contents · ooi yoong yoong (maicsa 7020753) auditors: bdo plt (llp0018825-lca & af 0206)...

CONTENTS

02 Corporate Information

03 Corporate Structure

04 - 05 Media Highlights

06 Financial Highlights

07 - 08 Chairman’s Statement

09 - 13 Management Discussion & Analysis

14 Board of Directors

15 - 21 Profile of Directors

22 - 23 Profile of Key Senior Management

24 - 27 Corporate Governance Overview Statement

28 - 35 Sustainability Report

36 - 38 Statement on Risk Management and Internal Control

39 - 44 Audit Committee Report

45 - 47 Nomination Committee Statement

48 Directors’ Responsibility Statement

49 Additional Compliance Information

50 - 110 Financial Statements

111 List of Properties

112 - 113 Analysis of Shareholdings

114 - 117 Notice of Second Annual General Meeting

118 Statement Accompanying Notice of Second Annual General Meeting

Proxy Form

Administrative Guide

Annexure

ANNUALREPORT

2019

UWC BERHAD(1274239-A)

UWC BERHAD (1274239-A)

PMT 744-745, Jalan Cassia Selatan 5/1,Taman Perindustrian Batu Kawan, 14110 Bandar Cassia,

Pulau Pinang, Malaysia.

www.uwcberhad.com.my

Tel : 604 – 555 6937Fax : 604 – 589 9503

ABOUT THE COVER

The key visual of circuits analogised as a tree expresses the theme of “Empowering Innovation” as the company thrives on its core capabilities to leverage business growth. The various branches of the tree further connote UWC Berhad’s strategy as a one-stop solution delivering high-end expertise across diverse industries, while the circuit illustrations and striking custom typeface imbue a futuristic edge which echoes the company’s far-sighted and innovation-centric philosophy. The dark blue tone further exemplify reliability and confidence in the company’s services as it reaches greater heights in the year 2019, being listed on the official Malaysia stock exchange.

VISION

Provide complete solution for high-tech Strategic Partners, delight the customers, develop supplier partnerships and the workplace of choice

MISSION

The preferred integrated OEM partner providing complete solution with leading edge technology

CORE VALUES

U – UnityW – WillpowerC – Commitment

2 UWC BERHAD (201801012223) (1274239-A)

Dato’ Wan Hashim Bin Wan JusohIndependent Non-Executive Chairman

Dato’ Ng Chai EngExecutive Director/Group CEO

Lau Chee KheongExecutive Director/Group COO

F’ng Meow ChengIndependent Non-Executive Director

Lio Chee YeongIndependent Non-Executive Director

Ng Chin Liang Alternate Director to Dato’ Ng Chai Eng/Deputy Group CEO

BOARD OF DIRECTORS

CORPORATE INFORMATION

AUDIT COMMITTEE

ChairmanF’ng Meow Cheng

MemberDato’ Wan Hashim Bin Wan JusohLio Chee Yeong

RISK MANAGEMENT COMMITTEE

ChairmanF’ng Meow Cheng

MemberDato’ Wan Hashim Bin Wan JusohLio Chee Yeong

REMUNERATION COMMITTEE

ChairmanLio Chee Yeong

MemberDato’ Wan Hashim Bin Wan JusohF’ng Meow Cheng

NOMINATION COMMITTEE

ChairmanLio Chee Yeong

MemberDato’ Wan Hashim Bin Wan JusohF’ng Meow Cheng

REGISTERED OFFICE

39, Salween Road10050 Georgetown, Pulau PinangTel : (604) 210 9828Fax : (604) 210 9827

HEAD OFFICE

PMT 744-745, Jalan Cassia Selatan 5/1Taman Perindustrian Batu Kawan 14110 Bandar CassiaPulau PinangTel : (604) 555 6937Fax : (604) 589 9509Website : www.uwcberhad.com.myE-mail : [email protected]

COMPANY SECRETARY

Ooi Yoong Yoong (MAICSA 7020753)

AUDITORS

BDO PLT (LLP0018825-LCA & AF 0206)Chartered Accountants51-21-F, Menara BHLJalan Sultan Ahmad Shah10050 Pulau PinangTel : (604) 222 0288Fax : (604) 222 0299

PRINCIPAL BANKER

Hong Leong Bank Berhad No.1823-G1, Jalan Perusahaan Auto-CityNorth-South Highway Juru Interchange13600 Prai, Pulau PinangTel : (604) 502 1488Fax : (604) 507 9488

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3Bangsar SouthNo.8, Jalan Kerinchi59200 Kuala LumpurTel : (603) 2783 9299Fax : (603) 2783 9222Website : www.tricorglobal.comE-mail : [email protected]

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad Stock Name : UWC Stock Code : 5292 Sector : Technology Sub-sector : Semiconductor

2 UWC BERHAD (201801012223) (1274239-A)

Annual Report 2019

3UWC BERHAD (201801012223) (1274239-A)

CORPORATE STRUCTURE

PRINCIPAL ACTIVITIES

Company Date of Incorporation

Ownership interest

Principal activities

UWC Berhad 29 March 2018 Investment holding

UWC Holdings Sdn. Bhd. 22 August 1990 100%Provision of precision sheet metal fabrication and value-added assembly services

UWC Industrial Sdn. Bhd. 31 May 2005 100%Provision of precision sheet metal fabrication and value-added assembly services

UWC Automation Sdn. Bhd. 28 July 2000 100% Provision of precision machined components

3

Annual Report 2019

100%

100%UWC Industrial200501016188(693235-T)

100%UWC Automation200001019356(521963-M)

UWC Holdings199001011504(203074-U)

UWC Berhad

UWC BERHAD (201801012223) (1274239-A)

201801012223 (1274239-A)

4 UWC BERHAD (201801012223) (1274239-A)

MEDIA HIGHLIGHTS

At Sofitel Kuala Lumpur Damansara

UWC Bhd signed an underwriting agreement with Hong Leong Investment Bank Bhd (HLIB) as its underwriter and placement agent in conjunction with its initial public offering (IPO) on the Main Market of Bursa Malaysia.

27 MAY

SIGNING OF UNDERWRITING AGREEMENT BETWEEN UWC BERHAD AND HONG LEONG INVESTMENT BANK BERHAD

17 JUNE

IPO PROSPECTUS LAUNCH

UWC Stages Strong Debut On Main Market

10 JULY

LISTING DAY, BURSA MALAYSIA KUALA LUMPUR

4 UWC BERHAD (201801012223) (1274239-A)

Annual Report 2019

5UWC BERHAD (201801012223) (1274239-A)

MEDIA HIGHLIGHTS (cont'd)

5UWC BERHAD (201801012223) (1274239-A)

6 UWC BERHAD (201801012223) (1274239-A)

FINANCIAL HIGHLIGHTS

144,354 46,191

76,31192,158

136,495144,354

2016 2017 2018 2019

23,599

30.90

19.9027.30

32.00

18,335

37,327

46,191

Profit Before Taxation (RM'000)

PBT Margin (%)

PROFIT AFTER TAXATION (RM'000)

36,236

2019201820172016

19,391

25.40

16.1022.90

25.10

14,863

31,224

36,236

Profit After Taxation (RM'000)

PAT Margin (%)

Basic and Diluted EPS (sen)

2019201820172016

EARNING PER SHARE (SEN)

9.9

5.3 4.1

8.5

9.9

REVENUE (RM'000) PROFIT BEFORE TAXATION (RM'000)

FYE 2016 FYE 2017 FYE 2018 FYE 2019

Revenue (in RM'000) 76,311 92,158 136,495 144,354

Gross Profit (in RM'000) 21,442 24,933 42,879 50,786

Profit Before Taxation (in RM'000) 23,599 18,335 37,327 46,191

Profit After Taxation (in RM'000) 19,391 14,863 31,224 36,236

EBITDA (in RM'000) 27,375 23,134 45,391 55,950

Basic and Diluted EPS (sen) 5.3 4.1 8.5 9.9

Shareholders' Equity (in RM'000) 62,755 74,431 84,173 176,517

Return on Equity 31% 20% 37% 21%

Current ratio (times) 2.0 1.7 1.7 3.9

Gearing ratio 0.2 0.3 0.6 0.1

2019201820172016

Annual Report 2019

7UWC BERHAD (201801012223) (1274239-A)

CHAIRMAN’S STATEMENT

Dear valued shareholders,

On behalf of the Board of Directors, I am proud to present to you our very first annual report and audited financial statements for the financial year ended 31 July 2019 (“FYE2019”).

For the benefit of our readers, do allow me to introduce UWC. UWC is an integrated engineering supporting services provider that provides fabrication and full turnkey assembly services for automated test equipment from semiconductor to life science industry. In addition to metal fabrication and assembly services, the Group collaborates with customers in the initial design and developmental stages of their products to achieve cost reduction and improve production cycle time. With that said, the working relationship with our top 5 customers, who have been with us for at least 5 years where some have even been with us for more than 12 years, contribute more than 70% of our revenue. This indirectly shows the capability and trust our customers have in UWC.

FINANCIAL PERFORMANCE

I am delighted to report that UWC closed the financial year with a 5.7% and 16.0% increase in revenue and profit to RM144.3 million and RM36.2 million respectively. The high growth, which was achieved despite the volatile global economy as a whole, was mainly attributed to higher sales and increase in value or complexity of the products manufactured.

As at the end of FYE2019, with the RM57.4 million proceeds from the IPO, our balance sheet is as healthy as ever as. UWC has a net cash position of RM29.7 million with shareholders’ equity of RM176.5 million. Having said that, we look forward to utilising the IPO proceeds to expand our production capacity to cater for the higher demand.

To reward our shareholders for the excellent support since our IPO, the Group will be distributing RM11.0 million in dividends for FYE2019 which represents 3.0 sen per ordinary share, to be tabled to you, the shareholders for approval at UWC’s forthcoming 2nd Annual General Meeting. This dividend pay-out is equivalent to 30.0% of UWC profits which is a sustainable dividend policy that was set out by the Group.

UWC Berhad’s (“UWC’’ or the “Group”) excellent start as a listed company was further punctuated by the strong set of results for FYE2019. This will certainly breathe new life into UWC as we continue to strive in the technology industry.

8 UWC BERHAD (201801012223) (1274239-A)

CHAIRMAN’S STATEMENT (cont'd)

ECONOMIC OUTLOOK AND INDUSTRY PROSPECTS

The Malaysian economy expanded by 4.9% growth in the second quarter of 2019 as compared to the first quarter’s 4.5%, backed by stronger household spending, private investment and improvement of net exports. Nonetheless, the economy is expected to soften in the second half of the year as global demand for tech weakens and tighter trade tensions weigh on external factor. Despite that, the revival of Government’s infrastructure spending is expected to counterbalance and support the momentum. The World Bank has forecasted Malaysia’s economy to grow by 4.6% in 2019, taking into consideration the uncertainty of the US-China trade tensions, amongst others.

On contrary to popular belief that the technology sector, as such, is also expected to slow down, where outsourced semiconductor assembly and test players as well as the automated test equipment manufacturers are expected to be affected by US-China trade war. However, the World Semiconductor Trade Statistics has projected global semiconductor sales to grow by a humble 2.6% in 2019. Nevertheless, going by the Bursa Malaysia Technology Index’s recent marginal hike year-to-date, many observers believe that is a sign of gradual recovery and that the worse may be over for the technology sector. Meanwhile, the local semiconductor industry is expected to recover after inventory adjustments, the investment theme of the upcoming 5G as well as the megatrend of Internet of Things (“IoT”).

MOVING FORWARD

All that being said, we believe UWC’s long term outlook remains sturdy as semiconductors continue to evolve and has increasing importance to our daily lives, surrounding us with a range of budding technologies and equipment.

Besides the new customers, we expect orders from our existing customers to increase. Not only that, we will continue to leverage on our close and tested working relationship with our existing customers to continue participating in their product design and development activities. Thus, this effectively maintains and increases orders from the existing customers.

Subsequently, we are looking to expand our in-house capabilities to provide a more comprehensive range of service offerings, maintain quality over surface treatment processes, and shorten our delivery lead time, which will give us an added advantage over our competitors. In addition, we will regularly review our production processes and explore ways to improve our production efficiency in order to meet dynamic customer requirements. To that end, we intend to automate some of the repetitive and laborious tasks in our production processes to help us improve speed, increase productivity, improve quality and reduce errors or wastage.

With our IPO proceeds of RM57.4 million, we will be purchasing 29 new CNC machines which is expected to be fully commissioned in the next 3 years. Above all, this expansion that we are embarking on is backed by our capable management team with extensive experience in the industry.

BUILDING A SUSTAINABLE FUTURE

We are a strong advocate on building a sustainable business. It is essential to build a business that delivers excellent results as well as building sustainable development goals that addresses the environmental, social and governance frameworks in our community. I would like to invite you to read about our sustainability developments in our sustainability statement.

APPRECIATION

On behalf of the Board of Directors, I would like to take this opportunity to express my sincere gratitude to the management and staff of UWC for their dedication and commitment for their immense contribution to the Group. The listing process was a huge success.

I would also like to extend our deepest appreciation to our clients across the globe, business partners, associates, bankers, and the respective regulatory authorities for their support and contribution. Lastly to you, UWC’s valued shareholders, thank you for your unwavering support and trust in UWC.

Yours sincerely,DATO’ WAN HASHIM BIN WAN JUSOHIndependent Non-Executive Chairman

Annual Report 2019

9UWC BERHAD (201801012223) (1274239-A)

MANAGEMENT DISCUSSION & ANALYSIS

REVIEW OF 2019

This year is a great year to us, as we have achieved another milestone. On 10 July 2019, we successfully debuted on the Main Market of Bursa Malaysia Securities Berhad and closed 71% on the first day of trading, making us one of the best IPO in 2019. A special thank you to UWC team for making this happen. Being listed on stock exchange is part of our business expansion strategy, which includes raising fund for CAPEX investment, creating awareness and most importantly showing our commitment to continue growing the company.

In UWC, we are guided every single step by our core values, Unity, Willpower and Commitment. We constantly push beyond our limits to deliver every single value to all our stakeholder in a sustainable way. We strive to be the best in our industry and our customers’ preferred strategic technology partners, working with them to be at the forefront of technology through our exceptional commitment to innovation and creativity, embedded in our corporate DNA.

KEY MILESTONES

Incorporated UWC Holdings and commenced operations as a trading company

Incorporated UWC Industrial to provide metal fabrication and value-added assembly services to the semiconductor industry

Set up the UWC Scholarship Fund

Ventured into the mould making business and started providing metal stamping services

Ventured into the life science and medical technology industry

Relocated all our operations to our new manufacturing plant in Batu Kawan, Penang

Set up UWC Edu Center at Seberang Perai Polytechnic

Expanded our services to include metal cutting

Set up our second manufacturing plant in Bukit Minyak, Penang

Ventured into front-end semiconductor segment

Listed on Main Market of Bursa Malaysia Securities Berhad

Set up our first manufacturing plant in Bukit Minyak, Penang

Ventured into the provision of sub-assembly services to our customers

Completed our first order for the provision of full-assembly services to an MNC in the semiconductor industry

Incorporated UWC Automation and commenced business in the manufacturing of precision machined components

Ventured into the heavy equipment industry and secured our first order from Bromma (Malaysia) Sdn Bhd

1990

2005

2017

1992

2006

2018

1994

2007

2019

1997

2010

2000

2014

9UWC BERHAD (201801012223) (1274239-A)

10 UWC BERHAD (201801012223) (1274239-A)

MANAGEMENT DISCUSSION & ANALYSIS (cont'd)

KEY AWARDS

BUSINESS OVERVIEW

UWC is an integrated engineering service provider providing one-stop solution for Multinational from piece part to full turnkey assembly to our customers specializing in automated test equipment spanning across semiconductor and life science industry.

Our manufacturing activities consist of the provision of fabrication services to produce metal piece-parts and precision machined components. The 4 main fabrication services namely cutting, forming, joining and other associated processes produce intermediate metal products, ranging from metal piece-parts to precision machined components. We then perform assembly of these metal products into machine structures, metal enclosures and metal chassis to the finished products. We provide value-added assembly services, where

we either sub-assemble self-manufactured metal piece-parts or fully assemble intermediate metal products produced by us into finished products.

The full turnkey products being manufactured by the group are processer chips testers, flash memory tester, networking server tester, signal testers as well as precision diffusion pump. The business with our customers usually start off from the piece part level, followed by module assembly and ultimately full-turnkey assembly.

Through the listing exercise of the company, the funds raised accelerate the company’s expansion plan and align with its strategy in moving up towards higher value supply chain.

2007Received the Top 50 Enterprise Awards Malaysia under the category of Golden Award from Malaysia Entrepreneurs’ Development Association

2015 Received Sin Chew Business Excellence Award 2015 under the category of Product and Service Excellence

2012 Received supplier recognition award from Teradyne

2017 Received recognition for outstanding commitment and support of new product introduction from Teradyne

2008 Received best on-time supplier recognition award from Harmer & Simmons Ltd

2016 Received Golden Eagle Award under the Excellent Eagles category from Nanyang Business Daily

2014 Received supplier recognition award from Agilent

2018 Received strategic partner award from Manpower Department, Ministry of Human Resources Malaysia

Annual Report 2019

11UWC BERHAD (201801012223) (1274239-A)


FINANCIAL REVIEW

UWC growth remains steady in year 2019. Our revenue grew approximately 5.7% to RM144.3 million in FYE 2019 from RM136.5 million in FYE 2018. UWC profit after tax also achieved a new height at RM36.2 million in FYE 2019, representing an increased growth of 16.0%.

The catalyst for the growth was mainly contributed by the strong demand from the Semiconductor industry. Based on FYE 2019 result, the contribution of semiconductor sales to UWC account for 59.8% of the Group’s revenue whereas life science and medical technology industry contributed 25.9% of the Group’s turnover. Customer A remains the top contributor to our Group turnover. However, there were one-off IPO expenses incurred during the financial year which were offset by the disposable gain of our old Bukit Minyak Factory. Based on an enlarged number of shares upon IPO of 366,800,002 shares, UWC earning per share (EPS) was 9.88 sen and return on equity for FYE 2019 was 20.53%. As of 31 July 2019, the Group’s balance sheet remains healthy with net cash and cash equivalent of RM54.4 million. The group Net Asset was RM176.5 million which translates to an NTA per share 48 sen.

REVIEW OF OPERATION ACTIVITIES

Technology

Being a technology company, adapting to the latest technology is vital for us to compete globally. Thus, we work closely with our customers and supplier to strengthen technical know-how and collaborate on New Product introduction projects as well as process improvements, to provide innovative solutions at a competitive price.

Others 4%

Life science andmedical technology

26%

Semiconductor

60%

Heavy duty

10%

In order to implement the latest manufacturing technology, our Process Engineering team of 23 personnel constantly engages with the supplier and consultant to master latest available technologies and implement it on the shop floor. Currently, the team is working on implementing Industry 4.0. Moving forward, we plan to utilize the funds raised from our IPO on robotic arms and automated material handler integration in our current production floor as well as continue implementing new machine purchases, as mentioned in our prospectus dated 17 June 2019. In addition, our process engineering team is conducting periodic training for our production staff on the 2 new machines that just docked into UWC from the funds raised via IPO.

Moreover, our internal team including Product Design and Development department is working towards developing the first article or prototype with our customers. This year, we have been working with 3 additional new customers to develop their first article as well as potential New Product Introduction project. As of 31 July 2019, we have 42 engineers under Product Design and Development department.

Sales and Marketing

We reached another height of sales closing at RM144.3 million in FYE 2019. As of 31 July 2019, there were 34 personnel in our business development department. During FYE 2019, majority of our sales is contributed by semiconductor industry followed by life science and medical technology industry. The pie chart below shows the sales composition by industry.

12 UWC BERHAD (201801012223) (1274239-A)


In terms of sales in other currency, 46.7% of sales were in the US Dollar, 53.3% of sales were in Ringgit Malaysia. Top 5 of our major customers contributed approximately 76% of our group revenue. Geographical location-wise, Singapore remains our top export county followed by United States of America and China.

Geographical location

FYE 2019(%)

Malaysia 58.8

Foreign

Singapore 34.0

USA 2.2

China 1.8

France 1.7

Others(1) 1.5

Total 100.0

In FYE 2019, there were many Multinational Corporations relocating and setting up their factory in Penang. Being strong in the supply chain, our team has received referrals from government-related organizations, such as MIDA and InvestPenang, on top of inquiries from potential customers. Presently, our team is working closely with these potential customers to transfer their manufacturing activities to our group.

Our team will continue to maintain close ties with our major customers through strong collaboration and making periodic visits to their offices to ensure customer satisfaction and drive repeat business. We will also develop more New Product Introduction project and submit requests for product and service qualifications, and visit potential customers to promote our service capabilities.

Moving forward, we will continue to leverage on our solid track record in delivering quality products, our relationships with our customers as well as government-related organizations to procure new business opportunities.

CHALLENGES AND STRATEGY

Constantly identify and deploy the latest technology

The industry that we are operating in, especially semiconductor, life science and medical technology adhere to technological changes and advancements in manufacturing technology. As our customers continuously introduce and upgrade their technology, we too have to enhance our capabilities by deploying latest technological equipment in meeting their requirements. Our continued success and ability to satisfy our customers’ needs, therefore, depends largely on our ability to offer product and service capabilities that meet changing market requirements, including conformity with the applicable industry standards.

REVIEW OF OPERATION ACTIVITIES (cont'd)

Sales and Marketing (cont'd)

2.2% 1.7%

34.0%

1.8%58.8%

Our relentless effort in pursuing latest technological advancements and practising latest industry standards involve exhibition visits, and continuous staff development to ensure our team’s skill and knowledge step up to the latest trends in technology, as well as automation breakthroughs in semiconductor, life science and medical technology.

To achieve this, we are required to constantly anticipate technological change, invest in new technologies and upgrade our machinery and equipment in a timely manner as part of our business operations to fulfill market demand.

Impact on customer performance

The nature of our business is dependent on the performance of the end-user markets of our major customers. The prospects of the customer will impact the demand and orders received by us, and this is influenced by factors including global demand, economic conditions as well as the individual customer’s technological advancements. A decrease in our customer’s product demand will adversely impact our business performance.

Besides demand from end-user market, life science, medical technology and semiconductor industries are also subject to technological changes and rapid advancement in industry standards. These factors typically contribute to frequent changes in our customers’ product design or specification. Hence, our customers typically do not enter into long-term purchase commitments with us. However, they will provide us with short-term rolling forecast of their potential demand for the next 6 to 12 months. Our sales are secured through purchase orders from our customers from time to time, which may vary from their forecasted volume.

(1) Others include Australia, Costa Rica, Denmark, Germany, Hong Kong, India, Japan, Netherlands, Philippines, Poland, Spain, Thailand and Vietnam.

Annual Report 2019

13UWC BERHAD (201801012223) (1274239-A)


CHALLENGES AND STRATEGY (cont'd)

Impact on customer performance (cont’d)

We are acquiring more customers to broaden our customer base and diversify the business segment which we are involved in. For instance, there are various segments within the semiconductor industry, such as front end and back end. While we focus on manufacturing back-end semiconductor equipment at the moment, we would like to diversify and move into front-end semiconductor segment to diversify our customer base. On top of that, we are also actively developing more new customers.

