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MQ TECHNOLOGY BERHAD(635804-H)

A N N U A L R E P O R T

2015

Annual Report 2015

01MQ Technology Berhad (635804-H)

Contents

02Corporate Information

04Corporate Structure

05Chairman's Statement

06Profile Of Directors

08Financial Highlights

09Statement Of Corporate Governance

14Statement On Risk Management And Internal Control

16Audit Committee Report

19Statement Of Directors’ Responsibilities

20Corporate Social Responsibility

21Disclosure Requirements

23Financial Statements

71List Of Properties

72Statistics Of Shareholdings

74Notice Of Annual General Meeting

Proxy Form

Annual Report 2015

02 MQ Technology Berhad (635804-H)

Corporate Information

BOARD OF DIRECTORS

Dr. Ch’ng Huck KhoonChairmanIndependent Non-Executive Director

Teh Eng HuatExecutive Director

Khoo Hun SniahExecutive Director

Wong Yu SunExecutive Director

Lim Soon SengExecutive Director

Na Chiang SengIndependent Non-Executive Director

Dato Lim Char BooIndependent Non-Executive Director

Mohd Anuar Bin Mohd HanadzlahIndependent Non-Executive Director

COMPANY SECRETARIES

Datuk Tan Leh Kiah (MAICSA 0719692) Ooi Yoong Yoong (MAICSA 7020753)

AUDIT COMMITTEE

Dr. Ch’ng Huck Khoon Chairman Independent Non-Executive Director

Na Chiang Seng MemberIndependent Non-Executive Director

Mohd Anuar Bin Mohd Hanadzlah MemberIndependent Non-Executive Director

REMUNERATION COMMITTEE

Dr. Ch’ng Huck KhoonChairman Independent Non-Executive Director

Teh Eng Huat MemberExecutive Director

Na Chiang Seng MemberIndependent Non-Executive Director

NOMINATION COMMITTEE

Na Chiang SengChairmanIndependent Non-Executive Director

Dr. Ch’ng Huck KhoonMemberIndependent Non-Executive Director

Mohd Anuar Bin Mohd Hanadzlah MemberIndependent Non-Executive Director

Annual Report 2015


AUDITORS

Messrs SJ Grant ThorntonChartered Accountants51-8-A, Menara BHLJalan Sultan Ahmad Shah10050 Penang Tel : 604-228 7828Fax : 604-227 9828

REGISTERED OFFICE

39, Salween Road 10050 PenangTel : 604-210 9828Fax : 604-210 9827

HEAD OFFICE

Plot 86-B, Lintang Bayan Lepas 9Bayan Lepas Industrial Park 411900 Bayan Lepas, Penang, Malaysia Tel : 604-646 5888Fax : 604-644 6888Website : www.mqtech.com.my

SOLICITOR

Zaid Ibrahim & Co.

PRINCIPAL BANKERS

Hong Leong Bank BerhadPublic Bank BerhadAmbank (M) Berhad

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn. Bhd. (11324-H)Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi,59200 Kuala Lumpur, Malaysia.Tel : 603-2783 9299Fax : 603-2783 9222

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities BerhadStock Name : MQTECHStock Code : 0070

Corporate Information (Cont’d)

Annual Report 2015


Corporate Structure

MQ Technology Berhad ("MQ") was incorporated in Malaysia under the Companies Act, 1965 on 2 December 2003 as a private limited company under the name of MQ Technology Sdn Bhd. Subsequently, on 13 February 2004, it was converted to a public limited company and since then assumed its present name.

The details of the subsidiaries of MQ as at the date of this Annual Report are summarised below:-

Company

Date / Place of

Incorporation

Issued and Paid-up Share

Capital RM

Effective Equity

Interest % Principal Activities

Microlead PrecisionTechnology Sdn Bhd(“MICROLEAD”)

12.12.1995/Malaysia

537,000 100. 00 (i) Manufacture of moulds, tools, dies, jigs and fixtures mainly for use in the manufacture of hard disk drives

(ii) Design, development and manufacture of advanced suspension tooling, progressive tooling, semiconductor cavity/encapsulation moulds for application in hard disk drives and semiconductor industries

(iii) Design, development and manufacture of advanced automation modules/assemblies for digital data storage, medical instrument systems/devices and optoelectronics applications and related components

MPT Solution Co., Ltd(“MPTS”)

29.03.2004/ Thailand

961,900 100.00 Manufacture of car spare parts, plastic moulds, metal moulds and blowing moulds for plastic products, tooling, jig and fixtures for electronic and semiconductor

Star AcresSdn Bhd (“SA”)

25.11.2014/ Malaysia

400,000 100.00 Develop and carry on the business of theme park.

MICROLEAD Rapid Tooling and

Prototyping Division

MPTSPrecision Processes

Division

SATheme park

100% 100% 100%

Annual Report 2015


CHAIRMAN’s STATEMENT

On behalf of the Board of Directors, I am delighted to present the annual report and the audited financial statements of the MQ Technology Berhad (“the Group”) for the financial year ended 31 December 2015.

FINANCIAL PERFORMANCE

The Group recorded a smaller loss before tax of RM1.57 million for the financial year ended 31 December 2015 as compared to a loss before tax of RM7.04 million registered in the previous year. The smaller losses incurred for the current financial year was mainly due to increase in sales of RM 4.12 million and effective cost control measures undertaken by the management. The higher sales were due to the Group’s success in winning new customers and sales which have more than offset for the declining orders from existing customers. The Group was able to achieve higher sales of RM 17.95 million as compared to RM 13.83 million in the previous year. Even though 2015 was not profitable, the Group had made notable performance improvement with the substantial reduction in losses. With similar performance improvement and barring any unforeseen circumstances, the Group expects to be profitable in the future.

OUTLOOK & PROSPECTS

The Hard Disk Drive (“HDD”) industry had been a significant revenue contributor for the Group’s tooling business in the past. Tooling business from the HDD industry is challenging and unpredictable and past efforts to reduce the Group’s reliance on HDD have shown results. At end of 2015, the Group has started getting more tooling orders from the non HDD industry and this is expected to grow further in 2016 and coming years. In addition, the Group has also strengthened its automation business and had achieved significant improvement in this business. The automation business is expected to grow even more rapidly in 2016. Moving forward, we expect the Group to achieve better financial performance with much stronger sales in the coming year.

The Group had on 19 January 2016 announced its joint venture proposal to develop and carry on the business of theme park via the acquisition of 9.16 acres piece of land in Klebang, Malacca. This will enable the Group to take advantage of Malacca as a popular tourist destination both locally and internationally. This proposed investment can provide the Group with more consistent income and lessen the impact of the existing tooling and automation business where the revenues are affected by significant fluctuations. If approved by the shareholders and authorities, the theme park business will only have an impact after 2016 when it is fully operational.

DIVIDENDS

There was no dividend declared or paid for the financial year ended 31 December 2015.

APPRECIATION

On behalf of the board, I wish to take the opportunity to express my sincere and heartfelt gratitude and appreciation to my fellow directors, Management and staff for your dedication and commitment.

To all our valued suppliers, distributors and customers for your continuous support and trust on us and to our bankers, business associates, advisers and regulatory authorities for your cooperation, trust and confident given towards us.

Last but not least to a big thank you to all valued shareholders for your believe in MQ Technology Berhad.

Dr. Ch’ng Huck KhoonChairman, Independent Non-Executive Director

Annual Report 2015


Profile Of Directors

TEH ENG HUAT, Malaysian, aged 48, appointed as Executive Director on March 19, 2014.

