Daya Materials Berhaddayagroup.com.my/zata_da/src/doc/dmb_annual_report_2017...18-01-2016/ Papua New...

w w w. d a y a g r o u p . c o m . m y

WE DELIVER • WE CAREa n n u a l r e p o r t 2 0 1 7

CONTENTSCorporate Information

Corporate Structure

Financial Information

Profile of Directors

Senior Management Team

Chairman’s Statement

Management Discussion and Analysis

Sustainability Statement

Corporate Governance Overview Statement

02

03

06

07

11

12

14

18

22

Statement on Risk Management and Internal Control

Audit Committee Report

Financial Statements

Directors’ Responsibilities Statement on Financial Statements

Analysis of Shareholdings

Additional Compliance Information

List of Properties

Notice of Fifteenth Annual General Meeting

Form of Proxy

37

41

45

160

161

164

166

169

WE DELIVER | WE CARE

CommittedAccountableResoluteEthical

At DMB, we work hand in hand with our clients to deliver the best solutions any where, any time.

DAYA MATERIALS BERHAD (636357-W)2

BOARD OF DIRECTORS

FAZRIN AZWAR BIN MD. NORSenior Independent Non-Executive Director/Chairman

DATUK LIM THEAN SHIANGExecutive Vice Chairman/Group Chief Executive Officer[Assumed the addition position of Executive Vice Chairman with effect from 3 November 2017]

TAN SRI DATO’ SRI KOH KIN LIP JPIndependent Non-Executive Director

DATUK LIM SOON FOOIndependent Non-Executive Director

AMINUDDIN BIN MOHD ARIFIndependent Non-Executive Director

NG HONG @ WONG CHIEN FOONGIndependent Non-Executive Director (appointed on 3 November 2017)

AUDIT COMMITTEE

Chairman

Fazrin Azwar bin Md. NorSenior Independent Non-Executive Director

Members

Tan Sri Dato’ Sri Koh Kin Lip JPIndependent Non-Executive Director

Datuk Lim Soon FooIndependent Non-Executive Director

Ng Hong @ Wong Chien Foong Independent Non-Executive Director(appointed on 6 February 2018)

COMPANY SECRETARIES

Chen Bee Ling (MAICSA 7046517)

Foo Ing Ing (LS0010047)

REGISTERED OFFICE

Level 8, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8199

HEAD/MANAGEMENT OFFICE

No. G16 & 116, Block 3 No. 7, Persiaran Sukan Laman Seri Business Park Seksyen 13, 40100 Shah Alam Selangor Darul Ehsan MalaysiaTel : 03-5510 5381Fax : 03-5510 5382Email : [email protected] : www.dayagroup.com.my

PRINCIPAL BANKERS

Export-Import Bank of Malaysia BerhadHong Leong Bank BerhadMalayan Banking BerhadAmIslamic Bank BerhadAmBank (M) Berhad

AUDITORS

Deloitte PLT (LLP0010145-LCA)Chartered Accountants (AF0080)Level 16, Menara LGB1 Jalan Wan Kadir Taman Tun Dr. Ismail60000 Kuala LumpurTel : 03-7610 8888Fax : 03-7726 8986

SHARE REGISTRAR

Symphony Share Registrars Sdn Bhd (378993-D)Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanTel : 03-7849 0777Fax : 03-7841 8151/8152

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities BerhadStock Short Name : DAYAStock Code : 0091

Polymer

Technical Services

Oil and Gas

DMTSB100% DPNG

100%DCMT51%DPSB100%

DHSB100%

DUSB100%

USB100%

DLDSB100%

THDSB100%

ZPSB100%

DSMG100%

DFMM100%

DOCSB100%

DML100%

DG1L100%

DG2L100%

SEMSSB100%

PTDSI100%

DSSB55%

SCCSB100%

DPV51%

DPRO58.50%

DOCL100%

DVL100%

DOCI50.1%

MOSB**100%

DMSB86.44%

DSFSB51%*

DSPL100%*

DPROS100%

* Joint Venture Company

** Meridian Orbit Sdn Bhd (Now known as Daya Infrastructure Group Sdn Bhd)

TUAN HAJI NORZAIN BIN ABDUL WAHAB Independent Non-Executive Director (appointed on 3 November 2017)

THAM JOOI LOON(Executive Vice Chairman)(Resigned on 3 November 2017)

CORPORATE INFORMATION

ANNUAL REPORT 2017 3

CORPORATE STRUCTURE

Daya Materials Berhad (“DMB”) was incorporated in Malaysia under the Companies Act, 1965 on 8 December 2003 as a public limited company. The principal activities of DMB are that of investment holding and provision of management services to its subsidiary companies. The particulars of the subsidiaries and joint venture as at 31 March 2018, are as follows:-

Subsidiary Companies

Date and Place of

incorporation

Issued and Paid-up

Share Capital

EffectiveEquity

Interest Principal Activities

1 Daya Polymer Sdn. Bhd. (324073-U) (“DPSB”)

21-11-1994/ Malaysia

RM6,000,000 100.00% Manufacture of semiconductor and XLPE compounds for cable and wire trading in specialty chemicals, related polymer compounds and hardware. It has temporarily ceased its trading activities since the financial year ended 31 December 2007.

2 DMB Marketing & TradingSdn. Bhd. (724943-U) (“DMTSB”)

27-02-2006/Malaysia

RM2.00 100.00% General trading, marketing and investment holding. The Company did not have any revenue generating activities during the current financial year.

3 Daya Infrastructure Group Sdn Bhd (780242-P) (formerly known as Meridian Orbit Sdn Bhd) (“DIFGSB”)

09-07-2007/Malaysia

RM100,000 100.00% Investment holding company.

4 Daya Secadyme Sdn. Bhd.(188542-W) (“DSSB”)

25-10-1989/Malaysia

RM1,008,000 55.00% Supplying industrial chemicals and catalysts for the oil and gas industry, blending, mixing and suppying oilfield chemicals, environmental chemicals and other related products for the oil and gas industry and to do all such acts, deeds or things as would be required for effective fulfillment of the said objectives.

5 Daya CMT Sdn. Bhd.(208646-U) (“DCMT”)

28-11-1990/Malaysia

RM8,000,000 51.00% Providing industrial facilities management including builder works, facility operation and maintenance services, upgrades, and retrofits, as well as design and build plant facility.

6 Daya Offshore ConstructionLimited (“DOCL”)

13-08-2008/Hong Kong

HKD 3,000,000 100.00% Center for regional procurement and trading as well as international investments.

7 Daya Proffscorp Sdn. Bhd.(173309-T) (“DPRO”)

24-08-1988/Malaysia

RM1,650,000 58.50% Hiring of lorries, trucks, forklifts, cranes and heavy machineries for loading and unloading, tally services and general trading.

8 Daya OCI Sdn. Bhd.(291138-U) (“DOCI”)

02-03-1994/Malaysia

RM10,000,000 50.10% Supply agent of equipment and specialty chemicals for oil and gas process plants, a provider installation and maintenance services for air-conditioning and ventilation system, automatic welding service for offshore pipeline installation, and a provider of maintenance service for both onshore and offshore facilities.

9 Seca Chemicals and CatalystsSdn. Bhd. (710772-A) (“SCCSB”)

26-09-2005/Malaysia

RM100,000 100.00% Dealing in petroleum, oil and gas products and consulting services.

10 Daya Offshore ConstructionSdn Bhd (651398-P) (“DOCSB”)

05-05-2004/Malaysia

RM5,000,000 100.00% Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.

11 Daya Petroleum VenturesSdn. Bhd. (736674-D) (“DPV”)

06-06-2006/Malaysia

RM350,000 51.00% Provision of drilling services, geological, petroleum engineering, subsea and deep-water support services and operations and maintenance services.

12 Daya Maritime Limited(LL10243) (“DML”)

27-12-2013/Malaysia

USD10 100.00% Shipping leasing business and other related services to the oil and gas industry.

13 Daya Global 1 Limited(LL11253) (“DG1L”)

03-10-2014/Malaysia


14 Daya Global 2 Limited(LL11254) (“DG2L”)

03-10-2014/Malaysia


15 Daya PNG Limited(1-109522) (“DPNGL”)

18-01-2016/Papua New

Guinea

PGK 1 100.00% Investment holding company and/or undertaking business activities in Papua New Guinea.


CORPORATE STRUCTURECONT’D

Subsidiary Companies

Date and Place of

incorporation

Issued and Paid-up

Share Capital

EffectiveEquity

Interest Principal Activities

Held through subsidiaries

16 Daya Hightech Sdn. Bhd. (791561-V) (“DHSB”)

10-10-2007/ Malaysia

RM100,000 100.00% Manufacturing of polymer compounds for cables and wires. The company had ceased operation with effect from January 2013 and become dormant.

17 Seca Engineering andManpower Services Sdn. Bhd.(704437-A) (“SEMSSB”)

28-07-2005/Malaysia

RM100,000 55.00% Providing engineering and manpower services. (in the midst of striking off)

18 Daya FMM Sdn. Bhd.(418776-U) (“DFMM”)

27-01-1997/Malaysia

RM750,004 51.00% General contractors and related services.

