearended31October2017


RM RM RM RM

Cash flows from operating activities

Profit/(Loss) before tax from continuing operations 5,995,624 (640,992) 1,310,394 (416,460)

Adjustments for:

Depreciation of property, plant and equipment 3 4,284,870 4,715,580 - -

Depreciation of investment properties 4 51,676 67,151 - -

Interest expense 18 338,654 297,014 - -

Interest income 16 (28,645) (6,771) (8) -

Gain on disposal of plant and equipment 16 - (492,808) - -

Plant and equipment written off 16 484,368 - - -

Dividend income 16 - - (1,550,000) -

Operating profit/(loss) before changes in working capital 11,126,547 3,939,174 (239,614) (416,460)

Changes in working capital:

Inventories (3,453,235) 1,247,395 - -

Trade and other receivables (2,934,155) 1,159,808 (17,469) 402,641

Trade and other payables 770,526 (2,717,674) (19,350) 18,264

Cash generated from/(used in) operations 5,509,683 3,628,703 (276,433) 4,445

Dividend received - - 1,550,000 -

Tax (paid)/refunded (146,532) 60,016 - -

Net cash from operating activities 5,363,151 3,688,719 1,273,567 4,445

Cash flows from investing activities

Acquisition of plant and equipment A (1,093,533) (221,121) - -

Proceeds from disposal of plant and equipment - 1,200,566 - -

Interest received 28,645 6,771 8 -

Investments in subsidiaries - - (750,002) -

Net cash (used in)/from investing activities (1,064,888) 986,216 (749,994) -



RM RM RM RM

Cash flows from financing activities

Repayment of other payable (677,390) (666,668) - -

Drawdown of other borrowing 903,500 - - -

Repayment of finance lease liabilities (1,694,022) (1,642,772) - -

Repurchase of treasury shares - (2,646) - (2,646)

Interest paid (338,654) (297,014) - -

Net cash used in financing activities (1,806,566) (2,609,100) - (2,646)

Net increase in cash and cash equivalents 2,491,697 2,065,835 523,573 1,799

Cash and cash equivalents at 1 November 2016/2015 2,097,010 31,175 20,820 19,021

Cash and cash equivalents at 31 October B 4,588,707 2,097,010 544,393 20,820

Notes to statements of cash flows

A. Acquisitionofplantandequipment

During the financial year, the Group acquired plant and equipment with an aggregate cost of RM2,763,533 (2016 : RM2,349,121) of which RM1,093,533 (2016 : RM221,121) was paid by cash. The balance of RM230,000 (2016 : RM2,128,000) was financed through finance lease creditor while the remaining sum of RM1,440,000 (2016 : RM Nil) was under a deferred payment scheme agreed with the machine vendor over the next 3 years period and are classified as “other payable”.

B. Cashandcashequivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts:


RM RM RM RM

Short term deposits placed with licensed banks 9 881,153 - - -

Cash and bank balances 9 3,707,554 2,112,583 544,393 20,820

Bank overdrafts 13 - (15,573) - -

4,588,707 2,097,010 544,393 20,820


STATEMENTS OF CASH FLOWS (Cont’d)fortheyearended31October2017


NOTES TO THE FINANCIAL STATEMENTS

Wong Engineering Corporation Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are as follows:

Principal place of business

Lot 24, Jalan Hi-Tech 4Kulim Hi-Tech Park (Phase 1)09000 KulimKedah Darul Aman

Registered office

Suite 16-1 (Penthouse Upper)Menara Penang Garden42A, Jalan Sultan Ahmad Shah10050 Penang

The consolidated financial statements of the Company as at and for the financial year ended 31 October 2017 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”). The financial statements of the Company as at and for the financial year ended 31 October 2017 do not include other entities.

The Company is principally engaged in investment holding activities while the other Group entities are principally engaged in manufacture of high precision metal stamped parts, sheet metals and turned metal components, trading, marketing and retailing of industrial and consumer products and design, manufacture and supply of complex welded frame structures, related modules and systems, provision of general building construction and infrastructure works and provision of property development and related business.

These financial statements were authorised for issue by the Board of Directors on 6 February 2018.

1. Basis of preparation

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2017• Amendments to MFRS 12, DisclosureofInterestsinOtherEntities(AnnualImprovementstoMFRSStandards

2014-2016Cycle)• Amendments to MFRS 107, StatementofCashFlows–DisclosureInitiative• Amendments to MFRS 112, IncomeTaxes–RecognitionofDeferredTaxAssetsforUnrealisedLosses

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018• MFRS 9, FinancialInstruments(2014)• MFRS 15, RevenuefromContractswithCustomers• Clarifications to MFRS 15, RevenuefromContractswithCustomers• IC Interpretation 22, ForeignCurrencyTransactionsandAdvanceConsideration• Amendments to MFRS 1, First-timeAdoptionofMalaysianFinancialReportingStandards(AnnualImprovements

toMFRSStandards2014-2016Cycle)• Amendments to MFRS 2, Share-basedPayment–ClassificationandMeasurementofShare-basedPayment

Transactions• Amendments to MFRS 4, InsuranceContracts–ApplyingMFRS9FinancialInstrumentswithMFRS4Insurance

Contracts• Amendments to MFRS 128, Investments inAssociates and Joint Ventures (Annual Improvements to MFRS

Standards2014-2016Cycle)• Amendments to MFRS 140, Investment Property – TransfersofInvestmentProperty

http://masb.org.my/pdf/MFRS 1 042015.pdf

http://masb.org.my/pdf/MFRS 140 042015.pdf


1. Basis of preparation (Cont’d)

(a) Statement of compliance (Cont’d)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019• MFRS16,Leases• ICInterpretation23,UncertaintyoverIncomeTaxTreatments• AmendmentstoMFRS9,PrepaymentFeatureswithNegativeCompensation• AmendmentstoMFRS128,Long-termInterestsinAssociatesandJointVentures

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021• MFRS17,InsuranceContracts

MFRSs, Interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed• AmendmentstoMFRS10,ConsolidatedFinancialStatementsandMFRS128, Investments inAssociatesand

JointVentures–SaleorContributionofAssetsbetweenanInvestoranditsAssociateorJointVenture

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations:

• from the annual period beginning on 1 November 2017 for those amendments that are effective for annual periods beginning on or after 1 January 2017, as applicable.

• from the annual period beginning on 1 November 2018 for those accounting standards, amendments and interpretation that are effective for annual periods beginning on or after 1 January 2018, as applicable.

• from the annual period beginning on 1 November 2019 for the accounting standards, amendments and interpretation that are effective for annual periods beginning on or after 1 January 2019, as applicable.

• from the annual period beginning on 1 November 2021 for the accounting standard that is effective for annual periods beginning on or after 1 January 2021, as applicable.

The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and of the Company except as mentioned below:

(i) MFRS 15, Revenue from Contracts with Customers

MFRS 15 replaces the guidance in MFRS 111, ConstructionContracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, TransfersofAssetsfromCustomers and IC Interpretation 131, Revenue-BarterTransactionsInvolvingAdvertisingServices.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.

(ii) MFRS 9, Financial Instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments:RecognitionandMeasurement on the classification and measurement of financial assets and financial liabilities, and on hedge accounting.


(iii) MFRS 16, Leases

MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, DeterminingwhetheranArrangementcontainsaLease, IC Interpretation 115, OperatingLeases–IncentivesandICInterpretation127,EvaluatingtheSubstanceofTransactionsInvolvingtheLegalFormofaLease.


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)



1. Basis of preparation (Cont’d)

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 to the financial statements.

(c) Functional and presentation currency

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

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes:-

(i) Note 6 - Deferred tax assets

Estimating the deferred tax assets to be recognised requires a process that involves determining appropriate tax provisions, forecasting future years’ taxable income and assessing our ability to utilise tax benefits through future earnings. The actual utilisation of tax benefit may be different from expected.

