The Board is committed to achieving and maintaining high standards of corporate governance and effective application of the
principles and best practices set out in the Malaysian Code on Corporate Governance 2012 (‘MCCG 2012’) throughout the Group
as a fundamental part of discharging its responsibilities to enhance long-term shareholders’ value and investors’ interest.
Pursuant to Rule 15.25 of Bursa Malaysia Securities Berhad ACE Market Listing Requirements (‘AMLR’), the Board is pleased to
outline below the manner in which the Group has applied the Principles and Recommendations of Corporate Governance set out
in the MCCG 2012. The Board of Directors supports the 8 principles and 26 recommendations stated in MCCG 2012 in promoting
best corporate governance through structures, systems, processes in self-promoting good practises and development of a
corporate governance culture and environment. The Board of Directors will continue the existing corporate governance practises
and will undertake appropriate action in promoting the principles and recommendations of the MCCG 2012 into the existing
Corporate Governance framework.
The Board is pleased to report below on the extent to which the principles and best practices of the MCCG 2012 were applied
throughout the financial year ended 31 December 2013.
1. Establish Clear Roles and Responsibilities
| 1.1 |
Clear Functions of the Board and Management |
|
The Group recognises the important role played by the Board in the stewardship of the Group’s direction and
operations, and ultimately, the enhancement of long-term shareholders’ value. To fulfill this role, the Board is
responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals
for management and monitoring the achievement of these goals.
Management is primarily responsible for implementing the plans chartered out and the day to day management of the Group, with clear authority delegated by the Board.
|
| 1.2 |
Board’s Roles and Responsibilities |
|
The Board’s roles and responsibilities are as follows:
| a. | Oversee and set the strategic direction of the Group and to ensure the Group operates efficiently and sustains continuous growth. |
| b. | Overseeing the conduct of the Group’s business to ensure the business is properly managed in conformity with ethical values, integrity, fairness, trust and high performance. |
| c. | Identify the business risks and established an appropriate system to reduce and minimize the risks that affects the performance of the Group and the interest of the stakeholders. |
| d. | Ensuring an appropriate succession plan is in place including the appointment, training and fixing compensation of and where appropriate for the Board, Managing Director and the Management of the Company. |
| e. | Developing and implementing an investor relations programme that creates better communication between the Company and shareholders as well as other stakeholders. |
| f. | Reviewing the adequacy and the integrity of the Group’s internal control system and information system, including system for compliance with applicable laws, regulations, rules, directives and guidelines. |
|
| 1.3 |
Formalised Ethical Standards Through Code of Conduct |
|
The Group has in place codes of ethics for Directors and employees which is based on four elements, which are
sincerity, integrity, responsibility and corporate responsibility. In the performance of the directors’ duties, the Board
should at all times observe the following codes:
| a. | Should have a clear understanding of the aims and purpose, capabilities and capacity of the Group; |
| b. | Should devote time and effort to attend meetings and to know what is required of the Board and each of its Directors, and to discharge those functions; |
| c. | Should ensure at all times that the Group is properly managed and effectively controlled; |
| d. | Should stay abreast of the affairs of the Group and be kept informed of the Group’s compliance with the relevant legislation and contractual requirements; |
| e. | Should insist on being kept informed on all matters of importance to the Group in order to be effective in corporate management; |
| f. | Should have access to the advice and services of the Company Secretary, who is responsible to the Board to ensure proper procedures, rules and regulations are complied with; |
| g. | Should at all times exercise his powers for the purposes they were conferred, for the benefit and prosperity of the Group; |
| h. | Should disclose immediately all contractual interests whether directly or indirectly with the Group; |
| i. | Should neither divert to his own advantage any business opportunity that the Group is pursuing, nor may he use confidential information obtained by reason of his office for his own advantage or that of others; |
| j. | Should at all times act with utmost good faith towards the Group in any transaction and to act honestly and responsibly in the exercise of his powers in discharging his duties; |
| k. | Should be conscious of the interest of shareholders, employees, creditors and customers of the Group; |
| l. | Should at all times promote professionalism and improve the competency of management and employees; |
| m. | Should ensure adequate safety measures and provide proper protection to workers and employees at the workplace; and |
| n. | Should ensure the effective use of natural resources, and improve quality of life by promoting corporate social responsibilities. |
|
| 1.4 |
Strategies Promoting Sustainability |
|
The Board of Directors exercises annual reviews of the strategic directions of the Company, by making necessary
assessment on the sustainability of the Group’s strategic directions, with due consideration over the progress of
the long term and short term plan, changes in business and political environment, level of competition, update in
risk factors and any other factors which could affects the sustainability of the Group’s strategic directions.
|
| 1.5 |
Access to Information and Advice |
|
The Directors whether as full Board or in their individual capacity, have full and unrestricted access to all information
within the Group and direct access to the advice and services of the Secretary who is responsible for ensuring
that Board meeting procedures are followed and that applicable rules and regulations are complied with. At each
meeting of the Board, the Secretary appraises the Board on the Group’s compliance obligations and highlights
non-compliances with legal, regulatory and statutory rules and guidelines, if any.