19 PT Daya Secadyme Indonesia(“PTDSI”)

14-01-2010/Indonesia

USD100,000 55.00% Trading in petrochemicals products.

20 Daya Proffscorp (Sabah)Sdn. Bhd. (922055-P) (“DPROS”)

15-11-2010/Malaysia

RM450,002.00 58.50% Hiring of lorries, trucks, forklifts, cranes and heavy machineries for loading and unloading, tally services and general trading.

21 Ultrafest Sdn. Bhd.(968989-X) (“USB”)

20-11-2011/Malaysia

RM1,000,000 51.00% Property development.

22 Terra Hill DevelopmentSdn. Bhd. (971347-V)(“THDSB”)

12-12-2011/Malaysia

RM2.00 70.00% Property development. The Company has not commenced its operation since the date of incorporation.

23 Zen Projects Sdn. Bhd.(974746-K ) (“ZPSB”)

11-01-2012/Malaysia

RM2.00 51.00% Investment holding. The Company has not commenced its operation sicne the date of incorporation.

24 Daya SMG EngineeringSdn. Bhd. (1024254-V) (“DSMG”)

09-11-2012/Malaysia

RM2.00 51.00% To provide project engineering services to the oil and gas industry in particular and other industries in general.

25 Daya Vessels Limited.(LL09292 ) (“DVL”)

19-11-2012/Malaysia

USD10.00 50.10% Shipping leasing business and other related services to the oil and gas industry.

26 Daya Maxflo Sdn Bhd(681714-M) (“DMSB”)

21-02-2005/Malaysia

RM1,420,000 51.00% Providing products and services for exploration, drilling and well intervention and production specifically for oil and gas, refinery and petro-chemical.

27 PT. Daya Maxflo (“PTDM”) 24-12-2013/Indonesia

USD250,000 25.28% Provision, trade, import and distribute oil and gas products and services to the oil & gas industry. (company voluntarily wound up)

28 Daya Land & DevelopmentSdn. Bhd. (524602-D) (“DLDSB”)

25-08-2000/Malaysia

RM500,000 51.00% Provision of project management services.

29 Daya Urusharta Sdn. Bhd.(863073-M) (“DUSB”)

03-07-2009/Malaysia

RM100,000 51.00% Property investment holding.

30 Daya Sheffield Sdn. Bhd.(919845-U) (“DSFSB”)

26-10-2010/Malaysia

RM350,000 51.00% Recruiting and providing specialised, qualified and professional personnel for the oil and gas industries.

31 Daya Sheffield Pte. Ltd.(201415457R) (“DSPL”)

29-05-2014/Singapore

SGD1.00 25.55% Provision for technical and engineering services in global oil and gas industries, as well as overseas consultancy services to oil and gas or any other industries.


BOARD OF DIRECTORS

FAZRIN AZWAR BIN MD. NORSenior Independent Non-Executive Director/Chairman

DATUK LIM THEAN SHIANGExecutive Vice Chairman/Group Chief Executive Officer[Assumed the addition position of Executive Vice Chairman with effect from 3 November 2017]

TAN SRI DATO’ SRI KOH KIN LIP JPIndependent Non-Executive Director

DATUK LIM SOON FOOIndependent Non-Executive Director

AMINUDDIN BIN MOHD ARIFIndependent Non-Executive Director

NG HONG @ WONG CHIEN FOONGIndependent Non-Executive Director (appointed on 3 November 2017)

AUDIT COMMITTEE

Chairman

Fazrin Azwar bin Md. NorSenior Independent Non-Executive Director

Members

Tan Sri Dato’ Sri Koh Kin Lip JPIndependent Non-Executive Director

Datuk Lim Soon FooIndependent Non-Executive Director

Ng Hong @ Wong Chien Foong Independent Non-Executive Director(appointed on 6 February 2018)

COMPANY SECRETARIES

Chen Bee Ling (MAICSA 7046517)

Foo Ing Ing (LS0010047)

REGISTERED OFFICE

Level 8, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8199

HEAD/MANAGEMENT OFFICE

No. G16 & 116, Block 3 No. 7, Persiaran Sukan Laman Seri Business Park Seksyen 13, 40100 Shah Alam Selangor Darul Ehsan MalaysiaTel : 03-5510 5381Fax : 03-5510 5382Email : [email protected] : www.dayagroup.com.my

PRINCIPAL BANKERS

Export-Import Bank of Malaysia BerhadHong Leong Bank BerhadMalayan Banking BerhadAmIslamic Bank BerhadAmBank (M) Berhad

AUDITORS

Deloitte PLT (LLP0010145-LCA)Chartered Accountants (AF0080)Level 16, Menara LGB1 Jalan Wan Kadir Taman Tun Dr. Ismail60000 Kuala LumpurTel : 03-7610 8888Fax : 03-7726 8986

SHARE REGISTRAR

Symphony Share Registrars Sdn Bhd (378993-D)Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanTel : 03-7849 0777Fax : 03-7841 8151/8152

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities BerhadStock Short Name : DAYAStock Code : 0091

Polymer

Technical Services

Oil and Gas

DMTSB100% DPNG

100%DCMT51%DPSB100%

DHSB100%

DUSB100%

USB100%

DLDSB100%

THDSB100%

ZPSB100%

DSMG100%

DFMM100%

DOCSB100%

DML100%

DG1L100%

DG2L100%

SEMSSB100%

PTDSI100%

DSSB55%

SCCSB100%

DPV51%

DPRO58.50%

DOCL100%

DVL100%

DOCI50.1%

MOSB**100%

DMSB86.44%

DSFSB51%*

DSPL100%*

DPROS100%

* Joint Venture Company

** Meridian Orbit Sdn Bhd (Now known as Daya Infrastructure Group Sdn Bhd)

TUAN HAJI NORZAIN BIN ABDUL WAHAB Independent Non-Executive Director (appointed on 3 November 2017)

THAM JOOI LOON(Executive Vice Chairman)(Resigned on 3 November 2017)

CORPORATE STRUCTURECONT’D


FINANCIAL INFORMATION

ActRestated 2013

ActRestated 2014

ActRestated 2015

ActRestated 2016

Act2017

Revenue 523,785 642,160 718,838 399,172 293,533

EBITDA 22,495 (13,789) 27,419 (138,279) 12,077

PBT 11,482 (36,772) (2,533) (200,943) (21,038)

PAT 4,244 (35,775) (14,192) (205,811) (43,338)

Total Equity 242,302 311,532 296,458 85,220 50,439

Total Assets 525,730 601,069 1,265,209 981,353 461,213

REVENUE(RM’000)

EDITDA(RM’000)

PBT(RM’000)

PAT(RM’000)

SHAREHOLDERS’ FUND(RM’000)

TOTAL ASSETS(RM’000)

293,

533

642,

160

523,

785

399,

172

718,

838

13 14 15 16 17

12,0

77

(13,

789)

22,4

95

(138

,279

)

27,4

19

13 14 15 16 17

(21,

038)

(36,

722)

11,4

82

(200

,943

)

(2,5

33)

13 14 15 16 17

(43,

338)

(35,

775)

4,24

4

(205

,811

)

(14,

192)

13 14 15 16 17

50,4

39

311,

532

242,

302

85,2

20

296,

458

13 14 15 16 17

461

,213

601,

069

525,

730

981,

353

1,26

5,20

9

13 14 15 16 17


PROFILE OF DIRECTORS

Encik Fazrin was appointed to the Board on 30 May 2005 and assumed the position as the Chairman of the Company on 25 August 2016. He graduated from the University of Malaya with a Bachelor of Law (LLB) Honors Degree. He is an Advocate and Solicitor and a member of the Malaysian BAR. He is currently the Managing Partner of Messrs. Azwar & Associates.

Encik Fazrin is also currently an Independent Non-Executive Chairman of Mercury Industries Berhad, an Independent Non-Executive Director and Audit Committee member of both Poh Kong Holdings Berhad and Tong Herr Resources Berhad, all listed on the Main Market of Bursa Securities.

Encik Fazrin is also an Independent Non-Executive Director of Times Offset (M) Sdn. Bhd. and a Non-Independent Non-Executive Director of the Kuchinta Holdings Group of Companies.

Encik Fazrin is also a chartered member of The Malaysian Institute of Directors and The Institute of Internal Auditors Malaysia.

Encik Fazrin is also the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committees of the Company.

Encik Fazrin attended all five (5) Board Meetings held in the year of 2017.

Datuk TS Lim was appointed as an Executive Director and Group Chief Executive Officer of DMB on 24 March 2015. Datuk TS Lim assumed the additional position of Executive Vice Chairman with effect from 3 November 2017.

Datuk TS Lim graduated from University of London, England with Bachelor of Law (Hons) and holds Bachelor of Business Administration (Hons) from Universiti Utara Malaysia.