(ii) Note 7 - Net realisable value of inventories

The management reviews for obsolescence and decline in net realisable value below cost. This review requires judgement and estimates. Possible changes in these estimates could result in revision to the valuation of inventories.

2. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.


2. Significant accounting policies (Cont’d)

(a) Basis of consolidation (Cont’d)

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;

less• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

(iii) Acquisitions of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against the Group’s reserves.

(iv) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.





(b) Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss.

(c) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost.

(iii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

(iv) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.




(c) Financial instruments (Cont’d)

(iv) Regular way purchase or sale of financial assets (Cont’d)

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a

receivable from the buyer for payment on the trade date.

(v) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

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

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” and “other expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.




(d) Property, plant and equipment (Cont’d)

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The depreciation rates for the current and comparative periods based on their estimated useful lives are as follows:

%Short term leasehold land 2Buildings 2Plant and machinery 10Furniture, fittings and office equipment 6.67 - 50Motor vehicles 16

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

(e) Leased assets

(i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment or as investment property if held to earn rental income or capital appreciation or for both.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statements of financial position.

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




(f) Investment properties

(i) Investment properties carried at cost

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. These include freehold land and buildings held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties. Investment properties are initially and subsequently measured at cost.

Cost includes expenditures that are directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Depreciation for building is charged to the profit or loss on a straight-line basis over the estimated useful lives of 50 years. Freehold land is not depreciated.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.

(ii) Reclassification to/from investment properties

Transfer between investment properties and property, plant and equipment do not change the carrying amount of the property transferred.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(h) Non-current assets held for sale or distribution to owners

Non-current assets comprising assets and liabilities, that are expected to be recovered primarily through sale or distribution to owners rather than through continuing use, are classified as held for sale or distribution.

Immediately before classification as held for sale or distribution, the assets are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs of disposal.

Impairment losses on initial classification as held for sale or distribution and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated.

(i) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any.




(j) Impairment

(i) Financial assets

All financial assets (except for investment in subsidiaries) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories, deferred tax assets and non-current assets classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.




(k) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Ordinary shares

Ordinary shares are classified as equity.

(iii) Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in equity.

Where treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.

(l) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(m) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(n) Revenue and other income

(i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.




(n) Revenue and other income (Cont’d)

(ii) Services

Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the end of the reporting period. The stage of completion is assessed by reference to surveys of work performed.

(iii) Rental income

Rental income from investment properties is recognised in profit or loss on a straight-line basis over the term of the lease.

(iv) Management fee income

Management fee income is recognised as it accrues, when the Group’s or the Company’s right to receive payment is established.

(v) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established.

(vi) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.

(o) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

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

(p) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.




(p) Income tax (Cont’d)

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance, being tax incentive that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against which the unutilised tax incentive can be utilised.

(q) Earnings per ordinary share

The Group presents basic earnings per share data for its ordinary shares (“EPS”).

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

(r) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

(s) Contingencies

(i) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(ii) Contingent assets

When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised.




(t) Fair value measurement

Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

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

Level 3: unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.


3.

Pro

pert

y, p

lant

and

equ

ipm

ent -

Gro

up Sho

rt te

rmle

aseh

old

land RM

Bui

ldin

gs RM

Pla

nt a

ndm

achi

nery RM

Furn

iture

,fit

tings

an

d of

fice

equi

pmen

tR

M

Mot

orve

hicl

es RM

Cap

ital

expe

nditu

re-in

-pro

gres

sR

MTo

tal

RM

Cos

t

At 1

Nov

embe

r 201

55,

262,

364

31,3

37,4

9858

,974

,946

14,3

30,6

642,

158,

324

-11

2,06

3,79

6

Add

ition

s-

-2,

022,

200

106,

610

170,

311

50,0

002,

349,

121

Dis

posa

ls-

-(3

,940

,646

)-

(219

,357

)-

(4,1

60,0

03)

At 3

1 O

ctob

er 2

016/

1 N

ovem

ber 2

016

5,26

2,36

431

,337

,498

57,0

56,5

0014

,437

,274

2,10

9,27

850

,000

110,

252,

914

Add

ition

s-

-2,

099,

988

328,

545

285,

000

50,0

002,

763,

533

Rec

lass

ifica

tion

--

-10

0,00

0-

(100

,000

)-

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e-of

f -

--

-(7

72,9

27)

-(7

72,9

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At 3

1 O

ctob

er 2

017

5,26

2,36

431

,337

,498

59,1

56,4

8814

,865

,819

1,62

1,35

1-

112,

243,

520



NOTES TO THE FINANCIAL STATEMENTS (Cont’d)3.

P

rope

rty,

pla

nt a

nd e

quip

men

t - G

roup

(Con

t’d)

Sho

rt te

rmle

aseh

old

land RM

Bui

ldin

gs RM

Pla

nt a

ndm

achi

nery RM

Furn

iture

,fit

tings

an

d of

fice

equi

pmen

tR

M

Mot

orve

hicl

es RM

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ital

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nditu

re-in

-pro

gres

sR

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tal

RM

Dep

reci

atio

n an

d im

pair

men

t los

s

At 1

Nov

embe

r 201

5

- Acc

umul

ated

dep

reci

atio

n1,

652,

137

11,1

77,5

0543

,711

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301,

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219

-67

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,690

- Acc

umul

ated

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irmen

t los

s-

-35

1,78

6-

--

351,

786

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62,8

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1,03

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9-

67,9

90,4

76

Dep

reci

atio

n fo

r the

yea

r87

,706

612,

322

2,86

8,55

986

0,85

528

6,13

8-

4,71

5,58

0

Dis

posa

ls-

-(3

,241

,528

)-

(210

,717

)-

(3,4

52,2

45)

At 3

1 O

ctob

er 2

016/

1 N

ovem

ber 2

016

- Acc

umul

ated

dep

reci

atio

n1,

739,

843

11,7

89,8

2743

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,130

10,9

23,5

851,

110,

640

-68

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- Acc

umul

ated

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irmen

t los

s-

-35

1,78

6-

--

351,

786

1,73

9,84

311

,789

,827

43,6

89,9

1610

,923

,585

1,11

0,64

0-

69,2

53,8

11

Dep

reci

atio

n fo

r the

yea

r87

,706

606,

796

2,72

1,41

972

4,00

914

4,94

0-

4,28

4,87

0

Writ

e-of

f -

--

-(2

88,5

59)

-(2

88,5

59)

At 3

1 O

ctob

er 2

017

- Acc

umul

ated

dep

reci

atio

n1,

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96,6

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36- A

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ed im

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ent l

oss

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1,78

6

1,82

7,54

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3511

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021

-73

,250

,122



P

rope

rty,

pla

nt a

nd e

quip

men

t - G

roup

(Con

t’d)

Sho

rt te

rmle

aseh

old

land RM

Bui

ldin

gs RM

Pla

nt a

ndm

achi

nery RM

Furn

iture

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an

d of

fice

equi

pmen

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es RM

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ital

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nditu

re-in

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Car

ryin

g am

ount

s

At 1

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embe

r 201

53,

610,

227

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59,9

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1 O

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1 N

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ber 2

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66,5

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1 O

ctob

er 2

017

3,43

4,81

518

,940

,875

12,7

45,1

533,

218,

225

654,

330

-

38,9

93,3

98



3. Property, plant and equipment - Group (Cont’d)

3.1 Assetsunderfinancelease

Included in the carrying amounts of plant and equipment are assets acquired under finance lease amounting to RM4,831,275 (2016 : RM5,538,565).

The leased plant and machinery secures lease obligations (Note 13).