Human capital

We acknowledge the fact that the Group’s continuous growth rely significantly on the talent, technical expertise and value created by the team. The risk of dependency on talent and technical expert is the possibility of losing key management including technical experts. Hence, adequate succession planning is essential. Succession planning has become a key element in evaluating and apprising all personnel holding leadership positions in our Group. Apart from that, we continue to provide professional development for existing staff, improve our remuneration package and introduce more attractive retention packages for our existing talent. Furthermore, we have set up a UWC education center at Polytechnic Seberang Perai and also provide scholarship opportunities to students at Penang Skill and Development Center to build a sustainable talent pipeline for the group.

Dividend

The group maintains our dividend policy of distributing a dividend of at least 20% of our annual audited consolidated PAT attributable to our shareholders.

Forward-looking statement

We are optimistic about our prospects for FY2020 and the years to come, as growth in demand for semiconductor products is expected. The implementation of industry 4.0, smart home including the demand for smart devices, 5G and cloud computing will be the catalyst for the growth in Semiconductor industry.

The demand for chips testers remains optimistic due to increasing usage of smart devices, industry 4.0, and cloud storage for the data center which requires processor chips. Smart devices, cloud computing, AI, and autonomous vehicle require chips to operate, therefore, demand for testers remain strong. As the chips evolve, high-powered testers are required to test the functionalities of the testers, hence, different testers are required.

The introduction of 5G has created the prospect for the testers market, since 5G compatible devices required high-speed chipset. In addition, data centers and 5G infrastructure require testers to test on the speed of data transfer. While the speed of 4G/LTE data is around 100 Mbps, 5G is expected to deliver a speed of more than 20 Gbps. Hence, any upgrade of 5G infrastructure requires testers to ensure that the infrastructure could support the demand, and data traffic of 5G. We see growth opportunities in 5G-related equipment.

In terms of life science and medical technology, we are expecting steady growth. Demand for healthcare is on the rise as a consequence of the increase in global household income and quality of living. People value health more than they used to, leading to a forecast of steady growth in this industry.

Despite continuous US-China trade war, research by Nomura Group shows that Malaysia is the fourth largest beneficiary as a result of this trade diversion from the US and China. Based on MIDA ‘s announcement, Penang has topped the national FDI during the 1st quarter of 2019. As we see more MNCs relocating to Penang, we are positive about their investment and the spillover effect by these FDI.

CONCLUSION

UWC has performed well in 2019 despite the challenging market condition especially in the technology industry. We look forward to the year ahead and are optimistic that 2020 will be another good year for us.

We would like to take this opportunity to express our sincere appreciation to our customers, suppliers, partners, and shareholders for their continuous support. Last but not least, we want to thank all our pillars being our employees for their Unity, Willpower, and Commitment towards the company’s growth. We will continue to drive UWC to another greater heights.


14 UWC BERHAD (201801012223) (1274239-A)

BOARD OF DIRECTORS

From left to right (standing):

1Alternate Director to Dato’ Ng Chai Eng /

Deputy Group CEO

Ng Chin Liang

2Independent Non-Executive Director

F’ng Meow Cheng

3Executive Director / Group CEO

Dato’ Ng Chai Eng

4Independent Non-Executive Chairman

Dato’ Wan Hashim Bin Wan Jusoh

5Executive Director / Group COO

Lau Chee Kheong

6Independent Non-Executive Director

Lio Chee Yeong

Annual Report 2019

15UWC BERHAD (201801012223) (1274239-A)

PROFILE OF DIRECTORS

Qualification 1. Bachelor of Science in Resource Economics, Universiti Pertanian

Malaysia (now known as Universiti Putra Malaysia)

Date first appointed to the board7 November 2018

Membership of Board Committee1. Audit Committee (Member)2. Risk Management Committee (Member)3. Nomination Committee (Member)4. Remuneration Committee (Member)

Working Experience and Occupation 1. Assistant Director, MIDA Kuala Lumpur (1981 – 1991)2. Deputy Director, MIDA Los Angeles, USA (1991 – 1995)3. Director, MIDA Kuala Lumpur (1996 – 2003)4. Director, MIDA Boston, USA (2003 – 2006)5. Director, MIDA New York, USA (2007 - 2008)6. Director of Foreign Direct Investment Promotion, MIDA Kuala

Lumpur (2009 – 2011)7. Senior Director, MIDA Kuala Lumpur (2011 – 2012)8. Executive Director, MIDA Kuala Lumpur (2012 – 2014)9. Senior Executive Director, MIDA Kuala Lumpur (2014 – 2017)

Present appointment 1. Independent Non-Executive Director of Integrated Logistic Berhad2. Independent Non-Executive Director of AYS Ventures Berhad

Any Family relationship with any director and/or major shareholder of UWCNone

Any conflict of interests that the person has with UWCNone

Other than traffic offences, the list of convictions for offences within the past 5 years and particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial yearNone

Number of board meetings attended in the financial year 5/5

Dato’ Wan Hashim Bin Wan JusohIndependent Non-Executive Chairman

Aged62 Male

16 UWC BERHAD (201801012223) (1274239-A)

PROFILE OF DIRECTORS (cont'd)

Qualification 1. Malaysian Skills Certificate Level 1 (formerly known as Sijil

Kecekapan Ketukangan Peringkat Asas) 2. Malaysian Skills Certificate Level 2 (formerly known as Sijil

Kecekapan Ketukangan Peringkat Pertengahan)

Date first appointed to the board29 March 2018

Membership of Board CommitteeNone

Working Experience and Occupation 1. Apprentice electrician, Mattel (Malaysia) Sdn Bhd (1982-1983)2. Senior Technician, Leader Electrical Appliances Manufacturing

Sdn Bhd (now known as GUH Electrical Appliances Sdn Bhd) (1985 – 1990)

3. Plant Manager, Leader Electrical Appliances Manufacturing Sdn Bhd (now known as GUH Electrical Appliances Sdn Bhd) (1990)

Present appointment 1. Management Council of Penang Skill and Development Centre2. Member of Machinery and Equipment Investment Advisory Panel

of MIDA 3. Director of all subsidiaries of UWC4. Director of several private limited companies

Any Family relationship with any director and/or major shareholder of UWCHe is the father of Ng Chin Liang, his Alternate Director





Aged56 Male

Annual Report 2019

17UWC BERHAD (201801012223) (1274239-A)


Qualification 1. Sekolah Menengah Jenis Kebangsaan Hua Lian Taiping, Perak

Date first appointed to the board29 March 2018


Working Experience and Occupation 1. Technical Supervisor, Tekskill Component Sdn Bhd (1980 – 1984)2. Supervisor, Toriki Metal Engineering Sdn Bhd (1984-1986)3. Assistant Factory Manager, Leader Electrical Appliances

Manufacturing Sdn Bhd (now known as GUH Electrical Appliances Sdn Bhd) (1986 – 1991)

Present appointment 1. Director of all subsidiaries of UWC2. Director of several private limited companies3. Vice President of Persatuan Alumni Sekolah Hua Lian Taiping Zon

Utara Malaysia





Lau Chee KheongExecutive Director/Group COO

Aged56 Male

18 UWC BERHAD (201801012223) (1274239-A)


Qualification 1. Bachelor of Science in Business Administration, University of

Southwestern Louisiana, USA2. Master of Management, Australian Institute of Business, Australia 3. Member of Malaysian Institute of Certified Public Accountants 4. Member of Malaysian Institute of Accountants


Membership of Board Committee1. Audit Committee (Chairman)2. Risk Management Committee (Chairman)3. Nomination Committee (Member)4. Remuneration Committee (Member)

Working Experience and Occupation 1. System Planner, Sony Electronics (M) Sdn Bhd (1991 – 1992)2. Auditor, Russ Ooi & Associates (1992 - 1996)3. Manager, H. B. Ooi & Co (1996 – 1998)4. Manager, K. B. Tan & Co (1998 – 2002)5. Partner, MC F’ng & Associates (2002 – Present)

Present appointment 1. Director of several private limited companies2. Consultant for a group of developers and construction companies





F’ng Meow ChengIndependent Non-Executive Director

Aged53 Female

Annual Report 2019

19UWC BERHAD (201801012223) (1274239-A)


Qualification 1. Bachelor of Laws, University of London2. Barrister-at-Law of the Middle Temple, London3. Registered mediator of the Malaysian Mediation Centre 4. Member of the Malaysian Institute of Arbitrators 5. Notary Public appointed by the Attorney General’s Chamber of

Malaysia


Membership of Board Committee1. Audit Committee (Member)2. Risk Management Committee (Member)3. Nomination Committee (Chairman)4. Remuneration Committee (Chairman)

Working Experience and Occupation 1. Legal Assistant, Messrs Chew, Tan & Lim (1997 – 1999)2. Sole Proprietor, Messrs. Lio Chee Yeong & Co (1999)3. Managing Partner, Messrs Lio & Partners (1999 – Present)

(formerly under Messrs. Lio, Soon & Poh) (1999 – 2001)

Present appointment 1. Honorary Consul of Denmark (Penang, Perlis, Kedah and Perak)2. Director of several private limited companies





Lio Chee YeongIndependent Non-Executive Director

Aged49 Male

20 UWC BERHAD (201801012223) (1274239-A)


Qualification 1. Bachelor of Arts (First Class Honours) in Accounting and Finance,

University of Exeter, UK2. Master of Science (Distinction) in Accounting and Finance

University of Exeter, UK (Under Scholarship)3. Member of the Association of Chartered Certified Accountants4. Member of the Malaysian Institute of Accountants



Working Experience and Occupation 1. Audit Associate, Deloitte PLT, Penang (2015 - 2016)2. Assistant Finance Manager, UWC Holdings Sdn. Bhd. (2016 –

2018)3. Head of Corporate Affairs and Communications, UWC Berhad.

(2018 – 2019)

Present appointment 1. Member of Industry Advisory Committee, Politeknik Seberang

Perai2. Member of Institute-Industry Management Board, Intitut Latihan

Perindustrian Arumgam Pillai Nibong Tebal3. Member of Committee, Federation Malaysia Manufacturer,

Penang Branch 4. President of JCI Bayan5. Director of several private limited companies

Any Family relationship with any director and/or major shareholder of UWCHe is the son of Dato' Ng Chai Eng, the Executive Director/Group CEO and major shareholder of UWC




Ng Chin Liang Alternate Director to Dato’ Ng Chai Eng/Deputy Group CEO

Aged26 Male

Annual Report 2019

21UWC BERHAD (201801012223) (1274239-A)

Training Programs attended by the Director

The following are the seminar, conference, exhibition, workshop attended by all Directors as at Financial Year Ended 31 July 2019 (“FYE 2019”).

Name of Directors* Mode of training Title

Dato’ Wan Hashim Bin Wan Jusoh Workshop Mandatory Accreditation Programme for Directors of PLCs

Workshop Practical Application of the New Malaysian Code of Corporate Governance - MCCG 2017

Workshop Sustainability Reporting

Dato’ Ng Chai Eng Workshop Human Capital Development Strategy for OEM+ Business Sustainability

Seminar Excellent Business Management 《卓越企业经营之道》

Exhibition International Machine Tools and Metalworking Technology Exhibition (MetalTech)

Lau Chee Kheong Workshop AMADA 4.0 Technology Workshop

Workshop Bystronic Bysoft 7 Plant Manager training

F’ng Meow Cheng Seminar Transformational Leadership and Organisational Effectiveness

Seminar Risk Management through Organisational Culture and Leadership Structure

Seminar National Tax Seminar 2018

Lio Chee Yeong Conference Penang International Halal Expo & Conference

Seminar ASEAN Integration Outlook 2019

Workshop Civil Litigation: Trial & Advocacy

Remuneration

The following are the remuneration breakdown of all directors as at FYE 2019.

Name of Directors* Salaries Fees Bonus

Employee Provident Fund

and Social Security Organisation Allowances

Benefits-in-kind Total

(RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000)

Dato’ Ng Chai Eng 768 6 10 93 100 7 984

Lau Chee Kheong 768 6 10 93 100 7 984

Dato’ Wan Hashim Bin Wan Jusoh

- 6 - - - - 6

F’ng Meow Cheng - 3 - - - - 3

Lio Chee Yeong - 3 - - - - 3


* Ng Chin Liang was appointed as Alternate Director to Dato’ Ng Chai Eng/Deputy Group CEO on 15 November 2019 which is after the FYE 2019 and therefore his training attendance and remuneration will be duly reported in the next Annual Report 2020.

22 UWC BERHAD (201801012223) (1274239-A)

PROFILE OF KEY SENIOR MANAGEMENT (cont'd)

Qualification 1. Bachelor of Commerce, majoring in Accountancy, Deakin

University, Australia2. Member of Certified Practicing Accountant (CPA),

Australia 3. Member of the Malaysian Institute of Accountants

Date first appointed to the Key Senior Management 1 May 2018

Working Experience and Occupation 1. Auditor, Wong Liu & Partners. (2000 – 2004)2. Accountant, Sin Tiong Lee Food Industry Sdn. Bhd. (2004)3. Account Manager, Wangsaga Industries Sdn. Bhd. (2004

- 2007)4. Assistant Finance Manager, Texchem Resources Berhad.

(2007 – 2008)5. Finance Manager, UWC Holdings Sdn. Bhd. (2008 –

2018)6. Financial Controller, UWC Berhad. (2018 – Present)

Present appointment None




Qualification 1. Bachelor of Mechanical Engineering, Universiti Tun

Hussein Onn


Working Experience and Occupation 1. Project Engineer, UWC Holdings Sdn. Bhd. (2006 – 2009)2. Senior Engineer, UWC Holdings Sdn. Bhd. (2009 – 2010)3. Assistant Business Development Manager, UWC Holdings

Sdn. Bhd. (2010 – 2011)4. Business Development Manager, UWC Holdings Sdn.

Bhd. (2011 – 2018)5. Head of Operation, UWC Berhad. (2018 – Present)


Any Family relationship with any director and/or major shareholder of UWC1. Niece of Dato’ Ng Chai Eng



Ng Sze YenHead of Operations

Aged43

Aged36

Ng Hui HooiFinancial Controller

Female Female

Annual Report 2019

23UWC BERHAD (201801012223) (1274239-A)

PROFILE OF KEY SENIOR MANAGEMENT (cont'd)

Qualification 1. Apprentice Certificatem, Lembaga

Latihan Perindustrian dan Persijilan Ketukangan Kebangsaan Kementerian Buruh Malaysia


Working Experience and Occupation1. Technician, Loh Kim Teow

Engineering Sdn. Bhd. (1986 – 1991)

2. Sales and Application, Engineer George Cohen (Malaysia) Sdn. Bhd. (1992 – 1997)

3. Director, Numeric Precision Engineering Sdn. Bhd. (1997 – 2000)

4. Director, UWC Automation Sdn. Bhd. (2000 – Present)

5. Head of Machining Division, UWC Berhad. (2018 – Present)





Qualification 1. Bachelor of Mechanical

Engineering, Universiti Teknologi Malaysia


Working Experience and Occupation 1. Technical Engineer, Antah

Schindler Sdn. Bhd. (1993 – 1995)2. Senior Purchasing Engineer, Antah

Schindler Sdn. Bhd. (1995 – 2002)3. Production Manager, Advance

Engineering Manufacturer Sdn. Bhd. (2002 – 2003)

4. Engineering Manager, UWC Holdings Sdn. Bhd. (2003 – 2018)

5. Senior Manager of Engineering Division, UWC Berhad. (2018 – Present)





Tan Kean HeanHead of Machining Division

Aged54 Male

Chong Yee BengSenior Manager of Engineering Division

Aged50 Male

Khor Kean SengSenior Manager of

Industrial Engineeringand Production Division

Aged49 Male

Qualification 1. Diploma in Electrical Engineering,

Institut Teknologi Butterworth


Working Experience and Occupation 1. Engineer, Penang Seagate

Industries (M) Sdn. Bhd. (1992 – 1993)

2. Supervisor, UWC Holdings Sdn. Bhd. (1993)

3. Section Head, UWC Holdings Sdn. Bhd. (1993 - 2010)

4. Factory Manager, UWC Holdings Sdn. Bhd. (2010 - 2018)

5. Senior Manager of Industrial Engineering and Production Division, UWC Berhad. (2018 - Present)





24 UWC BERHAD (201801012223) (1274239-A)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

This Corporate Governance Overview Statement is presented pursuant to Paragraph 15.25(1) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the resolution and approval of the Board.

The objective of this Statement is to provide an overview of the application of the corporate governance practices of the Group during the financial year ended 31 July 2019. In accordance with the Malaysian Code on Corporate Governance (“MCCG”) the main principles governing these governance practices are Board Leadership and Effectiveness; Effective Audit and Risk Management; and Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders.

Separately, the Board has also provided specific disclosures on the application of each Practice in its Corporate Governance (“CG”) Report. This CG Report was announced together with the Annual Report of the Company on 29 November 2019. Shareholders may obtain this CG Report by accessing this link www.uwcberhad.com.my for further details and are advised to read this CG Overview Statement together with the CG Report.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

(I) Board Responsibilities

The Board is entrusted to overseeing the overall management of the business affairs of the Group; determining all major policies; ensuring effective strategies and management are in place; assessing the performance of the Group and its management team; and reviewing the systems of risk management and internal control of the Group.

When implementing the business plan, the Executive Directors are responsible for executing corporate decisions made by the Board while the Non-Executive Directors scrutinise the management performance by providing independent views and advice in the interests of the shareholders at large.

In order to ensure that its obligations to its shareholders and other stakeholders are understood, the Board has defined and collectively review and approved its roles and responsibilities as well as its schedule of reserved matters in its Board Charter.

The Board has deliberated the utilisation of proceeds from its IPO and approved the capital commitment and budget of the Group. This helps in ensuring management works towards the achievement of the business aims of the Group as well as ensuring the Group has the financial resources to meet its objectives.

Periodically, the Board will review and track the management performance through its review of the interim financial results of the Group.

The Board has also defined its Code of Conduct and Ethics and Whistleblowing Policy. This Code of Conduct and Ethics serve as a tool for the Board to convey and instil its values into the organisation.

The Charter, schedule of matters, Code of Conducts and the terms of reference of the Board Committees are also posted on the Company Corporate website at www.uwcberhad.com.my

The Board Chairman instils good governance practices, leadership and effectiveness in the Board through chairing of board and shareholders meetings and deliberating together with the Board members on board matters and policies. The position of Board Chairman and Group CEO are held by different Individuals.

The Board is assisted by a Company Secretary who is a member of Malaysian Institute of Chartered Secretaries and Administrators. The Company Secretary assists the Board in discharging its duties in regard to compliance with regulatory requirements, guidelines, legislations and the principles of best corporate governance practices.

Board papers were circulated to the Board members prior to the Board meetings in order to provide the Board members with information beforehand so that they can deliberate issues more effectively during the Board meetings. During the board meeting, Executive Directors and Management were also invited to attend the Board meetings to provide explanations to the Board on the operations of the Group.

The Board also has access to all information and assistance necessary for the discharge of its responsibilities. Subject to Board’s approval, all Board members could seek independent professional advice in discharging their responsibilities, at the expense of the Group.

Annual Report 2019

25UWC BERHAD (201801012223) (1274239-A)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont'd)

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont'd)

(I) Board Responsibilities (cont'd)

The underlying factors of Directors’ commitment to the Group are devotion of time and continuous improvement of knowledge and skill sets. During the financial year, five (5) Board meetings were held. These meetings were attended by all members of the Board.

The Board is updated regularly by the Company Secretary and management on the training programme available by regulators and professional bodies. The present Board members have attended the following trainings:

Director Training Attended

Dato’ Wan Hashim Bin Wan Jusoh(Independent Non-Executive Chairman)

i) Mandatory Accreditation Programme for Directors of PLCsii) Practical Application of the New Malaysian Code of Corporate Governance

- MCCG 2017iii) Sustainability Reporting

Dato’ Ng Chai Eng(Executive Director / Group CEO)

i) Human Capital Development Strategy for OEM+ Business Sustainabilityii) Excellent Business Management 《卓越企业经营之道》iii) International Machine Tools and Metalworking Technology Exhibition

(MetalTech)

Lau Chee Kheong (Executive Director/Group COO)

i) AMADA 4.0 Technology Workshopii) Bystronic Bysoft 7 Plant Manager training

F’ng Meow Cheng (Independent Non-Executive Director)

i) Transformational Leadership and Organisational Effectivenessii) Risk Management through Organisational Culture and Leadership Structureiii) National Tax Seminar 2018

Lio Chee Yeong (Independent Non-Executive Director)

i) Penang International Halal Expo & Conference ii) ASEAN Integration Outlook 2019iii) Civil Litigation: Trial & Advocacy

(II) Board Composition

Presently, the majority of the board members are Independent Non-Executive Directors. This composition is on par with the practice required for Large Company under the MCCG. Descriptions of the background of each director are presented in the respective profile of Directors on pages 15 to 21 of this Annual Report.

The Nominating Committee reviewed the independence of the Independent Directors annually based on the requirements and definition of “independent director” as set out in the MMLR, the confirmation of independence declared by Independent Directors as well as their objectivity in carrying out their duties and responsibilities objectively.

The appointment of Board and key senior management are based on objective criteria, merit and with due regards for diversity in skills, experience, age, cultural background and gender. The current diversity in age distribution, gender and skillsets of the existing Board are shown in Practice 4.4 in the CG Report.

When identifying candidates for appointment of director, the Nominating Committee will consider recommendations from existing board members, management, major shareholders and third-party sources to identify suitably qualified candidates, when necessary before recommending the shortlisted candidates to the Board for further deliberation.

The identification of candidates for directorship will be based on their skills, knowledge, professionalism, character and experience in line with the needs of the Group.

Going forward, the Board will undertake a formal and objective annual evaluation to determine the effectiveness of the board, its committees and each individual director as well as disclose how the assessments are carried out and its outcome on the anniversary of their appointment in next financial year.

26 UWC BERHAD (201801012223) (1274239-A)

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (cont'd)

(III) Remuneration

Broadly, the remuneration policy of the Board requires that the remuneration of the Non-Executive Directors to be determined in accordance with their experience and the level of responsibilities assumed in the Board Committees, their attendance and special skills and expertise they bring to the Board whilst the remuneration of the Executive Directors will be based on the individual’s and Group’s performance the market conditions trends and industry practice.

The Board has established its Remuneration Committee comprising wholly Independent Non-Executive Director. The terms of reference of the Remuneration Committee is posted on the Company’s website.

During the financial year, the Remuneration Committee has reviewed the remuneration of Chief Executive of other listed companies of similar industry and size and recommended to the Board to approve the remuneration of the Group CEO and COO for 2020. Both Group CEO and COO who are the members of the Board have abstained from the deliberation and approval of their remuneration.

Pursuant to Section 230(1) of the Companies Act 2016, the fees of the directors and any benefits payable to the directors of a listed company and its subsidiaries shall be approved at a general meeting.

The details disclosure of the Directors' remunerations is reported in Practice 7.1 in the CG Report.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

(I) Audit Committee

The members of Audit Committee comprising fully Independent Non-Executive Directors. The Chairman of the Committee is not the Chairman of the Board. Members of the Audit Committee are financially literate, with diverse background, experience and knowledge in accountancy, business management, commercial and corporate laws and national investment policies and administration.