He is the Director of Delta Mining (M) Sdn Bhd, a gold mining company that he founded in 2014. His qualification and past experience is on electronics and Mechanical engineering and he also holds a Masters of Business Administration from the Southern Pacific University. He has over 20 years’ experience as an entrepreneur starting up new businesses and managing them. He first ventured into business in 1992 when he setup several ventures to provide electronics engineering solution, electro-mechanical automation projects and manufacturing services to multinational companies in Malaysia, North America, Europe and Asia Pacific.

Besides Malaysia, he also manages and runs businesses in China and Thailand. He brings with him extensive business contacts and networks as well as vast hands on knowledge and skills on manufacturing management, business development and marketing.

He is a member of the Remuneration Committee since April 23, 2014.

He is the brother in law of Mr.Khoo Hun Sniah, the Executive Director of the company. He is the substantial shareholder of MQ Technology Berhad. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years.

NA CHIANG SENG, Malaysian, aged 40, appointed as Independent Non-Executive Director on March 19, 2014.

He graduated with a Bachelor of Engineering (Civil Engineering) from The University of Sydney, Australia in 1999 and continued his studies to attain his Master of Business Administration from University of Heriot-Watt, United Kingdom in year 2005. Upon graduation in 1999, he worked as a Project Engineer in Sunlight Engineering Sdn. Bhd. and promoted to Project Manager in year 2001. In 2003, he joined Broadland Development Sdn.Bhd and advances himself as a Senior Manager. He then took up the challenge to become a Project Director in Naing Sdn Bhd.

In relation to directorship in public company, he is an Independent Non-Executive Director in Ire-tex Corporation Berhad.

He is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company.

He does not have any family relationship with any director and/or major shareholder of the Company. He has no conflict of interest in any business arrangements involving the Company and has had no convictions for offences within the past 10 years.

LIM SOON SENG, Malaysian, aged 57, appointed as Independent Non-Executive Director on April 17, 2014, redesignated to Non-Independent Non-Executive Director on July 11, 2014, subsequently appointed as Executive Director on January 21, 2016.

He qualified as a Certified Public Accountant from the Malaysian Institute of Public Accountants in 1986. He is currently a member of the Malaysian Institute of Accountants.

He has over 20 years working experience in audit, treasury and financial management with accounting firms such as Price Waterhouse and Touche Ross, and a multinational, Northern Telecom (Nortel). Besides Malaysia, he has also worked in Thailand. He was one of the key staff who was involved the setting up, Nortel’s manufacturing operations in Thailand.

He was also formerly the Executive Director and Chief Financial Officer of Mlabs Systems Berhad, a public company listed on Mesdaq (now ACE) on KLSE. He was one of the pioneers of Mlabs who has managed and guided Mlabs from a start-up to its eventual listing in 2005. With Mlabs, he played a key role in restructuring and preparing the group for listing. He has also been involved in several start-up companies, helping them to commercialize R&D results and technologies developed by Malaysian public universities.


KHOO HUN SNIAH, Malaysian, aged 47, appointed as Executive Director on November 26, 2014.

He Graduated with Double advance diploma in Computer & Telecommunication Engineering from Kolej Damansara Utama, P.J. Selangor.

He worked in Imprimis Technology-Components (M) Sdn Bhd (later known as Penang Seagate Sdn Bhd) as Maintenance Engineer from 1989 to 1991. He then joined a company providing industrial engineering support and Industrial Automation Product Development. Over the past 17 years, he has involved in supporting manufacturing processes for various industries such as EMS, RF, Hard-disk drive & Semiconductor. Through the years of experience, he has developed & deployed various types of technology for the company such as Vision Inspection Software for Disk-drive magnetic head, spring loaded pick-up head for pick and place system. Mr. Khoo has brought considerable knowledge in Electro-mechanic Design Engineering and Operation to the company.

He is the Brother in law of Mr. Teh Eng Huat, the Executive Director and substantial shareholder of MQ Technology Berhad.

Annual Report 2015


Profile Of Directors (Cont’d)

DR. CH’NG HUCK KHOON, Malaysian, aged 47, appointed as Chairman, Independent Non-Executive Director on November 26, 2014.

Dr. Ch’ng Huck Khoon pursued his PhD studies in Finance at the Universiti Sains Malaysia (USM). He also holds a Master of Business Administration (Finance) from University of Stirling, United Kingdom. He is a Certified Financial Planner and also an Associate Member of the Institute of Chartered Secretaries and Administrators (ICSA).

Dr Ch’ng was an Assistant Professor at the Universiti Tunku Abdul Rahman (UTAR) and Wawasan Open University (WOU). He was also a Capital Markets Services Representative License holder for 15 years with A A Anthony Securities Sdn. Bhd.

Currently, he is an Independent Non-Executive Director of CNI Holdings Berhad, YGL Convergence Berhad and AT Systematization Berhad.

He is a Chairman of the Audit Committee and Remuneration Committee. He is also a member of the Nomination Committee.


WONG YU SUN, Malaysian, aged 63, appointed as Executive Director on March 13, 2015.

He is a graduate of the Chartered Association of Certified Accountants, UK and is a member of the Malaysian Institute of Accountants.

Prior to coming back to Malaysia in 1981, Mr Wong was trained in an audit firm in London. He has over 30 years of experience in the property development, construction and manufacturing industries and has held management positions with several public listed companies including on the AIM market of the London Stock Exchange.

He currently acts as a corporate adviser to a company listed on AIM market of the London Stock Exchange and was formerly a corporate adviser to a number of companies listed in AIM and GXG markets, assisting them through his extensive experience in corporate finance.


MOHD ANUAR BIN MOHD HANADZLAH, Malaysian, aged 57, appointed as Independent and Non- Executive director on January 21, 2016.

He graduated in Accounting from MARA Institute of Technology (now known as Universiti Teknologi MARA). Mohd Anuar Bin Mohd Hanadzlah started his career as an auditor in 1982 with Azman Wong Salleh & Co., Kuala Lumpur for 3 years. Since then he has worked in a number of companies namely, Mafira Holdings Sdn. Bhd., Ipoh as Assistant Accountant (3 years), Permodalan Perak Bhd., Ipoh as Assisstant Manager (9 years), PT. Wapoga Mutiara Indutries, Indonesia as Branch Manager (3 years) and Precision Logging Ltd., Papua New Guinea as Accountant (6 months).

In all these companies he was assigned to various departments and fields such as accounts, finance, sales, marketing, wholesale, trading, personnel, administration, mining, sawmilling, plywood, and wood working factory. In the month of June 2007, he joined Avic Tech Corporation Sdn. Bhd. as Marketing Manager and was subsequently appointed as the General Manager in January 2008. He left Avic Tech Corporation Sdn. Bhd on 31 August 2008.

Currently, he is a director of Inix Technologies Holdings Berhad, Milux Corporation Berhad and SM Track Berhad

He is a member of the Audit Committee and Nomination Committee.


Other than Inix Technologies Holdings Berhad, he is also a director of Milux Corporation Berhad & Smtrack Berhad.

DATO LIM CHAR BOO, Malaysian, aged 62, appointed as Independent Non- Executive director on July 01, 2015.

Dato Lim Char Boo persue his studies in various places, he graduated from University of Malaya with B.Sc (Hons), an Advance Dip in Bussiness Administration at the same university and a holds LLB (Hons) from University of London.