4. Investment properties - Group

NoteAt

costAccumulated depreciation

Carrying amount

RM RM RM

At 1 November 2015 4,672,561 (1,275,873) 3,396,688

Depreciation for the year - (67,151) (67,151)

At 31 October 2016/1 November 2016 4,672,561 (1,343,024) 3,329,537

Depreciation for the year - (51,676) (51,676)

Transfer to assets classified as held for sale 10 (4,050,061) 1,284,450 (2,765,611)

At 31 October 2017 622,500 (110,250) 512,250

4.1 The carrying amounts are represented by:

2017 2016RM RM

Freehold land 360,000 1,315,000

Freehold buildings 152,250 2,014,537

512,250 3,329,537

4.2 The following are recognised in profit or loss in respect of investment properties:

2017 2016RM RM

Rental income 48,600 48,600

Direct operating expenses:

- income generating investment properties 4,681 6,404

- non-income generating investment properties 43,670 57,722

4.3 Leases as lessor

Investment properties comprise commercial properties that are leased to third parties. No contingent rents are charged.



4. Investment properties - Group (Cont’d)

4.4 Security

Investment properties with carrying amount of RM Nil (2016 : RM3,256,037) are charged to bank for banking facilities granted to a subsidiary.

4.5 Fair value

The fair value of the investment properties was based on the Directors’ estimation using the latest available market information and recent experience and knowledge in the location and category of property being valued. The fair value of the investment properties of the Group as at 31 October 2017 is classified as Level 3 of the fair value hierarchy and is determined to be approximately RM789,000 (2016 : RM4,745,000).

Estimationuncertaintyandkeyassumptions

The Directors estimate the fair value of the Group’s investment properties based on the following key assumptions:

- The investment properties are valued by an independent external valuer in the last financial year using the comparison approach and cost approach. Comparison method determines the value of the land by comparing and adopting as a yardstick recent transactions and sale evidences involving other similar properties in the vicinity. Cost method ascertain the value of the property through the summation of the value components of the land and cost of building. The value of land under cost method is adopted as described in the comparison method whilst the cost of the building considers the current estimates on construction costs of similar accommodation, including contractor’s overheads, fees and profits. Appropriate adjustments are made for obsolescence and existing physical condition of the building.

- Comparison of the Group’s investment properties with similar properties that were listed for sale within the same locality or other comparable localities.

5. Investment in subsidiaries - Company

2017 2016RM RM

Unquoted shares, at cost

At 1 November 2016/2015 67,719,743 28,130,743

Additions 750,002 39,589,000

At 31 October 68,469,745 67,719,743

Accumulated impairment losses (5,444,892) (5,444,892)

63,024,853 62,274,851



5. Investment in subsidiaries - Company (Cont’d)

Details of the subsidiaries are as follows:

Name of entity Principal activities

Effective ownership interest and voting interest

2017 2016% %

Wong Engineering Industries Sdn. Bhd.

Design and manufacture of high precision metal stamped parts and sheet metals

100 100

Wong Engineering Electronics Sdn. Bhd.

Manufacture of high precision turned metal components 100 100

WEC Marketing Sdn. Bhd. Trading, marketing and retailing of industrial and consumer products

100 100

Wong Engineering Metals (M) Sdn. Bhd.

Dormant 100 100

WEC Construction Sdn. Bhd. Provision of general building construction and infrastructure work

100 -

WEC Development Sdn. Bhd. Provision of property development and related business 100 -

SubsidiariesofWongEngineeringIndustriesSdn.Bhd.

Wong Exerion Precision Technology Sdn. Bhd.

Design, manufacture and supply of complex welded frames structure, related modules and system

100 100

FWE Global Sdn. Bhd. Design, manufacture and supply of complex welded frames structure, related modules and systems

51 51

All the above subsidiaries are incorporated in Malaysia.

5.1 Non-controlling interest in a subsidiary

The Group’s subsidiary that has material non-controlling interest (“NCI”) is as follows:

FWE2017 2016

RM RM

NCI percentage of ownership interest and voting interest 49% 49%

Carrying amount of NCI 76,541 46,328

Profit allocated to NCI 26,163 9,675



5. Investment in subsidiaries - Company (Cont’d)

5.1 Non-controlling interest in a subsidiary (Cont’d)

The Group’s subsidiary that has material non-controlling interest (“NCI”) is as follows: (Cont’d)

FWE2017 2016

RM RM

Summarised financial information before intra-group elimination:

As at 31 October

Current assets 169,462 100,746

Net assets 169,462 100,746

Year ended 31 October

Revenue 187,477 106,754

Profit for the year 53,394 19,745

Total comprehensive income 53,394 19,745

Cash flows from operating activities 57,876 3,343

Cash flows from investing activity 9 -

Net increase in cash and cash equivalents 57,885 3,343



D

efer

red

tax

asse

ts

Rec

ogni

sed

defe

rred

tax

asse

ts a

nd li

abili

ties

Def

erre

d ta

x as

sets

and

liab

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s af

ter a

ppro

pria

te o

ff-se

tting

are

attr

ibut

able

to th

e fo

llow

ing:

Ass

ets

Li

abili

ties

Net

2017

2016

2017

2016

2017

2016

Gro

upR

MR

MR

MR

MR

MR

M

Pro

perty

, pla

nt a

nd e

quip

men

t 54

1,49

21,

917,

482

(1,7

11,3

93)

(1,8

22,5

64)

(1,1

69,9

01)

94,9

18

Tax

loss

car

ry-fo

rwar

ds27

3,49

9-

--

273,

499

-

Rei

nves

tmen

t allo

wan

ces

carr

y-fo

rwar

ds2,

443,

717

1,31

1,18

5-

-2,

443,

717

1,31

1,18

5

Oth

er it

ems

--

-(3

5,10

3)-

(35,

103)

Tax

asse

ts/(l

iabi

litie

s)3,

258,

708

3,22

8,66

7(1

,711

,393

)(1

,857

,667

)1,

547,

315

1,37

1,00

0

Set

off

of ta

x (1

,711

,393

)(1

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,667

)1,

711,

393

1,85

7,66

7-

-

Net

tax

asse

ts

1,54

7,31

51,

371,

000

--

1,54

7,31

51,

371,

000

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erre

d ta

x as

sets

and

liab

ilitie

s ar

e of

fset

whe

n th

ere

are

lega

lly e

nfor

ceab

le r

ight

s to

set

off

curr

ent t

ax a

sset

s ag

ains

t cur

rent

tax

liabi

litie

s an

d w

hen

the

defe

rred

ta

xes

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te to

the

sam

e ta

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n au

thor

ity.

Mov

emen

t in

tem

pora

ry d

iffer

ence

s du

ring

the

year

At

1.11

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5

Rec

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sed

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rofit

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ote

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11.2

016

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ogni

sed

in

profi

t or

loss

(N

ote

19)

At 3

1.10

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7R

MR

MR

MR

MR

M

Pro

perty

, pla

nt a

nd e

quip

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t(1

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)(1

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x lo

ss c

arry

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ards

--

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3,49

927

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einv

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ent a

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ance

s ca

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ards

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311,

185

1,31

1,18

51,

132,

532

2,44

3,71

7O

ther

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(35,

103)

35,1

03-

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371,

000

1,37

1,00

017

6,31

51,

547,

315



6. Deferred tax assets (Cont’d)

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items (stated at gross):

Group Company 2017 2016 2017 2016

RM RM RM RM

Unabsorbed capital allowances carry-forwards - 118,000 - -

Unabsorbed reinvestment allowances carry-forwards 20,458,000 22,284,000 - -

Unutilised tax losses carry-forwards 4,406,000 7,076,000 633,000 563,000

Other items 1,566,000 1,097,000 - -

26,430,000 30,575,000 633,000 563,000

The unabsorbed capital allowances, unabsorbed reinvestment allowances, unutilised tax losses and other temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.

The comparative figures have been restated to reflect all the revised unabsorbed capital allowances, unabsorbed reinvestment allowances, unutilised tax losses and other temporary differences available to the Group and to the Company.