None of the members of the Audit Committee are former audit partners of the current External Auditor of the Group. The Committee is mindful of the minimum two (2) years cooling off period best practice under the MCCG when considering the appointment of former key audit partner from its current External Auditor’s firm.

The present External Auditors has been appointed since Financial Year 2011. Nonetheless, the External Auditors practise a 5-year engagement partner rotation policy.

Before the commencement of the current financial year audit, the AC has reviewed and deliberated with the External Auditors on their audit planning memorandum, covering the audit risk areas, approach, emphasis and timeline.

The External Auditors’ confirmed that independence check and confirmation procedures are carried out in the firm and there is no conflict of interest for rendering their non-audit services to UWC presently.

(II) Risk Management and Internal Control

The Board acknowledges its overall responsibility for maintaining a sound internal control system for the Group identifying and reviewing risks; and ensuring the implementation of appropriate systems to manage risks. While the Board has delegated its oversight role in risk management and the system of internal controls to the Risk Committees, the Board understands the key risks of the business that the Group is engaged in.

The risk management processes in identifying, evaluating, managing and documenting key operational risks in UWC are embedded in the operation and business processes in accordance with the ISO Quality Management System. These processes are performed by key senior management and reported to the Executive Directors cum Group CEO and COO. Quarterly, management will report to the Risk Management Committees of the status of its key risks.

The detailed features of the Group’s risk management and internal control framework are disclosed in Statement of Risk Management and Internal Control.


Annual Report 2019

27UWC BERHAD (201801012223) (1274239-A)


PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (cont'd)

(II) Risk Management and Internal Control (cont'd)

The Audit Committee conducted a special meeting to review the nomination and appointment of the Internal Auditor on 9 July 2019.

Functionally, the Internal Auditors report directly to the Audit Committee. The Audit Committee also reviewed and approved the Internal Audit Engagement and fees to ensure the independence and objectivity of the Internal Auditors.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

(I) Communication with Stakeholders

Information about the Group’s business and corporate developments is disseminated through the Company’s annual reports, various disclosures to Bursa Securities including quarterly financial results and various announcements made from time to time.

In addition, the Group maintains a website at www.uwcberhad.com.my where shareholders or investors may access information of the Group encompassing corporate information, latest financial results, annual reports, announcements to Bursa Securities, Board Charter, other Board policies and Board Committees’ terms of reference.

(II) Conduct of General Meetings

The Board will ensure that the Notice of the AGM is sent to shareholders at least 28 days ahead of the date of general meeting in order to provide sufficient time and opportunity to shareholders to prepare for the discussion in general meetings. The Board Chairman, Chairmen of the respective Board Committees as well as other Board members will be present at the general meetings to respond to shareholders’ queries.

Shareholders who are unable to attend the AGM are advised that they can appoint proxies to attend and vote on their behalf by completing the proxy form enclosed in the Annual Report and depositing it at the Share Registrar Office at least forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

All resolutions set out in the Notice of AGM will be put to vote by poll. The Company will also appoint independent scrutineer to validate the vote cast in the AGM. The outcome of the AGM will be announced to Bursa Securities on the same meeting day.

Before resorting to the use of technology voting system, the Board will observe the number of shareholders turn-up in the next few general meetings and evaluate the cost and benefit of the electronic and technology voting system options for managing voting by large group of shareholders.

The Statement is made in accordance with a resolution of the Board on 15 November 2019.

28 UWC BERHAD (201801012223) (1274239-A)

SUSTAINABILITY REPORT

INTRODUCTION

This sustainability report is prepared as required under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and in accordance with the Sustainability Reporting Guide (“Guide”) issued by Bursa Malaysia.

The Company and its subsidiaries (“Group”) have relied on the guidance provided under the Guide for its sustainability practices. The Guide provides guidance on how to embed sustainability in our organisation and helps us to identify, evaluate and manage our material economic, environmental and social (“EES”) risk and opportunities. Our sustainability practices aim to generate long term benefits to our stakeholders in terms of business continuity and value creation. Besides, we strongly support the UN 17 Sustainability Development Goals and such goals will be progressively integrated into our sustainability practices.

SCOPE OF REPORTING

This report covers the sustainability performance of our core business operations for the financial year ended 31 July 2019 unless stated otherwise.

Our core business operations comprised of manufacturing and provision of precision sheet metal fabrication, precision machined components and value-added assembly services.

COMMITMENT TO SUSTAINABILITY

Our corporate vision is to be the preferred integrated OEM partner providing complete solution with leading-edge technology while our corporate mission is to be a complete solution for high-tech strategic partners.

Our Board of Directors is committed to sustainability practices in our organisation and has appointed Mr. Ng Chin Liang, the Alternate Director to Dato’ Ng Chai Eng/Deputy Group CEO, to lead the sustainability development efforts. He is responsible for identifying material sustainability matters and formulating the related sustainability initiatives. Mr. Ng Chin Liang provides strong stewardship towards the implementation of the sustainability initiatives within the Group and he is supported by a number of sub-committees to aid him to discharge this responsibility effectively. Together, Mr. Ng Chin Liang and the sub-committees form the Sustainability Committee which ensures that sustainability practices are embedded and integrated into the Group’s business operations rather than as a standalone basis, to ensure continuity, relevance and sustainability of the practices.

The reporting governance structure is as follows:

5s CommitteeSafety, Health & Environmental

Committee

Emergency ResponseTeam Committee

R&R Committee

Canteen CommitteeInternal Audit Team

ISO 14001:2015 Committee

Internal Audit TeamBS OHSAS 18001:2007

Committee

Internal Audit TeamISO 9001:2015 & ISO 13485:2016

Committee

Board of Directors

Sustainability Committee

Spearheaded by:Alternate Director to Dato’ Ng Chai Eng/

Deputy Group CEO(Chairman)

Annual Report 2019

29UWC BERHAD (201801012223) (1274239-A)

SUSTAINABILITY REPORT (cont'd)

The roles and responsibilities of the above governance bodies are:

(Source: Adapted from the GRI Standards)

• Oversees the sustainability efforts and initiatives of the Group;• Reviews and endorses the Group’s material sustainability matters;• Reviews and endorses the sustainability initiatives proposed by the Sustainability Committee; • Reviews and endorses the annual sustainability report for inclusion in our annual report; and• Sets strategies that support long-term value creation and includes strategies on EES considerations underpinning

sustainability.

• Identifies material sustainability matters that are relevant to the Group’s business operations;• Proposes sustainability initiatives and measures to be implemented across the Group;• Implements sustainability initiatives that have been approved by the Board;• Conducts data gathering for sustainability reporting; and• The Chairman reports the overall progress of the Group’s sustainability efforts to the Board.

In line with the Guide, sustainability is viewed in the context of EES, and good governance is regarded as one of the underlying foundations that underpin the focus on performance along the aforementioned dimensions. The terms economic, environmental and social can be explained as follows:

The Board

Sustainability Committee

Sustainability Practices

An organisation’s impacts on the economic conditions of its stakeholders and on economic systems at local, national, and global levels. It does not focus on the financial condition of the organisation.

Note: These may include the organisation’s procurement practices, or community investment.

An organisation’s impact on living and non-living natural systems, including land, air, water and ecosystems.

Note: These may include the organisation’s usage of energy and water, discharge of emissions, or loss of biodiversity, etc.

The impacts an organisation has on the social systems within which it operates.

Note: These may include the organisation’s relationships with communities, employees, consumers, etc.

Economic Environmental Social

30 UWC BERHAD (201801012223) (1274239-A)


Stakeholder Engagement

A stakeholder is essentially an individual or a group that has an effect on, or is affected by our Group and our activities. Naturally, our stakeholders influence the way we carry out our business activities and how we formulate our strategies to meet their expectations and to generate long term benefits to our stakeholders in terms of business sustainability and value creation.

The table below lists the needs of our different stakeholder groups and how we engaged and addressed their needs.

Stakeholder Groups Areas of Interest Engagement Methods

Investors / Shareholders • Return on investment• Business prospects• Future roadmap• Corporate governance

• Engagement with shareholders during the Company’s annual general meeting

• Quarterly reporting• Dissemination of information through the

Company’s website• Roadshow and Investors’ briefing• Whistle blower policy, Shareholder communication

policy, Corporate disclosure policy and Investor relation policy

Directors • Return on investment• Business prospects• Future roadmap • Corporate governance

• Board of Directors meetings• Business updates and CEO reports• Company events

Management • Human capital• Financial performance • Production performance• Business strategy

• Continuous management progress meeting and reporting

• On-going interaction• Company events

Employees • Competitive salary and benefits package

• Occupational safety and health• Clear line of reporting and proper

communication channel• Work –life balance• Career path and opportunities• UWC Scholarship Fund

• Employee handbook• Monthly employee meetings• Performance appraisal • Internal training and development• Engagement with employees• Sports and recreation programme• Occupational safety and health programme

Customers • Product quality• Reliable delivery • Competitive prices• Technical advancement• Customer service and responsiveness

• Customers feedback• After sales service• Customer periodic visit and audit• Customer evaluation on suppliers• Training and development• Customer survey

Vendors • Procurement policy and procedures• Product cost• Industry standard and requirement• Prompt payments within credit

period• Business prospects and financial

stability

• Disseminate procurement policy and procedures• Supplier evaluation and assessment on suitability of

vendors• Reinforcement of code of conduct for ethical

practices• Supplier periodic visit and audit

Communities • Impact of operations on surrounding environment

• Corporate social responsibility • Corporate governance

• Engagement with local communities• Provide job opportunities • Pay attention to polluting emissions and effluents

Regulatory authorities • Compliance with existing laws• Standards and certification

• Updates on rules and regulations• Consultation with authorities • Attendance at relevant seminars and conferences• Government agency on site and off site meetings• Member of the Federation of Malaysia

Manufacturers

Annual Report 2019

31UWC BERHAD (201801012223) (1274239-A)


Material Sustainability Matters

Sustainability matters are the risks and opportunities arising from the EES impacts of an organisation’s operations and activities and sustainability matters are considered material if they (a) reflect our Group’s significant EES impacts; or (b) substantively influence the assessments and decisions of our stakeholders.

Based on existing policies and practices, we have identified and prioritised the following material sustainability matters which have the greatest impacts on our business operations and stakeholders.

We have formulated sustainability practices which aim to generate long term benefits to all our stakeholders in terms of business continuity and value creation.

Depending on the financial performance of our Group, we are mindful of rewarding our shareholders with the appropriate returns on their investments in our Company. We engage our shareholders during our annual general meeting which is a platform for them to air their views and to question management on matters of interest. In addition, we conduct periodical investors’ briefing and work with independent market researchers for the Group’s financial review and analysis. We have in place policies and practices which govern our business dealings and the conduct of our employees and the same have been disseminated to all concerned either through our website or made known to employees at their place of work.

MarketplaceWe are committed to conduct our business activities ethically and in a transparent manner so as to build a lasting and trusting business relationship with all our stakeholders.

Product quality Our reputation is built upon the quality products we

deliver to our customers who are in the semiconductor, life science and medical technology industries which are mostly large Multi National Companies (“MNCs”). Orders from these customers often involve the exchange of confidential information, such as product technologies, designs and specifications. Trust and integrity of the service providers are, therefore, among the major deciding factors for MNCs in selecting their suppliers, and any leakage or unauthorised use of our customers’ confidential information could lead to loss of business from these customers. The quality management we have in place is designed to monitor and control the processes from planning and development to production, shorter lead time for delivery and after-sales service in order to fulfil our customers’ high demand for quality.

Economic

1

Our ability to provide integrated engineering supporting services has enabled us:

(i) to participate in design and development activities through our involvement in our customers’ new production introduction activities where we assist our customers by providing inputs on design, engineering and manufacturability aspects of a new product;

(ii) to serve our customers better by helping them to reduce the number of suppliers to whom they outsource for their manufacturing needs; and

(iii) to have complete control over the entire manufacturing and assembly process which in turn, allows us to readily trace the source of any problem or issue by tracking our entire process flow. The ability to quickly detect the root cause and diagnose the problem throughout the supply chain is critical for most of our MNC customers.

In addition, as most of our manufacturing processes are carried out in-house, we are able to have a better control over the quality of our products, costs of production and delivery lead time. All the above factors have enabled us to maintain our business relationship with our customers.

As a testimony to the quality of our services and capabilities, we have received the following awards:

• 2007 Top 50 Enterprise Awards Malaysia under the category of Golden Award from Malaysia Entrepreneurs' Development Association

• 2008 Best On-Time Supplier Recognition Award from Harmer & Simmons Ltd

• 2012 Received supplier recognition award from Teradyne

• 2014 Supplier Recognition Award from Agilent• 2015 Sin Chew Business Excellence Award 2015

under the category of Product and Service Excellence• 2016 Golden Eagle Award under the Excellent Eagles

category from Nanyang Business Daily • 2017 Outstanding Commitment and Support and

New Product Introduction from Teradyne• 2018 Strategic Partner Award from Manpower

Department, Ministry of Human Resources Malaysia

32 UWC BERHAD (201801012223) (1274239-A)


Customer satisfaction Our corporate vision is to be the preferred integrated

OEM partner providing complete solution with leading-edge technology. In line with this vision, our service staffs are well trained to give high priority to customer satisfaction and to achieve this attribute our service staffs are required to attend training in product knowledge and soft skills development in line with the Quality Policy commitment within ISO9001:2015. We believe in product and service quality, reliability of delivery and product satisfaction.

Market presence To constantly build up our market share, we regularly

visit our customers and suppliers to solidify our market presence. We have visited customers to engage with them and to obtain feedback which will form part of our data base to formulate our business strategy to expand our market share.

Through our publicity activities that can be seen on our website under “news” and presence through social media have also increased public awareness of our Group.

Procurement policy and procedures We are engaged in responsible procurement practices

whereby proper procedures are laid down to ensure that any procurement made is properly evaluated and approved by the relevant authority after considering the production needs and existing stock balance position. We only source our materials from approved vendors which meet certain acceptable business practices and deliver high quality materials based on our specifications. Our officers are expected to conduct themselves ethically and are not allowed even to accept non-cash gifts from vendors in relation to cultural/festive celebrations. We will not tolerate any corrupt practices in all business dealings and any breach of this policy will be dealt with severely. We also pay our suppliers within the stipulated credit period and this practice will help sustain their operations which will be translated into quality service to our Group.

The Group has also signed a commitment in meeting responsible sourcing of conflict material in response to inhuman rights treatment in mining from the Republic of Congo and adjoining countries throughout their supply chain.

IT system We are supported by an ERP system which captures

all our sales and service staffs are given access to the system which provides on-time details on stocks and production status. This enables our staffs to engage meaningfully with our customers and therefore cuts down on unnecessary delay in obtaining/extracting data. The system also allows another staff to access to a particular project account in the event the person-in-charge is not around to attend to it. The investment in a reputable IT system will sustain our business practices for the long term benefits to be derived there from.

Our IT system has all the necessary security features in place to secure our data base and to protect against malware attacks.

WorkplaceOur employees are our greatest asset and managing them is our priority. We have in place our Employee Handbook which spelt out our HR policies and practices and comply with the Employment Act, 1955. In order to retain our talents, we have come out with competitive remuneration package which is comparable in the industry, as well as creating a healthy and conducive workplace. This strategy will provide us with a stable and productive workforce which will contribute to our sustainability efforts. Further, we have in place our code of conduct to govern the ethics and behaviour of our employees in the discharge of their duties in our workplace as well as in our business dealings with customers, vendors and service providers.

Recruitment We have implemented a standard recruitment

procedure which will ensure the proper identification and recruitment of new talent to join our organisation to contribute to the growth of our business.

Career path In order to retain our talents, we provide opportunities

for high-potential employees to develop and progress to senior positions in the Group. Regular performance appraisals are conducted. Priority is given to existing employees for promotions rather than getting fresh candidates from outside.

Training We believe in empowering our employees by having

in place a standard operating procedure on training and personnel development. By providing appropriate training to our employees will result in better customer service, productivity improvements, better efficiency and better workplace safety practices. During the year, we carried out 94 training sessions for our employees. Ultimately, we hope to achieve better business performance and profitability and improve staff morale.

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33UWC BERHAD (201801012223) (1274239-A)

Work and business ethics and anti-corruption policy

Our work ethics require all our employees to discharge their duties and responsibilities in accordance to their job functions professionally, honestly, productively and efficiently. Likewise for those conducting business on behalf of the Group are required to observe generally accepted business ethics such as engaging in fair negotiations with our customers and vendors and adopting a “win-win” strategy when closing business deals.

Premised on the aforementioned, we will not tolerate bribery and corruption practices among our employees irrespective of ranks and status. As bribery and corruption practices fall under criminal, anyone caught will be dealt with severely like reporting to the police and brought to court.

Whistleblower policy We are committed to conduct our affairs in an ethical,

responsible and transparent manner. In this respect we have a whistleblower policy in place whereby our employees are encouraged to report any malpractices or wrongdoings to the Chairman of the Audit Committee including any unethical or illegal conduct in financial reporting and to the Managing Director for any employment related concerns. The identity of a whistleblower is protected under this policy.

Certification We have acquired the certification of ISO 9001:2015 –

Quality Management Systems which sums up the high standard of management practices in our organisation. This certification ensures our customers consistently receive high quality product and services, which in turns bring many benefits to our customers, management and employees.

We received the ISO 13485:2016 certification (first awarded as ISO 13485:2003 in 2011) for our business processes in the life science and medical technology industry. Based on ISO 9001:2015 framework, ISO 13485:2016 further requires companies to put in place risk management policies as well as maintain effective processes related to the design, manufacture and distribution of medical related devices.

Our environmental management system was accredited with ISO 14001:2015 certification in 2018, demonstrating our ability in managing our environmental responsibilities in a systematic manner.

Employee engagement In engaging our employees, we employ a “two-

way” approach where we give opportunity for the employees to make known their grievances and also to give suggestions to improve or resolve their concerns and unhappiness through monthly employee meetings.

We embrace diversities by celebrating the various major festivals with our employees to promote understanding of each other’s culture and thereby creating harmony, peace and joy in our organisation.

Work-life balance To promote a healthy working life, we believe in

providing a balanced work-life environment to all our employees to enable them to have more time for their family and/or to pursue and advance their areas of interest. In this respect we do not encourage overtime work unless it is absolutely necessary such as to meet customer’s order or regulatory deadlines. To promote a healthy lifestyle, our R&R committee organises various events to ensure work-life balance.

Safety and health Our policy is to plan and organize our work and facilities

which will help to maintain our operations in a safe and orderly manner. We have complied to the best of our ability the existing laws and regulations relevant to our operations such as Occupational Safety and Health Act, 1994, Environmental Quality Act, 1974, Factories and Machinery Act, 1967 and Fire Services Act, 1988. We have been awarded the Occupational Health and Safety Management System Certificate OHSAS 18001.

Some of the more important measures which we

have implemented to complement the compliance of the aforementioned laws and regulations establish to oversee and monitor ongoing safety, health, electrical and environmental initiatives are:

• Established a Safety, Health and Environmental Sub-committee.

• Giving priority to continuous effort to occupational ill health and accident prevention.

• Training towards effective supervision by assigning clearly to each supervisor his/her responsibilities.

• Continuously minimize work hazards and environmental pollution.

• The training of subordinates in the proper use of equipment and safe working practices.

• The development of electrical, environmental, health, and safety consciousness.

• Securing full cooperation of all employees for the attainment of these objectives.

• To comply with all relevant electrical, environmental, health, and safety rules and laws of Malaysia and other requirements.

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34 UWC BERHAD (201801012223) (1274239-A)


As a responsible corporate citizen, we have the responsibility to protect the environment where we operate in. As such we are committed to sustainability development goals and we operate in a way that ensures the environment is clean and safe from harmful pollutants. We believe in preserving the environment for future generations whilst meeting the needs of our stakeholders. We have received certification of the Environmental Management System through ISO 14001:2015.

• Environmental safety We practise regular assessments to evaluate the

environmental aspects and impacts to products and services of the Group. Thanks to our sustainability practices for to date, there have been no untoward incidents which have a negative impact to our environment.

• Waste management We store our production waste in a proper storage area

and the waste is regularly disposed of as scraps. We do not have any scheduled waste which requires special handling pursuant to the Environmental Quality Act, 1974.

• Going green We have negotiated with a vendor to install solar panels

on the roofs of our premises in order to reduce our carbon footprint. This project is targeted to be completed within the next three (3) months and will save approximately 20% in our electricity bills when commissioned. Other effort we have undertaken to further reduce our carbon footprint includes the installation of LED lights.

We believe in the philosophy of giving back to society to show our gratitude and appreciation for our success and in giving, we strengthen the local communities which will contribute to nation building and at the same time helps to create a culture of giving among our employees.

• Education and employment opportunities The UWC Scholarship Fund was established in 2017 to

provide eligible students pursuing diploma courses in the engineering fields at Penang Skills Development Centre with scholarship of up to RM100,000 per year until March 2023. To date we have awarded scholarships valued at RM143,120 to 15 students.

Further, we have established an Education Center at Politeknik Malaysia in Seberang Perai whereby once every two weeks our senior technicians give lectures to students. This has allowed us to partner formative agencies that produce potential employees that are relevant to the workforce.

We are also a participant in the PSDC sponsorship program for the Miester, German dual vocational training.

Collaboration with Technical and Vocational Education and Training (TVET) institutes has provided employment opportunities to potential students to work in our Group.

• Corporate social activities The Group has organised a blood donation drive on 22

July 2019 from its employees.

Our collaboration to organise the JCI Bayan Charity Golf Tournament on 19 January 2019 has helped to raise RM100,000 for the Penang Heart Safe AED.

Environment Social

UNITED NATION’S 17 SUSTAINABLE DEVELOPMENT GOALS (“UN 17 SDG”)

UWC Berhad is committed to supporting and fulfilling the UN 17 SDG. We believe in the symbiotic partnership between business, regulatory and society in achieving sustainability in our world.

The UN 17 SDG are:

Annual Report 2019

35UWC BERHAD (201801012223) (1274239-A)


We are committed to progressively integrate as many goals into our sustainability practices as follows:

Provide employment. We have

a current work force of 742 people.

• Miester, German dual vocational training

• UWC Scholarship Fund established in 2017

• UWC Education Center at Politeknik Malaysia in Seberang Perai

• Employment opportunities for all irrespective of race, religion and disabilities

• Employees are given equal opportunity to progress in our organisation

We have established a supplier development program to build a long term business partnership by providing guidance and understanding as to how the Group operates.

The Group practices the philosophy of Kaizen to encourage process upgrade or innovation among staff.

• JCI Bayan Charity Golf Tournament

• Education Center with Politeknik Malaysia

• Miester, German dual vocational training

• Technical and Vocational Education and Training (TVET)

• Blood donation drive

• Co-organisers for a charity golf tournament

UWC supports gender equality in our organisation. To date, women in leadership roles comprise

34% of our workforce.

Our effort to reduce carbon footprint through the pending installation of solar panels on our premises.

Going forward, we will continue to strengthen our sustainability development efforts by revisiting and reassessing the identified material sustainability matters (“MSM”) for recalibration if necessary, and to identify new MSM for action.

We are committed and serious in our sustainability practices to bring our Group to the next level of excellence giving assurance to our business continuity and value creation and at the same time to fulfil the UN 17 SDG so as to make the world a better place for mankind.