Dato Lim started police career on 28 February 1982 as cadet Assistant Superintendent with 11 months of basic training programme. He was a CID investigation officer for 2 years in police district in Johor Baru. From 1985-1989 he served as an intelligences official in Special Branch. In 1989, he was transferred to Commercial Crime Department to carry out investigation work mostly on corporate fraud and banking cheating cases. From 1996-2003, he was promoted to Superintendent and assuming the post of Deputy OCPD in Kuantan Pahang involving all aspects of police duties and management. In 2003, he was transferred to Terengganu as Assistant Commissioner holding the post of OCCI i.e. State Head for all CID matter. In 2006, he was promoted to Senior Assistant Commissioner as Unit Head in Anti Money Laundering unit in Commercial Investigation Department at Bukit Aman.


Annual Report 2015


Financial Highlights

Group 2011

RM’000

Group 2012

RM’000

Group 2013

RM’000

Group 2014

RM’000

Group 2015

RM’000

Turnover 26,689 27,190 20,554 13,832 17,950

Profit/(Loss) Before Taxation (4,303) (19,585) (8,158) (7,041) (1,565)

Profit/(Loss) After Taxation (4,312) (19,437) (8,159) (7,031) (1,524)

No. of Share assumed in Issue (‘000) 230,563 229,306 223,021 240,250 260,915

Earnings per Share (sen) (1.87) (8.48) (3.66) (2.93) (0.58)

Turnover (RM’000)

20132011 2012 2014 2015

26,68927,190

20,554

13,832

17,950

20132011 2012 2014 2015

Profit/(Loss) After Taxation (RM’000)

Turnover vs Profit/(Loss) After Taxation (RM’000)

20132011 2012 2014 2015

Turnover

Profit After Taxation

(4,312) (19,437) (8,159) (7,031) (1,524)

Annual Report 2015MQ Technology Berhad (635804-H) 09

Statement Of Corporate Governance

Malaysian code on Corporate Governance 2012 (‘the MCCG 2012” or the “Code”) recommends and lays out the importance of the principles as a main factor in achieving the governance framework in managing and operating the business of a company.

The Board of Directors (“the Board”) of MQ Technology Berhad trust and believe that with good Corporate Governance, the group would enhance business prosperity and maximize shareholders’ value. The Board will continue to review and evaluate the Group’s corporate governance in order to exercise the best practices as set out in the Code.

The Corporate Governance guideline below is to help the Board to comply with the principles and best practice as recommended in the Code. 1. Establish clear roles and responsibilities

1.1 Clear functions of the Board and Management

The Board is responsible for the overall management of the Company. The Board delegates the day to day management to the Executive Directors (“ED”), save for the significant matters reserved for the Board’s approval, such as financial results (quarterly or annually), declaration of dividends, review annual budget and business plan, issuance of new shares, expenditure above a certain limit, disposals or acquisition of significant fixed assets and etc.

1.2 Clear roles and responsibilities of the Board

1.2.1 Reviewing and adopting a strategic plan for the Company

The ED and Senior Management present to the Board the proposed annual business strategies and plans for the Board’s review. The Board deliberates the business strategies and plans to ensure the Company is steering towards the correct direction, which is also reflecting the latest market conditions and internal capabilities.

1.2.2 Overseeing the conduct of the Company’s business

The ED is responsible for overseeing the day-to-day management of the business and operations of the Group in respect of both its regulatory and commercial function. He is supported by a team of Senior Management consists of the head of respective departments or subsidiaries. Comprehensive financial performances of the Group are presented by ED and Senior Management to the Board on quarterly basis.

1.2.3 Succession planning

The Remuneration Committee (“RC”) holds the responsibility to determine the fair remuneration package for Directors, with the main purpose to attract and retain the right candidates. As part of the succession planning, ED and Senior Management are encouraged to identify and to train those outstanding and potential subordinates, in order to prepare them to move up to a higher level of their career ladder.

1.2.4 Overseeing the development and implementation of a communication policy of the Company

The Board has oversight on the Company to maintain an up-to-date corporate website, www.mqtech.com.my. The website serves as a major platform to provide details of corporate information, financial results, latest news and events of the Company to the public, investors and shareholders. The website provides the platform to contact Company for corporate matter, investor relationship, or business potential, where the public, shareholders or investors are welcomed to enquire directly or to provide valuable feedback to the Company.

1.2.5 Reviewing the adequacy and integrity of the management information and internal controls system of the Company

The Board has the ultimate responsibility for the adequacy and integrity of the Company’s risk management and internal control system. Details of the system are set out in the Statement on Risk Management and Internal Control of this Annual Report.

1.3 Strategies promoting sustainability

The Board has steered the Company in a business direction that promote sustainability in its business operation and corporate value. The Company has an ongoing product development process with the aim to continue improving the products’ quality, in order to preserve the well-known quality of its products.

Annual Report 2015


Statement Of Corporate Governance (Cont’d)

1. Establish clear roles and responsibilities (Cont’d)

1.4 Access to information and advice

The Board is provided with sufficient and timely information to enable them to discharge its duties effectively. The Board may seek independent professional advice on any matter connected with the discharge of their responsibility, at the Company’s expense. The Board has direct access to the Senior Management to attain any information relating to the Company’s business and affairs in discharging their duties. Senior Management is also invited to attend the Board and Audit Committee meetings, as and when required, in order to provide further explanation and presentation to the members of the Board and Audit Committee.

1.5 Company Secretary

The Company Secretary attends all Board and Board Committee meetings and ensures that meetings are properly convened.

The Company Secretary also ensures that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly.

All Directors have access to the advice and service of the Company Secretary.

1.6 Board charter

The Board has formally adopted a Board Charter which provides guidance to the Board in the fulfillment of its roles, duties and responsibilities. The Board Charter was drawn up in line with the Board’s commitment to comply with relevant legislations, regulations and the principles of good corporate governance. The Board Charter outlines the composition and structure of the Board, the Board’s powers, duties and responsibilities, and processes and procedures for Board meeting. The Board Charter will be reviewed periodically and updated from time to time to reflect changes to the Company’s policies, procedures and processes as well as changes to legislations and regulations. The Board Charter is available on the Company’s website at www.mqtech.com.my.

2. Strengthen composition

2.1 Nomination Committee

The Nomination Committee consists of the following members:

Name Designation

Na Chiang Seng Chairman (Independent Non-Executive)

Dr.Ch’ng Huck Khoon Member (Independent Non-Executive)

Mohd Anuar Bin Mohd Hanadzlah (Appointed on January 21, 2016)

Member (Independent Non-Executive)

Soo Tee Wei (Retired on June 22, 2015) Member (Independent Non-Executive)

Lim Soon Seng (Resigned on January 21, 2016) Member (Executive Director) The primary function of the Nomination Committee is to consider and propose new directors on the Board and / or

Board Committee by considering the required mix of skills, experience, expertise, knowledge, qualification and other core competencies required for the position.

The Nomination Committee also reviews the adequacy of the committee structures, size and composition of the Board in order to establish an effective Board and make recommendations with regard to any adjustments that are deemed necessary.

The Nomination Committee meetings are held as and when required and at least once every year to assess the

contribution of each individual Director, the effectiveness of the Board as a whole and the Committees of the Board.

During the financial year under review, two (2) meetings were held to undertake the following activities:-a. Review and proposing to the board members, the suitable candidate to be member of the Audit Committee and

Nomination Committee.b. Reviewing and recommending to the shareholders, the retiring directors to stand for re-election at the

forthcoming AGM.c. Assessing the size and composition of the Board.d. Assessing the effectiveness and performance of the board as a whole, directors and its sub-committee for 2015.