7. Inventories - Group

2017 2016RM RM

Raw materials 5,943,990 4,158,251

Work-in-progress 5,084,612 2,922,925

Finished goods 2,168,926 2,663,117

13,197,528 9,744,293

Recognised in profit or loss:

2017 2016RM RM

Inventories recognised as cost of sales 29,598,889 27,457,867

Write-down to net realisable value 195,972 365,605

Reversal of inventories written down (129,054) -

The write-down and reversal are included in cost of sales.



8. Trade and other receivables


RM RM RM RM

Trade

Trade receivables 9,105,590 6,780,459 - -

Non-trade

Amount due from subsidiaries 8.1 - - 32,172 2,179

Other receivables 543,589 360,232 3,921 16,445

Deposits 58,932 51,862 1,000 1,000

Prepayments 644,600 226,003 - -

1,247,121 638,097 37,093 19,624

10,352,711 7,418,556 37,093 19,624

8.1 Amount due from subsidiaries

The non-trade amount due from subsidiaries is unsecured, interest-free and repayable on demand.

9. Cash and cash equivalents

Group Company 2017 2016 2017 2016

RM RM RM RM

Short term deposits placed with licensed banks 881,153 - - -

Cash and bank balances 3,707,554 2,112,583 544,393 20,820

4,588,707 2,112,583 544,393 20,820


10. Assets classified as held for sale - Group

Non-current assets held for sale comprise the following:

Note Freehold

land Buildings Total RM RM RM

Balance at 1 November 2015/31 October 2016/1 November 2016 - - -

Transfer from investment properties 4 955,000 1,810,611 2,765,611

Balance at 31 October 2017 955,000 1,810,611 2,765,611

The above properties had been classified as held for sale as a subsidiary had on 25 July 2017 entered into a Sale and Purchase Agreement (“SPA”) to dispose off the properties for a total consideration of RM5.05 million, of which a deposit of RM1,010,000 (2016 : RM Nil) has been collected as at 31 October 2017. The SPA has yet to be completed as at the financial year end, and the completion is expected by 31 January 2018.

11. Share capital - Group/Company

2017 2016Amount

RMNumber of

sharesAmount

RMNumber of

shares

Ordinary shares

Authorised: N/A N/A 100,000 200,000

Note 11.2 Note 11.2

Issued and paid up:

Balance at 1 November 2016/2015 45,844,000 91,688,000 45,844,000 91,688,000

Transfer from share premium in accordance with Section 618(2) of the Companies Act 2016 (Note 11.3) 12,065,068 - - -

Balance at 31 October 57,909,068 91,688,000 45,844,000 91,688,000

11.1 Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

11.2 Authorised share capital

The concept of authorised share capital and par value of share capital have been abolished on the commencement of the Companies Act 2016 on 31 January 2017.




11. Share capital - Group/Company (Cont’d)

11.3 Share premium

In accordance with Section 618 of Companies Act 2016, any amount standing to the credit of the share premium account has become part of the Company’s share capital. The Company has twenty-four months upon the commencement of Companies Act 2016 on 31 January 2017 to utilise the credit.

Included in share capital is share premium amounting to RM12,065,068 that is available to be utilised in accordance with Section 618(3) of Companies Act 2016 on or before 30 January 2019 (twenty-four months from commencement of Section 74).

12. Reserves


RM RM RM RM

Non-distributable:

Share premium 12.1 - 12,065,068 - 12,065,068

Treasury shares 12.2 (70,379) (70,379) (70,379) (70,379)

Accumulated losses - (4,224,061) - -

Distributable:

Retained earnings 1,889,921 - 4,629,480 3,319,086

1,819,542 7,770,628 4,559,101 15,313,775

The movements of the above reserves are disclosed in the statement of changes in equity.

12.1 Share premium

Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the shares. During the financial year, the share premium is reclassified to share capital in accordance with Section 618(2) of the Companies Act 2016.

12.2 Treasury shares

The shareholders of the Company, by a special resolution passed in a general meeting held on 25 March 2017, approved the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

During the previous financial year, the Company repurchased 5,000 of its issued ordinary share from the open market. The average price paid for the shares repurchased was RM0.53 per ordinary share, including transaction costs, and the repurchase transactions were financed by internally generated funds. The shares repurchased are held as treasury shares.

As of 31 October 2017, the Company repurchased a total of 146,900 (2016 : 146,900) of its issued share capital from the open market. The repurchased shares are held as treasury shares and carried at cost. Treasury shares have no rights to voting, dividends and participation in other distribution.



12. Reserves (Cont’d)

Group/Company 2017 2016

Amount Number of Amount Number of RM shares RM shares

Balance at 1 November 2016/2015 70,739 146,900 67,733 141,900

Shares repurchased - - 2,646 5,000

Balance at 31 October 70,739 146,900 70,379 146,900

13. Loans and borrowings - Group

2017 2016RM RM

Non-current

Finance lease liabilities 1,723,847 2,895,813

Current

Finance lease liabilities 1,393,476 1,685,532

Revolving credits - unsecured 903,500 -

Bank overdrafts - unsecured - 15,573

2,296,976 1,701,105

13.1 Finance lease liabilities

Finance lease liabilities are payable as follows:

2017 2016

Futureminimum

lease payments Interest

Present value of

minimum lease

payments

Futureminimum

lease payments Interest

Present value of

minimum lease

paymentsRM RM RM RM RM RM

Less than one year 1,532,698 139,222 1,393,476 1,912,794 227,262 1,685,532

Between one and five years 1,848,454 124,607 1,723,847 3,146,081 250,268 2,895,813

3,381,152 263,829 3,117,323 5,058,875 477,530 4,581,345

13.2 Securities

The loans and borrowings are secured by corporate guarantee from the Company.



14. Trade and other payables


RM RM RM RM

Non-current

Other payable 14.1 926,547 606,907 936,909 -

Current

Trade

Trade payables 3,604,789 2,421,658 - -

Non-trade

Amount due to Directors 14.2 - 2,000,000 - -

Amount due to a subsidiary 14.2 - - - 940,457

Other payables 14.1 2,013,778 1,056,881 1,428 18,410

Deposit received 14.3 1,010,000 - - -

Accrued expenses 831,202 767,734 199,833 198,653

3,854,980 3,824,615 201,261 1,157,520

7,459,769 6,246,273 201,261 1,157,520

14.1 Other payables

Included in the current non-trade other payables of the Group is an amount owing to a supplier of plant and machinery of RM1,048,627 (2016 : RM605,659). The balance sum of RM926,547 (2016 : RM606,907) owing to the similar machine supplier is not payable within a year and is thus classified as non-current other payable.

14.2 Amount due to Directors and a subsidiary

The non-trade amounts due to Directors and a subsidiary were unsecured, interest-free and repayable on demand.

14.3 Deposit received

The deposit received is in relation to the disposal of the freehold land and buildings under assets classified as held for sale.