The Directors are also regularly updated and advised on new regulations, guidelines or directive issued by Bursa
Securities, Securities Commission and other relevant regulatory authorities.
The Board also avails itself of independent professional advice as and when necessary in furtherance of their
duties, at the Company’s expense. Additionally, the Board invites the senior management to brief the Board from
time to time on matters being deliberated as they are able to help bring insight into these matters.
|
| 1.6 |
Qualified and Competent Company Secretaries |
|
The Board is satisfied with the performance and support rendered by the Company Secretary to the Board in the
discharge of its functions. The Company Secretary ensures that all Board meetings are properly convened, and
that accurate and proper records of the proceedings and resolutions passed are recorded and maintained in the
statutory register of the Company. The Company Secretary also keeps abreast of the evolving capital market
environment, regulatory changes and developments in Corporate Governance through continuous training.
|
| 1.7 |
Board Charter |
|
The Board is guided by a Charter which was adopted on 27 August 2013. The Board Charter sets out the principal roles
of the Board, the functions, roles and responsibilities of the Board and its various committees.
The Board Charter would act as a source reference and primary induction literature, provide insights to prospective
Board members as well as assist the Board in the assessment of its own performance and that of its individual Directors.
The Board Charter will be reviewed periodically and updated in accordance with the needs of the Group and any
new regulations.
|
2. Strengthen Composition
| 2.1 |
Nomination Committee |
|
The Nomination Committee (‘NC’) is to identify, assess and recommend new nominees to the Board and Board
Committees. The NC assists the Board in reviewing the Board required mix of expertise, skill, experiences,
qualifications and to assess the effectiveness of the Board as a whole, the Board Committees and the eventually
the contribution of each individual Director. The Committee met on two (2) occasion in the financial year 2013.
The Board delegates specific responsibilities to the respective Committees of the Board namely the Audit Committee,
Nomination Committee and Remuneration Committee in order to enhance business and corporate efficiency and
effectiveness. The Chairman of the respective Committees will brief the Board on the matters discussed at the
Committee meetings and minutes of these meetings are circulated to the full Board.
The Board has established a Nomination Committee, consisting of three (3) Directors who are Independent Non-
Executive Directors of the Company as follows:
| Name | Designation | Directorship |
| Azman bin Abdul Jalil | Chairman | Independent Non-Executive Director |
| Dr. Vijaya Raghavan A/L M P Nair | Member | Independent Non-Executive Director |
| Dato’ Hon Choon Kim | Member | Executive Director |
This Committee is responsible for making recommendations on the appointment of any new Directors. New
appointees will be considered and evaluated by the Board and the Company Secretary will ensure that all
appointments are properly made, and that legal and regulatory obligations are met.
The Nomination Committee also annually reviews the effectiveness of the Board as a whole, its committees and the
contribution of each individual Director, as well as the Managing Director. The Nomination Committee will ensure
that all assessments and evaluations carried out are properly documented and filed.
In accordance with the Company’s Articles of Association, one-third (1/3) of the Directors, shall retire from office,
at least once in three (3) years. The retiring Directors can offer themselves for re-election. The Directors who are
appointed by the Board during the financial year are subject to re-election by shareholders at the next Annual
General Meeting held following their appointments. Directors over seventy (70) years of age are required to submit
themselves for re-appointment annually in accordance with section 129(6) of the Companies Act, 1965.
The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information
such as personal profile, meetings attendance and the shareholdings in the Group of each Director standing for
election are furnished.
|
| 2.2 |
Recruitment Process, Annual Assessment and Gender Diversity Policy |
|
Recruitment Process
The Board believes in a right composition of Board members with balance of qualifications, skills, experiences and
diversity among its Board members.
As defined as one of the function of the NC, NC is periodically reviewing and making recommendation to the Board
on Board composition matters and recommendations, which inclusive in identification and selection of high calibre
candidate who will be able to meet the present and future need of the company.
For the year under review, the Board is satisfied with its current mix of qualification, skills, experiences, expertise
and strength, in discharge its duties effectively.