2. Strengthen composition (Cont’d)

2.1 Nomination Committee (Cont’d)

The meetings were attended by:-

Name Attendance

Na Chiang Seng 2/2Dr.Ch’ng Huck Khoon 2/2Lim Soon Seng 2/2Soo Tee Wei 1/1Mohd Anuar Bin Mohd Hanadzlah * -

*There were no meeting held during his tenure

2.2 Remuneration Committee

The Remuneration Committee consists of the following members:

Name Designation

Dr.Ch’ng Huck Khoon (Appointed on January 21, 2016) Chairman (Independent Non-Executive)Teh Eng Huat Member (Executive Director)Na Chiang Seng Member (Independent Non-Executive)Lim Soon Seng (Resigned on January 21, 2016) Chairman (Executive Director)

The Remuneration Committee is responsible for recommending to the Board the remuneration packages of Executive Directors. The Executive Directors should play no part in determining their individual remuneration while the determination of the remuneration payable to Non-Executive Directors should be a matter for the Board as a whole with individual Directors abstaining from discussion and voting in respect of their individual remuneration.

During the financial year under review, one (1) meeting was held to review of remuneration package for Executive Director.

The meeting was attended by:-

Name Attendance

Teh Eng Huat 1/1Na Chiang Seng 1/1Lim Soon Seng 1/1Dr.Ch’ng Huck Khoon* -


The amounts of remuneration paid to the Directors during the financial year ended 31 December 2015 were as follows:

Category Fees (RM) EPF & other emoluments (RM) Total (RM)Executive DirectorsNon-Executive Directors

173,383144,000

406,376-

579,759144,000

The number of Directors whose remuneration is within the following bands is as follows:

Remuneration Band Number of Directors

Executive Non-Executive

RM 50,000 and belowRM 50,000 – RM100,000RM101,000 – RM150,000RM150,000 – RM200,000RM200,001 – RM250,000 RM250,001 – RM300,000 RM300,001 – RM350,000

-1-1--1

5------

Annual Report 2015



2. Strengthen composition (Cont’d)

2.3 Audit Committee

The composition of the Committee its term of reference and attendance of meeting by each of the Committee Member are set out on pages 16 to 18 of this Annual Report.

3. Reinforce independence

3.1 Annual assessment on independence

The Company has four (4) Independent Directors. The Board has assessed and satisfied that these Independent Directors have the ability to exercise independent judgement at all times.

3.2 Tenure of independent directors

In compliance with the recommendation of MCCG 2012, all of the Independent Directors of the Company has tenure not exceeding a cumulative term of nine (9) years.

3.3 Composition of the Board

The current Board has eight (8) members, comprising four (4) Executive Directors and four (4) Independent Non-Executive Directors. Hence the Company is in compliance with ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), where at least two (2) directors or one-third (1/3) of the total number or Directors, whichever is higher, are to be Independent Directors. The Board considers that its present composition is optimal based on the Group’s operations and it reflects a fair mix of financial, technical and business experiences that are necessary for the successful direction of the Group.

3.4 Re-election of Directors

In accordance with the Company’s Articles of Association, Directors who are appointed by the Board either to fill a casual vacancy or as an additional to the Board shall hold office only until the next Annual General Meeting (“AGM”) and shall then be eligible for re-election. The articles also provide that one-third or the number nearest to one-third (1/3) of the Directors shall retire from office at every AGM and if eligible, may offer themselves for re-election. Each Director shall retire at least once in every three (3) years.

4. Foster commitment

4.1 Time commitment

The Board meets on a scheduled basis at least four (4) times a year and additional Board meetings are convened when necessary. During the financial year 2015, the Board has convened five (5) meetings.

Name of Directors AttendanceDr.Ch’ng Huck Khoon 5/5Teh Eng Huat 5/5Khoo Hun Sniah 5/5Wong Yu Sun 4/4Lim Soon Seng 5/5Na Chiang Seng 4/5Dato Lim Char Boo 2/2Soo Tee Wei (retired on June 22, 2015) 3/3Mohd Anuar Bin Mohd Hanadzlah* -


4.2 Directors’ training

All Directors have attended and successfully completed the Mandatory Accreditation Programme prescribed by Bursa Securities. The Directors will continue to attend any other training programs to keep them abreast with the current developments of the industry and the current changes in laws and regulations where appropriate. Conferences, seminars and training programs attended by Directors during the financial year 2015 are as follows:

Name of Director Date Programmes/Seminar

Teh Eng Huat 23 March 2015 GST Tax Code & GST Implementation Training Khoo Hun Sniah 23 March 2015 GST Tax Code & GST Implementation Training Wong Yu Sun 27 November 2015 2016 Budget Highlights SeminarLim Soon Seng 23 March 2015 GST Tax Code & GST Implementation Training Na Chiang Seng 23 March 2015 GST Tax Code & GST Implementation Training Dato Lim Char Boo 9 -10 December 2015 MAPDr.Ch’ng Huck Khoon 18 April 2015 Technical Analysis as a Method of Investment Risk

ManagementMohd Anuar Bin Mohd Hanadzlah*

- -

* He was only appointed in 2016



5. Uphold integrity in financial reporting

5.1 Compliance with applicable financial reporting standards

The Board aims to provide a balanced and understandable assessment of the Group’s and the Company’s financial performance, financial position and prospects primarily through the annual financial statements and quarterly announcements of results to shareholders.

The Audit Committee is responsible to review the annual financial statements and quarterly announcements of results to ensure that an effective and efficient financial reporting process are in place and appropriate accounting policies have been adopted and applied consistently. The accounting policies of the Company are in compliance with the latest Malaysian Financial Reporting Standards (“MFRS”).

The annual financial statements and quarterly announcements reports prepared are in compliance with the requirements of MFRS, Companies Act 1965 and ACE Market Listing Requirements of Bursa Securities.

5.2 Assessment of suitability and independence of external auditors

The Board has established a transparent and professional relationship with the Company’s external auditors through Audit Committee. The Audit Committee assesses the performance of the external auditors in terms of suitability, objectivity and independence of their services. The Audit Committee will then recommend their reappointment to the Board, subject to shareholders’ approval in the AGM.

6. Recognize and manage risks

6.1 Internal audit function

The Board has appointed an independent firm for internal audit function of the Company. Details of the internal audit function are set out in the Statement on Risk Management and Internal Control of this Annual Report.

7. Ensure timely and high quality disclosure

7.1 Corporate disclosure policy

The Company refers to ACE Market Listing Requirements of Bursa Securities as a fundamental basis for the ongoing disclosure and announcement to Bursa Securities. The Senior Management is responsible to highlight to the Board any corporate matters or issues warrant for disclosure or announcement to Bursa.

7.2 Leverage on information technology for effective dissemination of information

The Board is committed in providing accurate, useful and timely information about the Company, its business and its activities. Realizing the importance of timely and thorough dissemination of material information to the shareholders, investors and the public at large, the Company maintains an open communications policy with its shareholders, investors and the public at large, and welcome feedback from them.

The Company made timely releases of quarterly interim and full year audited financial results, annual reports and announcements to Bursa Securities. All corporate information and financial results are available on the Company’s corporate website, www.mqtech.com.my.

8. Strengthen relationship between Company and shareholders

8.1 Encourage shareholder participation at general meetings

The Company dispatches its notice of AGM to shareholders at least 21 days before the AGM date. This is to allow the shareholders to have adequate time to make necessary arrangements to attend the AGM either in person, by corporate representative or by proxy.

8.2 Effective communication and proactive engagement

The AGM is the key element of the Company’s dialogue with its shareholders. During the AGM, shareholders are encouraged to ask questions about the resolutions being proposed, about the Company’s operations in general or about the annual reports of the Company and of the Group. All the Directors, Senior Management and external auditors are available in the AGM to provide responses to questions from the shareholders. During any time other than AGM, shareholders or investors are also encouraged to contact Dr.Ch’ng Huck Khoon ([email protected]) for any queries or feedback.