15. Revenue

Group Company 2017 2016 2017 2016

RM RM RM RM

Sale of goods 42,707,471 33,086,522 - -

Management fee from subsidiaries - - 182,500 167,200

Dividend income - - 1,550,000 -

42,707,471 33,086,522 1,732,500 167,200

16. Results from operating activities

Results from operating activities are arrived at:

Group Company 2017 2016 2017 2016

RM RM RM RM

After charging:

Auditors’ remuneration

- Audit fees 114,000 103,800 29,000 27,000

- Non-audit fees

- Other services by KPMG 7,000 7,000 7,000 7,000

Bad debts written off - 9,520 - -

Depreciation of property, plant and equipment (Note 3) 4,284,870 4,715,580 - -

Depreciation of investment properties (Note 4) 51,676 67,151 - -

Plant and equipment written off 484,368 - - -

Rental of buildings 3,450 19,590 - -

Inventories written down 195,972 365,605 - -

Inventories written off 95,032 - - -

Personnel expenses (including key management personnel)

- wages, salaries and others 8,179,133 8,976,783 165,000 167,200

- contribution to Employees’ Provident Fund 735,368 674,891 - -

Loss on foreign exchange

- unrealised 182,672 - - -



16. Results from operating activities (Cont’d)

Group Company 2017 2016 2017 2016

RM RM RM RM

and after crediting:

Interest income 28,645 6,771 8 -

Dividend income - - 1,550,000 -

Reversal of inventories written down 129,054 - - -

Gain on disposal of plant and equipment - 492,808 - -

Rental income on premises 74,490 99,629 - -

Gain on foreign exchange

- realised 319,858 31,524 - -

- unrealised - 152,730 - -

17. Key management personnel compensation

The key management personnel compensations are as follows:

Group Company 2017 2016 2017 2016

RM RM RM RM

Present Directors:

Fees 165,000 140,000 165,000 140,000

Remuneration 460,197 838,000 - -Other short term employees benefits

(including estimated monetary value of benefits-in-kind) 25,461 29,425 16,500 2,200

650,658 1,007,425 181,500 142,200

Past Directors:

Fees - 193,000 - 25,000

Remuneration 83,520 33,800 - -Other short term employees benefits

(including estimated monetary value of benefits-in-kind) 355,830 3,479 1,000 -

439,350 230,279 1,000 25,000

1,090,008 1,237,704 182,500 167,200



18. Finance costs - Group

2017 2016RM RM

Interest expense of financial liabilities that are not at fair value through profit or loss:

- bank overdrafts 14,916 45,816

- finance lease liabilities 268,652 251,198

- revolving credits 55,086 -

338,654 297,014

19. Tax expense

Recognised in profit or loss

Group Company 2017 2016 2017 2016

RM RM RM RM

Current tax expense

- Current year 34,113 17,833 - -

- Prior year (2,319) (12,351) - -

Total current tax recognised in profit or loss 31,794 5,482 - -

Deferred tax expense

- Origination and reversal of temporary differences 651,504 (1,371,000) - -

- Prior year (827,819) - - -

Total deferred tax recognised in profit or loss (176,315) (1,371,000) - -

Total tax expense (144,521) (1,365,518) - -



19. Tax expense (Cont’d)

Reconciliation of tax expense (Cont’d)

Group Company 2017 2016 2017 2016

RM RM RM RM

Profit/(Loss) before tax 5,995,624 (640,992) 1,310,394 (416,460)

Income tax calculated using Malaysian tax rate of 24% 1,438,950 (153,838) 314,495 (99,950)

Non-deductible expenses 259,083 191,893 40,735 78,493

Effect of deferred tax assets not recognised - - 16,770 21,457

Deferred tax assets recognised (994,686) (1,391,222) - -

Non-taxable income - - (372,000) -

Others (17,730) - - -

Over provision in prior year (830,138) (12,351) - -

(144,521) (1,365,518) - -

20. Basic earnings per ordinary share - Group

The calculation of basic earnings per ordinary share was based on the profit attributable to ordinary shareholders of RM6,113,982 (2016 : RM714,851) and a weighted average number of ordinary shares outstanding, excluding treasury shares held by the Company, calculated as follows:

2017 2016

Issued ordinary shares at 1 November 2016/2015 91,541,100 90,947,177

Effect of shares buy back - (144,728)

Weighted average number of ordinary shares at 31 October 91,541,100 90,802,449

21. Dividend

A final single tier dividend of 2 sen per ordinary share totalling RM1,830,822 have been recommended by the Directors in respect of the financial year ended 31 October 2017, subject to approval of the shareholders at the forthcoming Annual General Meeting.

22. Operating segment

The Group has one operating segment comprises mainly the manufacturing and sale of high precision metal stamped parts and high precision turned metal components. Segment information has not been separately presented because internal reporting uses the Group’s financial statements. Other non-reportable segments comprise operations related to construction and property development.

The Group’s manufacturing activities are performed in Malaysia while sales are mainly to two principal geographical areas namely Asia and Europe.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.



22. Operating segment (Cont’d)

Asia

MalaysiaOutside

Malaysia Europe OthersConsolidated

totalRM RM RM RM RM

2017

Revenue from external customers 28,133,141 5,054,109 8,260,482 1,259,739 42,707,471

Non-current assets (excluding deferred tax assets) 39,505,648 - - - 39,505,648

2016

Revenue from external customers 21,194,441 5,985,979 4,677,717 1,228,385 33,086,522

Non-current assets (excluding deferred tax assets) 44,328,640 - - - 44,328,640

Major customers

The following are major customers with revenue equal or more than 10% of the Group’s total revenue:

2017 2016RM RM

- Customer A 7,018,713 5,500,485

- Customer B 6,695,087 5,061,384

- Customer C 5,538,573 3,611,733

- Customer D* - 3,783,091

* The revenue for this customer did not equate to or more than 10% of the Group’s total revenue for the financial year.



23. Financial instruments

23.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loans and receivables (“L&R”); and(b) Financial liabilities measured at amortised cost (“FL”).

Carryingamount L&R

RM RM

2017

Financial assets

Group

Trade and other receivables (excluding prepayments) 9,708,111 9,708,111Cash and cash equivalents 4,588,707 4,588,707

14,296,818 14,296,818

Company

Trade and other receivables 37,093 37,093Cash and cash equivalents 544,393 544,393

581,486 581,486

Carryingamount FL

RM RM

2017


Group

Loans and borrowings (4,020,823) (4,020,823)Trade and other payables (8,386,316) (8,386,316)

(12,407,139) (12,407,139)

Company

Trade and other payables (1,138,170) (1,138,170)


23. Financial instruments (Cont’d)

23.1 Categories of financial instruments (Cont’d)

Carryingamount L&R

RM RM

2016

Financial assets

Group

Trade and other receivables (excluding prepayments) 7,192,553 7,192,553

Cash and cash equivalents 2,112,583 2,112,583

9,305,136 9,305,136

Company

Trade and other receivables 19,624 19,624

Cash and cash equivalents 20,820 20,820

40,444 40,444

Carryingamount FL

RM RM

2016


Group

Loans and borrowings (4,596,918) (4,596,918)


(11,450,098) (11,450,098)

Company






23.2 Net gains and losses arising from financial instruments

Group Company 2017 2016 2017 2016

RM RM RM RM

Group

Net gains/(losses) on:

Loans and receivables 210,304 190,253 8 -

Financial liabilities measured at amortised cost (383,127) (305,762) - -

(172,823) (115,509) 8 -

23.3 Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk • Liquidity risk• Market risk

23.4 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposure to credit risk arises principally from advances to a subsidiary and financial guarantees given to banks for credit facilities granted to subsidiaries.

Receivables

Riskmanagementobjectives,policiesandprocessesformanagingtherisk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally, financial guarantees given by banks, shareholders or directors of customers are obtained and credit evaluations are performed on customers requiring credit over a certain amount.

Exposuretocreditrisk,creditqualityandcollateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 90 days, which are deemed to have higher credit risk, are monitored individually.




23.4 Credit risk (Cont’d)

Receivables (Cont’d)

Exposuretocreditrisk,creditqualityandcollateral(Cont’d)

The exposure of credit risk for trade receivables as at the end of the reporting period by geographic region was:

2017 2016RM RM

Group

Domestic 6,340,847 3,703,803

Asia 943,450 1,281,334

Europe 1,330,856 1,783,424

Others 490,437 11,898

9,105,590 6,780,459

Impairmentlosses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as at the end of the reporting period was:

GrossIndividual

impairment NetRM RM RM

Group

2017

Not past due 7,106,442 - 7,106,442Past due 1 - 30 days 1,062,446 - 1,062,446Past due 31 - 60 days 462,224 - 462,224Past due 61 - 90 days 400,701 - 400,701Past due more than 90 days 73,777 - 73,777

9,105,590 - 9,105,590

2016

Not past due 3,890,692 - 3,890,692

Past due 1 - 30 days 1,179,611 - 1,179,611

Past due 31 - 60 days 531,482 - 531,482

Past due 61 - 90 days 377,357 - 377,357

Past due more than 90 days 801,317 - 801,317

6,780,459 - 6,780,459




23.4 Credit risk (Cont’d)

Receivables (Cont’d)

Impairmentlosses(Cont’d)

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk other than 3 (2016 : 4) customers who collectively contributed 53% (2016 : 56%) of the Group’s trade receivables as at the end of the reporting period.