Conclusion

36 UWC BERHAD (201801012223) (1274239-A)

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The Board of Directors (“Board”) of UWC Berhad (“UWC”) is pleased to present its first Statement on Risk Management and Internal Control for the financial year ended 31 July 2019. This Statement is presented and disclosed pursuant to paragraph 15.26(b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad and is guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers and the Malaysian Code on Corporate Governance.

BOARD’S RESPONSIBILITIES

The Board acknowledges its overall responsibility for maintaining a sound internal control system for the Group to safeguard the shareholders’ investment and the Group’s assets, and to discharge their stewardship responsibilities in identifying and reviewing risks and ensuring the implementation of appropriate systems to manage these risks. While the Board has delegated its oversight role in risk management and the system of internal controls to the Audit and Risk Committees, the Board understands the principal risks of the business that the Group is engaged in.

RISK MANAGEMENT

The risk management processes in identifying, evaluating, managing and documenting key operational risks in UWC are embedded in the operation and business processes in accordance with the ISO Quality Management System. These processes are performed by key senior management in their course of work and matters reported to the Executive Directors cum Group CEO and COO for oversight purpose.

Following are the summary of the key risks identified in the organisation and the mitigation plans:

No. Key Risks Management Mitigation Plan

a Technological change and rapid advancement in the industry standards resulting product, knowledge and machinery obsolescence

Management is constantly engaged with customers and market trends to anticipate technological changes in advance. Machinery and equipment with latest technologies and upgrades are identified, planned and brought in timely to keep up with the pace of technological changes.

b Dependency on major customers Management is mindful of this risk and keeping close monitoring of the proportion of sales to each major customer. Any potential imbalance or overdependency on a single major customer will be realigned by adjusting the proportion of sales and by increasing the portfolio of customer base.

c Fluctuation of raw material commodity prices such as steel or aluminium resulted from market conditions, energy costs and governmental regulations

Management had locked-in prices for some commodities and packing materials by entering into material purchase contracts with suppliers. Management will continue to manage the fluctuation of material prices by negotiating for more competitive prices when the opportunity and timing are right.

d Disruption to manufacturing facility and business operations due to unanticipated machinery failure and damages

Preventive scheduled maintenance is carried out for all machinery and equipment in the plant in order to minimise unexpected machine failure.

e Impact of fluctuation of foreign currency on export sales

USD Foreign currency accounts are maintained to serve as a natural hedging tool for receipts and payment in USD currency. Any significant foreign currency net exposure will be negotiated and hedged with the financial institutions.

Annual Report 2019

37UWC BERHAD (201801012223) (1274239-A)

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont'd)

INTERNAL CONTROLS

As part of the pre-listing requirements, a control due diligence review was conducted on the key management areas. The objective of this review was to ascertain and assess the effectiveness and adequacy of key internal control procedures in these areas.

• Sales• Credit Control• Production & Maintenance• Accounts• Human Resource

• Purchasing & Payment• Information Technology General Control• Fixed Asset Management• Warehouse & Logistic• Environment Health and Safety

Key Management Areas Reviewed

Subsequent to the review and prior to the listing, follow-up review was performed to ensure that areas of improvement were fully implemented by management. Management has also performed self-review to consider and to confirm that the key controls are in place in supporting the assurance of the effectiveness and adequacy of the systems of risk management and internal control provided by the Group CEO and Financial Controller.

Separately, the Board also derives its comfort on the state of internal control in the Group through the following internal controls, information and review mechanisms and systems:

i. Delegation and separation of responsibilities between the Board and management. The Independent Directors overseeing the financial and operational performance reported to the Board by the Executive Director and Financial Controller;

ii. Defined authority and responsibility for core business activities and functional divisions. These limits of authority and approval are programmed into the Group ERP System facilitating delegation of power to management;

iii. Board discussions with management during the board meetings on financial and operational issues as well as the measures taken by management to mitigate and manage the associated risks;

iv. The quality management systems possessed by the subsidiaries and their continual compliance with these respective certification bodies’ requirements.

Subsidiary Scope Quality Certificate

UWC Holdings Sdn Bhd and UWC Industrial Sdn Bhd

The manufacturing of sheet metal fabrication, precision engineering parts, mechanical and electrical assembly of automated equipment.

• ISO 9001:2015 (Quality Management Systems)

• ISO 14001:2015 (The Environment Management Systems)

• OHSAS 18001: 2007 (Occupational Safety and Health Management System)

Contract manufacturing of sheet metal fabrication, precision engineering and mechanical parts for medical device and hospital furniture.

• ISO 13485: 2016 (Medical Devices-Quality Management System)

UWC Automation Sdn Bhd Manufacturer of machining part • ISO 9001:2015 (Quality Management Systems)

• ISO 14001:2015 (The Environment Management Systems)

• OHSAS 18001: 2007 (Occupational Safety and Health Management System)

38 UWC BERHAD (201801012223) (1274239-A)

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont'd)

INTERNAL CONTROLS (cont'd)

v. The establishment of Internal Audit Function to carry out independent internal control review on the systems of internal control implemented by management and to report its finding to the Audit Committee directly to ensure its impartially;

vi. Potential financial risk exposure resulting from fire, perils, consequential loss, burglary, fidelity and public liability are insured to minimize Group’s financial exposures and losses;

vii. A comprehensive Employee Handbook is established to regulate human resources management and practices; and

viii. Implementation of physical security controls at the strategic locations such as CCTVs, security guards, fencing and gate in the plants.

MANAGEMENT ACCOUNTABILITY AND ASSURANCE

Management is accountable to the Board for identifying risks associated with the business of the Group and its strategies; maintaining sound systems of risk management and internal control; and monitoring and reporting to the Board of control deficiencies and changes in risks that could affect the Group achievement of its objective and performance significantly.

Before producing this Statement, the Board has received assurance from Group CEO and Financial Controller that, to the best of their knowledge that the Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects.

BOARD ASSURANCE AND LIMITATION

For the financial year under review, the Board is satisfied that the existing systems of risk management and internal control are effective and there were no losses resulted from significant control weakness.

The Board acknowledges that the risk management and internal control systems should be continuously improved. However, stakeholders should note that all risk management and internal control systems could only manage rather than eliminate risks of failure to achieve business objectives. Therefore, these systems can only provide reasonable but not absolute assurance against material misstatements, frauds and losses.

REVIEW OF STATEMENT ON INTERNAL CONTROL BY EXTERNAL AUDITORS

As required by Paragraph 15.23 of the MMLR, the External Auditors shall review this Statement on Risk Management and Internal Control. The review should be guided by the Audit and Assurance Practice Guide 3 (“AAPG3”) issued by the Malaysian Institute of Accountants.

Based on AAPG3, the External Auditors have reviewed this Statement and have reported to the Board that nothing has come to their attention that causes them to believe that the explanation disclosed in this Statement is inconsistent with their understanding of the processes adopted by the Board and management in their risk management and internal control systems of the Group.

The Statement is made in accordance with a resolution of the Board on 15 November 2019.

Annual Report 2019

39UWC BERHAD (201801012223) (1274239-A)

AUDIT COMMITTEE REPORT

COMPOSITION AND DESIGNATION

F’ng Meow Cheng Chairman(Independent Non-Executive Director)

Dato’ Wan Hashim Bin Wan Jusoh Member (Independent Non-Executive Chairman)

Lio Chee Yeong Member (Independent Non-Executive Director)

The members of the Audit Committee (“AC”) comprise wholly Independent Non-Executive Directors.

The AC Chairman, Ms. F’ng Meow Cheng is a member of Malaysian Institute of Certified Public Accountants and Malaysian Institute of Accountants.

Members of the Committee are financially literate, with diverse background, experience and knowledge in accountancy, business management, commercial and corporate laws and national investment policies and administration.

TERMS OF REFERENCE

Following are the details of the AC’s term of reference. This term of reference are also posted at the Company’s website at www.uwcberhad.com.my.

1.0 Objectives

The principal objectives of the AC is to assist the Board of Directors (“the Board”) on following:

a. To independent review and oversee UWC Berhad (“the Company”) financial reporting process;

b. To oversee and appraise the sustainability and quality of the audit conducted by internal and external auditors; and

c. To review the Company’s process for ensuring compliance with laws and regulations.

2.0 Composition

(a) The AC of the Company shall be appointed from amongst the Board of Directors and shall comprise not less than three (3) members who fulfils the following requirements:

i. all the AC members must be non-executive directors, with all of them being independent directors; and

ii. have at least one (1) member who is a member of the Malaysian Institute of Accountants or who complies with paragraph 15.09 of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad or fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

(b) No alternate Director of the Board shall be appointed as a member of the AC.

(c) The Chairman, who shall be elected by the AC, shall be an Independent Director and shall not be the Chairman of the Board.

(d) In the event of any vacancy resulting in non-compliance with the terms of reference hereof, the vacancy must be filled within three (3) months.

(e) The term of office and performance of the AC and each of its members must be reviewed by the Nominating Committee annually in order to determine whether the AC and members have carried out their duties in accordance with their terms of reference.

(f) A former key audit partner involved in the audit works of the Group must observe a cooling-off period of two (2) years before he/she may be appointed as a member of the AC.

40 UWC BERHAD (201801012223) (1274239-A)

AUDIT COMMITTEE REPORT (cont'd)

TERMS OF REFERENCE (cont'd)

3.0 Functions And Duties

(a) In respect of the external audit, to review and report the same to the Board:

i. the audit plan, its scope and nature;

ii. the audit reports and management letter issued by the External Auditors and the implementation of audit recommendations;

iii. the results of the External Auditors’ evaluation of the accounting policies and systems of internal control and risk management within the Company and its subsidiaries (collectively “the Group”); and

iv. the assistance given by the employees of the Company to the External Auditors;

(b) To review the quarterly reports on consolidated financial results and annual financial statements prior to submission to the Board, focusing particularly on:

i. changes in or implementation of major accounting policies and practices;

ii. significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed;

iii. the going concern assumption;

iv. integrity of financial statements; and

v. compliance with accounting standards and other legal requirements;

(c) To discuss the problems and reservations arising from the audits, and any matter the Internal and External Auditors may wish to discuss (in the absence of Management, where necessary);

(d) To consider the appointment (or re-appointment as the case may be) of the Internal and External Auditors, the audit fee, the terms of reference of the said appointment/re-appointment and any question on their resignation or dismissal before making a recommendation to the Board.

In determining the appointment/re-appointment of the External Auditors, in addition to the suitability factors as set out below:

i. the adequacy of the experience and resources of the accounting firm;

ii. the persons assigned to the audit;

iii. the accounting firm’s audit engagements;

iv. the size and complexity of the Group being audited; and

v. the number and experience of supervisory and professional staff assigned to the particular audit.

to also consider the performance of the External Auditors and its independence such as:

i. the auditors’ ability to meet deadlines in providing services and responding to issues in a timely manner as contemplated in the external audit plan;

ii. the nature of the non-audit services provided by the External Auditors and fees paid for such services relative to the audit fee; and

iii. whether there are procedures in place to ensure that there is no threat to the objectivity and independence of the audit arising from the provision of non-audit services or length of service tenure of the External Auditors;

Annual Report 2019

41UWC BERHAD (201801012223) (1274239-A)



3.0 Functions And Duties (cont'd)

(e) To obtain the confirmation from External Auditors that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements;

(f) To discuss the contracts and nature for the provision of non-audit services which can be entered into by the Group with the External Auditors or its affiliates and procedures that must be adhered to by the External Auditors. The following contracts cannot be entered into with the External Auditors:

• Management consulting;

• Strategic decision;

• Internal audit; and

• Policy and standard operating procedures documentation.

Any exceptions to the above require the AC and Board’s approval. The Company is required to state the details on the nature of the non-audit services rendered in the Company’s annual report in accordance with the Listing Requirements;

(g) To do the following, in relation to the internal audit function:

i. review the adequacy of the scopes, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work;

ii. review the internal audit plan and the results of the internal audit process and, where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function; and

iii. review any appraisal or assessment of the performance of members of the internal audit function, whether in-house or outsourced. Where internal audit function is in-house, approve any appointment or termination of senior staff members and take cognisance of resignations of its staff members, providing them an opportunity to submit reasons for resigning;

(h) To consider the major findings of internal audit investigations and Management’s response or action plan;

(i) To ensure the internal audit function is independent of the work it audits and the head of internal audit reports directly to the AC. The head of internal audit should have the relevant qualification and be responsible for providing assurance to the AC that the internal controls are operating effectively. The head of internal audit will be responsible for the regular review and/or appraisal of the effectiveness of risk management, internal control and governance processes within the Company;

(j) To review any related party transaction and conflict of interest that may arise within the Company or the Group including any transaction, procedure or course of conduct that raise question of management integrity;

(k) To review the adequacy and effectiveness of risk management and internal control systems deployed by the Key Senior Management to address those risks and recommend corrective measures undertaken to remedy failures and/or weaknesses;

(l) To submit to the Board a report on the summary of activities of the AC in the discharge of its functions and duties in respect of each financial year including details of relevant training attended by the AC for inclusion into the annual report of the Company;

(m) To review and assess the adequacy and relevance of its terms of reference annually and recommend any changes it considers necessary to the Board for endorsement; and

(n) To consider and examine such other matters as defined by the Board or as may be prescribed by Bursa Securities or any other relevant authority from time to time.

42 UWC BERHAD (201801012223) (1274239-A)



4.0 Rights

The AC shall:

a. have authority to investigate any matter within its terms of reference;

b. have the resources which are required to perform its duties;

c. have full and unrestricted access to any information pertaining to the Group;

d. have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity on a continuous basis in order to be kept informed of matters affecting the Group;

e. have the right to obtain independent professional or other advice at the Company’s expense;

f. have the right to convene meetings with the Internal and External Auditors, without the attendance of the other Directors or employees of the Group, whenever deemed necessary; and

g. promptly report to Bursa Malaysia Securities Berhad matters which have not been satisfactorily resolved by the Board resulting in a breach of the Listing Requirements of Bursa Malaysia Securities Berhad.

5.0 Meetings

a. The AC shall meet at least four (4) times in each financial year. The quorum for a meeting shall be two (2) members. Additional meetings may be conducted if the need arises.

b. A circular resolution in writing signed by the members of the AC who are sufficient to form a quorum, shall be valid and effectual as if it had been passed at a meeting of the AC duly convened. Any such resolution may consist of several documents in like form, each signed by one (1) or more members of the AC and shall include signed copies via legible and written electronic means.

c. Any member of the AC may participate in any meeting of the AC via telephone conferencing, video conferencing or by means of any communication equipment which allows all persons participating in the meeting to hear each other. A person so participating shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly.

d. The Company Secretary or any other person approved by the AC shall act as the Secretary of the AC and shall attend all meetings and minute the proceedings thereof.

e. The Chairman shall upon request of the Internal or External Auditors convene a meeting of the AC to consider any matter the Internal or External Auditors believe should be brought to the attention of the AC members or shareholders.

f. The External Auditors, the Head of Finance and the Head of Internal Audit shall attend any meeting of the AC at the invitation of the AC.

g. The Chairman of the AC should engage on a continuous basis with the Chairman of the Board, the Group CEO and COO, Financial Controller, the Head of Internal Audit, the External Auditors and the Company Secretary in order to be kept informed of matters affecting the Company and Group.

Annual Report 2019

43UWC BERHAD (201801012223) (1274239-A)



6.0 Annual AC Report

The AC is required to prepare a Committee Report at the end of each financial year for inclusion in the Annual Report of the Company. The Committee Report shall include the following information:

a. Composition of the AC, including the name, designation (indicating the Chairman) and directorship of the members (indicating whether the Directors are independent or otherwise);

b. Number of AC meetings held during the financial year and details of attendance of each Committee member;

c. Summary of the work carried out by the AC in the discharge of its functions and duties for that financial year of the Company and how it has met its responsibilities; and

d. Summary of the work of the internal audit function.

The AC shall also assist the Board in making the following additional statements in the Company’s Annual Report:

a. Statement explaining the Board’s responsibility for preparing the annual audited financial statements of the Group; and

b. Statement about the state of risk management and internal controls of the Group.

7.0 Review of the Terms of Reference

The Terms of Reference of the AC should be reviewed annually and updated in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the AC’s duties and responsibilities.

ATTENDANCE

The AC was constituted on 16 November 2018. During the financial year ended 31 July 2019, there were three (3) meetings held. These meetings were attended by all members of the AC.

SUMMARY OF ACTIVITIES

The activities undertaken by the AC in discharging its duties and functions during the financial year are summarised as follows:

a. Reviewing the Related Party Transactions

In order to safeguard the interest of the UWC Group and its minority shareholders, and to mitigate any potential conflict of interest, the AC has reviewed the related party transactions and was satisfied that the related party transactions were transacted on an arm’s length basis and on normal commercial terms which are not unfavourable to the Group nor detrimental to the minority shareholders’ interest of the Company.

b. Reviewing UWC Accounting Function Readiness for Meeting the Financial Reporting Requirement of a Listed Company

A private session was held between the AC and the External Auditors on 17 June 2019. In this private session, the AC sought feedbacks from the External Auditors of the readiness of the Accounting Function in UWC to ensure compliance with the timeline and financial reporting requirements under the Listing Requirements.

AC noted that prior to the listing, UWC Group has prepared its financial statements in accordance with the Malaysian Financial Reporting Standards (“MFRS”) and the Finance and Accounts Department of UWC was able to resolve matters raised by the External Auditors. In addition, the External Auditors were satisfied with the co-operation provided by the personnel in the Finance and Accounts Department.

44 UWC BERHAD (201801012223) (1274239-A)


SUMMARY OF ACTIVITIES (cont'd)

c. Reviewing 2019 External Audit Planning Memorandum and the Independence of the External Auditors

Before the commencement of the current financial year audit, the AC has reviewed and deliberated with the External Auditors on their audit planning memorandum, in particular the audit risk areas, approach, emphasis and timeline.

The AC also noted the External Auditors’ independence check and confirmation procedures carried out in the firm as well as no conflict of interest for rendering their non-audit services to UWC presently.

d. Reviewing the Interim Financial Results

The AC has reviewed the financial statements and the third quarter results, cash flows, and financial positions with management. During this review, the Financial Controller and Head of Corporate Affairs and Communication were invited to present and respond to questions raised by the AC on the financial performance and significant financial reporting concerning compliance with applicable approved accounting standards and other regulatory requirements. Based on the clarifications and answers provided by the management, the AC resolved to present the financial results and statements to the Board for consideration and approval.

e. Reviewing the Appointment of Internal Auditor

The AC conducted a special meeting to review the nomination and appointment of the Internal Auditor on 9 July 2019.

In assessing the suitability and “fit and proper” of the Internal Auditor, the AC has set and considered the following criteria in selecting and recommending the firm for Board approval:

i. Track records of the firm;

ii. The experience, resources and independence of the audit team;

iii. Familiarity with the business of the Group; and

iv. Reasonableness of their quoted fees.

INTERNAL AUDIT FUNCTION

The Group has outsourced the internal audit function to IA Essential Sdn Bhd (“IAE”), an internal audit firm. The Internal Audit fee for financial year 2019 is RM20,000.

The internal audit function is headed by a director and supported by an audit team comprising a team manager and executives who are accounting graduates. The Director in charge is Chong Kian Soon who is a member of the Malaysian Institute of Certified Public Accountants, the Chartered Accountants Australia and New Zealand, and the Institute of Internal Auditors Malaysia.

Functionally, the Internal Auditors report directly to the AC. The primary responsibility of the Internal Auditors is to assist the Board and the AC in reviewing and assessing management systems of internal control and procedures. The AC reviews and approves the Internal Audit Engagement and fees to ensure the independence and objectivity of the Internal Auditors.

Upon assuming its role effectively in July 2019, the Internal Auditors has conducted a Corporate Governance gap analysis and reported to the AC on the proposed actions needed to further strengthen and adopt the practices in Malaysian Code on Corporate Governance.

Annual Report 2019

45UWC BERHAD (201801012223) (1274239-A)

NOMINATION COMMITTEE STATEMENT

The Nomination Committee (“NC”) was instituted on 16 November 2018. Accordingly, the NC has yet to discharge its responsibilities fully under the term of reference empowered by the Board. However, the NC assures the shareholders that a statement explaining its activities undertaken for 2020 financial year will be duly reported in the next Annual Report.

Following are the details of the composition of the NC and its term of reference. This term of reference are also posted at the Company’s website at www.uwcberhad.com.my.

COMPOSITION AND DESIGNATION

Chairperson : Lio Chee Yeong(Independent Non-Executive Director)

Member : Dato’ Wan Hashim Bin Wan Jusoh(Independent Non-Executive Chairman)

F’ng Meow Cheng(Independent Non-Executive Director)

TERMS OF REFERENCE

1.0 Objective

The principal objective of the NC is to develop and maintain a formal, rigorous and transparent procedure for assessing the performance of the Board, the Board Committees and Individual Directors; making recommendations on appointments and reappointments of Directors to the Board; and reviewing candidate recommended for appointment and promotion as key senior management in the Group.

2.0 Composition

a. The members of the NC shall be appointed from amongst the Board and shall:

i) comprise no fewer than three (3) members;

ii) consist exclusively of non-executive directors, a majority of whom are independent; and

iii) where Independent Director shall be the Chairman of the NC.

b. No alternate Director of the Board shall be appointed as a member of the NC.

c. In the event of any vacancy resulting in non-compliance with the terms of reference hereof, the vacancy must be filled within three (3) months.

3.0 Functions and Duties

3.1 Appointment of New Directors

The duties of NC with respect to the appointment of new directors are:

(a) to develop, maintain and review, for Board’s approval, the criteria to be used in the recruitment and screening process for prospective directors covering his or her:

• skills, knowledge, expertise and experience;

• professionalism;

• background, character, integrity and competence;

• contribution and performance;

46 UWC BERHAD (201801012223) (1274239-A)


3.0 Functions and Duties (cont'd)

3.1 Appointment of New Directors (cont'd)

(a) to develop, maintain and review, for Board’s approval, the criteria to be used in the recruitment and screening process for prospective directors covering his or her (cont'd):

• time commitment to effectively discharge his or her duties to the Company including, amongst others, attendance at board or committee meetings, shareholders’ meetings, major company events and participation in continuing training programmes;

• Boardroom diversity including gender diversity, age and ethnicity diversity; and

• in the case of candidates for the position as independent non-executive directors, the candidates’ ability to discharge such responsibilities or functions as expected from independent non-executive directors.

Candidates may be proposed by any director or shareholder or any senior management personnel. The NC should also utilise independent sources to identify suitably qualified candidates.

(b) Where there is a vacancy in Board seat or a need to add additional director on Board, to search across a diverse candidate pool, then identify, nominate and make recommendations to the Board, the appointment of new candidates to the Board, based on recruitment criteria set by the Board;

(c) to recommend to the Board, candidates to fill memberships in the Board Committees; and

(d) to ensure that new appointees to the Board undergo Mandatory Accreditation Programme as prescribed by Bursa Securities and an induction programme to facilitate their understanding of the operations, products and services.