Annual Assessment
The NC will also be responsible in undertaking an annual evaluation of Directors, Board Committees as well as
the Board performance as a whole. Such evaluation will be used as a tool to evaluate the strength, to identify the
gaps or areas for improvement which would give rise in the requirement for new recruitments of board members,
if necessary.
The Board annual evaluation process is being conducted by cross evaluation among the Board members, of which
the criteria of evaluation are predetermined as below:
| a. | Board Structure; |
| b. | Board operation and communication; |
| c. | Board roles and responsibilities; |
| d. | Undertaking of roles and assignments; |
| e. | Mix of roles and knowledge; |
| f. | Commitment of members; and |
| g. | Depth of contribution. |
The results of the evaluation are compiled into a report to be deliberated by both NC and the Board.
Gender Diversity Policy
The Board steadily recognises the challenge and is encouraging initiatives to improve gender diversity in the Board. Currently,
the Board has no specifi c policy on setting targets on female candidates to be appointed to the Board. The evaluation of the
suitability of candidates is solely based on candidates’ competency, character, time commitment, integrity and experience
in meeting the needs of the Company.
|
| 2.3 |
Remuneration Policies |
|
In compliance with the MCCG 2012, the Board has established a Remuneration Committee, consisting of two (2)
Independent Non-Executive Directors and one (1) Executive Director as follows:
| Name | Designation | Directorship |
| Dr. Vijaya Raghavan A/L M P Nair | Chairman | Independent Non-Executive Director |
| Dato’ Hon Choon Kim | Member | Independent Non-Executive Director |
| Dr. Teo Kooi Cheng | Member | Independent Non-Executive Director |
The remuneration of the Executive Directors is structured so as to link rewards to corporate and individual
performance. In the case of Non-Executive Directors, the level of remuneration reflects the experience, expertise
and level of responsibility undertaken by the particular Non-Executive Director concerned. The Board as a whole
determines the remuneration of Non-Executive Directors, and each individual Director abstains from the Board
decision on his own remuneration.
The details of the remuneration of the Directors of the Company for the financial year under review are as follows:
The aggregate remuneration of the Directors categorised into appropriate components are as follows:
|
Basic Salary &
other Emonuments
RM'000 |
Fees
RM'000 |
Bonuses
RM'000 |
EPF(Employer)
RM'000 |
Total
RM'000 |
| Executive Directors |
879 |
- |
187 |
112 |
1,178 |
| Non-Executive Directors |
- |
96 |
- |
- |
96 |
| Total |
879 |
96 |
187 |
112 |
1,274 |
The numbers of Directors whose total remuneration falls within the following bands is set out as follows:
|
Number of Directors |
| Band of Remuneration |
Executive |
Non-Executive |
| Less than RM50,000 |
- |
4 |
| RM50,001 to RM100,000 |
- |
- |
| RM100,001 to RM150,000 |
- |
- |
| RM150,001 to RM200,000 |
- |
- |
| RM200,001 to RM250,000 |
- |
- |
| RM250,001 to RM300,000 |
1 |
- |
| RM350,001 to RM400,000 |
3 |
- |
The disclosure of directors’ remuneration is made in accordance with Appendix 9C, item 12 of the Bursa Securities,
AMLR. This method of disclosure represents a deviation from the Best Practices set out in the MCCG 2012,
which suggests separate disclosure of each director’s remuneration. The Board of Directors is of the opinion that
separate disclosure will impinge upon the directors’ right of privacy and would not add value significantly to the
understanding of shareholders and other interested investors in this area.
|
3. Reinforce Independence
| 3.1 |
Assessment of Independence Annually |
|
The Board strives on the independency of the non-executive directors, who shall have the ability to exercise their
duties and make decisions which are in the best interests of the shareholders, unfettered by any business or
other relationship with the executive directors, ownership and any other interest in the operation of the company.
The Board conducts annual reviews on the independence of each and every of the Directors, in addition of the
responsibility of each Director in making immediate declaration over their interest and independency to the Board
at any time during his tenure of service.