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

Financial guarantees


The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.


The maximum exposure to credit risk amounts to RM4,021,000 (2016 : RM4,597,000) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.

The financial guarantees have not been recognised since the fair value on initial recognition was not material.

Inter company advances


The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.


As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.

Impairmentlosses

As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to the subsidiaries. Nevertheless, these advances are repayable on demand.

23.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings. The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)23

. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

23.5

Li

quid

ity r

isk

(Con

t’d)

Maturityanalysis

The

tabl

e be

low

sum

mar

ises

the

mat

urity

pro

file

of th

e G

roup

’s a

nd C

ompa

ny’s

fina

ncia

l lia

bilit

ies

as a

t the

end

of t

he r

epor

ting

perio

d ba

sed

on u

ndis

coun

ted

cont

ract

ual p

aym

ents

:

Car

ryin

g am

ount

Con

trac

tual

in

tere

st r

ate

Con

trac

tual

ca

sh fl

ows

Und

er 1

ye

ar1

- 2 y

ears

2 - 5

ye

ars

RM

%R

MR

MR

MR

M

2017

Gro

up

Non-derivativefinancialliabilities

Trad

e an

d ot

her p

ayab

les

6,41

1,14

0-

6,41

1,14

06,

411,

140

-

-

Oth

er p

ayab

le

1,97

5,17

63.

182,

106,

664

1,14

6,66

448

0,00

048

0,00

0Fi

nanc

e le

ase

liabi

litie

s3,

117,

323

2.10

- 4.

723,

381,

152

1,53

2,69

882

1,01

21,

027,

442

Rev

olvi

ng c

redi

ts

903,

500

5.66

903,

500

903,

500

-

-

12,4

07,1

3912

,802

,456

9,99

4,00

21,

301,

012

1,50

7,44

2

Com

pany


Trad

e an

d ot

her p

ayab

les

1,13

8,17

0-

1,13

8,17

020

1,26

193

6,90

9

- Fi

nanc

ial g

uara

ntee

s

- -

4,02

1,00

04,

021,

000

-

-

1,13

8,17

05,

159,

170

4,22

2,26

193

6,90

9

-



. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

23.5

Li

quid

ity r

isk

(Con

t’d)

Maturityanalysis(Cont’d)

Car

ryin

g am

ount

Con

trac

tual

in

tere

st r

ate

Con

trac

tual

ca

sh fl

ows

Und

er 1

ye

ar1

- 2 y

ears

2 - 5

ye

ars

RM

%R

MR

MR

MR

M

2016

Gro

up


Trad

e an

d ot

her p

ayab

les

5,64

0,61

4-

5,64

0,61

45,

640,

614

--

Oth

er p

ayab

le

1,21

2,56

63.

181,

312,

786

646,

119

666,

667

-

Fina

nce

leas

e lia

bilit

ies

4,58

1,34

53.

18 -

4.72

5,05

8,87

51,

912,

794

1,42

2,28

81,

723,

793

Ban

k ov

erdr

afts

- un

secu

red

15,5

738.

4015

,573

15,5

73-

-

11,4

50,0

9812

,027

,848

8,21

5,10

02,

088,

955

1,72

3,79

3

Com

pany


Trad

e an

d ot

her p

ayab

les

1,15

7,52

0-

1,15

7,52

01,

157,

520

--

Fina

ncia

l gua

rant

ees

--

4,59

7,00

04,

597,

000

--

1,15

7,52

05,

754,

520

5,75

4,52

0-

-




23.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates that will affect the Group’s financial position or cash flows.

23.6.1 Currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the functional currency of the Group entities. The currency giving rise to this risk is primarily U.S. Dollar (USD).


In respect of monetary assets and liabilities held in currencies other than Ringgit Malaysia, the Group does not hedge this exposure. However, the Group keeps this policy under review.

Exposuretoforeigncurrencyrisk

The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:

Denominated inUSD

RM equivalent

2017

Trade receivables 4,006,893Bank balances 780,079Trade payables (423,706)

Net exposure 4,363,266

2016

Trade receivables 1,059,338

Bank balances 1,742,383

Trade payables (117,863)

Net exposure 2,683,858




23.6 Market risk (Cont’d)

23.6.1 Currency risk (Cont’d)

Currencyrisksensitivityanalysis

A 5% (2016: 5%) strengthening of the RM against the following currency at the end of the reporting period would have decreased post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

Profit or loss2017 2016

RM RM

Group

USD (165,804) (101,987)

A 5% (2016 : 5%) weakening of the RM against the above currency at the end of the reporting period would have had equal but opposite effect on the above currency to the amount shown above, on the basis that all other variables remained constant.

23.6.2 Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.


Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Group’s income and operating cash flows are substantially independent of changes in market interest rates.

Exposuretointerestraterisk

The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:

2017 2016RM RM

Group

Fixed rate instruments

Financial assets 881,153 -

Financial liabilities (5,995,999) (5,793,911)

Floating rate instruments

Financial liabilities - (15,573)




23.6 Market risk (Cont’d)

23.6.2 Interest rate risk (Cont’d)

Interestraterisksensitivityanalysis

(a) Fairvaluesensitivityanalysisforfixedrateinstruments

The Group does not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

(b) Cashflowsensitivityanalysisforvariablerateinstruments

The Directors are of the opinion that change in interest rates at the end of the reporting period would not significantly affect the profit or loss of the Group.

23.7 Fair value information

The carrying amounts of cash and cash equivalents, short term receivables and payables, and short term borrowings reasonably approximate their fair values due to the relatively short term nature of these financial instruments.

The Directors believe that there is no significant difference between the fair value and the carrying amount of the finance lease liabilities.



. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

23.7

Fa

ir v

alue

info

rmat

ion

(Con

t’d)

The

tabl

e be

low

ana

lyse

s fin

anci

al in

stru

men

ts c

arrie

d at

fair

valu

e an

d th

ose

not c

arrie

d at

fair

valu

e fo

r whi

ch fa

ir va

lue

is d

iscl

osed

, tog

ethe

r with

thei

r fai

r val

ues

and

carr

ying

am

ount

s sh

own

in th

e st

atem

ent o

f fina

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l pos

ition

.

Fair

val

ue o

f fina

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l ins

trum

ents

car

ried

at

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val

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of fi

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umen

ts n

ot c

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t fa

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l fa

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ntLe

vel 1

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l 2Le

vel 3

Tota

lLe

vel 1

Leve

l 2Le

vel 3

Tota

lR

MR

MR

MR

MR

MR

MR

MR

MR

MR

M

Gro

up

2017

Fina

ncia

l lia

bilit

ies

Oth

er p

ayab

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--

--

-(1

,975

,000

)(1

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)Fi

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ase

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s-

--

--

-(3

,117

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)(3

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)(3

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)

2016

Fina

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l lia

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--

--

-(1

,212

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)(1

,212

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)(1

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)(1

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)

Fina

nce

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--

--

--

(4,5

81,0

00)

(4,5

81,0

00)

(4,5

81,0

00)

(4,5

81,3

45)



23.7 Fair value information (Cont’d)

Policy on transfer between levels

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

There has been no transfer between the fair value levels during the financial year (2016: no transfer in either directions).

Level 3 fair value


Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. The fair value of the loans and borrowings is calculated using discounted cash flows where the market rate of interest is determined by reference to similar borrowing arrangements.

24. Capital management

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business.

There was no change in the Group’s approach to capital management during the financial year.