Conclusion

This Statement on Corporate Governance is established by the Board in conjunction with the Board’s approach and consideration of how the Company has, throughout the year, applied the principles and recommendations in the MCCG 2012 in conjunction with the ACE Market Listing Requirements of Bursa Securities. It considers that this Statement provides the information necessary on how the MCCG 2012 has been applied throughout the year.

The Statement is made in accordance with the resolution of the Board dated 25 February 2016.

Annual Report 2015


Statement On Risk Management And Internal Control

INTRODUCTION

The Board of Directors of MQ Technology Berhad is pleased to present its Statement on Risk Management and Internal Control (“Statement”) for the financial year ended 31 December 2015 as required by Bursa Malaysia Securities Berhad (“Bursa Securities”). This Statement has been prepared pursuant to Chapter 15.26(b) of ACE Market Listing Requirements, and in accordance with the Statement on Risk Management & Internal Control - Guideline for Directors of Listed Issuers (the Guidelines”). This Statement outlines the nature of the risk management and internal controls of the Group.

BOARD RESPONSIBILITY

The Board recognises and acknowledges the importance and the responsibilities of a good risk management practices and a sound internal controls which includes the establishment of an appropriate control environment and framework, and the review of the effectiveness, adequacy and integrity. The system of risk management and internal control is meant to effectively manage business risk towards the achievement of objectives, to enhance the value of shareholders’ investments and to safeguard the Group’s assets.

Due to the inherent limitations of the system of internal control, such system is designed to manage rather than to eliminate the risks of failure to achieve the Group’s corporate objectives. Therefore, the system can only provide a reasonable and not absolute assurance against material misstatement or losses and fraud.

RISK MANAGEMENT FRAMEWORK

The Board recognises the importance of the risk management framework to manage the risk within the Group and to identify, evaluate and manage significant risks of the Group which will be an on-going process of identifying, assessing and managing risks faced.

The functional management is given a clear line of accountability and delegated authorities were established as part of the internal control efforts through the standard operating practices. The internal audit function supports the review and assists the Audit Committee in conducting their review more effectively.

INTERNAL CONTROL SYSTEM

The Board maintains an organisational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures. The Board meets regularly and has a schedule of matters that are brought to it for decision making process in order to ensure effective control over strategic, financial, operation and compliance issues can be maintained.

The following outlines the main elements of the Group’s internal control system:

i. Having an organisational structure that ensures segregation of duties among employees so that there is an appropriate level of checks and balances on the activities of individual employee.

ii. Supplying comprehensive financial and management reports to the Audit Committee and the Board on a quarterly basis for review.

iii. Stringent recruitment policy is set to ensure that only capable and competent staffs are employed which in turn ensures each operating unit is functioning effectively.

iv. The Group’s performance is monitored through management and operational meeting attended by Senior Management. The Executive Directors are involved in the day to day operations of the Group.

v. Internal policies and procedures are updated regularly to reflect changing risk or to resolve operational deficiencies.

The Group’s internal control systems are continuously being reviewed and enhanced to ensure that changes in the Group’s business and operating environment are adequately managed.

The Board has also received assurance from the Group Executive Director that the risk management and internal control system of the Company and its subsidiaries are operating adequately and effectively, in all material aspects, based on the risk management and internal control system adopted.


Statement On Risk Management And Internal Control (Cont’d)

INTERNAL AUDIT FUNCTION

The Board has outsourced its internal audit function to an independent professional firm to carry out reviews and assess the adequacy and integrity of the system of internal control of the Group. The internal auditors report directly to the Audit Committee, who receives reports of issues and recommendations arising from each review. The internal auditors have also carried out follow-up reviews to ensure that recommendations for improving the internal control systems were being implemented satisfactorily. The cost incurred for internal audit for the financial year 2015 was RM16,000.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

This Statement has been reviewed by the external auditors as required under Chapter 15.23 of ACE Market Listing Requirements for inclusion in the annual report. Their review was performed in accordance with Recommended Practice Guide 5 (Revised): Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe the Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls.

This statement was made in accordance with a Board of Directors’ Resolution dated 25 February 2016.

Annual Report 2015


Audit Committee Report

AUDIT COMMITTEE

Name of Director Designation Dr.Ch’ng Huck Khoon Chairman(Appointed as member on February 17, 2015) Independent Non-Executive Director(Redesignated as Chairman on August 26, 2015)

Na Chiang Seng Member(Appointed on April 23, 2014) Independent Non-Executive Director

Mohd Anuar Bin Mohd Hanadzlah Member(Appointed on January 21, 2016) Independent Non-Executive Director

Lim Soon Seng Member(Appointed as Chairman/member on April 23, 2014) Non-Independent Non-Executive Director(Redesignated as member on July 11, 2014) (Resigned on January 21, 2016)

Soo Tee Wei Member (Appointed as member on April 23, 2014) Independent Non-Executive Director(Redesignated as Chairman on July 11, 2014) (Ceased on June 22, 2015)

TERMS OF REFERENCE

1. MEMBERSHIP

a) The Audit Committee shall be appointed by the Board from amongst their members and comprising not less than three (3) members, exclusively Non-Executive Directors of whom majority shall be the Independent Directors.

b) At least one of the members of the Audit Committee must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years of working experience and either must have passed the examinations specified in Part I of the schedule of Accountants Act, 1967, or must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountant Act, 1967 or fulfills such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad (“Bursa Securities”).

c) The members of the Audit Committee must elect a Chairman among themselves who is an Independent Director. No alternate direct shall be appointed as a member of the Audit Committee.

d) If a member of the Audit Committee, for whatsoever reason ceases to be a member with a result that the number of members is reduced below three (3), the Board shall, within three (3) months of the event, appoints such number of new members as may be required to make the minimum number of three (3) members.

2. ATTENDANCE AT MEETINGS

The Head of Finance and Head of Internal Audit, if any, will attend the meetings. At least twice a year, the Committee shall meet with external/internal auditors, excluding the attendance of the other directors and employees of the Company. The Company Secretary shall be the secretary of the Committee.

3. FREQUENCY AT MEETINGS

Meetings will be held not less than four times a year. The external auditors may request for meetings if they consider necessary. The quorum for any meeting shall be two members of the Committee who shall be Independent Directors.

4. AUTHORITY

The Committee is authorized by the Board to investigate any activity within its term of reference. It is authorized to seek any information it requires from any employee and that all employees are directed to co-operate with any request made by the Committee.


Audit Committee Report (Cont’d)

5. ROLES AND RESPONSIBILITIES

The roles and responsibilities of the Committee shall include:

a) to recommend the appointment of the external auditors, their audit fee and any question of their resignation or dismissal to the Board.

b) to discuss the nature and scope of the audit with the external auditors before the audit commences.

c) To review the financial statements of the Company and of the Group before submission to the Board, focusing particularly on:-

• public announcements of results and dividend payments;

• any changes in accounting policies and practices;

• major judgmental areas;

• significant adjustments resulting from the audit;

• the going-concern assumption;

• compliance with accounting standards; and

• compliance with stock exchange and legal requirements.

d) to discuss problems and reservations arising from the interim and final audits and any matters the external/internal auditors may wish to discuss (in the absence of management where necessary).

e) to review the internal audit programme, consider the major findings of internal audit investigations and management’s response and ensure co-ordination between the internal and external auditors.

f) to review the adequacy of the scope, functions, competency and resources of the internal audit function and to ensure that it has the necessary authority to carry out its work.

g) to review the appraisal or assessment of the performance of the staff for the internal audit function.

h) to approve any appointment or termination of senior staff of the internal audit function.

i) to keep under review the effectiveness of internal control system and, in particular, review external auditors management letter and management’s response.

j) to review any related party transactions that may arise within the Company or the Group.

k) to carry out such other functions and consider other topics, as may be agreed upon by the Board.