The Company currently has four (4) independent non-executive directors, who fulfill the criteria of “Independence”
as prescribed under Rule 1.01 of the AMLR.
|
| 3.2 |
Tenure of Independent Directors |
|
The Board has adopted the recommendation of MCCG 2012 that the tenure of an independent director should not
exceed a cumulative term of nine (9) years. Upon the completion of the nine (9) years, an independent director may
continue to serve on the Board subject to the director’s re-designation as non-independent director or to obtain
shareholders’ approval in the event it retains as an independent.
|
| 3.3 |
Shareholders’ Approval for the Re-appointment of Independent |
|
For the year under review, none of the current independent Board members had served the Company for more than nine
(9) years cumulatively. However, if the tenure of the independent director exceeds nine (9) years, the said Board member
would be re-designated as a non-independent director after the said nine (9) years of service. In the event that the said
Board member is being retained as an independent director, he is to be offi cially re-elected by the shareholders at the
general meeting.
|
| 3.4 |
Separate Positions of the Chairman and CEO |
|
There is a clear division of responsibility between the Chairman and the Managing Director to ensure that there is
a balance of power and authority. The roles of the Chairman and the Managing Director are separated and clearly
defined. The Chairman is responsible for ensuing Board effectiveness and conduct whilst the Managing Director
has overall responsibilities over the Group’s operating units, organisational effectiveness and implementation of
Board policies and decisions.
|
| 3.5 |
Composition of the Board |
|
The current Board has eight (8) members comprising one (1) Independent Non-Executive Chairman, one (1)
Managing Director, three (3) Executive Directors and three (3) Independent Non-Executive Directors, which is in
compliance with Rule 15.02(1) of the AMLR.
The Board comprises professionals drawn from various backgrounds, bringing in-depth and diversity in
experience, expertise and perspectives to the Group’s business operations. The Board is satisfied that the
current Board composition facilitate effective decision making and independent judgment where no individual
shall dominate the Board’s decision making. The profiles of the members of the Board are set out in this
Annual Report on pages 6 to 8.
|
4. Foster Commitment
| 4.1 |
Commitment of the Board Members |
|
The Board meets regularly on a quarterly basis and as and when required. During the financial year under review, the
Board held five (5) meetings. A summary of the attendance of each Director at the Board meetings held during the
financial year are as follows:
| Name of Directors |
Meetings Attended |
Percentage of Attendance (%) |
| Dato’ Hon Choon Kim |
5/5 |
100 |
| Lim Tong Seng |
5/5 |
100 |
| Teo Chin Heng |
5/5 |
100 |
| Dr. Teo Kooi Cheng |
5/5 |
100 |
| Lau Yeng Khuan |
5/5 |
100 |
| Prof. Dr. Paul Cheng Chai Liou |
5/5 |
100 |
| Dr. Vijaya Raghavan A/L M P Nair |
5/5 |
100 |
| Azman bin Abdul Jalil |
5/5 |
100 |
All the Directors have complied with the minimum attendance at Board meetings of at least 50% attendance as
stipulated by the AMLR during the financial year.
The notices of meetings and board papers are distributed to the Directors prior to Board meetings to provide Directors
with sufficient time to deliberate on issues to be raised at the Board meetings. All proceedings and resolution pass
at each meeting are properly minuted and filed by Company Secretary.
To facilitate the Directors’ time planning, an annual meeting calendar is prepared and circulated to them before the
beginning of every year. The Directors are required to submit and update on their other directorships and shareholdings
to the Company Secretary whenever there is a change.
|
| 4.2 |
Training |
|
All members of the Board have attended the Mandatory Accreditation Programme as prescribed by the AMLR. The
Directors are also encouraged to attend any relevant training programme to further enhance their knowledge to
enable them to discharge their responsibilities more effectively.
List of training attended by the Directors during the financial year are as follows:
| SUBJECT |
DATE |
ORGANISER/SPEAKER |
ATTENDEE(S) |
| Feed Act Seminar |
25 January 2013 |
Malaysia Animal Health &
Nutrition Industries Association |
Mr. Lim Tong Seng
Mr. Teo Chin Heng
Mr. Lau yeng Khuan |
Board Oversight
Responsibilities for
Mergers & Acquisition -
Passion Beyond Numbers |
18 April 2013 |
Bursatra Sdn Bhd |
Mr. Azman Bin Abdul Jalil |
Advocacy Sessions on Corporate Disclosure
for Directors |
21 May 2013 |
Bursa Malaysia Berhad |
Mr.Teo Chin Heng
Mr. Lau yeng Khuan
|
National Tax
Conference 2013
|
24 & 25 June 2013 |
LHDN Malaysia |
Prof. Dr. Paul Cheng Chai Liou |
| Workshop – Financial Accounting – Part 1
|
27 August 2013 |
Prof. Dr. Paul Cheng |
Dr. Teo Kooi Cheng
Mr. Lau yeng Khuan
Dr. Vijaya Raghavan A/L M P Nair
Mr. Teo Chin Heng
Mr. Lim Tong Seng
Dato’ Hon Choon Kim
Mr. Azman Bin Abdil Jalil
|
| Enhancing Corporate Governance Seminar |
1 October 2013 |
SJ Grant Thornton |
Mr. Teo Chin Heng |
| Workshop – Management Accounting – Part 2 |
13 November 2013 |
Prof. Dr. Paul Cheng |
Dr. Teo Kooi Cheng
Mr. Lau yeng Khuan
Dr. Vijaya Raghavan A/L M P Nair
Mr. Teo Chin Heng
Mr. Lim Tong Seng
Dato’ Hon Choon Kim
Mr. Azman Bin Abdil Jalil |
Risk Management &
Internal Control Workshop
for Audit Committee
Members |
2 December 2013 |
Bursa Malaysia Berhad |
Dato’ Hon Choon Kim
Mr. Azman Bin Abdul Jalil
|
|
5. Uphold Integrity in Financial Reporting
| 5.1 |
Compliance with Applicable Financial Reporting Standards |
|
The Board takes the responsibility for presenting a clear, balanced and comprehensive assessment of
the Group’s position and prospects in its presentation of the annual financial statements and quarterly
announcements of its results.