25. Capital commitment - Group

2017 2016RM RM

Plant and equipment

Contracted but not provided for 61,000 365,000

26. Contingent liabilities - Company

The Company has given corporate guarantees of RM8,973,000 (2016 : RM12,923,000) as security for banking facilities granted to certain subsidiaries of which RM4,021,000 (2016 : RM4,597,000) were utilised as at the end of the reporting period.

27. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of management of the Group.




27. Related parties (Cont’d)

Identity of related parties (Cont’d)

The Group has related party relationship with the following parties:

i) Subsidiaries of the Company as disclosed in Note 5 to the financial statements.

ii) The substantial shareholder, TNTT Realty Sdn. Bhd. which holds 32.06% interest in the Company and presumed to exercise significant influence over the Company.

iii) The subsidiaries of TNTT Realty Sdn. Bhd. and the direct and indirect associates of TNTT Realty Sdn. Bhd..

iv) Key management personnel as defined above.

Significant related party transactions

Related party transactions have been entered into in the normal course of business under normal trade terms. The significant related party transactions of the Group and the Company are shown below. The balances related to the below transactions are shown in Notes 8 and 14 to the financial statements. All the amounts outstanding are unsecured and are expected to be settled in cash.

i) Transactions with subsidiaries

2017 2016RM RM

Company

Additional investment in subsidiaries through capitalisation of debts - 39,589,000

Dividend income 1,550,000 -

Management fee received 182,500 167,200

ii) Transactions with key management personnel

There were no transactions with key management personnel other than as disclosed in Note 17 to the financial statements.

28. Significant event

The Group has on 31 October 2017 received a Letter of Award dated 30 October 2017 from Havana Solaris Sdn. Bhd. (“Havana”) to undertake a contract to build 2 blocks of 37-Storey Apartment (556 units) Affordable Homes (RRM) and Hawker Centre (31 units) at Kuchai Lama Entrepreneurs Park, Mukim Petaling, Wilayah Persekutuan Kuala Lumpur for a contract value of RM87.5 million (“Contract”).

The Group has accepted the Letter of Award on 31 October 2017. The tenure of the Contract is 30 months from 16 November 2017 to 15 May 2020.


STATEMENT BY DIRECTORSpursuanttoSection251(2)oftheCompaniesAct2016

In the opinion of the Directors, the financial statements set out on pages 47 to 97 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 October 2017 and of their financial performances and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Yong Loy HuatDirector

Eng Teik HiangDirector

Penang,


STATUTORY DECLARATION pursuanttoSection251(1)(b)oftheCompaniesAct2016

I, Yong Loy Huat, the Director primarily responsible for the financial management of Wong Engineering Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 47 to 97 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the declaration to be true, and by virtue of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Yong Loy Huat, NRIC: 540718-01-6085, at Georgetown in the State of Penang on 6 February 2018.

__________________________________Yong Loy Huat

Before me:


INDEPENDENT AUDITORS’ REPORTtothemembersofWongEngineeringCorporationBerhad(CompanyNo.409959-W)(IncorporatedinMalaysia)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Wong Engineering Corporation Berhad, which comprise the statements of financial position as at 31 October 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 47 to 97.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 October 2017, and of their financial performances and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ResponsibilitiesfortheAuditoftheFinancialStatements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws(onProfessionalEthics,ConductandPractice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ CodeofEthicsforProfessionalAccountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of inventories

Refer to the accounting policy in Note 1(d)(ii) Basis of preparation - use of estimates and judgements, and Note 7 - Inventories to the financial statements.

The key audit matter

Raw materials, work-in-progress and finished goods are required to be stated at the lower of cost and net realisable value.

Identifying and determining the appropriate write-down amounts for raw materials, work-in-progress and finished goods require the use of judgement. Factors to consider for write-down by the Directors include among others, overall demand in semiconductors industry, age of the inventories held and the fluctuations in overall metal prices.

This was a key audit matter as the write-down of the inventories was inherently uncertain and Directors’ judgement was involved.

How the matter was addressed in our audit

Our audit procedures performed in this area included, among others:

• Inquired the Directors and assessed their process in identifying slow-moving and obsolete inventories;• Tested whether items in the system generated inventory ageing reports were classified within the appropriate ageing bracket;• Evaluated the Group’s basis of write-down for slow-moving and obsolete inventories as at 31 October 2017 based essentially

on the age of the inventory with consideration of consumption history as well as the past and present sales;• Compared the carrying value of sampled finished goods as at 31 October 2017 to sales made to external customers

subsequent to year end to test whether the finished goods were recorded at the lower of costs and net realisable value.

We have determined that there is no key audit matter in the audit of the separate financial statements of the Company to communicate in our auditors’ report.


Information Other than the Financial Statements and Auditors’ Report Thereon

The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the annual report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the annual report and, in doing so, consider whether the annual report is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the annual report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Group and of the Company.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

INDEPENDENT AUDITORS’ REPORT (Cont’d)tothemembersofWongEngineeringCorporationBerhad(CompanyNo.409959-W)(IncorporatedinMalaysia)


INDEPENDENT AUDITORS’ REPORT (Cont’d)tothemembersofWongEngineeringCorporationBerhad(CompanyNo.409959-W)(IncorporatedinMalaysia)

Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (Cont’d)

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG PLT Lee Phaik ImLLP0010081-LCA & AF 0758 Approval Number : 03177/05/2019 JChartered Accountants Chartered Accountant


Penang


LIST OF GROUP PROPERTIES asat31October2017

Location Description

Land area/ Built-up

Area TenureAge of

Building

Carrying Amount as at 31 October

2017RM’000

Date of Acquistion

H.S. (D) 32374766, Lorong Permatang Pauh, Off Jalan Permatang Pauh, 13400 Butterworth

Double Storey Semi-Detached Light Industrial

(Factory)

4,523 sq.ft./5,949 sq.ft.

Freehold 39 years 441 13/11/96

H.S. (D) 1705 & 3238, 4767, Lorong Permatang Pauh, Off Jalan Permatang Pauh, 13400 Butterworth (*)

Four Storey Light Industrial

(Office and Factory)

12,966 sq.ft./47,303 sq.ft.

Freehold 26 years 2,766 13/11/96

Lot 24, Jalan Hi-Tech 4, Kulim Hi-Tech Park (Phase 1) 09000 Kulim, Kedah Darul Aman

Seven units of Industrial

Factories and One unit of

Office Block

7.759 acres/ 245,483 sq.ft.

60 years lease

expiring on 17/3/2056

19 years 21,899 Land: 05/12/96Building:14/01/99

1759-1769 Taman Mutiara 6 09700 Karangan Kulim, Kedah Darul Aman

11 units Single Storey

Terrace House

17,842 sq.ft. Freehold 14 years 493 19/12/01

4-12A Blk 8, 3-01 & 3-02 Blk 9, R/Pangsa Taman Bagan Jalan Bagan 13400 Butterworth

3 units Flat 1,560 sq.ft. Freehold 26 years 71 13/11/96

(*) – Property 4767 was classified as Asset Held for Sale as at 31 October 2017 pending the completion of the Sale and Purchase Agreement.