Datuk TS Lim started his career as a Marketing Executive with TA Construction & Properties Sdn Bhd in 1994. Later in 1996, he joined Wayteam Sdn Bhd as a Business Development Manager. In 1997, he progressed to join Ideal Palms Sdn Bhd as the Personal Advisor to the Chairman. He left employment and set up his own businesses in 1999. During the same period, he was appointed as Director in several private companies. From 2008 to 2009, he was appointed as General Manager of Port Klang Authority and Executive Chairman of Port Klang Free Zone.

Datuk TS Lim has been sitting on the Board of several companies within the Felda Global Ventures (“FGV”) Group of Companies since 2013. He is one of the Advisors to the Investment Committee of FGV. Datuk TS Lim is also an Independent Non-Executive Director of Malaysia Holding Berhad (“MSM”) and Tropicana Corporation Berhad. At MSM Group, he is the Chairman of both the Investment Committee and the Board Governance & Risk Management Committee. In 2015, he has also been appointed as Director of the Maritime Institute of Malaysia (“MIMA”).

Datuk TS Lim is a member of the Executive Committee (“EXCO”) of the Company.

Datuk TS Lim attended all five (5) Board Meetings held in the year of 2017.

FAZRIN AZWAR BIN MD NORMalaysian, aged 51, Male

Chairman/Senior IndependentNon-Executive Director

DATUK LIM THEAN SHIANG(”Datuk TS Lim”)Malaysian, aged 46, Male

Executive Vice Chairman/Group Chief Executive Officer

REVENUE(RM’000)

EDITDA(RM’000)

PBT(RM’000)

PAT(RM’000)

SHAREHOLDERS’ FUND(RM’000)

TOTAL ASSETS(RM’000)

293,

533

642,

160

523,

785

399,

172

718,

838

13 14 15 16 17

12,0

77

(13,

789)

22,4

95

(138

,279

)

27,4

19

13 14 15 16 17

(21,

038)

(36,

722)

11,4

82

(200

,943

)

(2,5

33)

13 14 15 16 17

(43,

338)

(35,

775)

4,24

4

(205

,811

)

(14,

192)

13 14 15 16 17

50,4

39

311,

532

242,

302

85,2

20

296,

458

13 14 15 16 17

461

,213

601,

069

525,

730

981,

353

1,26

5,20

9

13 14 15 16 17


Tan Sri Dato’ Sri Koh was appointed to the Board on 22 December 2008. He graduated from Plymouth Polytechnic (now known as Plymouth University), UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business and was principally involved in administrative and financial matters. In 1985, he assumed the role as Chief Executive Officer of the family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the flagship company of the family business which involved activities ranging from properties investment/holding, properties letting, property development, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, hotel business, car park operator, insurance agency, trading in golf equipment and accessories, river sand mining, bricks manufacturing and quarry operations.

Presently, Tan Sri Dato’ Sri Koh is also a Director of NPC Resources Berhad, Cocoaland Holdings Berhad and IOI Properties Group Berhad. He is also a member of the Management Committee of Red Sena Berhad.

Tan Sri Dato’ Sri Koh is the Chairman of the Remuneration Committee and Nomination Committee and a member of the Audit Committee of the Company.

He attended four (4) out of five (5) Board Meetings held in the year of 2017.

Datuk SF Lim was appointed to the Board on 15 August 2011. He was admitted as member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited, Optic Marine Offshore Limited & Optic Marine Gateway Limited providing highly specialised services in the optic fibre submarine cable industry which extend into many countries in Asia Pacific region. The Companies also worked alongside many Global Partners in the optic fibre submarine industry. Datuk SF Lim is also a Director of Optic Marine Berhad and sits in the board of several other private companies involved in plantation, logging and real estates.

Datuk SF Lim is a member of the Remuneration Committee and Audit Committee of the Company.

Datuk SF Lim attended all five (5) Board Meetings held in the year of 2017.

DATUK LIM SOON FOO (”Datuk SF Lim”)Malaysian, aged 62, Male

Independent Non-Executive Director

TAN SRI DATO’ SRI KOH KIN LIP, JP(”Tan Sri Dato’ Sri Koh”)Malaysian, aged 69, Male


Encik Aminuddin was appointed to the Board on 1 October 2014. Encik Aminuddin graduated from Robinson College, Cambridge, UK with a Second Class Upper Honors in Economics. A Yayasan Sime Darby scholar, he started his career as an Economist with Sime Securities Sdn Bhd, in 1997. In 1998, he joined Sime AXA Assurance where he was involved at the marketing and planning levels. Subsequently, he moved to Consolidated Plantations Bhd in 2000, where he gained exposure at both the corporate and operations areas. In 2001, Encik Aminuddin joined the government when he was appointed the Special Officer to the Minister of Youth and Sports, Malaysia. He later joined the Ministry of Education as the Private Secretary to the Minister of Education Malaysia in 2004. In 2009, Encik Aminuddin continued his career in government as Private Secretary to the Minister of Home Affairs, Malaysia. He later joined the Ministry of Transport, Malaysia as the Principal Private Secretary to the Minister of Transport Malaysia in 2013. Encik Aminuddin is also a Director of MRCB-Quill Reit.

Encik Aminuddin is a member of Nomination Committee of the Company.

En. Aminuddin attended four (4) out of five (5) Board Meetings held in the year of 2017.

Mr. Ng Hong was appointed to the Board on 3 November 2017. Mr. Ng Hong is a Fellow of Association of Chartered Certified Accountants, UK (FCCA), a member of The Malaysian Institute of Certified Public Accountants (MICA) and Chartered Accountants, Institute Akauntan Malaysia (CA(M)).

Mr. Ng Hong started his career as an Audit Assistant with Lim Ali & Co. (now known as Ernst & Young) in 1973. He then joined Peat Marwick Mitchell & Co./Desa Megat (now known as KPMG) as a Qualified Assistant in 1979. In 1981, Mr. Ng Hong worked as Group Financial Accountant in Cold Storage (Malaysia) Berhad. He then held the position as Chief Accountant in United Malaysian Management Services Sdn Bhd from 1983 to 1986. In 1986, he was appointed as Management Accountant (Property Division) in Amalgamated Properties & Industries Berhad. Mr. Ng Hong then joined Kewangan Usahama Makmur Berhad in 1988 as Manager, Finance and Accounts Department up to 1991. In 1992, Mr. Ng Hong was appointed as Finance Director at Assunta Hospital, Petaling Jaya and he also became a Member of Board of Governor of Tun Tan Cheng Lock College of Nursing. Mr. Ng Hong continued his career in Tung Shin Hospital from 2002 to 2011 as Hospital Administrator. At Tun Shin Hospital, he was also appointed as Chief Executive Officer of Tung Shin Academy of Nursing and Management Representative to Chinese Maternity Hospital at Jalan Pudu, Kuala Lumpur. He had also worked as Administrative Adviser in Anson Bay Medical Centre from 2012 to 2015.

Mr. Ng Hong is a member of Audit Committee of the Company effective from 6 February 2018.

Mr. Ng Hong is the brother in-law of the wife of Datuk SF Lim, a Director and substantial shareholder of the Company.

Mr. Ng Hong attended one (1) Board Meeting in the year of 2017 since his appointment on 3 November 2017.

NG HONG @ WONG CHIEN FOONG (“Ng Hong”)Malaysian, aged 69, Male

IndependentNon-Executive Director

AMINUDDIN BIN MOHD ARIFMalaysian, aged 42, Male


PROFILE OF DIRECTORSCONT’D


Tan Sri Dato’ Sri Koh was appointed to the Board on 22 December 2008. He graduated from Plymouth Polytechnic (now known as Plymouth University), UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business and was principally involved in administrative and financial matters. In 1985, he assumed the role as Chief Executive Officer of the family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the flagship company of the family business which involved activities ranging from properties investment/holding, properties letting, property development, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, hotel business, car park operator, insurance agency, trading in golf equipment and accessories, river sand mining, bricks manufacturing and quarry operations.

Presently, Tan Sri Dato’ Sri Koh is also a Director of NPC Resources Berhad, Cocoaland Holdings Berhad and IOI Properties Group Berhad. He is also a member of the Management Committee of Red Sena Berhad.

Tan Sri Dato’ Sri Koh is the Chairman of the Remuneration Committee and Nomination Committee and a member of the Audit Committee of the Company.

He attended four (4) out of five (5) Board Meetings held in the year of 2017.

Datuk SF Lim was appointed to the Board on 15 August 2011. He was admitted as member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited, Optic Marine Offshore Limited & Optic Marine Gateway Limited providing highly specialised services in the optic fibre submarine cable industry which extend into many countries in Asia Pacific region. The Companies also worked alongside many Global Partners in the optic fibre submarine industry. Datuk SF Lim is also a Director of Optic Marine Berhad and sits in the board of several other private companies involved in plantation, logging and real estates.

Datuk SF Lim is a member of the Remuneration Committee and Audit Committee of the Company.

Datuk SF Lim attended all five (5) Board Meetings held in the year of 2017.