6. REPORTING PROCEDURES

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.

7. ATTENDANCE OF MEETINGS

During the financial year ended 31 December 2015, the Audit Committee held five (5) meetings to discuss the matters relating to the accounting and reporting practices of the Group and of the Company. Details of attendance of the Committee Members are as follows:-

Audit Committee Members Attendance

Ch’ng Huck Khoon 4/4 Na Chiang Seng 4/5 Lim Soon Seng 5/5 Soo Tee Wei 3/3

Mohd Anuar Bin Mohd Hanadzlah* -

* There were no meeting held during his tenure.

Annual Report 2015


Audit Committee Report (Cont’d)

8. SUMMARY OF ACTIVITIES The following activities were undertaken by the Audit Committee during the five (5) meetings in discharging their duties and

responsibilities:-

a) Reviewed the quarterly financial results and annual financial statements before submission to the Board for approval.b) Reviewed with external auditors on their audit planning memorandum on the statutory audit of the Group for the

financial year ended 31 December 2015.c) Discussed with the external auditors on audit issues.d) Reviewed the state of internal control with internal auditors on findings and recommendation.e) Reviewed the Statement on Risk Management and Internal Control and Audit Committee Report.f) Considered and recommended the external auditors for re-appointment.g) Reviewed and discussed the internal audit report and the follow-up actions taken by management on audit issues

raised by the internal auditors .h) Discussed with the internal auditors on the annual internal audit plan for the Group.i) Meetings with external auditors without the presence of Executive Directors and management.j) Reviewed the recurrent related party transactions entered into by the Group.k) Reviewed the proposed audit fees of the external auditors in respect of their audit of the Group and of the Company

for the financial year.l) Reviewed and reported the following aspect of internal audit:-

- the adequacy of the scope, function, competency and resources of the internal audit functions.- the internal audit program, processes, the results of the internal audit program, processes or investigation

undertaken and whether or not appropriate action is taken on the recommendation of the internal audit function.

9. INTERNAL AUDIT FUNCTION

The internal auditors will carry out the internal audit assignments based on the internal audit plan. Any findings arising from the internal audit review has been reported to the Audit Committee. The internal auditors will, on a continuous basis, advise the management on areas of improvement and initiate follow-up action to determine the extent of implementation of their recommendations.

During the financial year ended 31 December 2015, the internal auditors have conducted periodic reviews on human resources management and information system of its subsidiaries. A number of minor internal control weaknesses were identified during the audit, all of which have been or are being addressed. None of the weaknesses have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report.

This Statement was made in accordance with a Board of Directors’ Resolution dated 25 February 2016.


Statement Of Directors’ Responsibilities

The Company Act, 1965 requires the Directors to prepare the annual audited financial statements for each financial year which give a true and fair view of the state of affairs, the results and cash flows of the Company and of the Group. In preparing the financial statements, the Directors have made judgements and estimates that are reasonable and prudent and adopted suitable accounting policies and applied them consistently. The Directors are responsible for ensuring that proper accounting and other records are kept which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and to enable them to ensure that the financial statements comply with the Companies Act, 1965 and applicable Malaysian Financial Reporting Standards.

The Directors have general responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Company and the Group, and to prevent and detect fraud and other irregularities.

Annual Report 2015


Corporate Social Responsibility

The Group has recognized Corporate Social Responsibility (“CSR”) as conducting business in a socially responsible and ethical manner for long term success. As a responsible corporate citizen, the Group have initiated, supported and successfully implemented various social, community and environmental projects.

COMMUNITY

1. Charities

During the financial year, the Group has contributed funds to charitable organisations which included religious institutions in order to help them with their development programmes.

2. Education

The Company has recognized the importance of education and has contributed to the capabilities of tomorrow’s workforce. Similar to previous years, we continue to support the internship program by providing industrial training to students from universities, colleges, polytechnics and other technical/vocational institutions.

WORKPLACE

1. Environment Health and Safety

The Company recognised the importance of pollution prevention and environmental protection by reducing the usage of the hazardous compounds in materials which are essential in maintaining the environment. The management and employees are responsible for contributing towards a safe working environment including fostering safe working attitudes and operating in an environmentally responsible manner.

2. Business Ethics and Transparency

The Company is committed in maintaining the highest standards of integrity and corporate governance practices in order to maintain excellence in daily operations and to promote confidence with business partners, customers and suppliers to look forward to long term relationship.

3. Staff Development Programme

The Company is committed to staff development by providing on-the-job training and external training programmes for all level of staff in order to improve their skills and knowledge for their career advancement. The Company will review the adequacy and suitability of the training requirements of the staff on a regular basis.

4. Staff Welfare

Employees are the most important assets to the Group; therefore the Group has offered attractive benefits package to retain and attract staff with relevant experience and expertise to continue servicing the Company.


Disclosure RequirementsPursuant To The Bursa Malaysia Securities Berhad (“Bursa Securities”) Ace Market Listing Requirements

1. Utilisation of Proceeds

The proceeds raised from the Private Placement which was completed on 2 October 2015 were utilized for working capital purposes as well as to defray expenses relating to the placement of shares.

Amount raised from the Private Placement RM’000

Amount utilised RM’000

Working capital 2,416 2,416

Expenses in relation to the Private Placement 120 120

Total 2,536 2,536

2. Share Buy-backs

There were no share buy-backs were granted or issued by the Company during the financial year.

3. Options, Warrants or Convertible Securities

No options, warrants or convertible securities were granted or issued by the Company during the financial year.

4. Depository Receipt (DR) Programme

During the financial year, the Company did not sponsor any DR programme.

5. Imposition of Sanctions and/ or Penalties

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

6. Non-Audit Fees

Non-audit fees amounting to RM5,000 were incurred for services rendered to the Company and its subsidiaries during the financial year under review by the Company’s external auditors.

7. Profit Forecast and Unaudited Results Deviation

There was no profit forecast issued by the Group during the financial year.

There were no material variation between the audited results for the financial year ended 31 December 2015 and the unaudited results released for the financial quarter ended 31 December 2015.

8. Profit Guarantee

The Company did not receive any profit guarantee during the financial year.

9. Material Contract

During the financial year, there were no material contracts entered into by the Company and its subsidiaries involving Directors’ and substantial shareholders’ interests.

Annual Report 2015


Disclosure Requirements (Cont’d)

10. Recurrent Related Party Transactions (“RRPT”) of a Revenue and Trading Nature

Details of the Recurrent Related Party Transaction of revenue and trading nature entered into during the financial year ended 31 December 2015, in accordance with the shareholders’ mandate obtained at the 12th Annual General Meeting of the Company held on 22 June 2015, were as follows:

No. Related Party with whom the Group is transacting

Company in the Group Involved

Nature of Transactions

Actual Amount Related Party

1 Zoomic Automation (M) Sdn Bhd (“ZA”)

Microlead Precision

Technology Sdn Bhd

Supply of precision parts and fabrication

to ZA.

RM 72,520 Teh Eng Huat is a Director & substantial shareholder of MQ. He is also a substantial shareholder of Ire-Tex Corporation Berhad, the holding Company of ZA.

2 Zoomic Automation (M) Sdn Bhd (“ZA”)

Microlead Precision

Technology Sdn Bhd

Purchase of automation solution

from ZA.