3.2 Assessment of Directors

The NC shall:

(a) assist the Board in an annual review of the appropriate size of the Board, the required mix of skills, current diversity level, experience and other qualities, including core competencies which nonexecutive directors should bring to the Board;

(b) annually assess the effectiveness of the Board as a whole, all Board Committees and the contribution of each individual Director, including the term of office and performance of the Board Committees and its member;

(c) assess the independence of the independent non-executive directors, including reviewing the criteria for assessing their independence;

(d) assess the desirable balance in board membership, considering the structure and development of excessive number of directorships;

(e) assess the desirable number of independent non-executive directors;

(f) review succession plans for the Board and senior management with a view to maintaining an appropriate balance of skills, experience, tenure and diversity on the Board;

(g) evaluate existing Directors who are subject to re-election/reappointment for recommendation to the Board;

(h) ensure that all Directors attend appropriate continuous training programmes; and

(i) properly document all assessments and evaluations and report to the Board all the results of the assessments and evaluations on an annual basis.

NOMINATION COMMITTEE STATEMENT (cont'd)

Annual Report 2019

47UWC BERHAD (201801012223) (1274239-A)


3.0 Functions and Duties (cont'd)

3.3 Others

(a) To report in the annual report, a statement about the activities of the NC in the discharge of its duties for the financial year; and

(b) To consider other matters as referred to the NC by the Board.

4.0 Rights

(a) The NC in carrying out its tasks under these Terms of Reference has the right to seek any information it requires from Management and employees.

(b) The NC may obtain independent professional or other external advice at the expense of the Company, with prior consent of the Board.

5.0 Meetings and Minutes

(a) The NC shall meet at least once in each financial year and report to the Board after each meeting, its recommendations, findings or decisions.

(b) The quorum for a meeting shall be two (2) members.

(c) A circular resolution in writing signed by the members of the NC who are sufficient to form a quorum, shall be valid and effectual as if it had been passed at a meeting of the NC duly convened. Any such resolution may consist of several documents in like form, each signed by one (1) or more members of the NC and shall include signed copies via legible and written electronic means.

(d) The Company Secretary or any other person approved by the NC shall act as the Secretary of the NC and shall attend all meetings and minute the proceedings thereof.

(e) Any member of the NC may participate in any meeting of the NC via telephone conferencing, video conferencing or by means of any communication equipment which allows all persons participating in the meeting to hear each other. A person so participating shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly.

6.0 Review of the Terms of Reference

The Terms of Reference of the NC should be reviewed annually and updated in accordance with the needs of the Board and any new regulations that may have an impact on the discharge of the NC’s duties and responsibilities.

NOMINATION COMMITTEE STATEMENT (cont'd)

48 UWC BERHAD (201801012223) (1274239-A)

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible for ensuring that:

i. The annual audited financial statements of the Group and of the Company are drawn up in accordance with applicable Financial Reporting Standards, the provisions of the Companies Act 2016 and the MMLR so as to give a true and fair view of the state of affairs of the Group and of the Company for the financial year, and

ii. Proper accounting and other records are kept which enable the preparation of the financial statements with reasonable accuracy and taking reasonable steps to ensure that appropriate systems are in place to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

In the preparation of the financial statements for the financial year ended 31 July 2019, the Directors have adopted appropriate accounting policies and have applied them consistently in the financial statements with reasonable and prudent judgments and estimates. The Directors are also satisfied that all relevant approved accounting standards have been followed in the preparation of the financial statements.

Annual Report 2019

49UWC BERHAD (201801012223) (1274239-A)

ADDITIONAL COMPLIANCE INFORMATION

1. UTILIZATION OF PROCEEDS

UWC Berhad listed on the Main Market of Bursa Malaysia Securities Berhad (“Listing”) on 10 July 2019. As part of the listing exercise, the company undertook a public issue of 70,000,000 new ordinary shares at an issue price of RM 0.82 per share, raising gross proceeds of RM 57.4 million (“IPO proceeds”).

As at 31 July 2019, our utilization of the IPO Proceeds is as follows:

Details RM’000

ActualUtilization

RM’000

Percentage utilized

%

Estimated time frame for use of

proceeds from the date of the Listing

Purchase of new machinery and equipment

- CNC machines 27,416 710 2.6 Within 36 months

- Industrial robotic arms and material handling system

4,700 - - Within 36 months

Repayment of bank borrowings 18,000 18,000 100.0 Within 12 months

Working capital 2,868 - - Within 12 months

Estimated listing expenses 4,416 4,416 100.0 Within 2 months

Total 57,400 23,126

The utilization of gross proceeds as disclosed above should be read in conjunction with the Prospectus of the Company dated 17 June 2019.

2. AUDIT AND NON-AUDIT FEES

The amount of audit and non-audit fees incurred for services rendered to the Company and its subsidiaries for the financial year ended 2019 (“FYE 2019”) by the Company’s Auditors are as follows:

CategoryAudit Fees

(RM)Non-Audit Fees

(RM)*

Company 25,000.00 24,000.00

Subsidiary 82,000.00 10,600.00

107,000.00 34,600.00

* Non-Audit fees include of review of Statement on Risk management and Internal Control, Tax Fees, review of IT General Control and review of Management Discussion and Analysis.

3. RECURRENT RELATED PARTY TRANSACTION

The Company and its subsidiaries did not have any recurrent related party transaction during FYE 2019.

4. MATERIAL CONTRACTS

There were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests as at FYE 2019.

50 UWC BERHAD (201801012223) (1274239-A)

51 - 54 Directors’ Report

55 Statement by Directors

55 Statutory Declaration

56 - 58 Independent Auditors’ Report

59 Statements of Financial Position

60 Statements of Profit or Loss and Other Comprehensive Income

61 Consolidated Statement of Changes in Equity

62 Statement of Changes in Equity

63 - 65 Statements of Cash Flows

66 - 110 Notes to the Financial Statements

FINANCIAL STATEMENTS

Annual Report 2019

51UWC BERHAD (201801012223) (1274239-A)

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 July 2019.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding. The principal activities of subsidiaries are set out in Note 7 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESULTS

Group Company

RM RM

Profit/(Loss) for the financial year, attributable to owners of the parent 36,236,415 (3,557,755)

DIVIDENDS

No dividend has been paid, declared or proposed by the Company since the end of the previous financial period.

The Directors recommend a final dividend of RM0.03 per ordinary share, amounting to approximately RM11,004,000 in respect of the financial year ended 31 July 2019, subject to the approval of members at the forthcoming Annual General Meeting.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the issued and fully paid-up ordinary share capital of the Company was increased from 296,800,002 ordinary shares to 366,800,002 ordinary shares by way of allotment of 70,000,000 new ordinary shares at an issue price of RM0.82 each for cash pursuant to its Initial Public Offering exercise.

The newly issued ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

The Company did not issue any debentures during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

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

FOR THE FINANCIAL YEAR ENDED 31 JULY 2019

52 UWC BERHAD (201801012223) (1274239-A)

DIRECTORS' REPORT (cont'd)

DIRECTORS

The Directors who have held office during the financial year and up to the date of this report are as follows:

UWC Berhad

Dato’ Ng Chai Eng*

Lau Chee Kheong*

Dato’ Wan Hashim Bin Wan Jusoh (appointed on 7 November 2018)

F’ng Meow Cheng (appointed on 7 November 2018)

Lio Chee Yeong (appointed on 7 November 2018)

Ng Chin Liang (Alternate Director to Dato’ Ng Chai Eng) (appointed on 15 November 2019)

* These Directors of the Company are also Directors of subsidiaries of the Company

Subsidiaries of UWC Berhad (Excluding those who are listed above)

Tan Kean Hean

DIRECTORS’ INTERESTS

The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares of the Company and of its related corporations during the financial year ended 31 July 2019 as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 59 of the Companies Act 2016 in Malaysia were as follows:

Number of ordinary shares

Balance as at Balance as at

1.8.2018 Bought Sold 31.7.2019

Shares in the Company

Direct interests:

Dato’ Ng Chai Eng* 1 142,395,345 (109,157,500) 33,237,846

Lau Chee Kheong* 1 142,395,345 (109,157,500) 33,237,846

Dato’ Wan Hashim Bin Wan Jusoh 0 300,000 0 300,000

F’ng Meow Cheng 0 300,000 0 300,000

Lio Chee Yeong 0 300,000 0 300,000

Ng Chin Liang (Alternate Director to Dato’ Ng Chai Eng) 0 110,000 0 110,000

Indirect interests:

Dato’ Ng Chai Eng* 0 192,899,000 0 192,899,000

Lau Chee Kheong # 0 192,789,000 0 192,789,000

* Deemed interest through shares held in UWC Capital Sdn. Bhd. by virtue of Section 8 of the Companies Act 2016 and the shares held by his son, Ng Chin Liang pursuant to Section 8 of the Companies Act 2016.

# Deemed interest through shares held in UWC Capital Sdn. Bhd. by virtue of Section 8 of the Companies Act 2016.

By virtue of Dato’ Ng Chai Eng’s and Lau Chee Kheong’s substantial interest in the shares of the Company, they are deemed to have interest in the shares of all the subsidiaries to the extent that the Company has an interest.

None of the other Directors holding office at the end of the financial year held any interest in the ordinary shares and options over ordinary shares of the Company and of its related corporations during the financial year.


Annual Report 2019

53UWC BERHAD (201801012223) (1274239-A)

DIRECTORS’ BENEFITS

Since the end of the previous financial period, none of the Directors have received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration 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 the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than the following:

(i) certain Directors who may be deemed to derive benefits by virtue of trade transactions entered into with companies in which certain Directors have substantial financial interests; and

(ii) certain Directors who received remuneration from the subsidiaries as Directors of the subsidiaries.

The details of the above transactions are disclosed in Note 28 to the financial statements.

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

DIRECTORS’ REMUNERATION

The details of Directors' remuneration are disclosed in Note 23 to the financial statements.

INDEMNITY AND INSURANCE FOR OFFICERS AND AUDITORS

There were no indemnity given to or insurance effected for the officers and auditors of the Group and of the Company during the financial year.

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY

(I) AS AT END OF THE FINANCIAL YEAR

(a) Before the financial statements of the Group and of the Company were prepared, 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 had satisfied themselves that there are no known bad debts to be written off and that adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

(b) In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than gain on disposal of asset classified as held for sale.

(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT

(c) The Directors are not aware of any circumstances:

(i) which would necessitate the writing off of bad debts or render the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any material extent;

(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; and

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



54 UWC BERHAD (201801012223) (1274239-A)

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (cont'd)

(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (cont'd)

(d) In the opinion of the Directors:

(i) there has not arisen any item, transaction or event of a material and unusual nature which is likely to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made; and

(ii) no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve (12) months after the end of the financial year which would or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

(III) AS AT THE DATE OF THIS REPORT

(e) There are no charges on the assets of the Group and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person.

(f) There are no contingent liabilities of the Group and of the Company which have arisen since the end of the financial year.

(g) The Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.

ULTIMATE HOLDING COMPANY

On 5 October 2018, the shareholders, namely Dato’ Ng Chai Eng, Lau Chee Kheong, Tan Kean Hean and Ng Sze Yen, completed an internal restructuring by transferring their shares comprising 192,789,000 ordinary shares to UWC Capital Sdn. Bhd. for a total consideration of RM37,200. Following this, the Company now regards UWC Capital Sdn. Bhd. as its holding and ultimate holding company.

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 33 to the financial statements.

AUDITORS

The auditors, BDO PLT (LLP0018825-LCA & AF 0206), have expressed their willingness to continue in office.

Auditors’ remuneration of the Company and its subsidiaries for the financial year ended 31 July 2019 amounted to RM20,000 and RM52,000 respectively.

BDO PLT (LLP0018825-LCA & AF 0206) was registered on 2 January 2019 and with effect from that date, BDO (AF 0206), a conventional partnership was converted to a limited liability partnership.

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

Dato’ Ng Chai Eng Lau Chee KheongDirector Director

Penang15 November 2019



Annual Report 2019

55UWC BERHAD (201801012223) (1274239-A)

In the opinion of the Directors, the financial statements set out on pages 59 to 110 have been drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 July 2019 and of the financial performance and cash flows of the Group and of the Company for the financial year then ended.

On behalf of the Board,

Dato’ Ng Chai Eng Lau Chee KheongDirector Director


I, Dato’ Ng Chai Eng, being the Director primarily responsible for the financial management of UWC Berhad, do solemnly and sincerely declare that the financial statements set out on pages 59 to 110 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 theabovenamed at Georgetown in the State ofPenang this 15 November 2019 Dato’ Ng Chai Eng

Before me,

Commissioner for Oaths

STATEMENT BY DIRECTORS

STATUTORY DECLARATION

56 UWC BERHAD (201801012223) (1274239-A)

INDEPENDENT AUDITORS' REPORT

TO THE MEMBERS OF UWC BERHAD

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of UWC Berhad, which comprise the statements of financial position as at 31 July 2019 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 59 to 110.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 July 2019, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards (‘MFRSs’), International Financial Reporting Standards (‘IFRSs’) and the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing (‘ISAs’). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (‘By-Laws’) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Impairment of trade receivables

As at 31 July 2019, the carrying amount of trade receivables of the Group amounted to RM40,777,742, which was net of impairment losses of RM123,137. The details of trade receivables have been disclosed in Note 9 to the financial statements.

We determined this to be key audit matter because it requires management to exercise significant judgement in determining the probability of default by trade receivables and appropriate forward looking information.

Audit response

Our audit procedures included the following:

(i) Recomputed the probability of default using historical data and forward looking information adjustment applied by the Group;

(ii) Recomputed the correlation coefficient between the macroeconomic indicators and historical losses to determine the appropriateness of the forward looking information used by the Group; and

(iii) Inquiries of management to assess the rationale underlying the relationship between the forward looking information and expected credit losses.

We have determined that there are no key audit matters to communicate in our report in respect of the audit of the financial statements of the Company.

Annual Report 2019

57UWC BERHAD (201801012223) (1274239-A)

Information Other than the Financial Statements and Auditors’ Report Thereon

The Directors of the Company are responsible for the other information. The other information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with MFRSs, IFRSs and the requirements of Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Group and of the Company.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

INDEPENDENT AUDITORS' REPORT (cont'd)


58 UWC BERHAD (201801012223) (1274239-A)

INDEPENDENT AUDITORS' REPORT (cont'd)


Auditors’ Responsibilities for the Audit of the Financial Statements (cont'd)

As part of an audit in accordance with approved standards on auditing in Malaysia and ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also (cont'd):

(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group and of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

BDO PLT Koay Theam HockLLP0018825-LCA & AF 0206 02141/04/2021 JChartered Accountants Chartered Accountant


Annual Report 2019

59UWC BERHAD (201801012223) (1274239-A)

STATEMENTS OF FINANCIAL POSITION

AS AT 31 JULY 2019

Group Company

2019 2018 2019 2018

Note RM RM RM RM

ASSETS

Non-current assetsProperty, plant and equipment 6 95,784,547 92,480,567 0 0

Investments in subsidiaries 7 0 0 59,360,000 59,360,000

95,784,547 92,480,567 59,360,000 59,360,000

Current assetsInventories 8 37,079,858 30,830,695 0 0

Trade and other receivables 9 43,666,842 37,819,884 18,000,000 0

Contract assets 10 880,193 1,030,790 0 0

Current tax assets 0 1,179,321 0 0

Cash and bank balances 11 54,418,741 13,106,554 37,536,947 10,761

136,045,634 83,967,244 55,536,947 10,761

Asset classified as held for sale 12 0 3,734,647 0 0

TOTAL ASSETS 231,830,181 180,182,458 114,896,947 59,370,761

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital 13 115,467,268 59,360,002 115,467,268 59,360,002

Reserves 14 61,049,318 24,812,903 (3,561,888) (4,133)

TOTAL EQUITY 176,516,586 84,172,905 111,905,380 59,355,869

LIABILITIES

Non-current liabilitiesDeferred tax liabilities 15 4,066,700 4,062,800 0 0

Borrowings 16 11,946,995 34,949,870 0 0

Government grants 19 4,740,511 5,918,681 0 0

20,754,206 44,931,351 0 0

Current liabilitiesTrade and other payables 20 17,694,242 32,191,211 2,973,205 14,892

Borrowings 16 12,818,284 16,388,617 0 0

Government grants 19 1,178,170 1,179,003 0 0

Current tax liabilities 2,868,693 1,319,371 18,362 0

34,559,389 51,078,202 2,991,567 14,892

TOTAL LIABILITIES 55,313,595 96,009,553 2,991,567 14,892

TOTAL EQUITY AND LIABILITIES 231,830,181 180,182,458 114,896,947 59,370,761

The accompanying notes form an integral part of the financial statements.

60 UWC BERHAD (201801012223) (1274239-A)

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

Note RM RM RM RM

Revenue 22 144,354,278 136,494,647 0 0

Cost of sales (93,567,642) (93,615,279) 0 0

Gross profit 50,786,636 42,879,368 0 0

Other operating income 11,739,687 7,861,259 76,507 0

Dividend income 0 150,000 0 0

General and administrative expenses (13,999,355) (11,802,571) (3,615,900) (4,133)

Profit/(Loss) from operations 48,526,968 39,088,056 (3,539,393) (4,133)

Finance costs 24 (2,335,704) (1,761,241) 0 0

Profit/(Loss) before tax 46,191,264 37,326,815 (3,539,393) (4,133)

Tax expense 25 (9,954,849) (6,103,157) (18,362) 0

Profit/(Loss) for the financial year/period, attributable to owners of the parent 36,236,415 31,223,658 (3,557,755) (4,133)

Other comprehensive income, net of tax 0 0 0 0

Total comprehensive income/(loss),attributable to owners of the parent 36,236,415 31,223,658 (3,557,755) (4,133)

Earnings per share attributable toowners of the parent:

Basic and diluted (sen) 27 11.43 67.37


Annual Report 2019

61UWC BERHAD (201801012223) (1274239-A)

Non-distributable Distributable

Sharecapital

Reorganisationdebit

reserveRetainedearnings

Totalequity

Note RM RM RM RM

Group

Balance as at 1 August 2017 3,134,400 0 71,296,566 74,430,966

Adjustments on initial application of:

- MFRS 9 0 0 (96,554) (96,554)

- MFRS 15 0 0 114,833 114,833

0 0 18,279 18,279

Profit for the financial year 0 0 31,223,658 31,223,658


Total comprehensive income 0 0 31,223,658 31,223,658

Transactions with owners:

Issuance of ordinary shares 13 2 0 0 2

Acquisition of subsidiaries in businesscombinations under common control 13 56,225,600 (56,225,600) 0 0

Dividends paid 26 0 0 (21,500,000) (21,500,000)

Total transactions with owners 56,225,602 (56,225,600) (21,500,000) (21,499,998)

Balance as at 31 July 2018 59,360,002 (56,225,600) 81,038,503 84,172,905

Balance as at 1 August 2018 59,360,002 (56,225,600) 81,038,503 84,172,905

Profit for the financial year 0 0 36,236,415 36,236,415


Total comprehensive income 0 0 36,236,415 36,236,415


Issuance of ordinary shares 13 57,400,000 0 0 57,400,000

Share issue expenses 13 (1,292,734) 0 0 (1,292,734)

Total transactions with owners 56,107,266 0 0 56,107,266

Balance as at 31 July 2019 115,467,268 (56,225,600) 117,274,918 176,516,586

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



62 UWC BERHAD (201801012223) (1274239-A)

STATEMENT OF CHANGES IN EQUITY


Non-distributable

Sharecapital

Accumulatedlosses

Totalequity

Note RM RM RM

Company

Balance as at 29 March 2018

(Date of incorporation) 2 0 2

Loss for the financial period 0 (4,133) (4,133)

Other comprehensive income, net of tax 0 0 0

Total comprehensive loss 0 (4,133) (4,133)

Transaction with owners:

Ordinary shares issued pursuant to acquisition of subsidiaries 13 59,360,000 0 59,360,000

Total transaction with owners 59,360,000 0 59,360,000

Balance as at 31 July 2018 59,360,002 (4,133) 59,355,869

Balance as at 1 August 2018 59,360,002 (4,133) 59,355,869

Loss for the financial year 0 (3,557,755) (3,557,755)

Other comprehensive income, net of tax 0 0 0

Total comprehensive loss 0 (3,557,755) (3,557,755)


Issuance of ordinary shares 13 57,400,000 0 57,400,000

Share issue expenses 13 (1,292,734) 0 (1,292,734)

Total transactions with owners 56,107,266 0 56,107,266

Balance as at 31 July 2019 115,467,268 (3,561,888) 111,905,380


Annual Report 2019

63UWC BERHAD (201801012223) (1274239-A)

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

Note RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES


Adjustments for:

Amortisation of government grants 19 (1,179,003) (1,187,337) 0 0

Allowance for impairment losses during the year

- trade receivables 9(g) 63,656 61,355 0 0

Reversal of allowance for impairment losses

- trade receivables 9(g) (71,974) (18,992) 0 0

- other receivables 9(h) (536) (6,701) 0 0

Depreciation of property, plant and equipment 6 9,027,086 7,742,646 0 0

Dividend income 0 (150,000) 0 0

Gain on disposal of other investment 0 (6,000,000) 0 0

Finance costs 24 2,335,704 1,761,241 0 0

Interest income (424,975) (253,391) (76,507) 0

Property, plant and equipment written off 205,186 0 0 0

(Gain)/Loss on disposal of property,plant and equipment (180,854) 42,402 0 0

Gain on disposal of asset classified as held for sale 12(b) (8,611,942) 0 0 0

Operating profit/(loss) before changes in working capital 47,353,612 39,318,038 (3,615,900) (4,133)

Increase in inventories (6,249,163) (10,952,029) 0 0

Increase in trade and other receivables (5,838,104) (10,051,616) (18,000,000) 0

Decrease/(Increase) in contract assets 150,597 (1,030,790) 0 0

(Decrease)/Increase in trade and other payables (14,496,969) 7,151,888 2,958,313 14,892

Cash generated from/(used in) operations 20,919,973 24,435,491 (18,657,587) 10,759

Interest paid 24 (2,335,704) (1,761,241) 0 0

Tax refunded 1,564,423 194,568 0 0

Tax paid (8,786,729) (5,505,364) 0 0

Net cash from/(used in) operating activities 11,361,963 17,363,454 (18,657,587) 10,759

STATEMENTS OF CASH FLOWS


64 UWC BERHAD (201801012223) (1274239-A)

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

Note RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES

Additional in paid up capital 0 56,225,602 0 0

Changes in combining entities 0 (56,225,600) 0 0

Dividend received 0 150,000 0 0

Interest received 424,975 253,391 76,507 0

Proceeds from disposal of property,plant and equipment 664,264 8,000 0 0

Proceeds from disposal of asset classified as held for sale 12,346,589 0 0 0

Proceeds from disposal of short term funds 0 1,404,583 0 0

Purchase of property, plant and equipment 6(c) (13,019,662) (16,355,328) 0 0

Net cash from/(used in) investing activities 416,166 (14,539,352) 76,507 0

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid 0 (15,000,000) 0 0

Proceeds from issuance of ordinary shares 13 56,107,266 0 56,107,266 0

Proceeds from bankers’ acceptances 31,200,000 28,400,000 0 0

Repayment of bankers’ acceptances (34,800,000) (21,400,000) 0 0

Repayment of hire purchase payables (4,126,434) (3,646,437) 0 0

Proceeds from term loans 810,000 15,048,298 0 0

Repayment of term loans (19,656,774) (775,386) 0 0

Net cash generated from financing activities 29,534,058 2,626,475 56,107,266 0

Net increase in cash and cash equivalents 41,312,187 5,450,577 37,526,186 10,759

Cash and cash equivalents at beginning of financial period/date of incorporation 13,106,554 7,655,977 10,761 2

Cash and cash equivalents at end of financial year/period 11 54,418,741 13,106,554 37,536,947 10,761

STATEMENTS OF CASH FLOWS (cont'd)


Annual Report 2019

65UWC BERHAD (201801012223) (1274239-A)

Reconciliation of liabilities arising from financing activities

Bankers’acceptances

(Note 16)

Hirepurchasecreditors(Note 17)

Termloans

(Note 18) Total

Note RM RM RM RM

Group

At 1 August 2017 3,600,000 6,727,536 11,481,444 21,808,980

Cash flows 7,000,000 (3,646,437) 14,272,912 17,626,475

Non-cash flows:

- Acquisition of property, plantand equipment 6(c) 0 11,903,032 0 11,903,032

At 31 July 2018 10,600,000 14,984,131 25,754,356 51,338,487

At 1 August 2018 10,600,000 14,984,131 25,754,356 51,338,487

Cash flows (3,600,000) (4,126,434) (18,846,774) (26,573,208)

At 31 July 2019 7,000,000 10,857,697 6,907,582 24,765,279

STATEMENTS OF CASH FLOWS (cont'd)



66 UWC BERHAD (201801012223) (1274239-A)

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

Bursa Malaysia Securities Berhad has, vide its letter dated 8 May 2019, approved the admission of the Company to the Official List, and the listing of and quotation for its entire enlarged issued share capital of the Company on the Main Market of Bursa Malaysia Securities Berhad. The ordinary shares of the Company were listed on the Main Market of Bursa Malaysia Securities Berhad on 10 July 2019.