DATUK LIM SOON FOO (”Datuk SF Lim”)Malaysian, aged 62, Male


TAN SRI DATO’ SRI KOH KIN LIP, JP(”Tan Sri Dato’ Sri Koh”)Malaysian, aged 69, Male


Encik Aminuddin was appointed to the Board on 1 October 2014. Encik Aminuddin graduated from Robinson College, Cambridge, UK with a Second Class Upper Honors in Economics. A Yayasan Sime Darby scholar, he started his career as an Economist with Sime Securities Sdn Bhd, in 1997. In 1998, he joined Sime AXA Assurance where he was involved at the marketing and planning levels. Subsequently, he moved to Consolidated Plantations Bhd in 2000, where he gained exposure at both the corporate and operations areas. In 2001, Encik Aminuddin joined the government when he was appointed the Special Officer to the Minister of Youth and Sports, Malaysia. He later joined the Ministry of Education as the Private Secretary to the Minister of Education Malaysia in 2004. In 2009, Encik Aminuddin continued his career in government as Private Secretary to the Minister of Home Affairs, Malaysia. He later joined the Ministry of Transport, Malaysia as the Principal Private Secretary to the Minister of Transport Malaysia in 2013. Encik Aminuddin is also a Director of MRCB-Quill Reit.

Encik Aminuddin is a member of Nomination Committee of the Company.

En. Aminuddin attended four (4) out of five (5) Board Meetings held in the year of 2017.

Mr. Ng Hong was appointed to the Board on 3 November 2017. Mr. Ng Hong is a Fellow of Association of Chartered Certified Accountants, UK (FCCA), a member of The Malaysian Institute of Certified Public Accountants (MICA) and Chartered Accountants, Institute Akauntan Malaysia (CA(M)).

Mr. Ng Hong started his career as an Audit Assistant with Lim Ali & Co. (now known as Ernst & Young) in 1973. He then joined Peat Marwick Mitchell & Co./Desa Megat (now known as KPMG) as a Qualified Assistant in 1979. In 1981, Mr. Ng Hong worked as Group Financial Accountant in Cold Storage (Malaysia) Berhad. He then held the position as Chief Accountant in United Malaysian Management Services Sdn Bhd from 1983 to 1986. In 1986, he was appointed as Management Accountant (Property Division) in Amalgamated Properties & Industries Berhad. Mr. Ng Hong then joined Kewangan Usahama Makmur Berhad in 1988 as Manager, Finance and Accounts Department up to 1991. In 1992, Mr. Ng Hong was appointed as Finance Director at Assunta Hospital, Petaling Jaya and he also became a Member of Board of Governor of Tun Tan Cheng Lock College of Nursing. Mr. Ng Hong continued his career in Tung Shin Hospital from 2002 to 2011 as Hospital Administrator. At Tun Shin Hospital, he was also appointed as Chief Executive Officer of Tung Shin Academy of Nursing and Management Representative to Chinese Maternity Hospital at Jalan Pudu, Kuala Lumpur. He had also worked as Administrative Adviser in Anson Bay Medical Centre from 2012 to 2015.

Mr. Ng Hong is a member of Audit Committee of the Company effective from 6 February 2018.

Mr. Ng Hong is the brother in-law of the wife of Datuk SF Lim, a Director and substantial shareholder of the Company.

Mr. Ng Hong attended one (1) Board Meeting in the year of 2017 since his appointment on 3 November 2017.

NG HONG @ WONG CHIEN FOONG (“Ng Hong”)Malaysian, aged 69, Male


AMINUDDIN BIN MOHD ARIFMalaysian, aged 42, Male




Tuan Haji Norzain was appointed to the Board on 3 November 2017. He holds a Bachelor of Business Administration Degree (Hons) (Marketing) from the Universiti Teknologi MARA from 2006-2012.

Tuan Haji Norzain was appointed as the Special Officer and Chief of Political Staff to Y.B. Dato’ Seri Hishammuddin Tun Hussein, the Minister of Defense, Government of Malaysia. Tuan Haji Norzain is currently the Managing Director of Glotel Sdn Bhd, a company which he founded in 2001 with the principal business of supplying medical equipment.

Tuan Haji Norzain attended one (1) Board Meeting in the year of 2017 since his appointment on 3 November 2017.

Family Relationship with Director and Major Shareholder

Save as disclosed, none of the Directors of the Company have any family relationship with any director and/or major shareholder of the Company.

Conflict of Interest

None of the Directors of the Company has entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company.

Conviction of Offences

All the Directors of the Company have not been convicted any offences within the past five (5) years or any public sanction or penalty imposed by relevant regulatory bodies during the financial year other than traffic offences, if any.

TUAN HAJI NORZAIN BIN ABDUL WAHAB(“Tuan Haji Norzain”)Malaysian, aged 51, Male




Tuan Haji Norzain was appointed to the Board on 3 November 2017. He holds a Bachelor of Business Administration Degree (Hons) (Marketing) from the Universiti Teknologi MARA from 2006-2012.

Tuan Haji Norzain was appointed as the Special Officer and Chief of Political Staff to Y.B. Dato’ Seri Hishammuddin Tun Hussein, the Minister of Defense, Government of Malaysia. Tuan Haji Norzain is currently the Managing Director of Glotel Sdn Bhd, a company which he founded in 2001 with the principal business of supplying medical equipment.

Tuan Haji Norzain attended one (1) Board Meeting in the year of 2017 since his appointment on 3 November 2017.

Family Relationship with Director and Major Shareholder

Save as disclosed, none of the Directors of the Company have any family relationship with any director and/or major shareholder of the Company.


None of the Directors of the Company has entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company.


All the Directors of the Company have not been convicted any offences within the past five (5) years or any public sanction or penalty imposed by relevant regulatory bodies during the financial year other than traffic offences, if any.

TUAN HAJI NORZAIN BIN ABDUL WAHAB(“Tuan Haji Norzain”)Malaysian, aged 51, Male


PROFILE OF SENIOR MANAGEMENT TEAM

Management Team GraduateYears of

Experience Date of Appointed

CHAI KOH HIUNGAged 52, Male, Malaysian

Western Michigan University with Bachelor of Business Administration in Finance.

21 May 2015,Deputy Group Chief Executive Officer

EN. SHAMSUL SAADAged 54, Male, Malaysian

University of Florida, USA with B.Sc. in Chemical Engineering.

32 June 2016Executive Vice President,Oil & Gas, Daya Materials Berhad

YAP EE SEONGAged 51, Male, Malaysian

Australian National University with Bachelor of Commerce

27 January 2016Chief Financial Officer

NOR’AINI BINTI SALLEHAged 58, Female, Malaysian

Asia University with Master in Human Resource Management

34 January 2015General Manager, Group HR & Admin

PRATHEB A/L BALANAged 42, Male, Malaysian

University of Buxton with Master in Computer System Engineering

20 January 2015Group IT Manager

NORHISHAM NORDINAged 35, Male, Malaysian

Polytechnic of Port Dickson with Diploma in Accountancy

13 April 2016Group Chief Internal Auditor

WILLIAM THAM WOOI LOON Aged 57, Male, Malaysian

University of Waterloo in Ontario, Canada with an Honours Degree in Mathematics, double majors in Computer Science, Combinatorics and Optimisations.

33 July 2013Managing Director of Daya CMT Sdn Bhd

ARTHUR SAMAged 42, Male, Malaysian

Universiti Teknologi Malaysia with Bachelor of Petroleum Engineering

18 July 2015Chief Executive Officer of Daya Maxflo Sdn Bhd

ADLI MOHD NOOR Aged 44, Male, Malaysian

University Teknologi Malaysia with Bachelor of Chemical Engineering

20 April 2017Deputy Chief Executive Officer of Daya Secadyme Sdn Bhd

IR. ZAIDI BIN AYUBAged 49, Male, Malaysian

Bradley University, Peoria, Illinois, USA with Bachelor of Science in Mechanical Engineering.

26 June 2015Chief Executive Officer of Daya OCI Sdn Bhd

GAN BOON CHEONGAged 57, Male, Malaysian

University of Malaya with Bachelor Art Hons (Economics).

21 May 2015Chief Executive Officer of Daya Land & Development Sdn Bhd

MOHD HAMKA BIN ABDUL AZIZAged 53, Male, Malaysian

Politeknik Ungku Omar with Diploma in Marine Engineering

19 January 2015General Manager of Daya Proffscorp Sdn Bhd

Family Relationship and Major Shareholders

Save as disclosed, none of the Management staff has any family relationship with any director and/or major shareholders of the Company.


None of the Management staff has entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company.


None of Management staff has convicted any offence within the past five (5) years other than traffic offences, if any.

CHAIRMAN’SSTATEMENT

Dear Shareholders,On behalf of the Board of Directors, it is my pleasure to present the Annual Report and Audited Financial Statements of Daya Materials Berhad and its subsidiary companies (“the Group”) for the financial year ended 31 December 2017 (“FY2017”).


PERFORMANCE REVIEW

The Group main business segments are Upstream and Downstream Oil & Gas (“O&G”) and Technical Services (“TS”), which made up of 28% and 70% of its turnover respectively in FY2017 total revenue. The Group exited the offshore subsea business, following the completed sale of Siem Daya 1 vessel via sale of Daya Global 1 Pte Ltd to Siem OCV Pte Ltd for US$100 million in September 2017. The Specialised Polymer segment was facing stiff price competition over the last few years resulted in poor sale performance and dismal operating results. After futile attempts to get buyer for the operation, the Group decided to wind down the operation, and subsequently dispose the plant, land and buildings during the year.