RM 25,037 Teh Eng Huat is a Director & substantial shareholder of MQ. He is also a substantial shareholder of Ire-Tex Corporation Berhad, the holding Company of ZA.

3 Zoomic Technology (Thailand) Co.,Ltd (“ZT”)

MPT Solution Co., Ltd

Supply of Wirecut and Electric

Discharge Machining (EDM) process to ZT

RM 226,324 Teh Eng Huat is a Director and substantial shareholder of MQ. He is also a Director and major shareholder of ZT

4 Zoomic Technology (Thailand) Co.,Ltd (“ZT”)

MPT Solution Co., Ltd

Provision of Computer Numerical Control (CNC) milling

and lathe to MPTS

RM 25,119 Teh Eng Huat is a Director and substantial shareholder of MQ. He is also a Director and major shareholder of ZT

The Company is proposing to seek a renewal of shareholders’ mandate at its forthcoming Annual General Meeting pursuant to Rule 10.09(2) and Guidance Note 8 of the Bursa Malaysia Securities Berhad ACE Market Listing Requirements for RRPT of a revenue and trading nature. Details of the proposals are being disclosed in the Circular to Shareholders dated 22 April 2016.


Financial Statements

24Directors’ Report

27Directors' Statement

27Statutory Declaration

28Independent Auditors’ Report

30Statements Of Financial Position

31Statements Of Comprehensive Income

32Consolidated Statement Of Changes In Equity

34Statement Of Changes In Equity

35Statements Of Cash Flows

37Notes To The Financial Statements

70Supplementary Information

- Realised And Unrealised Profits Or Losses

Annual Report 2015


Directors’ Report

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2015.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of investment holding.

The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

RESULTS

GROUPRM

COMPANYRM

Loss after tax for the financial year (1,523,789) (1,764,525)

In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2015 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report, other than those disclosed in the financial statements.

DIVIDENDS

No dividends have been declared or paid by the Company since the end of the previous financial year.

The Company is not in a position to pay any dividend in view of the current year loss and the accumulated losses as at the end of the reporting period.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year, other than those disclosed in the financial statements.

SHARE CAPITAL AND DEBENTURE

During the financial year, the Company has increased its issued and paid up capital from RM25,361,891 to RM27,898,071 by way of allotment of 25,361,800 new ordinary shares of RM0.10 each at an issue price of RM0.10 per share for cash pursuant to a private placement. The proceeds were used for working capital. The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

Other than the foregoing, the Company did not issue any share or debenture and did not grant any option to anyone to take up unissued shares of the Company.


Directors’ Report (Cont’d)

DIRECTORS

The directors who served since the date of the last report are as follows: Ch’ng Huck Khoon Teh Eng Huat Khoo Hun Sniah Lim Soon Seng Na Chiang SengWong Yu Sun (appointed on 13.3.15)Dato Lim Char Boo (appointed on 1.7.15)Mohd Anuar Bin Mohd Hanadzlah (appointed on 21.1.16)Soo Tee Wei (retired on 22.6.15)

DIRECTORS’ INTERESTS IN SHARES

According to the Register of Directors’ Shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year are as follows:

------------- Number of ordinary shares of RM0.10 each -------------

Balanceat

1.1.15

Bought Sold Balance at

31.12.15

The Company

Direct interest:

Teh Eng Huat 14,330,000 1,150,000 - 15,480,000

Khoo Hun Sniah - 500,000 - 500,000

Deemed Interest

Khoo Hun Sniah* 80,000 - - 80,000

* By virtue of the spouse's interests

Other than as disclosed above, none of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, other than those related party transactions disclosed in the notes to the financial statements.

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Annual Report 2015


Directors’ Report (Cont’d)

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts, and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

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

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

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

(iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, and

(iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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

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

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

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

SIGNIFICANT EVENTS

Details of significant events are disclosed in Note 29 to the financial statements.

SUBSEQUENT EVENTS

Details of subsequent events are disclosed in Note 30 to the financial statements.

AUDITORS

The auditors, SJ Grant Thornton, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the directors:

.......................................................... ..............................................................Teh Eng Huat Khoo Hun Sniah Penang,

Date: 18 April 2016


Directors' Statement

In the opinion of the directors, the financial statements set out on pages 30 to 69 are properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the directors, the supplementary information set out on page 70 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the directors:

.......................................................... ..............................................................Teh Eng Huat Khoo Hun Sniah

Date: 18 April 2016

Statutory Declaration

I, Teh Eng Huat, the director primarily responsible for the financial management of MQ Technology Berhad do solemnly and sincerely declare that the financial statements set out on pages 30 to 69 and the supplementary information set out on page 70 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Penang, this 18th )day of April 2016. ) .............................................................. Teh Eng Huat Before me,

..............................................................Commissioner for Oaths

Annual Report 2015


Independent Auditors’ Report To The Members Of MQ TECHNOLOGY BERHAD

Report on the Financial Statements

We have audited the financial statements of MQ Technology Berhad, which comprise the statements of financial position as at 31 December 2015 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 30 to 69.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act,

(b) We have considered the accounts and the auditors’ report of a subsidiary of which we have not acted as auditors, which are indicated in Note 6 to the financial statements,

(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes, and

(d) The auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.


Independent Auditors’ Report To The Members Of MQ TECHNOLOGY BERHAD (Cont’d)

Other Reporting Responsibilities

The supplementary information set out on page 70 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

SJ Grant Thornton John Lau Tiang Hua, DJNNo. AF: 0737 No. 1107/03/18 (J)Chartered Accountants Chartered Accountant Penang

Date: 18 April 2016

Annual Report 2015


STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2015

The notes set out on pages 37 to 69 form an integral part of these financial statements.

GROUP COMPANY

NOTE2015 RM

2014RM

2015RM

2014RM

NON-CURRENT ASSETS

Property, plant and equipment 4 26,125,526 26,378,663 - 65

Goodwill 5 - - - -

Investments in subsidiaries 6 - - 10,432,931 11,463,158

26,125,526 26,378,663 10,432,931 11,463,223

CURRENT ASSETS

Inventories 7 1,163,322 715,351 - -

Trade and other receivables 8 7,901,089 4,238,094 13,691,286 9,434,123

Current tax assets 433,339 231,448 - -

Cash and bank balances 9 2,136,266 4,911,189 34,930 2,581,129

11,634,016 10,096,082 13,726,216 12,015,252

CURRENT LIABILITIES

Trade and other payables 10 3,868,196 2,977,964 104,257 65,559

Borrowings 11 1,692,366 1,797,742 - -

5,560,562 4,775,706 104,257 65,559

NET CURRENT ASSETS 6,073,454 5,320,376 13,621,959 11,949,693

NON-CURRENT LIABILITIES

Borrowings 11 3,607,412 4,587,522 - -

Deferred tax liabilities 12 1,899,218 1,940,709 - -

5,506,630 6,528,231 - -

NET ASSETS 26,692,350 25,170,808 24,054,890 23,412,916

EQUITY

Share capital 13 27,898,071 25,361,891 27,898,071 25,361,891

Share premium 8,257,853 8,387,534 8,257,853 8,387,534

Currency translation reserve 14 971,200 332,368 - -

Asset revaluation reserve 15 6,315,268 6,315,268 - -

Accumulated losses (16,750,042) (15,226,253) (12,101,034) (10,336,509)

TOTAL EQUITY 26,692,350 25,170,808 24,054,890 23,412,916


STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015


GROUP COMPANY

NOTE2015 RM

2014RM

2015RM

2014RM

Revenue 16 17,949,550 13,831,660 30,000 -

Cost of goods sold (15,154,159) (15,997,632) - -

Gross profit/(loss) 2,795,391 (2,165,972) 30,000 -

Other income 998,233 424,799 - 19,281

Administrative and general expenses (4,496,775) (4,714,382) (451,796) (390,479)