The Board is responsible for keeping proper maintenance of accounting records of the Group and that the financial
reporting and disclosure are clearly completed to the highest standards. The Audit Committee assists the Board
by reviewing the information to be disclosed, to ensure completeness, accuracy and adequacy, and recommends
the same for consideration and approval by the Board.
|
| 5.2 |
Assessment of Suitability and Independence of External Auditors |
|
The Board has established a transparent relationship with the external auditors through the Audit Committee,
which has been accorded the authority to communicate directly with the external auditors. The external auditors
in turn are able to highlight matters requiring the attention of the Board effectively to the Audit Committee in terms
of compliance with the accounting standards and other related regulatory requirements.
|
6. Recognise and Manage Risks
| 6.1 |
Framework to Manage Risks |
|
The Board has the overall responsibility for maintaining a system of internal controls, which provides reasonable
assessments of effective and efficient operations, internal controls and compliance with laws and regulations.
|
| 6.2 |
Internal Audit Function |
|
Details of the Company’s internal audit function are set out in the statement on risk management and internal
control on page 26 and 27 of this Annual Report.
|
7. Ensure Timely and High Quality Disclosure
| 7.1 |
Corporate Disclosure Policy |
|
The Board strives to comply with corporate disclosure requirements set by Bursa Securities and adopted the
following forms of information disclosure:
| a. |
Continuous disclosure – the core disclosure obligation and primary method of informing the market and shareholders. |
| b. |
Periodical disclosure – quarterly reporting of financial results, annual audited accounts and annual report.
|
| c. |
Specific information disclosure – as and when required, of administrative and corporate developments, usually in the form of Bursa releases. |
All information made available to Bursa Securities is immediately available to shareholders, stakeholders and the
public on the Company’s Investor Relations section of the website: www.peterlabs.com.my.
|
| 7.2 |
Leverage on information technology |
|
The Board continue to leverage the use of information technology to disseminate information to shareholders. The
Group’s website was developed and maintained by IT professional to ensure the website is up to date and secured. The
website has a dedicated section to provide information such as the Board Charter, share price announcements made to
Bursa Securities and copies of the annual report.
|
8. Strengthen relationship between Company and Shareholders
| 8.1 |
Shareholder Participation at General Meetings |
|
The Annual General Meeting (‘AGM’) is the principal forum for dialogue with the shareholders. Shareholders are
notified of the meeting and provided with a copy of the Company’s annual report twenty one (21) days before the
meeting. All shareholders are encouraged to participate in discussions with the Board on matters relating to the
Group’s operations and performance at the Company’s AGM.
|
| 8.2 |
Encourage poll voting |
|
There were no substantive resolutions put forth for shareholders’ approval at the previous AGM held on 12 June 2013.
As such, all resolutions tabled for shareholders’ approval were voted by a show of hands.
Nevertheless, the Company would conduct poll voting if demanded by shareholders at the general meeting. The
Board recognises that effective 1 June 2013, poll voting is mandated for related party transactions that require specific
shareholders’ approval.
|
| 8.3 |
Communication and Engagements with Shareholders |
|
The Group recognises the importance of keeping shareholders informed of the Group’s business and corporate
developments. Such information is disseminated via the Group’s annual reports, quarterly financial results and
announcements made from time to time. The Company’s announcements made to Bursa Securities and other
relevant information is also available at the Group’s website at www.peterlabs.com.my.
|
COMPLIANCE WITH THE CODE
The Board considers that the Group has substantially complied with the best practices as stipulated in the Principles and
Recommendations of the MCCG 2012 throughout the financial year ended 31 December 2013.
|
Investor Relations 