For the FY 2017, the Group recorded a pretax loss of RM21.0 million on turnover of RM294 million. This represents an improvement of 90 % over the pretax loss of RM200.9 million in financial year 2016.The improvement was primarily attributed to the cessation of the offshore business overhead, the improved

performance in the downstream O&G and technical services division. Nevertheless, the Group still suffered the losses arising from one-off adjustment in the costs in relation to the cessation of offshore subsea construction business after exiting from this sector. Apart from the losses in offshore subsea segment, a provision was made for impairment of receivables under dispute.

One enlightening note, excluding these losses and provision, the Group would have generated RM17.3 million pretax profit from the Downstream O&G and TS segments in FY 2017 as compared to RM6.6 million pretax profit from the same segments in FY2016. These performance showed that the Group is operating profitably without the Upstream O&G and Specialised Polymer segments. The performance of the various segments of the Group’s business is tabulated as follows:-


CHAIRMAN’SSTATEMENT

Dear Shareholders,On behalf of the Board of Directors, it is my pleasure to present the Annual Report and Audited Financial Statements of Daya Materials Berhad and its subsidiary companies (“the Group”) for the financial year ended 31 December 2017 (“FY2017”).

Segmental Contribution

Revenue EBITDAProfit/(loss) before tax

Profit/(loss) after tax

2017 RM’000 RM’000 RM’000 RM’000Upstream O&G - (9,975) (25,118) (42,479)Downstream O&G 81,778 17,748 11,706 9,599 Technical Services 206,587 7,911 5,598 870 Specialised Polymer 5,168 (2,820) (3,180) (3,180)

293,533 12,864 (10,994) (35,190)

Revenue EBITDAProfit/(loss) before tax

Profit/(loss) after tax

2016 RM’000 RM’000 RM’000 RM’000Upstream O&G 71,930 (145,095) (203,777) (203,777)Downstream O&G 64,943 10,277 4,104 (258)Technical Services 251,930 4,551 2,564 1,318 Specialised Polymer 10,321 (1,171) (1,702) (1,429)

399,124 (131,438) (198,811) (204,146) • The comparative amounts have been reclassified to conform with the current year audited financial statement presentation. For comparative

purposes, the above table is meant to refelct the performamnce of each segment only. The total figures do not tally with consolidated accounts because of minority interest in certain operating units and the centralised costs at holding company level which are not reflected here.

FINANCIAL POSITION & DIVIDEND

For the FY 2017, the Group incurred a loss after tax of RM 43.3 million with net current assets of RM 15.4 million, this resulted after the one off adjustment in the costs in cessation of offshore subsea business, provision for impairment of receivables and write-off deferred tax asset. Subsequently. as a result, the Group’s shareholders’ equity on a consolidated basis dropped to RM13.2 million, less than the required RM40.0 million and dipping below the 25% threshold of the Group’s issued capital. This caused the Group to lapse into Practice Note 17 (“PN17”) status due to minimum shareholder fund threshold criteria. Notwithstanding, it is noted that excluding the offshore business and specialised polymer segments, the core existing businesses of the Group remain profitable.

As an Affected Issuer, the Group is required to submit to Bursa a Regularisation Plan within 12 months. We have been working on the said plan since our PN17 announcement. While the plan has yet to be finalised, after preliminary discussions with various stakeholders, the proposal will likely involve raising fresh capital and also restructuring the loans to improve the shareholders’ equity and cash flow position of the Group. Once the proposal is finalised and received the necessary approvals from the authorities, the appropriate announcement will be made. With the continuing contribution from the existing business, injection of the fresh fund and the structuring of the loan, re-engineering and re-grow plans, the Group expects to turnaround within the next 12 to 24 months.

In view of the tight operating performance and in view of the on-going re-regularisation plan and our present financial position, the Board is of the view that, out of financial prudency, no dividends will be declared.

FUTURE OUTLOOK

Moving forward, the existing core Downstream O&G and the TS business will remain the key business of the Group. For the Group, these segments are seeing growth and the start of probability securing new contracts from prospective customers. Going forward, with the existing order book of more than RM670 million todate in these segments which provide underlying framework of sustainable earnings, the Group is confident that it will be regularised and operated onto a profitable course of business in the coming year.

APPRECIATION

On behalf of the Board, I would like to also take this opportunity to express our immense gratitude to our ex-Executive Vice Chairman, Mr Nathan Tham Jooi Loon, who resigned as our Executive Vice Chairman in November 2017. We wish him the best in his future endeavours. Also, on behalf of the Board, I would like to welcome our two new board members, Mr Ng Hong @ Wong Chien Foong, who joined us as an Independent Non-Executive Director and Tuan Haji Norzain Bin Abdul Wahab, as an Independent Non-Executive Director. Both joined as of 3 November 2017.

Lastly, I would like to thank our shareholders for their continuous support and confidence in our business and operations; our customers, for their trust in our ability to deliver; and our financiers, business associates as well as partners, for their unremitting commitment, support and contribution throughout the year. With the challenges ahead, I again look forward to your relentless support in ensuring that we achieve our goals in the coming year.

Fazrin Azwar bin Md NorSenior Independent Non-Executive Director/Chairman

CHAIRMAN’S STATEMENTCONT’D


BUSINESS OVERVIEW

The Group has operated in four (4) main segments of business, primarily offering a range of products and services to both the upstream and downstream sectors of the Oil and Gas (“O&G”) industry, and also has significant non-O&G interests in engineering and construction (“E&C”), heating, ventilation & air-conditioning (“HVAC”), and specialised polymers. Most of these non-O&G businesses (other than specialized polymers) are classified under the Technical Services Division.

The Group upstream O&G business segment is mainly represented by DOCSB, DOCL, DVL and DML. The downstream O&G is mainly represented by DSSB, DOCI, DMAX and DPRO. The Technical Service business segment is represented by DCMT group of companies.

The upstream O&G (“US”) service segment covers the following areas:-

l Subsea engineering services • Subsurface services• Offshore & integrity chemicals• Pipe-lay, cable-lay & flexi-lay• Chartering of marine assets

The downstream O&G (“DS”) service segment covers the following areas:

l Supply of downstream chemicals• Bulk chemical logistics & transportation • Well intervention & completion services • HVAC & marine HVAC• Tanking, storage & warehousing • Mobile cranes & specialised lifting • Recycling & desludging• Facility upgrades & maintenance

The Technical Services (“TS”) segment provides:

l Engineering, procurement, construction and commissioning (“EPCC”)• Industrial, commercial and residential construction • Fabrication of steel structures• Mechanical & electrical (“M&E”) installations• Build/lease & turnkey construction

The Specialised Polymer (“SP”) segment manufactures materials for the power cables and wires industry and trades in other polymer related compounds and specialty chemical products. It offers semi-conductive compounds, medium-voltage cross-linked polyethylene (“XLPE”) compounds, low-voltage XLPE compounds and jacketing compounds.

Due to the heavy losses suffered in the US O&G business segment, and the dismal performance in SP segment, the Group has made an effort to exit from these segments with the subsequent sale of the SD1 vessel and also the closing down of the operation and disposal of the SP plant.

MANAGEMENT DISCUSSION AND ANALYSIS


REVIEW OF BUSINESS

Revenue EBITDA PBT/(LBT) PAT/(LAT)

2017 RM’000 RM’000 RM’000 RM’000

O&G - US - (9,975) (25,118) (42,479)

O&G - DS 81,778 17,748 11,706 9,599

TS 206,587 7,911 5,598 870

SP 5,168 (2,820) (3,180) (3,180)

293,533 12,864 (10,994) (35,190) Revenue EBITDA PBT PAT

2016 RM’000 RM’000 RM’000 RM’000

O&G - US 71,930 (145,095) (203,777) (203,777)

O&G - DS 64,943 10,277 4,104 (258)

TS 251,930 4,551 2,564 1,318

SP 10,321 (1,171) (1,702) (1,429)

399,124 (131,438) (198,811) (204,146)

* The comparative amounts have been reclassified to conform with the current year audited financial statement’s presentation. The above figures do not take into account management fee and other expenses charged by holding company to each business segment.

O&G – US

The O&G US Division continued to suffer losses in FY2017 principally due to various write-off relating to the cessation of the offshore business in the North Sea. For the FY2017, the offshore business ceased during the first quarter of 2017. Subsequently, the Group entered into a conditional Sale and Purchase Agreement (“SPA”) on 30 March, 2017 with Siem OCV Pte Ltd (“Siem OCV”) to dispose Siem Daya 1 vessel via disposal of 100% equity interest in Daya Global 1 Pte Ltd for a disposal consideration of USD100 mil. Upon obtaining the regulatory and shareholders’ approval, the disposal was completed on the 19 September 2017, which marked an end to the Group’s offshore business in the North Sea.