The registered office of the Company is located at 39, Salween Road, 10050 Georgetown Penang.

The principal place of business of the Company is located at PMT 744-745, Jalan Cassia Selatan 5/1, Taman Perindustrian Batu Kawan, 14110 Bandar Cassia, Penang.

The Directors regard UWC Capital Sdn. Bhd., a company incorporated in Malaysia as the holding and ultimate holding company.

The consolidated financial statements for the financial year ended 31 July 2019 comprise the financial statements of the Company and its subsidiaries. These financial statements are presented in Ringgit Malaysia (‘RM’), which is also the functional currency of the Company.

The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 15 November 2019.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding. The principal activities of subsidiaries are set out in Note 7 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3. BASIS OF PREPARATION

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (‘MFRSs’), International Financial Reporting Standards (‘IFRSs’) and the provisions of the Companies Act 2016 in Malaysia.

The accounting policies adopted are consistent with those of the previous financial year except for the effects of adoption of new MFRSs during the financial year. The new MFRSs and Amendments to MFRSs adopted during the financial year are disclosed in Note 34(a) to the financial statements.

The financial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in financial statements.

In the previous financial year, the Group applied merger method of accounting on a retrospective basis arising from the acquisition of the entire equity interest of UWC Industrial Sdn. Bhd., UWC Holdings Sdn. Bhd. and its subsidiary, UWC Automation Sdn. Bhd. by the Company in business combinations under common control. Consequently, the Group presented comparative information as if the business combinations had taken place before the start of the earliest period presented in the financial statements.

Consequently, the following accounting treatment has been applied in the consolidated financial statements arising from the business combinations under common control:

(a) Assets and liabilities of UWC Industrial Sdn. Bhd., UWC Holdings Sdn. Bhd. and its subsidiary, UWC Automation Sdn. Bhd. are recognised and measured at their pre-business combination carrying amount without restatement to fair value;

(b) Retained earnings and other equity reserves of the Group as at 1 August 2016 are those of UWC Industrial Sdn. Bhd., UWC Holdings Sdn. Bhd. and its subsidiary, UWC Automation Sdn. Bhd.;

NOTES TO THE FINANCIAL STATEMENTS

31 JULY 2019

NOTES TO THE FINANCIAL STATEMENTS (cont'd)

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3. BASIS OF PREPARATION (cont'd)

Consequently, the following accounting treatment has been applied in the consolidated financial statements arising from the business combinations under common control (cont'd):

(c) Share capital as at 1 August 2016 reflects the share capital of UWC Industrial Sdn. Bhd., UWC Holdings Sdn. Bhd. and its subsidiary, UWC Automation Sdn. Bhd. prior to the incorporation of the Company;

(d) Comparative financial information are those of UWC Industrial Sdn. Bhd., UWC Holdings Sdn. Bhd. and its subsidiary, UWC Automation Sdn. Bhd.; and

(e) The statements of financial position as at 31 July 2018 represents the financial position of the Group after reflecting the effect of the acquisitions in previous financial year.

The preparation of financial statements in conformity with MFRSs and IFRSs requires the Directors to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and contingent liabilities. In addition, the Directors are also required to exercise their judgement in the process of applying the accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 5 to the financial statements. Although these estimates and assumptions are based on the Directors’ best knowledge of events and actions, actual results could differ from those estimates.

4. SIGNIFICANT ACCOUNTING POLICIES

4.1 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

(a) Power over the investee;(b) Exposure, or rights, to variable returns from its involvement with the investee; and(c) The ability to use its power over the investee to affect its returns.

If the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) The contractual arrangement with the other vote holders of the investee;(b) Rights arising from other contractual agreements; and(c) The voting rights of the Group and potential voting rights.

Intragroup balances, transactions, income and expenses are eliminated on consolidation. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the interest of the Group in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no impairment.

The financial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by the Group.

Non-controlling interests represent equity in subsidiaries that are not attributable, directly or indirectly, to owners of the parent, and is presented separately in the consolidated statement of profit or loss and other comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the parent. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.


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4. SIGNIFICANT ACCOUNTING POLICIES (cont'd)

4.1 Basis of consolidation (cont'd)

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the financial year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity and attributed to owners of the parent.

If the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between:

(i) The aggregate of the fair value of the consideration received and the fair value of any retained interest; and

(ii) The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.

Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 9 Financial Instrument or, where applicable, the cost on initial recognition of an investment in associate or joint venture.

4.2 Business combinations under common control

Business combinations under common control in the form of equity instrument exchanges are accounted for by applying the merger method of accounting. Assets, liabilities, income and expenses of the merger entities are reflected at their carrying amounts reported in the individual financial statements for the full financial year, irrespective of the date of the merger. Any difference between the consideration paid and the share capital of the merger entity are reflected within equity as reorganisation debit reserve.

4.3 Business combinations not under common control

Business combinations not under common control are accounted for by applying the acquisition method of accounting.

Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the acquisition date, except that:

(a) Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee Benefits respectively;

(b) Liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement by the Group of an acquiree’s share-based payment transactions are measured in accordance with MFRS 2 Share-based Payment at the acquisition date; and

(c) Assets (or disposal groups) that are classified as held for sale in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.


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4.3 Business combinations not under common control (cont'd)

Any contingent consideration payable is recognised at fair value at the acquisition date. Measurement period adjustments to contingent consideration are dealt with as follows:

(a) If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity; and

(b) Subsequent changes to contingent consideration classified as an asset or liability that is a financial instrument within the scope of MFRS 9 are recognised either in profit or loss or in other comprehensive income in accordance with MFRS 9. All other subsequent changes are recognised in profit or loss.

In a business combination achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are initially measured at the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a combination-by-combination basis. Subsequent to initial recognition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the previously held equity interest of the Group in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill in the statement of financial position. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.

4.4 Property, plant and equipment and depreciation

All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the subsequent costs would flow to the Group and the cost of the asset could be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has different useful life, is depreciated separately.

After initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated to write off the cost of the assets to their residual values on a straight line basis over their estimated useful lives. The principal annual depreciation rates are as follows:

Leasehold buildings 2%

Plant, machinery and equipment 10%

Production equipment 10%

Furniture, fittings, office equipment and computer system 10% to 20%

Motor vehicles 20%

Fire and electrical installation 10%

Air conditioning 10%

Security control systems 10%

Renovation 10% to 20%


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4.4 Property, plant and equipment and depreciation (cont'd)

Leasehold land are amortised equally over the lease periods of sixty (60) years. Capital work-in progress represents machinery under installation and factory building under construction. Capital work-in-progress is not depreciated until such time when the asset is available for use.

At the end of each reporting period, the carrying amount of an item of property, plant and equipment is assessed for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount (see Note 4.7 to the financial statements on impairment of non-financial assets).

The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.

The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is included in profit or loss.

4.5 Leases and hire purchase

(a) Finance leases and hire purchase

Assets acquired under finance leases which transfer substantially all the risks and rewards of ownership to the Group are recognised initially at amounts equal to the fair value of the leased assets or, if lower, the present value of minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the incremental borrowing rate of the Group is used. Any initial direct costs incurred by the Group are added to the amount recognised as an asset. The assets are capitalised as property, plant and equipment and the corresponding obligations are treated as liabilities. The property, plant and equipment capitalised are depreciated on the same basis as owned assets.

The minimum lease payments are apportioned between finance charges and the reduction of the outstanding liability. The finance charges are recognised in profit or loss over the period of the lease term so as to produce a constant periodic rate of interest on the remaining lease and hire purchase liabilities.

(b) Operating leases

A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

4.6 Investments in subsidiaries

A subsidiary is an entity in which the Group and the Company are exposed, or have rights, to variable returns from its involvement with the subsidiary and have the ability to affect those returns through its power over the subsidiary.

An investment in subsidiary, which is eliminated on consolidation, is stated in the separate financial statements of the Company at cost less impairment loss, if any. Put options written over non-controlling interests on the acquisition of subsidiary shall be included as part of the cost of investment in the separate financial statements of the Company. Subsequent changes in the fair value of the written put options over non-controlling interests shall be recognised in profit or loss. Investments accounted for at cost shall be accounted for in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations when they are classified as held for sale (or included in a disposal group that is classified as held for sale).


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4.6 Investments in subsidiaries (cont'd)

When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the Group would derecognise all assets, liabilities and non-controlling interests at their carrying amount and to recognise the fair value of the consideration received. Any retained interest in the former subsidiary is recognised at its fair value at the date control is lost. The resulting difference is recognised as a gain or loss in profit or loss.

4.7 Impairment of non-financial assets

The carrying amount of assets, except for financial assets (excluding investments in subsidiaries), inventories and deferred tax assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

The recoverable amount of an asset is estimated for an individual asset. Where it is not possible to estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit (‘CGU’) to which the asset belongs.

The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use.

In estimating the value in use, the estimated future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. An impairment loss is recognised in profit or loss when the carrying amount of the asset or the CGU, exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated to the assets of the CGU on a pro-rata basis of the carrying amount of each asset in the CGU.

The impairment loss is recognised in profit or loss immediately.

An impairment loss for assets is reversed if, and only if, there has been a change in the estimates used to determine the assets’ recoverable amount since the last impairment loss was recognised.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Such reversals are recognised as income immediately in profit or loss.

4.8 Inventories

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

Cost is determined using the first-in, first-out formula. The cost comprises all costs of purchase, cost of conversion plus other costs incurred in bringing the inventories to their present location and condition. The cost of work-in-progress and finished goods includes the cost of raw materials, direct labour, other direct cost and a proportion of production overheads based on normal operating capacity of the production facilities.

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

4.9 Financial instruments

Regular way purchases and sales of financial assets are recognised on trade date, the date on which the Group and the Company commit to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company have transferred substantially all the risks and rewards of ownership.


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4.9 Financial instruments (cont'd)

(a) Financial assets

At initial recognition, the Group and the Company measure a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely for payment of principal and interest (“SPPI”).

Subsequent measurement of debt instruments depends on the Group’s and the Company’s business model for managing the asset and the cash flow characteristics of the asset. The Group and the Company classify its debt instruments under amortised cost category.

(i) Financial assets at amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent SPPI are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of comprehensive income.

(ii) Financial assets at fair value through profit and loss (“FVTPL”)

Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income (“FVOCI”) are measured at FVTPL. The Group and the Company may also irrevocably designate financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different bases. Fair value changes is recognised in profit or loss in the period which it arises.

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity, is recognised in profit or loss.

(b) Financial liabilities

A financial liability is any liability with contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. The Group’s and the Company’s significant financial liabilities include trade and other payables, terms loans, long-term and deferred payables, short-term borrowings and bank overdrafts which are initially measured at fair value and subsequently measured at amortised cost.

(i) Financial liabilities at fair value through profit or loss

Financial liabilities are classified as at FVTPL when financial liabilities are either held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss.


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4.9 Financial instruments (cont'd)

(b) Financial liabilities (cont'd)

(ii) Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

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

(c) Equity investments

The Group and the Company subsequently measure all equity investments at fair value. Where the Group’s and the Company’s management have elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.

Equity investments which are not held for trading for which the Group has irrevocably elected at initial recognition to recognise at fair value through other comprehensive income. These are strategic investments for which the Group considers this classification to be appropriate and relevant.

Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s and the Company’s right to receive payments is established.

Changes in the fair value of financial assets at FVOCI are recognised in the statement of comprehensive income as applicable.

4.10 Impairment of financial assets

The Group and the Company apply the simplified approach to measure expected credit losses (“ECL”). This entails recognising a lifetime expected loss allowance for all trade receivables. Loss rates are determined based on grouping of receivables sharing the same credit risk characteristics and past due days.

The management assesses the ECL for portfolios of trade receivables based on customer segments, historical information on payment patterns, terms of payment and information about the general economic situation in the countries.

The Group and the Company consider the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group and the Company compare the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportable forward looking information.

For other receivables and intercompany balances, the Group and the Company apply 3-stage approach to measure expected credit losses which reflect their credit risk and how the loss allowance is determined.


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4.11 Borrowing costs

Borrowing costs that are directly attributable to the acquisition or production of a qualifying asset is capitalised as part of the cost of the asset until when substantially all the activities necessary to prepare the asset for its intended use or sale are complete, after which such expense is charged to profit or loss. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing cost is suspended during extended periods in which active development is interrupted.

The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the borrowing during the period less any investment income on the temporary investment of the borrowing.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

4.12 Income taxes

Income taxes include all taxes on taxable profit. Income taxes also include other taxes, such as real property gains taxes payable on the disposal of properties, if any.

Taxes in the statement of profit or loss and other comprehensive income comprise current tax and deferred tax.

(a) Current tax

Current tax expenses are determined according to the tax laws of the jurisdiction in which the Group operates and include all taxes based upon the taxable profits and real property gains taxes payable on disposal of properties, if any.

(b) Deferred tax

Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the statement of financial position and its tax base.

Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profits.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits would be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amount of a deferred tax asset is reviewed at the end of each reporting period. If it is no longer probable that sufficient taxable profits would be available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset would be reduced accordingly. When it becomes probable that sufficient taxable profits would be available, such reductions would be reversed to the extent of the taxable profits.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority on either:

(i) The same taxable entity; or

(ii) Different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax would be recognised as income or expense and included in the profit or loss for the period unless the tax relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax would be charged or credited directly to equity.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates and tax laws by the Government in the annual budgets which have the substantive effect of actual enactment by the end of each reporting period.


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UWC BERHAD (201801012223) (1274239-A)


4.13 Provisions

Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, and when it is probable that an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, the amount of a provision would be discounted to its present value at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits would be required to settle the obligation, the provision would be reversed.

Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

4.14 Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources would be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Group does not recognise a contingent liability but discloses its existence in the financial statements.

A contingent asset is a possible asset that arises from past events whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise a contingent asset but discloses its existence where the inflows of economic benefits are probable, but not virtually certain.

In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair value at the acquisition date.

4.15 Employee benefits

(a) Short term employee benefits

Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and non-monetary benefits are measured on an undiscounted basis and are expensed when employees rendered their services to the Group.

Short term accumulating compensated absences such as paid annual leave are recognised as an expense when employees render services that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur and they lapse if the current period’s entitlement is not used in full and do not entitle employees to a cash payment for unused entitlement on leaving the Group.

Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation.

(b) Defined contribution plans

The Company and its subsidiaries incorporated in Malaysia make contributions to a statutory provident fund. The contributions are recognised as a liability after deducting any contribution already paid and as an expense in the period in which the employees render their services.


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4.16 Foreign currencies

(a) Functional and presentation currency

Items included in the financial statements of each of the entities of the Group are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Ringgit Malaysia, which is the functional and presentation currency of the Company.

(b) Foreign currency translations and balances

Transactions in foreign currencies are converted into Ringgit Malaysia at rates of exchange ruling at the transaction dates. Monetary assets and liabilities in foreign currencies at the end of the reporting period are translated into Ringgit Malaysia at rates of exchange ruling at that date. All exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in profit or loss in the period in which they arise. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost, are translated using the historical rate as of the date of acquisition, and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined for presentation currency purposes.

4.17 Revenue recognition

The Group and the Company recognise revenue from contracts with customers for the provision of services and sale of goods based on the five-step model as set out below:

(a) Identify contract(s) with a customer. A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria that must be met.

(b) Identify performance obligations in the contract. A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.

(c) Determine the transaction price. The transaction price is the amount of consideration to which the Group and the Company expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

(d) Allocate the transaction price to the performance obligations in the contract. For a contract that has more than one performance obligation, the Group and the Company allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group and the Company expect to be entitled in exchange for satisfying each performance obligation.

(e) Recognise revenue when (or as) the Company satisfy a performance obligation.

Revenue with contract customers

When the Group and the Company satisfy a performance obligation by delivering the promised goods or services, it creates a contract based asset on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognised, this gives rise to a contract liability.

Revenue is measured at the fair value of consideration received or receivable. The following describes the performance obligations in contracts with customers:

(a) Contract revenue

The contract revenue is recognised over time when the Group satisfies a performance obligation by transferring a promised good to a customer. An asset is transferred as and when the customer obtains control of that asset, which coincides with the delivery of goods and services and acceptance by customers.


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UWC BERHAD (201801012223) (1274239-A)


4.17 Revenue recognition (cont'd)

Revenue with contract customers (cont'd)

(b) Sale of goods

Revenue from sale of goods is recognised at a point in time when the Group satisfies a performance obligation by transferring a promised good to a customer. An asset is transferred as and when the customer obtains control of that asset, which coincides with the delivery of goods and services and acceptance by customers.

Other revenue

(a) Dividend income

Dividend income is recognised when the right to receive payment is established.

(b) Rental income

Rental income is accounted for on a straight line basis over the lease term of an ongoing lease. The aggregate cost of incentives provided to the lessee is recognised as reduction of rental income over the lease term on a straight line basis.

(c) Interest income

Interest income is recognised as it accrues, using the effective interest method.

4.18 Fair value measurements

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

The Group measures the fair value of an asset or a liability by taking into account the characteristics of the asset or liability if market participants would take these characteristics into account when pricing the asset or liability. The Group has considered the following characteristics when determining fair value:

(a) The condition and location of the asset; and

(b) Restrictions, if any, on the sale or use of the asset.

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

The fair value of a financial or non-financial liability or an entity’s own equity instrument assumes that:

(a) A liability would remain outstanding and the market participant transferee would be required to fulfil the obligation. The liability would not be settled with the counterparty or otherwise extinguished on the measurement date; and

(b) An entity’s own equity instrument would remain outstanding and the market participant transferee would take on the rights and responsibilities associated with the instrument. The instrument would not be cancelled or otherwise extinguished on the measurement date.


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UWC BERHAD (201801012223) (1274239-A)


4.19 Government grants

Government grants are recognised in the financial statements as deferred income when there is reasonable assurance that:

(a) The Group would comply with the conditions attached to the grant; and

(b) The grants would be received.

Government grants related to costs are recognised as income in profit or loss in the period in which the grants had been received to match them with the costs which they are intended to compensate.

Where the grants related to an asset, they are recognised as income and transferred to profit or loss on a systematic basis over the useful lives of the related asset.

4.20 Non-current assets (or disposal group) held for sale

Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts would be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the assets (or disposal groups) shall be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. The probability of shareholders’ approval (if required in the jurisdiction) is considered as part of the assessment of whether the sale is highly probable.

The sale is expected to qualify for recognition as a completed sale within one (1) year from the date of classification. However, an extension of the period required to complete the sale does not preclude the assets (or disposal groups) from being classified as held for sale if the delay is caused by events or circumstances beyond the control of the Group and there is sufficient evidence that the Group remains committed to its plan to sell the assets (or disposal groups).

Immediately before the initial classification as held for sale, the carrying amounts of the assets (or all the assets and liabilities in a disposal group) are measured in accordance with applicable MFRSs. On initial classification as held for sale, non-current assets or disposal groups (other than investment properties, deferred tax assets, employee benefits assets, and financial assets carried at fair value) are measured at the lower of its carrying amount before the initial classification as held for sale and fair value less costs to sell. The differences, if any, are recognised in profit or loss as impairment loss.

The Group measures a non-current asset (or disposal group) classified as held for distribution to owners at the lower of its carrying amount and fair value less costs to distribute.

Non-current assets (or disposal groups) held for sale are classified as current assets (and current liabilities, in the case of non-current liabilities included within disposal groups) in the statement of financial position and are stated at the lower of carrying amount immediately before initial classification and fair value less costs to sell and are not depreciated. Any cumulative income or expense recognised directly in equity relating to the non-current asset (or disposal group) classified as held for sale is presented separately.

If the Group has classified an asset (or disposal group) as held for sale but subsequently, the criteria for classification is no longer met, the Group ceases to classify the asset (or disposal group) as held for sale. The Group measures a non-current asset that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) at the lower of:

(a) Its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale; and

(b) Its recoverable amount at the date of the subsequent decision not to sell.


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UWC BERHAD (201801012223) (1274239-A)


4.21 Operating segments

Operating segments are defined as components of the Group that:

(a) Engages in business activities from which it could earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group);

(b) Whose operating results are regularly reviewed by the chief operating decision maker of the Group in making decisions about resources to be allocated to the segment and assessing its performance; and

(c) For which discrete financial information is available.

An operating segment may engage in business activities for which it has yet to earn revenues.

The Group reports separately information about each operating segment that meets any of the following quantitative thresholds:

(a) Its reported revenue, including both sales to external customers and intersegment sales or transfers, is ten percent (10%) or more of the combined revenue, internal and external, of all operating segments.

(b) The absolute amount of its reported profit or loss is ten percent (10%) or more of the greater, in absolute amount of:

(i) The combined reported profit of all operating segments that did not report a loss; and

(ii) The combined reported loss of all operating segments that reported a loss.

(c) Its assets are ten percent (10%) or more of the combined assets of all operating segments.

Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if the management believes that information about the segment would be useful to users of the financial statements.

Total external revenue reported by operating segments shall constitute at least seventy-five percent (75%) of the revenue of the Group. Operating segments identified as reportable segments in the current financial year in accordance with the quantitative thresholds would result in a restatement of prior period segment data for comparative purposes.

4.22 Earnings per share

(a) Basic

Basic earnings per share for the financial year is calculated by dividing the profit for the financial year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year after deducting treasury shares, if any.

(b) Diluted

Diluted earnings per ordinary share for the financial year is calculated by dividing the profit for the financial year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year adjusted for the effects of dilutive potential ordinary shares.


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UWC BERHAD (201801012223) (1274239-A)


4.23 Contract assets

A contract asset is recognised when the right to consideration of the Group and the Company is conditional on something other than the passage of time.