SHAREHOLDINGS STATISTICS asat23January2018

Issued Share Capital : 91,688,000 Ordinary Shares (including 146,900 treasury shares)Class of Share : Ordinary SharesNo. of Shareholders : 1,653Voting Rights : One vote per ordinary share

Distribution of Shareholdings

Size of Holdings No. of Holders % No. of Shares %

1 - 99 12 0.726 318 0.000

100 - 1,000 118 7.139 83,978 0.092

1,001 - 10,000 1,067 64.549 5,172,600 5.651

10,001 - 100,000 376 22.747 12,214,400 13.343

100,001 - 4,577,054(*) 79 4.779 44,762,804 48.899

4,577,055 and above (**) 1 0.060 29,307,000 32.015

Total: 1,653 100.000 91,541,100 100.000

Remark: * - Less than 5% of issued shares ** - 5% and above of issued shares

Substantial Shareholders

NameNo. of Shares

Direct% of Issued

CapitalNo. of Shares

Deemed*% of Issued

Capital

TNTT Realty Sdn Bhd 29,343,100 32.05 - -

Ong Yoong Nyock 4,500,000 4.92 29,343,100* 32.05*

Yong Kwee Lian - - 29,343,100* 32.05*

Yong Loy Huat 13,719,000 14.99 - -

* DeemedinterestbyvirtueofSection8oftheCompaniesAct,2016heldthroughTNTTRealtySdnBhd

Directors’ Interest

Name of Director No. of Shares Direct

% of Issued Capital

No. of Shares Deemed*

% of Issued Capital

Datuk Haji Muhamad Shapiae bin Mat Ali - - - -

Yong Loy Huat 13,719,000 14.99 4,500,000* 4.92*

Chang Joo Huat 60,000 0.07 -

Low Seong Chuan 10,000 0.01 -

Eng Teik Hiang - - 199,000* 0.22*

Lau Chia En - - - -

* HeldinthenameofspouseandistreatedasinterestoftheDirectorinaccordancewithSection59(11)(c)oftheCompaniesAct2016.


SHAREHOLDINGS STATISTICS asat23January2018

LIST OF TOP 30 HOLDERS AS AT 23/01/2018

NO. NAME HOLDINGS %

1 MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TNTT REALTY SDN BHD

29,307,000

32.015

2 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDLOW AH LIN

4,500,000 4.915

3 RHB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR ONG YOONG NYOCK

4,500,000 4.915

4 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YONG LOY HUAT(7000875)

3,900,000 4.260

5 RHB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITES ACCOUNT FOR YONG LOY HUAT

3,700,000 4.041

6 HLB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YONG LOY HUAT

2,819,000 3.079

7 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB BANK FOR YONG LOY HUAT (M78069)

2,700,000 2.949

8 TA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR CHAN WEI DE

2,000,000 2.184

9 AMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR GAN BOON AIK

1,682,800 1.838

10 NG SWEE YING @ NG SOOI YING 1,000,000 1.092

11 HLB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR ENG TEIK KAI

787,300 0.860

12 TAN GUEK HUWA 726,500 0.793

13 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR RONIE TAN CHOO SENG (MARGIN)

700,000 0.764

14 TAN PAK NANG 680,000 0.742

15 YONG LOY HUAT 600,000 0.655

16 WONG QUIN EE, QUEENIE 584,200 0.638

17 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDPHUA SIN MO

561,000 0.612

18 RHB NOMINEES (TEMPATAN) SDN BHDRHB ASSET MANAGEMENT SDN BHD FOR LAU JUI CHENG(EPF-SPA)

500,000 0.546

19 WONG KEM CHEW 494,666 0.540

20 TAY HONG SING 424,300 0.463

21 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB BANK FOR OH KWAN HWA (MY2220)

400,000 0.436

22 GAN BOON AIK 380,000 0.415

23 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHDEXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD (EPF)

370,800 0.405

24 TAN BOON SIANG 362,600 0.396

25 WONG KAM HOOI 358,664 0.391

26 SHIANGLY BUILDER SDN BHD 345,000 0.376

27 CHEONG BOON LONG 320,000 0.349

28 HLIB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YEOH ENG HUA

320,000 0.349

29 USP RESOURCES SDN BHD 318,000 0.347

30 TAN SZE LAN 303,400 0.331

I/We _______________________________________________________________________________________________(FullnameinBlockLettersandNRIC/CompanyNo.)

of ______________________________________________________________ and _______________________________(Address) (Tel.No.)

being a member/members of Wong Engineering Corporation Berhad hereby appoint

Full Name (in Block Letters) NRIC/Passport No. No. of Shares % of Shareholding

*and/or(*deleteifnotapplicable)

Full Name (in Block Letters) NRIC/Passport No. No. of Shares % of Shareholding

as my/our Proxy to vote in my/our name(s) on my/our behalf at the Twenty-First Annual General Meeting of the Company to be held at Auditorium Room, Level 1, Lot 204, Jalan Bukit Belimbing 26/38, Off Persiaran Tengku Ampuan, Lion Industrial Park Seksyen 26, 40400 Shah Alam, Selangor on Friday, 23 March 2018 at 9:30 a.m. and at any adjournment thereof in the manner indicated below:-

ORDINARY RESOLUTIONS1 2 3 4 5 6 7 8 9 10

FORAGAINST

(Please indicate with an “X” in the appropriate spaces provided above on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain as he/she thinks fit).

In the case of more than one proxy is appointed, the proportions of my/our shareholding to be represented by my/our proxies are as follows:

Signed this ________ day of _________________, 2018

Signature of Shareholder Common Seal to be affixed here if Shareholder is a Corporation

Notes:

1. AproxymaybutneednotbeamemberoftheCompanyandamembershallbeentitledtoappointuptotwo(2)proxiestoattendandvoteatthesamemeeting.Whereamemberappointsmorethanone(1)proxy,theappointmentshallbeinvalidunlesshespecifiestheproportionsofhisshareholdingtoberepresentedbyeachproxy.

2. Whereamemberof theCompany isanauthorisednomineeasdefinedunder theSecurities Industry (CentralDepositories)Act,1991(“SICDA”),itmayappointuptotwo(2)proxiesinrespectofeachsecuritiesaccountitholdswithordinarysharesoftheCompanystandingtothecreditofthesaidsecuritiesaccount.

3. WhereaMemberoftheCompanyisanexemptauthorisednomineewhichholdsordinarysharesintheCompanyformultiplebeneficialownersinone(1)securitiesaccount(“omnibusaccount”),thereisnolimittothenumberofproxieswhichtheexemptauthorisednomineemayappointinrespectofeachomnibusaccountitholds.

Anexemptauthorisednominee refers toanauthorisednomineedefinedunder theSecurities Industry (CentralDepositories)Act1991(“SICDA”)whichisexemptedfromcompliancewiththeprovisionsofsubsection25A(1)ofSICDA.

4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororofhisattorneydulyauthorisedinwritingon,iftheappointorisacorporation,theProxyFormmustbeexecutedunderthecorporation’ssealorunderthehandofanofficerorattorneydulyauthorised.

5. Foraproxytobevalid,theProxyFormdulycompletedmustbedepositedattheRegisteredOfficeoftheCompany,Suite16-1(PenthouseUpper),MenaraPenangGarden,42AJalanSultanAhmadShah,10050Penang,Malaysianotlessthanforty-eight(48)hoursbeforethetimeappointedforholdingthemeetingoratanyadjournmentthereof.

6. Forpurposeofdeterminingwhoshallbeentitledtoattendthismeeting,theCompanyshallberequestingBursaMalaysiaDepositorySdn.Bhd.tomakeavailabletotheCompany,aRecordofDepositors(“ROD”)asat16March2018andonlyaDepositorwhosenameappearsonsuchRODshallbeentitledtoattendthismeetingorappointproxytoattendand/orvoteinhis/herbehalf.

WONG ENGINEERING CORPORATION BERHAD (409959-W)

PROXY FORMTwenty-First

AnnualGeneralMeeting

CDS Account No. No. of Shares Held

Foldalongthisline

STAMP

The Joint Company SecretariesWONG ENGINEERING CORPORATION BERHAD (409959-W)

Suite 16-1 (Penthouse Upper), Menara Penang Garden,42A Jalan Sultan Ahmad Shah,

10050 Penang.

Foldalongthisline

www.wec.com.my

Wong Engineering Corporation BerhadLot 24, Jalan Hi-Tech 4, Kulim Hi-Tech Park (Phase 1),

09000 Kulim, Kedah Darul Aman, Malaysia.T: +604 427 1788 F : +604 427 1799 E: [email protected]

(409959-W)

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