Despite the impairment of the vessel in the financial year ended 31 December 2016 (“FY2016”), the Group suffered a pre-tax loss of RM21 million as a result of cost charged out in relation to the termination of offshore business and the financing costs in respect of the working capital loan for the offshore business. Post disposal of the vessel, the Division has not been able to identify profits in the immediate term and had made a decision to impair its deferred tax assets of RM16 million. This resulted in a post-tax loss of RM43 million for the upstream segment.

O&G – DS

For FY2017, revenue from the downstream O&G segment increased to RM82 million from RM65 million in FY2016. This translated to an increment in revenue of 26% largely due to the increased activities in the specialised lifting, chemical trading and supplies, well intervention services and HVAC division followed by some renewed work orders from oil majors after some slight recovery on oil prices above USD60 per barrel. The downstream segment registered a pre-tax profit of RM12 mil as compared to RM4 million in FY2016. The improved results was mainly contributed by a more streamlined and upgraded management team after the restructuring of the organisation in the last couple of years. We are pleased that these new teams are committed and focused to strive for a better performance.

MANAGEMENT DISCUSSION AND ANALYSISCONT’D


TECHNICAL SERVICES (“TS”)

For the financial year in review, the TS segment reported a revenue of RM207 million as compared to RM252 million in FY2016. This represented a decline of 18% mainly due to the delayed commencement of two (2) major contracts for two (2) clients in the prior years. One of which is in the retail cum commercial development for a new client. Pre-tax profit increased from RM2.6 million in FY2016 to RM5.6 million in FY2017, attributed to the realisation of cost saving from the successfully completed projects upon finalisation of the project accounts.

Gross margin was largely in line with historical trends while the segment expects the construction sector to remain competitive and will implement close monitoring of progress to ensure cost control and progress of works according to project schedule. The timely completion of the project would be the key criteria for cost efficiency and customer satisfaction in the technical service division.

SPECIALIZED POLYMER (“SP”)

Our SP segment registered a revenue of RM5 million in FY2017 as compared to RM10 million in FY2016. The pretax losses increased from RM1.7 million in FY2016 to RM3.2 million in FY2017. Due to the stiff price competition and poor market dynamics, the Group decided to wind down the segment as the sales performance of the polymer products had been dismal over the last few years. During the year, the Group made a strategic decision to dispose the factory land and building after attempts of finding the buyer for the existing operation was unsuccessful despite multiple attempts.

SIGNIFICANT BUSINESS RISKS

The Group is exposed to several key risks such as:

l Competition – the Group operates in industries which are highly competitive with many experienced and agile players of all sizes. Competition against our products and services are intense. We attempt to mitigate this risk by constantly improving our value propositions to our clients, expanding our marketing reach, enhancing our products and service quality, offering high-valued services and improving our cost structures where possible.

• Regulatory & Licensing – the Group is involved in businesses where licensing from principals, regulators and

clients is of paramount importance. We constantly and proactively engage these stakeholders at all levels to ensure that our licenses and permits are maintained. In instances where our licenses are at risk, we minimise such risk by entering into arrangements to secure similar or comparable licenses to protect our overall business franchise.

• Legal – the Group operates in an environment where legal and contractual arrangements with all our stakeholders, especially clients, partners and principals, are vital. We maintain an in-house team of experienced legal counsels to review and scrutinise our legal relationships with all parties on a regular basis and alert us of any potential risks and need for further improvements. Where active legal actions are required, we will typically also engage established external legal counsels to work with our in-house counsels to preserve and enhance our legal position.

• Foreign exchange (“Forex”) & Price fluctuations – the Group regularly enters into mid and long-term contracts with our clients where we are required to make assumptions on future prices of raw materials. Fluctuations in price are an inevitable part of our businesses. We attempt to mitigate this risk by directly hedging (where possible), locking in certain products upfront, sharing the pricing risks with our suppliers and/or sub-contractors, entering into variable price contracts, and/or other risk management strategies.

• Financial & Liquidity – the Group is involved in several businesses which are capital intensive, especially the offshore marine sector. Such businesses require sizeable investments which in turn require significant funding. As a result, our financial leverage has increased over time, especially since the purchase of SD1 in 2015. We manage this risk by enhancing our capital base systematically, optimising our effective cost of funds, maintaining solid relationships with our financiers, sharing financial responsibilities with our suppliers, and selectively de-leveraging where possible.



PROSPECTS O&G Sentiment in the Offshore O&G segment is expected to remain challenging in the short to medium term. With the completion of the disposal of vessel and exiting the offshore business segment, the O&G segment will no longer be impacted by the losses in offshore segment. With the improving trend in the downstream O&G segment, as seen from the recorded pre-tax profit in the past years, the Group expects that business in these areas will continue to perform well given the existing capabilities and know-how in some of the products/ service segments.

TS The construction sector is expected to remain competitive. The Group has performed and recorded pre-tax profit in the past years despite such a competitive environment and is expected to continue its performance going forward. We have target to secure more projects involving commercial, industrial and special purposed building nature. The Group is confident of securing more projects from our rapidly expanding tender book. We are also exploring new opportunities in infrastructure/ utility-related construction with our strategic international partners. The management is therefore optimistic about the prospects of this segment.

Our group currently has approximately RM670 million worth of order book from ongoing projects under the downstream O&G and TS segments. We believe these businesses will continue to provide a reliable and sustainable source of revenue.

Overall, the management is cautiously optimistic of an improved performance in the coming year.



SUSTAINABILITY STATEMENT

INTRODUCTION

Daya Materials Berhad and its subsidiaries (“Group”) is an oil and gas and engineering company based in Malaysia with presence throughout Asia Pacific and Middle East region. Through our dedicated focus on delivering world-class products and services to our customers, our vision is set firmly on establishing ourselves as the supplier of choice in the regional markets.

The Group is offering a range of products and technical services to both the upstream and downstream sectors of the industry. The Group also has significant non-O&G interests in Engineering and Construction (“E&C”), Mobile Crane and Specialized Lifting, and Heating, Ventilation and Air-Conditioning (“HVAC”).

THE WORLD OF DAYA – We Deliver, We Care

At DAYA, we believe in unleashing today’s ideas for tomorrow’s growth and we committed to work side-by-side with our clients to deliver our products, services and solutions at any time, any place.

Dedicated to cultivate a competitive and sustainable environment that effectively promotes excellence of performance, creation of ideas and utmost integrity among our people and the community, our people are aspired and motivated by the Group’s core values in order to achieve the business objectives.

We are resolute in achieving our objectives

Accountable

Ethical

Committed

Resolute

We are committed in whatever we do

We are accountable to our stakeholders

We are accord to the regulations and standards

C.A.R.E.VALUES

MATERIALITY AWARENESS

Corporate BehaviourBusiness ContinuityOperational EfficiencyPeople DevelopmentSafety & EnvironmentalSocial Responsibility


SUSTAINABILITY STATEMENTCONT’D

OUR COMMITMENT

At DAYA, sustainability has been the very core of everything we do. We believe in giving back to the society and community by a responsible approach to developing relationships as an important part of delivering business success. The focuses are encompassing continuous improvement and making positive impacts Economically, Environmentally and Socially through direct engagements with both our internal and external stakeholders.

We are enthused to develop a holistic approach to sustainability focusing on business continuity, operational efficiency, corporate behaviour, people development, safety and environmental awareness.

We are resolute in achieving our objectives

Accountable

Ethical

Committed

Resolute

We are committed in whatever we do

We are accountable to our stakeholders

We are accord to the regulations and standards

C.A.R.E.VALUES

MATERIALITY AWARENESS

Corporate BehaviourBusiness ContinuityOperational EfficiencyPeople DevelopmentSafety & EnvironmentalSocial Responsibility

CORPORATE BEHAVIOUR

We strongly believe good corporate governance creates a business environment conducive to long-term investments and sustainable economic growth. We are committed to the highest standards of integrity, transparency and accountability in the conduct of our businesses and operations.

The Group has put in place the followings policies that govern our corporate environment and conduct:

• Board Charter• Code of Conduct and Business Ethics• Risk Management Policies and Guidelines• Organizational & Authority Limits• Whistleblowing Policies• ISO Certification• Safety & Health Policies• Environmental Policies

Further details relating to our corporate behaviour, governance and internal controls are set out in the followings:

• Corporate Governance Statement – Pages 22 to 36• Statement of Risk Management and Internal Control – Pages 37 to 40



BUSINESS CONTINUITY

With attention to manage our sustainability and viability, the Group has a long-term business strategy and applying a sustainability lens to re-assess whether the existing business strategy is robust enough to withstand material sustainability risks and has taken into account the strength, weakness, threat, and opportunity in our endeavor.

Also, our direct engagements with the existing and potential clients and suppliers entail building a strong relationships in each of our business undertakings in order to create and deliver value to our stakeholders. Through our subsidiaries, we have been recognized by the key clients as a reputable and reliable vendor based on the projects entrusted to the Group.

OPERATIONAL EFFICIENCY

We operate under a common set of business principles that supported by a well-established and documented business processes which are aligned with the Group’s strategic business objectives and goals. Policies and procedures relating to the delegation and segregation of duties have also been established for key business processes.