Contract assets are transferred to receivables when the rights to economic benefits become unconditional. This usually occurs when the Group issues billing to the customer. Contract liabilities are recognised as revenue when performance obligations are satisfied.

Incremental costs of obtaining a contract with a customer are recognised as assets if the entity expects to recover those costs. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

5. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

5.1 Changes in estimates

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Directors are of the opinion that there are no significant changes in estimates at the end of the reporting period.

5.2 Critical judgements made in applying accounting policies

There are no critical judgements involved that have a significant effect on the amounts recognised in the financial statements.

5.3 Key sources of estimation uncertainty

The management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

Impairment of trade receivables

Management has exercised significant judgement in determining the probability of default by trade receivables and appropriate forward looking information and recognised the expected credit loss accordingly.


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UWC BERHAD (201801012223) (1274239-A)

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82

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

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83

31 JULY 2019

Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

6. PROPERTY, PLANT AND EQUIPMENT (cont'd)

(a) The carrying amount of property, plant and equipment of the Group which have been pledged to licensed banks for banking facilities granted to the Group as referred to in Note 18 to the financial statements are as follows:

Group

2019 2018

RM RM

Leasehold land and buildings 40,076,125 40,738,441

(b) The carrying amount of property, plant and equipment of the Group acquired under hire purchase arrangements are as follows:

Group

2019 2018

RM RM

Plant, machinery and equipment 15,291,627 17,279,050

Motor vehicles 0 531,525

15,291,627 17,810,575

(c) During the financial year, the Group made the following cash payments to purchase property, plant and equipment:

Group

2019 2018

RM RM

Purchase of property, plant and equipment 13,019,662 28,258,360

Financed by hire purchase arrangements 0 (11,903,032)

Cash payments on purchase of property, plant and equipment 13,019,662 16,355,328

7. INVESTMENTS IN SUBSIDIARIES

Company

2019 2018

RM RM

Unquoted shares, at cost 59,360,000 59,360,000


84

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

7. INVESTMENTS IN SUBSIDIARIES (cont'd)

Details of the subsidiaries are as follows:

Effective ownershipinterest

Name of subsidiariesCountry of

incorporation2019

%2018

% Principal activities

UWC Holdings Sdn. Bhd. Malaysia 100 100* Provision of precision sheet metal fabrication and value-added assembly services

UWC Industrial Sdn. Bhd. Malaysia 100 100# Provision of precision sheet metal fabrication and value-added assembly services

Subsidiary of UWC Holdings Sdn. Bhd.

UWC Automation Sdn. Bhd. Malaysia 100 100 Provision of precision machined components

* On 1 June 2018, the Company has entered into a Share Sale Agreement to acquire entire equity interest in UWC Holdings Sdn. Bhd., for a total consideration of RM34,885,000, which was satisfied via the issuance of 174,425,000 new ordinary shares in the capital of the Company at an issue price of RM0.20 per share. Consequently, UWC Holdings Sdn. Bhd. became a wholly owned subsidiary of the Company on 4 June 2018.

# On 1 June 2018, the Company has entered into a Share Sale Agreement to acquire entire equity interest in UWC Industrial Sdn. Bhd., for a total consideration of RM24,475,000, which was satisfied via the issuance of 122,375,000 new ordinary shares in the capital of the Company at an issue price of RM0.20 per share. Consequently, UWC Industrial Sdn. Bhd. became a wholly owned subsidiary of the Company on 4 June 2018.

8. INVENTORIES

Group

2019 2018

RM RM

At cost

Raw materials 18,944,051 10,952,608

Work-in-progress 8,743,075 11,336,419

Finished goods 9,392,732 8,541,668

Total 37,079,858 30,830,695

During the financial year, inventories of the Group recognised as cost of sales amounted to RM50,489,085 (2018: RM50,337,067).


85

31 JULY 2019

Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

9. TRADE AND OTHER RECEIVABLES

Group Company

2019 2018 2019 2018

RM RM RM RM

Trade receivables

Third parties 40,900,879 32,058,938 0 0

Less: Allowance for impairment losses (123,137) (131,455) 0 0

40,777,742 31,927,483 0 0

Other receivables

Third parties 1,874,579 4,784,453 0 0

Amount owing by subsidiaries 0 0 18,000,000 0

Amount owing by related parties 0 491,337 0 0

1,874,579 5,275,790 18,000,000 0

Less: Allowance for impairment losses (225) (761) 0 0

1,874,354 5,275,029 18,000,000 0

Deposits and prepayments

Deposits 88,740 176,158 0 0

Prepayments 926,006 441,214 0 0

1,014,746 617,372 0 0

43,666,842 37,819,884 18,000,000 0

(a) Trade receivables are non-interest bearing and the normal trade credit terms granted by the Group range from 30 to 90 days (2018: 30 to 90 days). They are recognised at their original invoice amounts which represent their fair values on initial recognition.

(b) In previous financial year, the amounts owing by related parties were unsecured, interest-free and repayable within the next twelve (12) months.

(c) The related parties are companies incorporated in Malaysia in which the Directors have significant and controlling financial interest.

(d) The currency exposure profile of trade and other receivables, net of deposits and prepayments are as follows:

Group Company

2019 2018 2019 2018

RM RM RM RM

Ringgit Malaysia (‘RM’) 26,333,270 20,600,427 18,000,000 0

United States Dollar (‘USD’) 15,992,656 16,472,180 0 0

Others 326,170 129,905 0 0

42,652,096 37,202,512 18,000,000 0


86

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

9. TRADE AND OTHER RECEIVABLES (cont'd)

(e) Impairment for trade receivables that do not contain a significant financing component are recognised based on the simplified approach using the lifetime expected credit losses (‘ECL’).

The Group uses an allowance matrix to measure the ECL of trade receivables from monthly aging.

During this process, the probability of non-payment by the trade receivables is adjusted by forward looking information (Consumer Price Index and Employment Rate) and multiplied by the amount of the expected loss arising from default to determine the lifetime ECL for the trade receivables. For trade receivables, which are reported net, such impairments are recorded in a separate impairment account with the loss being recognised within administrative expenses in the statements of profit or loss and other comprehensive income. On confirmation that the trade receivable would not be collectable, the gross carrying value of the asset would be written off against the associated impairment.

It requires management to exercise significant judgement in determining the probability of default by trade receivables and appropriate forward looking information.

Impairment for other receivables and intercompany balances are recognised based on the general approach within MFRS 9 using the forward looking ECL model. The methodology used to determine the amount of the impairment is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. At the end of the reporting period, the Group assess whether there has been a significant increase in credit risk for financial assets by comprising the risk of default occurring over the expected life with the risk of default since initial recognition. For those in which the credit risk has not increased significantly since initial recognition of the financial asset, twelve month ECL along with gross interest income are recognised. For those in which credit risk has increased significantly, lifetime ECL along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime ECL along with interest income on a net basis are recognised.

(f) Lifetime expected loss provision for trade receivables are as follows:

Not Trade receivables-days past due

Group past due 1-30 31-60 61-90 > 90 Total

As at 31 July 2019

ECL rate (%) 0.04 0.50 1.32 3.78 4.93 0.30

Trade receivables, gross (RM) 35,849,501 2,528,965 571,605 628,782 1,322,026 40,900,879

Allowance for impairment losses (RM) (13,978) (12,661) (7,557) (23,738) (65,203) (123,137)

35,835,523 2,516,304 564,048 605,044 1,256,823 40,777,742

As at 31 July 2018

ECL rate (%) 0.08 0.83 1.15 1.15 7.24 0.41

Trade receivables, gross (RM) 28,256,086 1,766,843 552,630 298,446 1,184,933 32,058,938

Allowance for impairment losses (RM) (21,232) (14,604) (6,364) (3,418) (85,837) (131,455)

28,234,854 1,752,239 546,266 295,028 1,099,096 31,927,483


87

31 JULY 2019

Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

9. TRADE AND OTHER RECEIVABLES (cont'd)

(g) The reconciliation of movement in the allowance for impairment losses of trade receivables are as follows:

Group Lifetime

ECL allowance

RM

Balance as at 1 August 2017 under MFRS 139 0

Restated through opening retained earnings 89,092

Opening allowance for impairment losses as at 1 August 2017 under MFRS 9 89,092

Reversal of allowance for impairment losses (18,992)

Allowance for impairment loss during the year 61,355

Balance as at 31 July 2018 131,455


Allowance for impairment losses during the year 63,656

Balance as at 31 July 2019 123,137

(h) The reconciliation of movement in the allowance for impairment loss of other receivables are as follows:

GroupLifetime

ECLallowance

RM

Balance as at 1 August 2017 under MFRS 139 0

Restated through opening retained earnings 7,462

Opening allowance for impairment losses as at 1 August 2017 under MFRS 9 7,462


Balance as at 31 July 2018 761

Reversal of allowance for impairment losses (536)

Balance as at 31 July 2019 225

(i) No expected credit losses were recognised arising from the amount owing by subsidiaries because the probability of default were negligible.

(j) Information on financial risks of trade and other receivables is disclosed in Note 32 to the financial statements.

10. CONTRACT ASSETS

(a) Contract assets represent the timing differences in revenue recognition and the milestone billings. The milestone billings are structured and/or negotiated with customers to reflect physical completion of the contracts.

Contract assets are transferred to receivables when the rights to economic benefits become unconditional. This usually occurs when the Group issues billing to the customer.

There were no significant changes in the contract assets during the financial year.

(b) No ECL were recognised arising from the contract assets because the probability of default by the contract assets were negligible.


88

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

11. CASH AND BANK BALANCES

Group Company

2019 2018 2019 2018

RM RM RM RM

Cash and bank balances 54,418,741 13,106,554 37,536,947 10,761

(a) The currency exposure profile of cash and bank balances are as follows:

Group Company

2019 2018 2019 2018

RM RM RM RM

RM 47,362,763 9,012,360 37,536,947 10,761

USD 5,307,414 4,036,318 0 0

Euro (‘EUR’) 1,700,232 21,364 0 0

Others 48,332 36,512 0 0

54,418,741 13,106,554 37,536,947 10,761

(b) No expected credit losses were recognised arising from the deposits with financial institutions because the probability of default by these financial institutions were negligible.

(c) Information on financial risks of cash and bank balances is disclosed in Note 32 to the financial statements.

12. ASSET CLASSIFIED AS HELD FOR SALE

Group

2019 2018

RM RM

At cost

Balance as at 1 August 2018/2017 5,883,554 0

Disposal (5,883,554) 0

Transferred from property, plant and equipment (Note 6) 0 5,883,554

Balance as at 31 July 2019/2018 0 5,883,554

Accumulated depreciation

Balance as at 1 August 2018/2017 2,148,907 0

Disposal (2,148,907) 0

Transferred from property, plant and equipment (Note 6) 0 2,148,907


Carrying amount


(a) In the previous financial year, the Group owned a piece of land and building in Bukit Minyak, Penang. The management had assessed that the disposal was highly probable and the total carrying amount of the said land and building of RM3,734,647 was reclassified from property, plant and equipment to asset held for sale. On 1 June 2018, the Group entered into a sale and purchase agreement to dispose the said land and building for a cash consideration of RM13,000,000 as set out in Note 33 to the financial statements.


89

31 JULY 2019

Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

12. ASSET CLASSIFIED AS HELD FOR SALE (cont'd)

(b) The gain on disposal of asset classified as held for sale during the financial year is as follows:

Group

2019 2018

RM RM

Gain on disposal of asset classified as held for sale 8,611,942 0

The gain on disposal of asset classified as held for sale is included in the other operating income of statements of profit or loss and other comprehensive income.

13. SHARE CAPITAL

Group

Number ofshares RM

Issued and fully paid up:

2019

Balance as at 1 August 2018 296,800,002 59,360,002

Issuance of ordinary shares pursuant to Initial Public Offering 70,000,000 57,400,000

Share issue expenses 0 (1,292,734)

Balance as at 31 July 2019 366,800,002 115,467,268

2018


Issuance of ordinary shares 2 2

Effects of business combinations under common control:

- Elimination of issued and paid up ordinary share capital of UWC Holdings Sdn. Bhd. (1,000,000) (1,000,000)

- Elimination of issued and paid up ordinary share capital of UWC Industrial Sdn. Bhd. (2,000,000) (2,000,000)

- Elimination of issued and paid up ordinary share capital of UWC Automation Sdn. Bhd. (134,400) (134,400)

- Restated to the ordinary share capital of the Company 296,800,000 59,360,000

293,665,600 56,225,600



90

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

13. SHARE CAPITAL (cont'd)

Company

Number ofshares RM

Issued and fully paid up:

2019


Issuance of ordinary shares pursuant to Initial Public Offering 70,000,000 57,400,000

Share issue expenses 0 (1,292,734)


2018

Balance as at 29 March 2018 (Date of incorporation) 2 2

Issuance of ordinary shares 296,800,000 59,360,000


(a) During the financial year, the issued and fully paid-up ordinary share capital of the Company was increased from 296,800,002 ordinary shares to 366,800,002 ordinary shares by way of allotment of 70,000,000 new ordinary shares at an issue price of RM0.82 each for cash pursuant to its Initial Public Offering exercise.

(b) In the previous financial period, the issued and paid up share capital of the Company has been increased from RM2 (as at date of incorporation) to RM59,360,002 by way of issuance of 296,800,000 new ordinary shares of RM0.20 each for cash pursuant to the acquisitions of subsidiaries.

(c) The owners of the parent are entitled to receive dividends as and when declared by the Company and are entitled to one (1) vote per ordinary share at meetings of the Company. All ordinary shares rank pari passu with regard to the residual assets of the Company.

14. RESERVES

Group Company

2019 2018 2019 2018

RM RM RM RM

Non-distributable:

Reorganisation debit reserve (56,225,600) (56,225,600) 0 0

Accumulated losses 0 0 (3,561,888) (4,133)

Distributable:

Retained earnings 117,274,918 81,038,503 0 0

61,049,318 24,812,903 (3,561,888) (4,133)

Reorganisation debit reserve

The reorganisation debit reserve arose as a result of the difference between consideration paid over the share capital and reserves of UWC Industrial Sdn. Bhd. and UWC Holdings Sdn. Bhd. and its subsidiary, UWC Automation Sdn. Bhd. pursuant to business combinations under common control.


91

31 JULY 2019

Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

15. DEFERRED TAX LIABILITIES

Group

2019 2018

RM RM

Balance as at 1 August 2018/2017 4,062,800 2,976,000

Recognised in profit or loss (Note 25) 3,900 1,086,800

Balance as at 31 July 2019/2018 4,066,700 4,062,800

Subject to income tax:

Deferred tax liabilities

Property, plant and equipment 4,066,700 4,062,800

16. BORROWINGS

Group

2019 2018

RM RM

Non-current liabilities

Hire purchase creditors (Note 17) 7,248,300 11,038,997

Term loans (Note 18) 4,698,695 23,910,873

11,946,995 34,949,870

Current liabilities

Bankers’ acceptances 7,000,000 10,600,000


Term loans (Note 18) 2,208,887 1,843,483

12,818,284 16,388,617

Total borrowings 24,765,279 51,338,487

Represented by:

Bankers’ acceptances 7,000,000 10,600,000


Term loans (Note 18) 6,907,582 25,754,356

24,765,279 51,338,487

(a) The interest rates of the borrowings of the Group are as follows:

Group

2019 2018

% %

Bankers’ acceptances 3.49 - 3.86 3.65 - 4.19

Hire purchase creditors 2.09 - 3.24 2.09 - 3.24

Term loans 4.52 - 4.66 4.77 - 4.82

(b) Information on financial risks of borrowings is disclosed in Note 32 to the financial statements.


92

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

17. HIRE PURCHASE CREDITORS

Group

2019 2018

RM RM

Representing hire purchase liabilities:

- current 3,609,397 3,945,134

- non-current 7,248,300 11,038,997

10,857,697 14,984,131

Minimum hire purchase payments:

- not later than one (1) year 4,126,395 4,704,527

- later than one (1) year and not later than five (5) years 7,699,706 12,012,045

11,826,101 16,716,572

Less: Future finance charges (968,404) (1,732,441)

Present value of hire purchase creditors 10,857,697 14,984,131

Present value of hire purchase creditors:



10,857,697 14,984,131

Hire purchase creditors amounting to RM3,506,204 (2018: RM4,362,190) are covered by corporate guarantees given by a subsidiary.

18. TERM LOANS

Group

2019 2018

RM RM

Secured

Representing term loans:

- current 2,208,887 1,843,483

- non-current 4,698,695 23,910,873

6,907,582 25,754,356

The term loans are repayable as follows:



- later than five (5) years 0 15,185,370

6,907,582 25,754,356


93

31 JULY 2019

Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

18. TERM LOANS (cont'd)

The term loans are covered by the following:

(a) first party charge over property, plant and equipment as disclosed in Note 6(a) to the financial statements;

(b) joint and several guarantee by Directors of the Company; and

(c) corporate guarantee by a subsidiary amounting to RM5,041,750 (2018: RM17,240,547).

19. GOVERNMENT GRANTS

Group

2019 2018

RM RM

At cost

Balance as at 1 August 2018/2017 7,097,684 8,285,021

Less: Amortisation during the financial year (1,179,003) (1,187,337)

Balance as at 31 July 2019/2018 5,918,681 7,097,684

Represented by:

Current 1,178,170 1,179,003

Non-current 4,740,511 5,918,681

5,918,681 7,097,684

(a) UWC Automation Sdn. Bhd. obtained government grant amounting to RM100,000 under the ‘Grant for Product and Process Improvement’ approved by Small and Medium Industries Development Corporation (“SMIDEC”).

(b) The remaining government grants was obtained by UWC Industrial Sdn. Bhd. from the Northern Corridor Implementation Authority Malaysia (“NCIA”) and Malaysian Investment Development Authority (“MIDA”).

20. TRADE AND OTHER PAYABLES

Group Company

2019 2018 2019 2018

RM RM RM RM

Trade payables

Third parties 10,834,370 16,899,718 0 0

Amount owing to related parties 0 1,712 0 0

10,834,370 16,901,430 0 0

Other payables

Third parties 3,521,383 1,627,090 547,549 0

Amount owing to subsidiaries 0 0 2,371,656 0

Amount owing to related parties 0 1,902 0 0

Amount owing to Directors 0 10,057,780 0 13,892

Accrued expenses 3,338,059 2,302,919 54,000 1,000

Deposits received 430 1,300,090 0 0

6,859,872 15,289,781 2,973,205 14,892

Total trade and other payables 17,694,242 32,191,211 2,973,205 14,892


94

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

20. TRADE AND OTHER PAYABLES (cont'd)

(a) Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 60 days (2018: 30 to 90 days).

(b) The amount owing to subsidiaries are unsecured, interest-free and payable upon demand in cash and cash equivalents.

(c) In the previous financial year, the amount owing to Directors and amount owing to related parties were unsecured, interest-free and payable upon demand in cash and cash equivalents.

(d) The related parties are companies incorporated in Malaysia in which the Directors have significant and controlling financial interest.

(e) In the previous financial year, included in deposit received was deposit received from the purchaser in respect of the asset classified as held for sale as set out in Note 12 and 33 to the financial statements amounting to RM1,300,000.

(f) The currency exposure profile of trade and other payables is as follows:

Group Company

2019 2018 2019 2018

RM RM RM RM

RM 15,453,504 31,283,420 2,973,205 14,892

USD 441,460 333,015 0 0

EUR 1,708,669 114,099 0 0

Singapore Dollar (‘SGD’) 79,722 345,589 0 0

Others 10,887 115,088 0 0

17,694,242 32,191,211 2,973,205 14,892

(g) Information on financial risks of trade and other payables is disclosed in Note 32 to the financial statements.

21. CAPITAL COMMITMENTS

Group

2019 2018

RM RM

Capital expenditure in respect of purchase ofproperty, plant and equipment:

- Contracted but not provided for 1,451,385 3,918,866

- Approved but not contracted for 29,666,000 13,750

31,117,385 3,932,616


95

31 JULY 2019

Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

22. REVENUE

Group

1.8.2018 1.8.2017

to to

31.7.2019 31.7.2018

RM RM

Revenue from contracts with customers:- Sales of goods 143,474,085 135,463,857

- Contract revenue 880,193 1,030,790

144,354,278 136,494,647

Timing of revenue recognition

- Transferred over time 880,193 1,030,790

- Transferred at a point in time 143,474,085 135,463,857

Revenue from external customers 144,354,278 136,494,647

Disaggregation of revenue from contracts with customers is disclosed in Note 30 to the financial statements.

23. EMPLOYEE BENEFITS

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

RM RM RM RM

Salaries and allowances 21,134,537 21,358,078 0 0

Directors’ remuneration:

- fees 18,000 72,000 12,000 0

- emoluments other than fees 2,300,861 1,261,980 0 0

Contributions to defined contribution plans 1,714,518 1,747,435 0 0

Other benefits 2,870,458 1,982,572 0 0

28,038,374 26,422,065 12,000 0

Included in Directors’ remuneration are contributions to a defined contribution plan amounting to RM206,856 (2018: RM131,880).

24. FINANCE COSTS

Group

1.8.2018 1.8.2017

to to

31.7.2019 31.7.2018

RM RM

Interest on bankers’ acceptances 410,185 238,858

Interest on hire purchase 752,595 762,546

Interest on term loans 1,172,924 759,837

2,335,704 1,761,241


96

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

25. TAX EXPENSE

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

RM RM RM RM

Current tax expense based onprofit/(loss) for the financial year 9,409,662 4,892,800 18,362 0

Overprovision of tax expensein prior years (143,813) (26,443) 0 0

9,265,849 4,866,357 18,362 0

Deferred tax (Note 15):

Relating to origination and reversal of temporary differences 105,100 815,100 0 0

(Over)/Underprovision in prior years (101,200) 271,700 0 0

3,900 1,086,800 0 0

Real property gain tax 685,100 150,000 0 0

9,954,849 6,103,157 18,362 0

(a) The Malaysian income tax is calculated at the statutory tax rate of 24% (2018: 24%) of the estimated taxable profits for the fiscal year.

(b) The numerical reconciliation between the tax expense and the product of accounting profit/(loss) multiplied by the applicable tax rates of the Group and of the Company are as follows:

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

RM RM RM RM


Tax at Malaysian statutory tax rate of 24% (2018: 24%) 11,085,900 8,958,400 (849,500) (1,000)

Tax effects in respect of:

Non-allowable expenses 1,256,362 294,346 867,862 1,000

Income not subject to tax (2,059,000) (1,808,100) 0 0

Tax incentives and allowances (768,500) (1,646,746) 0 0

Different tax rate for the first RM500,000 of chargeable income 0 (90,000) 0 0

Real property gain tax 685,100 150,000 0 0

Overprovision of tax expense in prior years (143,813) (26,443) 0 0

(Over)/Underprovision of deferred tax in prior years (101,200) 271,700 0 0

9,954,849 6,103,157 18,362 0


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UWC BERHAD (201801012223) (1274239-A)

26. DIVIDENDS

Group

2019 2018

Grossdividend

per shareAmount of

dividend

Grossdividend

per shareAmount of

dividend

RM RM RM RM

Distribution of ordinary shares of

RM13.00 each in UVC Technology

Sdn. Bhd. (‘Distribution Shares’)

held by the UWC Holdings

Sdn. Bhd. by way of

dividend-in-specie on a basis

of 1 Distribution Share for every

2 existing ordinary shares held in

the Company Nil Nil 13.00 6,500,000

First single tier interim dividend

- UWC Holdings Sdn. Bhd. Nil Nil 10.00 10,000,000

- UWC Industrial Sdn. Bhd. Nil Nil 2.50 5,000,000

Nil Nil 25.50 21,500,000

The Directors recommend a final dividend of RM0.03 per ordinary share, amounting to approximately RM11,004,000 in respect of the financial year ended 31 July 2019, subject to the approval of members at the forthcoming Annual General Meeting.