Impairment loss on investment in a subsidiary - - (1,342,729) (1,251,447)

Selling and distribution expenses (458,326) (301,277) - -

Finance costs (403,744) (284,104) - -

Loss before tax 17 (1,565,221) (7,040,936) (1,764,525) (1,622,645)

Tax income 18 41,432 9,717 - -

Loss for the financial year (1,523,789) (7,031,219) (1,764,525) (1,622,645)

Other comprehensive income, net of tax Item that will not be reclassified subsequently to profit or loss

Revaluation of property, plant and equipment - 6,315,268 - -

Item that will be reclassified subsequently to profit or loss

Foreign exchange differences for foreign operation 638,832 347,146 - -

Other comprehensive income for the financial year, net of tax 19 638,832 6,662,414 - -

Total comprehensive loss for the financial year attributable to owners of the Company (884,957) (368,805) (1,764,525) (1,622,645)

Basic/Diluted loss per share (sen) 20 (0.58) (2.93)

Annual Report 2015


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015


|---------------------- Non-distributable ---------------------|

NOTE

Share Capital

RM

Share Premium

RM

CurrencyTranslation

ReserveRM

AssetRevaluation

ReserveRM

Accumulated Losses

RM

TotalEquity

RM

2015

Balance at beginning 25,361,891 8,387,534 332,368 6,315,268 (15,226,253) 25,170,808

Foreign exchange differences for foreign operation 19 - - 638,832 - - 638,832

Loss for the financial year - - - - (1,523,789) (1,523,789)

Total comprehensive loss for the financial year - - 638,832 - (1,523,789) (884,957)

Transactions with owners:

Issuance of shares pursuant to private placement 13 2,536,180 - - - - 2,536,180

Payment of private placement expenses - (129,681) - - - (129,681)

Total transactions with owners 2,536,180 (129,681) - - - 2,406,499

Balance at end 27,898,071 8,257,853 971,200 6,315,268 (16,750,042) 26,692,350


The

note

s se

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t on

pag

es 3

7 to

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form

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inte

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l par

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inan

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sta

tem

ents

.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (Cont’d)

|----

------

------

------

Non

-dis

trib

utab

le --

------

------

------

-|

NO

TE

Shar

e C

apit

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M

Trea

sury

Shar

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M

Shar

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mR

M

Cu

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ansl

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eser

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Ass

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eval

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ion

Res

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RM

Acc

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ted

Lo

sses

RM

Tota

lEq

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M

2014

Bala

nce

at b

egin

ning

23,

056,

291

(1,

232,

597)

8,6

16,8

47

(14

,778

) -

(8,

195,

034)

22,

230,

729

Reva

luat

ion

of p

rope

rty,

pla

nt a

nd e

quip

men

t -

- -

- 6

,315

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-

6,3

15,2

68

Fore

ign

exch

ange

diff

eren

ces

for

fore

ign

oper

atio

n -

- -

347

,146

-

- 3

47,1

46

Tota

l oth

er c

ompr

ehen

sive

inco

me

for

the

finan

cial

ye

ar19

- -

- 3

47,1

46

6,3

15,2

68

- 6

,662

,414

Loss

for

the

fin

anci

al y

ear

- -

- -

- (

7,03

1,21

9) (

7,03

1,21

9)

Tota

l com

preh

ensi

ve lo

ss f

or t

he f

inan

cial

yea

r -

- -

347

,146

6

,315

,268

(

7,03

1,21

9) (

368,

805)

Tran

sact

ions

with

ow

ners

:

Issu

ance

of

shar

es p

ursu

ant

to p

rivat

e pl

acem

ent

13

2,3

05,6

00

- -

- -

- 2

,305

,600

Paym

ent

of p

rivat

e pl

acem

ent

expe

nses

- -

(67

,028

) -

- -

(67

,028

)

Reis

sue

of t

reas

ury

shar

es21

- 1

,232

,597

(

162,

285)

- -

- 1

,070

,312

Tota

l tra

nsac

tions

with

ow

ners

2,3

05,6

00

1,2

32,5

97

(22

9,31

3) -

- -

3,3

08,8

84

Bala

nce

at e

nd 2

5,36

1,89

1 -

8,3

87,5

34

332

,368

6

,315

,268

(

15,2

26,2

53)

25,

170,

808

Annual Report 2015


STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015


|------ Non-distributable ------|

NOTE

ShareCapital

RM

TreasuryShares

RM

SharePremium

RM

AccumulatedLosses

RM

TotalEquity

RM

2015

Balance at beginning 25,361,891 - 8,387,534 (10,336,509) 23,412,916

Net loss, representing total

comprehensive loss for

the financial year - - - (1,764,525) (1,764,525)


Issuance of shares pursuant

to private placement 13 2,536,180 - - - 2,536,180

Payment of private placement

expenses - - (129,681) - (129,681)

Total transactions with owners 2,536,180 - (129,681) - 2,406,499

Balance at end 27,898,071 - 8,257,853 (12,101,034) 24,054,890

2014

Balance at beginning 23,056,291 (1,232,597) 8,616,847 (8,713,864) 21,726,677

Net loss, representing total

comprehensive loss for

the financial year - - - (1,622,645) (1,622,645)


Issuance of shares pursuant

to private placement 13 2,305,600 - - - 2,305,600

Payment of private placement

expenses - - (67,028) - (67,028)

Reissue of treasury shares 21 - 1,232,597 (162,285) - 1,070,312

Total transactions with owners 2,305,600 1,232,597 (229,313) - 3,308,884

Balance at end 25,361,891 - 8,387,534 (10,336,509) 23,412,916


STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015


GROUP COMPANY2015RM

2014RM

2015RM

2014RM

CASH FLOWS FROM OPERATING ACTIVITIESLoss before tax (1,565,221) (7,040,936) (1,764,525) (1,622,645)Adjustments for:Deposits forfeited - 12,293 - - Depreciation 3,081,778 4,306,671 65 803 Gain on disposal of property, plant and equipment (143,589) (132,922) - - Impairment loss on investment in a subsidiary - - 1,342,729 1,251,447 Interest expense 403,744 284,104 - - Interest income (3,044) (21,724) - (19,281)Property, plant and equipment written off 3,263 6,475 - - Unrealised loss on foreign exchange 160,299 5,849 - -

Operating profit/(loss) before working capital changes 1,937,230 (2,580,190) (421,731) (389,676)Increase in inventories (438,332) (450,188) - - Increase in receivables (3,578,803) (2,085,202) (4,257,163) (3,348,587)Increase/(Decrease) in payables 859,223 (141,407) 38,698 15,068

Cash used in operations (1,220,682) (5,256,987) (4,640,196) (3,723,195)Income tax paid (210,533) (143,454) - - Income tax refunded 35,940 35,763 - -

Net cash used in operating activities (1,395,275) (5,364,678) (4,640,196) (3,723,195)

CASH FLOWS FROM INVESTING ACTIVITIESInterest received 3,044 21,724 - 19,281 Investment in a subsidiary - - (2) - Placement of fixed deposit (10,000) (250,000) - - Proceeds from disposal of property, plant and equipment 143,589 157,531 - -

* Purchase of property, plant and equipment (1,501,380) (1,993,495) - - Subscription for shares in a subsidiary - - (312,500) (591,314)Net cash used in investing act

malaysiastock.biz a loss before tax of rm7.04 million registered in the previous year. the smaller...

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