We have developed and upheld a competitive culture that promotes good business practices, operational excellence and efficiency, and best stewardship. We continuously review and monitor to ensure that our operations support sustaining growth.

PEOPLE DEVELOPMENT

We believe that our people are the key to our business success and our people’s development are always at the top of our priority to ensure the deliverables and business targets are met. We review the performance as a continuous process, consisting of regular assessments to evaluate the employees’ performance against their targets and achievements in accordance to the Group’s business objectives.

The results of the performance review enable us to identify the key strengths and weaknesses of our people and able to determine what are the best development plan which includes training, succession, knowledge-sharing and mentoring as we endeavour to attract, retain and nurture the best people we have by investing in their professional development and providing them with challenging and rewarding opportunities for personal and professional growth.

To ensure a work and lifestyle balanced culture among our employees, we organized various employee’s engagement activities throughout the year focusing on healthy lifestyle and social interactions amongst our people.

This helps our people to stay focused, physically and mentally healthy; and able to accomplish personal and business objectives.

SOCIAL RESPONSIBILITIES

As part of our corporate social responsibilities, we maintain a high level of social and community investments through our outreach programmes that we spearhead in partnership with the Rotary Club of Bukit Kiara Sunrise, local communities and schools within our vicinity.

We reach out to underprivileged communities, whether to celebrate cultural festive occasion with them or offer them specific support such as food supplies, electrical appliances and monetary donations. Among the CSR’s activities during the year are as follows:

Charity Program at Pertubuhan Baitul Rahmah and Rumah Kasih Sayang was organized by Daya Maxflo Sdn Bhd on 22nd June 2017 during the Holy Month of Ramadhan.



Community service for Sekolah Menengah Kebangsaan Darul Ehsan Selayang was done by Daya OCI Sdn Bhd to provide an engineering drawing to build a multi-purpose covered court that will be benefited by the students, teachers and their neighbouring areas.

Partnered with the Rotary Club of Bukit Kiara Sunrise to sponsor a charity event for 280 children from a number of homes who were treated for dinner, games & movie screening.

SAFETY AND ENVIRONMENTAL

The Group is committed to ensure safety and environmental impacts and issues are addressed in accordance to the relevant environmental legislation and other requirements related to our operations.

Our commitment to manage and address the safety and environmental issues begins with educating and training our employees to be safety and environmentally conscious in carrying out their work. All the Group-owned and operated facilities have the relevant required permits/ approvals and maintained good HSE management systems.

Our operating companies take the initiative to drive various safety and environmental campaigns of their own. Among the initiatives that have been established and activities that carried out during the year are as follows: • Emergency Response Team• Fire Drill Training• U See U Act Campaign• Recycling or Scrap of Raw Material• Disposal of Scheduled Waste• Daily Tool Box Meeting We strive hard to attain continuous safety improvement in preventing all injuries, occupational illnesses and incidents at all times through our systematic approach to personal health, safety, security and environmental management.

Petronas HSE Achievement awarded to Daya Secadyme Sdn Bhd for contributing in 8 Million Safe Manhours without Loss Time Injury.

PCPP Operating Company HSE Achievement awarded to Daya Maxflo Sdn Bhd for contributing in 500,000 Safe Manhours without Loss Time Injury.


CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of Directors (“the Board”) of Daya Materials Berhad (“DMB”) is committed towards achieving excellence in corporate governance and acknowledges that the primary responsibility for good corporate governance lies within the Board. The Board, in carrying out their roles and responsibilities, is firmly committed to ensuring that the highest standards of corporate governance and corporate conduct are adhered to, in order that the Group achieves strong financial performance for each financial year, and more importantly delivers long-term and sustainable value to shareholders.

The Malaysian Code on Corporate Governance 2017 (“the Code”) sets out principles and recommendations on structures and processes that companies should adopt in making good corporate governance an integral part of their business dealings and culture. The Board reaffirms its support to the Code and believes that good corporate governance is fundamental in achieving the Group’s objectives. To ensure that the best interests of shareholders and other stakeholders are effectively served, the Board continues to play an active role in improving governance practice and constantly monitors the development in corporate governance including in the Code.

The Corporate Governance Overview Statement is made in pursuant to Paragraph 15.25(1) to the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and guidance was drawn from Practice Note 9 of the MMLR and the Corporate Governance Guide (3rd edition) issued by Bursa Securities.

The Board is pleased to report to the shareholders, the manner and the extent in which the Group has applied and complied with the following three main principles and recommendations of the Code for the financial year ended 31 December 2017:-

A. Board leadership and effectiveness; B. Effective audit and risk management; and C. Integrity in corporate reporting and meaningful relationship with stakeholders.

This Corporate Governance Overview Statement should be read together with Corporate Governance Report 2017 which is available on the Company’s website at www.dayagroup.com.my

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS I. BOARD RESPONSIBILITY

Board Charter

The Board recognises the importance to set out the key values, principles and ethos of the Group, as policies and strategy development are based on these considerations. The Board Charter includes the division of responsibilities and powers between the Board and the management as well as the different committees established by the Board.

The Board Charter sets out the principal role of the Board, the demarcation of the roles, functions, responsibilities and power of the Board, various Board Committees and the management team of the Company.

The Board Charter further defines the specific responsibilities of the Board, in order to enhance coordination and communication between the senior management and Board and more specifically, to clarify the accountability of both the Board and management for the benefit of the Company and its shareholders. In addition, it will assist the Board in the assessment of its own performance and of its individual Directors.

The Board will review and update the Board Charter periodically in accordance with the needs of the Company

and any new regulations that may have an impact on the discharge of the Board’s responsibilities. The Board Charter is available for reference on the Company’s website at www.dayagroup.com.my.


CORPORATE GOVERNANCE OVERVIEW STATEMENTCONT’D

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS cont’d

I. BOARD RESPONSIBILITY cont’d

Clear Roles and Responsibilities of the Board

The Board is overall responsible for the corporate governance structure of the Group. Its primary responsibilities pursuant to the recommendations of the Code include:

l review and adopt a strategic plan for the Group; l oversee the conduct of the Group’s business to evaluate whether the business is being properly managed; l identify principal risk and ensure the implementation of appropriate systems to manage these risks; l implement succession planning, including appointing, training, fixing the compensation of and where

appropriate, replacing senior management; l develop and implement an investor relations program or shareholders communications policy for the

Group; and l review the adequacy and the integrity of the Group’s internal control systems and management information

systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

The Board maintains a schedule of matters reserved for its collective decision. The Board reserves full decision-making powers on the following matters:-

(a) Conflict of interest issues relating to a substantial shareholder or a Director; (b) Material acquisition and disposition of assets not in the ordinary course of business; (c) Investment in capital projects; (d) Authority level; (e) Treasury policies; (f) Risk Management Policies; and (g) Key Human Resources issues.

The Board has delegated certain responsibilities to the Board Committees, such as the Audit Committee, Nomination Committee and Remuneration Committee, which operate within clearly defined terms of reference. These Board Committees have the authority to examine specific issues and forward their recommendations to the Board. At each Board meeting, minutes of the Board Committees meetings are presented to the Board. The respective Chairman of the Board Committees will also report to the Board on key issues deliberated by the Board Committees. The final decisions on all matters, however, rest with the Board.

Clear Functions of the Board and Management

To ensure the effective discharge of its function and responsibilities, the Board also delegates some of the Board’s authorities to the management team headed by the Executive Vice Chairman and the Group Chief Executive Officer. The management team is entrusted with the responsibility of carrying out tasks which are assigned by the Board. The management team acts on behalf of the Board on matters concerning administrations, operations, capital expenditure, debt approvals and investments. It meets at regular intervals to review and decide on administrative and operational matters, budgets and investment strategies of the Group.

Separation of the Roles of Chairman and Chief Executive Officer

The roles of the Chairman and the Executive Vice Chairman and Group Chief Executive Officer are separate with clear distinction of responsibilities between them to ensure balance of power and authority. The Chairman, who is a Non-Executive Director, is primarily responsible for the orderly conduct and working of the Board whilst the Executive Vice Chairman and Group Chief Executive Officer is responsible for the running of the business and operations and implementation of the Board’s policies and decisions.




Code of Conducts and Ethics

The Group is committed in maintaining the highest standards of honesty, integrity and ethical conduct and has established a Code of Conduct and Business Ethics (“the Code of Conducts and Ethics”) and includes rules and guidance on anti-fraud and whistle blower protection to ensure effective investigation, reporting and disclosure of any occurrences of fraud within the Group.

The Code of Conducts and Ethics provides general compliance requirements as to employees’ conduct and behaviour in carrying out their duties and responsibilities in day-to-day business operations. The Code of Conducts and Ethics outlines minimum standards expected of employees in dealing with conflicts of interest, supplier relationships, competitors, external businesses or activities, transactions with the Group, use of the Group’s real and intellectual, use and disclosure of the Group’s confidential information, compliance of national and international laws and regulations, compliance of all relevant health & safety requirements, maintenance of business records and illegal or questionable payments.

The Code of Conducts and Ethics will be reviewed periodically and it is published on the Company’s website.

Whistle-Blowing Policy

A Whistle-Blowing Policy was established and approved by the Board in November 2015 to provide a platform and to act as a mechanism for parties to channel their complaints or to provide information on fraud, wrongdoings or non-compliance to any rules or procedures by the employees or Management of the Company. The policy outlines the scope and procedures a concern may be properly raised, distinguishes a concern from a personal grievance and allows the whistleblower the opportunity to raise a concern outside their management line and in confidence. The identity of the whistleblower is kept confidential and protection is accorded to the whistleblower against any form of reprisal or retribution. Any concerns raised will be investigated and a report and update are provided to the Board of Directors, through the Audit Committee.

The Whistle-Blowing Policy is available for reference on the Company’s website.

Promoting Sustainability

The Board promotes good corporate governance in the application of sustainability practices throughout the Group, the benefits of which are believed to translate into better corporate performance.

A detailed report on sustainability activities, demonstrating the Company’s commitment to the global environmental, social, governance and sustainability agenda, appears in the Sustainability Statement on pages 18 to 21 of this Annual Report.

Access to Information and Advice

The Board has unrestricted access to timely and accurate information necessary in the furtherance of their duties. All Directors are furnished with the meeting agenda and other documents on matters requiring their consideration prior to and in advance of each Board meeting. This is to facilitate meaningful and productive deliberation and discussion during the Board meetings. The documents are comprehensive and include qualitative and quantitative information to enable the Board members to make an informed decision. Senior management may be invited to attend these meetings to explain and clarify to the Board on matters being tabled.

The Chairman, with the assistance of the management, undertakes primary responsibility for organising information necessary for the Board to deal with the agenda and in ensuring all Directors have full and timely access to the information relevant to the matters that will be deliberated at the Board meetings. Certain reports, such as those relating to the Company’s financial results for statutory announcements, are submitted to the Audit Committee for their review and recommendation to the Board for approval thereafter.





Access to Information and Advice cont’d

All proceedings from the Board meetings are recorded by way of minutes. The minutes are then confirmed by the Board and signed as correct records of the proceedings thereat by the Chairman of the meetings.

The Board has direct access to the Senior Management and has unrestricted and immediate access to any information relating to the company’s business and affairs in the discharge of their duties. When required, they may request to be furnished with additional information and clarification. For complex and technical issues, the Board may seek independent professional advice at the Company’s expense in discharging their duties. Individual Director may also obtain independent professional or other advice in fulfilling their duties and responsibilities, subject to the Chairman’s or Board’s approval, and depending on the quantum of the fees involved.

Qualified and Competent Company Secretaries

The Board is supported by two (2) experienced and competent Company Secretaries, who are qualified to act under Section 235(2) of the Companies Act, 2016 (“the Act”).

The Company Secretaries plays an advisory role to the Board in relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Company Secretaries supports the Board in managing the Company’s governance model, ensuring its effectiveness and relevance. The Company Secretaries also ensures that the deliberations and decisions made at the Board meetings are well captured and minuted.

The Board is satisfied with the performances and support rendered by the Company Secretaries to the Board in the discharge of its functions.

II. BOARD COMPOSITION

As at the date of this statement, the Board consists of seven (7) principal directors. Out of the seven (7) principal directors, one (1) is Executive Director and six (6) are Independent Non-Executive Directors. With this Board composition, the Company has thus complied with paragraph 15.02(1) of the MMLR of Bursa Securities which requires that at least two (2) Directors or one-third (1/3) of the Board of Directors, whichever is the higher, to be Independent Directors. The size and composition of the board remain adequate to provide for a diversity of views, facilitate effective decision making, and appropriate balance of Executive, Independent and Non-Independent Directors.

The Directors come from diverse backgrounds with skills and expertise in different area, such as accounting, banking, finance, engineering, business and legal. Their diverse skills and background collectively bring depth and diversity in experience to the Group’s operations. The Independent Non-Executive Directors are independent from the day to day management and have no family or business relationships with the Group that could interfere with the exercise of their independent judgement. They bring to bear objective and independent judgement to the decision making of the Board and provide an effective check and balance for the Executive Director.

During the financial year, Mr Nathan Tham Jooi Loon, the former Executive Vice Chairman of the Company has resigned from the Board on 3 November 2017. In replacement thereof, Mr Ng Hong @ Wong Chien Foong and Tuan Haji Norzain Bin Abdul Wahab were appointed as new Directors on 3 November 2017.

The profiles of each Board member are set out under Profile of Directors on pages 7 to 10 of this Annual Report.

To assist the Board in discharging of their duties and responsibilities effectively, the Board has delegated specific functions to Audit Committee, Nomination Committee and Remuneration Committee respectively with clear terms of reference. Each of the committee will report to the Board of the outcome of their meetings.




II. BOARD COMPOSITION cont’d

Board Committee

Audit Committee (“AC”)

The Board established the AC on 1 June 2005. With effect from 6 February 2018, the AC comprises of four (4) members, all of whom are Independent Non-Executive Directors. The composition and summary of activities of the AC during the financial year under review are disclosed in the Audit Committee Report as set out on pages 41 to 44 of this Annual Report.

Nomination Committee

The Nomination Committee comprises three (3) members, all of whom are Independent Non-Executive Directors:

Chairman : Tan Sri Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director) Member : Fazrin Azwar bin Md. Nor (Senior Independent Non-Executive Director) Aminuddin Bin Mohd Arif (Independent Non-Executive Director)

The functions of the Nomination Committee are as follows:

i) To review regularly the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary;

ii) To propose and identify new nominees for appointment to the Board of Directors; iii) To assess Directors on an on-going basis, the effectiveness of the Board as a whole, the Board Committees

and the contribution of each individual Director, including independent Non-Executive Directors as well as the Chief Executive Officer to the effectiveness of the Board;

iv) To recommend to the Board, candidates for all directorships to be filled by the shareholders or the Board; v) To recommend to the Board, Directors to fill the seats on Board Committees; vi) To review annually the Board’s mix of skills and experience and other qualities including core competencies

which Non-Executive Directors should bring to the Board; vii) To develop the criteria to assess independence of the Independent Directors of the Company; viii) To determine annually whether or not a Director is Executive, Non-Executive or Independent; ix) To recommend to the Board for continuation (or not) in service of executive Director(s) and Directors who

are due for retirement by rotation; x) To consider, in making its recommendations, candidates for directorships proposed by the Chief Executive

Officer and, within the bounds of practicability, by any other senior executive or any Director or shareholder; xi) To orientate and educate new Directors on the nature of the business, current issues within the Group and

the corporate strategy, the expectations of the Group concerning input from the Directors and the general responsibilities of Directors; and

xii) To review the term of office and performance of the Audit Committee and each of its members annually to determine whether the Audit Committee and members have carried out their duties in accordance with the terms of reference.

The Nomination Committee is responsible for identifying, assessing and recommending to the Board, suitable nominees for appointment to the Board and Board Committees. Candidates are normally sourced through recommendations by existing Board members, Management or major shareholder. Nevertheless, the Nomination Committee is also open to utilise independent sources to identify suitable qualified candidates.




II. BOARD COMPOSITION cont’d

Board Committee cont’d

Nomination Committee cont’d

The Nomination Committee held two (2) meetings during the financial year ended 31 December 2017. Details of attendance of each member are as follows:

Nomination CommitteeNo. of meetings

attended

Tan Sri Dato’ Sri Koh Kin Lip JP 2/2

Fazrin Azwar bin Md. Nor 2/2

Aminuddin Bin Mohd Arif 2/2

The summary of activities of the Nomination Committee during the financial year ended 31 December 2017 is as follows:-

(a) Reviewed and recommended to the Board, Directors’ retiring by rotation and re-election; (b) Assessed the independence of an Independent Director, who has served the Board for more than nine (9)

years; (c) Assessed the effectiveness of the Board as a whole and Board Committees and contribution of individual

Directors; (d) Reviewed the term of office of the AC and each of its members to determine whether the AC and members

have carried out their duties in accordance with their terms of reference; (e) Reviewed and recommended to the Board, the appointment of two (2) key management personnel; (f) Reviewed the service contract of the Executive Vice Chairman of the Company; and (g) Reviewed and recommended to the Board, the appointment of two (2) new Independent Non-Executive

Directors and Change of Executive Vice Chairman of the Company.

Remuneration Committee

The Remuneration Committee comprises three (3) members, all of whom are Independent Non-Executive Directors:

Chairman : Tan Sri Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director) Member : Fazrin Azwar bin Md. Nor (Senior Independent Non-Executive Director) : Datuk Lim Soon Foo (Independent Non-Executive Director)

The duties and functions of the Remuneration Committee are as follows:

i. To review and recommend to the Board the framework of Executive Directors’ remuneration and the remuneration package for each Executive Director, drawing from outside advice as necessary;

ii. Review and recommend to the board on the remuneration of Non-Executive Directors, particularly on whether the remuneration remains appropriate to each Director’s contribution, by taking into account the level of expertise, commitment and responsibilities undertaken;

iii. Review and recom

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