The financial statements for the financial year ended 31 July 2019 do not reflect this proposed final cash dividend. The proposed final cash dividend, shall be accounted for as an appropriation of retained earnings in the financial year ending 31 July 2020.

27. EARNINGS PER SHARE

(a) Basic

Basic earnings per share for the financial year is calculated by dividing the profit for the financial year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

Group

1.8.2018 1.8.2017

to to

31.7.2019 31.7.2018

Profit attributable to owners of the parent (RM) 36,236,415 31,223,658

Weighted average number of ordinary shares in issue (unit) 317,090,413 46,349,606

Basic earnings per share (sen) 11.43 67.37

(b) Diluted

Diluted earnings per share equals basic earnings per share because there are no potentially dilutive instruments in existence as at the end of each reporting period.


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28. RELATED PARTY DISCLOSURES

(a) Identities of related parties

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

The Company has controlling related party relationship with its direct subsidiaries. Related parties of the Group and of the Company include companies in which certain Directors have substantial financial interest and are common Directors.

(b) In addition to the transactions and balances detailed elsewhere in the financial statements, the Group had the following transactions with subsidiaries and related parties during the financial year:

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

RM RM RM RM

Related parties:

- Rental expense 0 9,900 0 0

- Rental income 0 3,250 0 0

- Purchase of goods 0 32,662 0 0

- Purchase of property,plant and equipment 0 527,139 0 0

- Sales of goods 10,000 128,492 0 0

Subsidiaries:

- Advances to 0 0 18,000,000 0

Balances with related parties at the end of the financial year are disclosed in Note 9 and 20 to the financial statements.

The related party transactions described above were carried out on agreed contractual terms and conditions and in the ordinary course of business between the related parties of the Group and of the Company.

(c) Compensation of key management personnel

The remuneration of certain Directors and other members of key management during the year were as follows:

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

RM RM RM RM

Short term employee benefits 3,043,550 2,072,537 12,000 0

Contributions to definedcontribution plans 293,580 209,370 0 0

3,337,130 2,281,907 12,000 0


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UWC BERHAD (201801012223) (1274239-A)

28. RELATED PARTY DISCLOSURES (cont'd)

(c) Compensation of key management personnel (cont'd)

Included in the remuneration of total key management personnel are:

Group Company

1.8.2018 1.8.2017 1.8.2018 29.3.2018

to to to to

31.7.2019 31.7.2018 31.7.2019 31.7.2018

RM RM RM RM

Directors’ remuneration (excluding fee) 2,300,861 1,261,980 0 0

29. CONTINGENT LIABILITIES

The Group provides corporate guarantees up to a total amount of RM8,547,954 (2018: RM21,602,737) to licensed banks for banking facilities granted to certain subsidiaries.

The corporate guarantees are given to the financial institutions as one of the securities in relation to banking facilities granted to the subsidiaries.

The Group designates corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance contracts as defined in MFRS 4 Insurance Contracts. The Group recognises these insurance contracts as recognised insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The Directors are of the view that the chances of the financial institutions to call upon the corporate guarantees are remote. Accordingly, the Directors have estimated the financial impact of the guarantees as at 31 July 2019 to be insignificant.

30. OPERATING SEGMENTS

The Group is principally involved in investment holding, provision of precision sheet metal fabrication and value-added assembly services and provision of precision machined components.

For management purpose, the Group is organised into business units based on their products and services. The reportable segments of the Group are as follows:

(a) Provision of precision sheet metal fabrication and value-added assembly services.

(b) Provision of precision machined components.

(c) Investment holding.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

The accounting policies of operating segments are the same as those described in Note 4.21 to the financial statements.

Inter-segment revenue other than investment holding segment is priced along the same lines as sales to external customers and is eliminated in the consolidated financial statements. These policies have been applied consistently throughout the financial years.

Segment assets exclude cash and bank balances and tax assets. Segment liabilities exclude tax liabilities. Even though borrowings arise from financing activities rather than operating activities, they are allocated to the segments based on relevant factors (e.g. funding requirements).


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UWC BERHAD (201801012223) (1274239-A)

30. OPERATING SEGMENTS (cont'd)

Investmentholding

Provision ofprecision sheet

metal fabricationand value-added

assembly services

Provision ofprecision

machinedcomponents Eliminations Consolidated

RM RM RM RM RM

2019

Revenue from external customers 0 127,842,693 16,511,585 0 144,354,278

Inter-segment revenue 0 31,374,799 22,520,517 (53,895,316) 0

Total revenue 0 159,217,492 39,032,102 (53,895,316) 144,354,278

Interest income 76,507 290,496 57,972 0 424,975

Finance costs 0 (1,562,076) (773,628) 0 (2,335,704)

Net finance expense 76,507 (1,271,580) (715,656) 0 (1,910,729)

Segment (loss)/profit before tax (3,539,393) 43,346,939 6,884,897 (501,179) 46,191,264

Tax expense (9,954,849)

Other material non-cash items:

- Amortisation of government grants 0 1,178,170 833 0 1,179,003

- Depreciation of investment property 0 (109,269) 0 109,269 0

- Depreciation of property, plant and equipment 0 (5,780,667) (3,137,150) (109,269) (9,027,086)

- Gain on disposal of asset classified as held for sale 0 8,611,942 0 0 8,611,942

Additions to non-current assets other than financial instruments 0 12,521,221 498,441 0 13,019,662

Assets

Segment assets 59,360,000 148,356,469 31,476,652 (61,781,681) 177,411,440

Current tax assets 0

Cash and bank balances 54,418,741

231,830,181

Liabilities

Segment liabilities 601,549 32,449,270 15,327,383 0 48,378,202

Deferred tax liabilities 4,066,700

Current tax liabilities 2,868,693

55,313,595


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UWC BERHAD (201801012223) (1274239-A)


Investmentholding

Provision ofprecision sheet

metal fabricationand value-added

assembly services

Provision ofprecision

machinedcomponents Eliminations Consolidated

RM RM RM RM RM

2018

Revenue from external customers 0 119,768,462 16,726,185 0 136,494,647

Inter-segment revenue 0 27,417,069 24,972,903 (52,389,972) 0

Total revenue 0 147,185,531 41,699,088 (52,389,972) 136,494,647

Interest income 0 198,780 54,611 0 253,391

Finance costs 0 (1,002,237) (759,004) 0 (1,761,241)

Net finance expense 0 (803,457) (704,393) 0 (1,507,850)

Segment profit before tax (4,133) 29,652,940 7,485,674 192,334 37,326,815

Tax expense (6,103,157)

Other material non-cash items:

- Amortisation of government grants 0 1,178,170 9,167 0 1,187,337

- Depreciation of investment property 0 (30,933) 0 30,933 0

- Depreciation of property, plant and equipment 0 (5,173,769) (2,537,944) (30,933) (7,742,646)

- Gain on disposal of other investment 0 (6,000,000) 0 0 (6,000,000)

Additions to non-current assets other than financial instruments 0 13,814,458 14,443,902 0 28,258,360

Assets

Segment assets 59,360,000 131,312,627 37,043,913 (61,819,957) 165,896,583

Cash and bank balances 13,106,554

Current tax asset 1,179,321

180,182,458

Liabilities

Segment liabilities 14,892 65,007,508 25,604,982 0 90,627,382

Deferred tax liabilities 4,062,800

Current tax liabilities 1,319,371

96,009,553


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UWC BERHAD (201801012223) (1274239-A)


(a) Geographical information

Segment revenue is based on geographical location of customers of the Group.

Group

1.8.2018 1.8.2017

to to

31.7.2019 31.7.2018

RM RM

Revenue from external customers

Malaysia 84,926,634 80,032,497

Singapore 49,016,399 45,360,951

United States 3,237,787 3,764,530

China 2,530,544 2,266,670

France 2,455,500 3,210,088

Others 2,187,414 1,859,911

144,354,278 136,494,647

(b) Major customers

The following are major customers with revenue equal or more than ten percent (10%) of revenue of the Group:

Group

1.8.2018 1.8.2017

to to

31.7.2019 31.7.2018

RM RM

Customer A 43,778,040 43,052,750

Customer B 33,371,708 35,494,895

Customer C 14,756,407 14,369,040

91,906,155 92,916,685

31. FINANCIAL INSTRUMENTS

(a) Capital management

The primary objective of the capital management of the Group is to ensure that entities of the Group would be able to continue as going concerns whilst maximising return to shareholders through the optimisation of the debt and equity ratios. The overall strategy of the Group remains unchanged throughout the reporting period.

The Group manages its capital structure and makes adjustments to it in response to changes in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes throughout the reporting periods.


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Annual Report 2019

UWC BERHAD (201801012223) (1274239-A)

31. FINANCIAL INSTRUMENTS (cont'd)

(a) Capital management (cont'd)

The Group monitors capital utilisation on the basis of net debt-to-equity ratio, which is net debt divided by total capital. The Group includes within net debt, loans and borrowings less cash and bank balances. Capital represents equity attributable to the owners of the parent. The net debt-to-equity ratios as at 31 July 2019 and 31 July 2018 are as follows:

Group Company

2019 2018 2019 2018

Note RM RM RM RM

Borrowings 16 24,765,279 51,338,487 0 0

Total liabilities 24,765,279 51,338,487 0 0

Less: Cash and bank balances 11 (54,418,741) (13,106,554) (37,536,947) (10,761)

(Net cash)/Net debt (29,653,462) 38,231,933 (37,536,947) (10,761)

Total capital 176,516,586 84,172,905 111,905,380 59,355,869

Net debt-to-equity ratio * 45% * *

* No net debt-to-equity ratio is presented as the Company is in net cash position.

Pursuant to the requirements of Guidance Note No. 17/2005 of the Bursa Malaysia Securities Berhad, the Group is required to maintain a consolidated shareholders’ equity of not less than or equals to twenty-five percent (25%) of the issued and paid-up capital of the Group. The Group has complied with this requirements for the financial year ended 31 July 2019.

The Company has complied with these requirements for the financial year ended 31 July 2019.

(b) Categories of financial instruments

Group Company

2019 2018 2019 2018

RM RM RM RM

Financial assets

Financial assets at amortised costs

Trade and other receivables

(excluding prepayments) 42,740,836 37,378,670 18,000,000 0

Cash and bank balances 54,418,741 13,106,554 37,536,947 10,761

97,159,577 50,485,224 55,536,947 10,761


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UWC BERHAD (201801012223) (1274239-A)

31. FINANCIAL INSTRUMENTS (cont'd)

(b) Categories of financial instruments (cont'd)

Group Company

2019 2018 2019 2018

RM RM RM RM

Financial liabilities

Financial liabilities amortised costs

Borrowings 24,765,279 51,338,487 0 0

Trade and other payables 17,694,242 32,191,211 2,973,205 14,892

42,459,521 83,529,698 2,973,205 14,892

(c) Methods and assumptions used to estimate fair value

The fair values of financial assets and financial liabilities are determined as follows:

(i) Financial instruments that are not carried at fair value and whose carrying amounts are at reasonable approximation of fair values

The carrying amounts of financial assets and financial liabilities, such as trade and other receivables, trade and other payables and bank borrowings, are reasonable approximation of fair value, either due to their short-term nature or that they are floating rate instruments that are re-priced at market interest rates on or near the end of the reporting period.

The carrying amount of the current portion of bank borrowings is reasonable approximation of fair value due to the insignificant impact of discounting.

The fair value of these borrowings is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.

(ii) Hire purchase creditors

The fair value of hire purchase creditors are estimated based on the future contractual cash flows discounted at current market interest rates available for similar financial instruments and of the same remaining maturities.

(d) Fair value hierarchy

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices).

Fair value of non-derivative financial liabilities, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. In respect of the borrowings, the market rate of interest is determined by reference to similar borrowing arrangements.

Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).


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UWC BERHAD (201801012223) (1274239-A)

31.

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106

31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The financial risk management objective of the Group is to optimise value creation for shareholders whilst minimising the potential adverse impact arising from fluctuations in foreign currency exchange and interest rates and the unpredictability of the financial markets.

The Group is exposed mainly to credit risk, liquidity and cash flow risks, foreign currency risk and interest rate risk. Information on the management of the related exposures is detailed below.

(a) Credit risk

Cash deposits and trade receivables could give rise to credit risk which requires the loss to be recognised if a counter party fails to perform as contracted. The counter parties are organisations that the Group has dealt with for numerous years, and with whom the Group maintains regular visits and communications. It is the policy of the Group to monitor the financial standing of these counter parties on an ongoing basis to ensure that the Group is exposed to minimal credit risk.

The primary exposure of the Group to credit risk arises through its trade receivables while the Company’s primary exposure is through the amount owing by subsidiaries. The trading terms of the Group with its customers are mainly on credit, except for new customers, where deposits in advance are normally required. The credit period ranges between 30 days to 90 days. Each customer has a maximum credit limit and the Group seeks to maintain strict control over its outstanding receivables via a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management.

Major classes of financial assets of the Group comprise trade and other receivables and cash and cash equivalents.

Bank balances and deposits with banks and other financial institutions possessed by the Group are placed with or entered into with reputable financial institutions with high credit ratings and no history of default.

Exposure to credit risk

At the end of each reporting period, the maximum exposure of the Group to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.

Credit risk concentration profile

The Group determines concentration of credit risk by monitoring the country profiles of its trade receivables on an ongoing basis. The credit risk concentration profile of the trade receivables of the Group at the end of the reporting period are as follows:

Group

2019 2018

RM % of total RM % of total

By countries

Malaysia 31,065,595 76% 26,018,358 81%

Singapore 1,304,459 3% 1,750,019 5%

United State 4,467,775 11% 1,905,677 6%

Others 3,939,913 10% 2,253,429 8%

40,777,742 100% 31,927,483 100%

At the end of each reporting period, approximately 60% (2018: 63%) of the trade receivables of the Group were due from three (3) (2018: three (3)) major customers.


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UWC BERHAD (201801012223) (1274239-A)

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)

(b) Liquidity and cash flow risk

The Group and the Company actively manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all operating, investing and financing needs are met. In executing its liquidity risk management strategy, the Group and the Company measures and forecasts its cash commitments and maintains a level of cash and cash equivalents deemed adequate to finance the activities of the Group and the Company.

The Group and the Company practises prudent liquidity risk management to minimise the mismatch of financial assets and liabilities whilst maintaining sufficient cash and the availability of funding through standby credit facilities.

The table below summarises the maturity profile of the liabilities of the Group and of the Company at the end of the reporting period based on contractual undiscounted repayment obligations.

On demandor withinone year

One tofive years

More thanfive years Total

RM RM RM RMGroup

2019

Financial liabilitiesTrade and other payables 17,694,242 0 0 17,694,242Borrowings 13,595,302 12,665,485 0 26,260,787Financial guarantees 8,547,954 0 0 8,547,954Total undiscounted

financial liabilities 39,837,498 12,665,485 0 52,502,983

2018

Financial liabilitiesTrade and other payables 32,191,211 0 0 32,191,211Borrowings 18,280,690 24,487,945 21,703,098 64,471,733Financial guarantees 21,602,737 0 0 21,602,737Total undiscounted

financial liabilities 72,074,638 24,487,945 21,703,098 118,265,681

On demandor withinone year Total

RM RMCompany

2019

Financial liabilityTrade and other payables 2,973,205 2,973,205Total undiscounted financial liability 2,973,205 2,973,205

2018

Financial liabilityTrade and other payables 14,892 14,892Total undiscounted financial liability 14,892 14,892


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UWC BERHAD (201801012223) (1274239-A)

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)

(c) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates.

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of entities within the Group. The currency giving rise to this risk is primarily in USD, SGD and EUR.

The following table demonstrates the sensitivity analysis of the profit after tax of the Group to a reasonably possible changes in the USD, SGD and EUR exchange rates against the functional currency of the Group, with all other variables held constant:

Effect on profit after tax

Increase/(Decrease)

2019 2018

RM RM

Group

USD/RM - strengthen by 15% (2018: 15%) 2,478,224 2,371,681

- weaken by 15% (2018: 15%) (2,478,224) (2,371,681)

SGD/RM - strengthen by 15% (2018: 15%) (4,099) (37,994)

- weaken by 15% (2018: 15%) 4,099 37,994

EUR/RM - strengthen by 15% (2018: 15%) 32,537 157,488

- weaken by 15% (2018: 15%) (32,537) (157,488)

Sensitivity analysis of other foreign currencies are not disclosed as the fluctuation of those foreign exchange rate against the Group’s functional currency are not significant.

(d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the financial instruments of the Group would fluctuate because of changes in market interest rates.

The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. Interest rates of bank borrowings are mainly subject to fluctuations in the banks’ base lending rates.

Sensitivity analysis for interest rate risk

The following table demonstrates the sensitivity analysis of the Group and Company if interest rates at the end of each reporting period changed by fifty (50) basis points with all other variables held constant:

Group

2019 2018

RM RM

Profit after tax

- Increase by 0.5% (2018: 0.5%) 52,849 138,147

- Decrease by 0.5% (2018: 0.5%) (52,849) (138,147)


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UWC BERHAD (201801012223) (1274239-A)

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31 JULY 2019

UWC BERHAD (201801012223) (1274239-A)

34. ADOPTION OF NEW MFRSs AND AMENDMENT TO MFRSs

(a) New MFRSs adopted during the financial year

The Group and the Company adopted the following Standards of the MFRS Framework that were issued by the Malaysian Accounting Standards Board (‘MASB’) for annual financial periods beginning on or after 1 January 2018:

Title Effective Date

Amendments to MFRS 1 Annual Improvements to MFRS Standards 2014 - 2016 Cycle 1 January 2018

Amendments to MFRS 2 Classification and Measurement of Share-based Payment Transactions 1 January 2018


Amendments to MFRS 140 Transfers of Investment Property 1 January 2018

IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018

Amendments to MFRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts

See MFRS 4 Paragraphs 46 and 48

Adoption of the above Standards did not have any material effect on the financial performance or position of the Group and of the Company.

(b) New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2019

The Standards that are issued but not yet effective up to the date of issuance of financial statements of the Group and of the Company are disclosed below. The Group and the Company intend to adopt these Standards, if applicable, when they become effective.

Title Effective Date

MFRS 16 Leases 1 January 2019

Amendments to MFRS 9 Prepayment Features with Negative Compensation 1 January 2019

Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures 1 January 2019

IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019





Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement 1 January 2019

Amendments to MFRS 3 Definition of a Business 1 January 20201 January 2020Amendments to MFRS 101 and MFRS 108 Definition of Material

Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020

MFRS 17 Insurance Contracts 1 January 2021

Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred

The Group is in the process of assessing the impact of implementing these Standards and Amendments, other than MFRS 16, since the effects would only be observable for the future financial years. The Group is currently finalising the adjustments upon adoption of MFRS 16.

Annual Report 2019

111UWC BERHAD (201801012223) (1274239-A)

LIST OF PROPERTIES

No. Name of registered owner/Address Description

Land Area (sq. feet) Tenure

Carryingamount as at31 July 2019(RM’000)

Date of acquisition

1 UWC Holdings Sdn. Bhd. PMT 744, Jalan Cassia Selatan 5/1, Taman Perindustrian Batu Kawan, 14110 Bandar Cassia, Pulau Pinang

A single-storey detached factory building

177,163 60 years leaseholdexpiring on 22 July 2075(remaining tenureof 57 years)

14,441 06-Aug-14

2 UWC Industrial Sdn. Bhd. PMT 745, Jalan Cassia Selatan 5/1, Taman Perindustrian Batu Kawan, 14110 Bandar Cassia, Pulau Pinang

A 2-storey office building annexed with a single-storey detached factory building

326,028 60 years leasehold expiring on 6 December 2075 (remaining tenure of 57 years)

25,635 06-Aug-14

112 UWC BERHAD (201801012223) (1274239-A)

ANALYSIS OF SHAREHOLDINGS

AS AT 21 OCTOBER 2019

TOTAL NUMBER OF ISSUED SHARES : 366,800,002 CLASS OF SHARE : Ordinary shares VOTING RIGHTS : One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGS

Size of shareholding Number of Shareholders

% of Shareholders

Number of Shares

% of Shares

Less than 100 4 0.17 100 -

100 to 1,000 473 20.16 328,100 0.09

1,001 to 10,000 1,310 55.84 6,384,800 1.74

10,001 to 100,000 469 19.99 15,444,500 4.21

100,001 - 18,339,999 87 3.71 85,377,810 23.28

18,340,000 And Above 3 0.13 259,264,692 70.68

Total 2,346 100.00 366,800,002 100.00

SUBSTANTIAL SHAREHOLDERS AS AT 21 OCTOBER 2019

No. Name Direct Interest Indirect Interest

No. of shares % of shares No. of shares % of shares

1 UWC Capital Sdn. Bhd. 192,789,000 52.56 - -

2 Dato’ Ng Chai Eng 33,237,846 9.06 192,899,000# 52.59

3 Lau Chee Kheong 33,237,846 9.06 192,789,000* 52.56

# Deemed interest through shares held in UWC Capital Sdn. Bhd. by virtue of Section 8 of the Companies Act 2016 and the shares held by his son, Ng Chin Liang pursuant to Section 8 of the Companies Act 2016

* Deemed interest through shares held in UWC Capital Sdn. Bhd. by virtue of Section 8 of the Companies Act 2016

DIRECTORS’ SHAREHOLDINGS AS AT 21 OCTOBER 2019

No. Name Direct Interest Indirect Interest

No. of shares % of shares No. of shares % of shares

1 Dato’ Ng Chai Eng 33,237,846 9.06 192,899,000# 52.59

2 Lau Chee Kheong 33,237,846 9.06 192,789,000* 52.56

3 Dato’ Wan Hashim Bin Wan Jusoh 200,000 0.05 - -

4 F’ng Meow Cheng 300,000 0.08 - -

5 Lio Chee Yeong 320,000 0.09 - -

# Deemed interest through shares held in UWC Capital Sdn. Bhd. by virtue of Section 8 of the Companies Act 2016 and the shares held by his son, Ng Chin Liang pursuant to Section 8 of the Companies Act 2016

* Deemed interest through shares held in UWC Capital Sdn. Bhd. by virtue of Section 8 of the Companies Act 2016

Annual Report 2019

113UWC BERHAD (201801012223) (1274239-A)

ANALYSIS OF SHAREHOLDINGS (cont'd)

AS AT 21 OCTOBER 2019

LIST OF 30 LARGEST SHAREHOLDERS

NO. NAMENO. OF

SHARES % OF

SHARES

1 UWC CAPITAL SDN. BHD. 192,789,000 52.56 2 LAU CHEE KHEONG 33,237,846 9.06 3 NG CHAI ENG 33,237,846 9.06 4 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 12,956,200 3.53

EXEMPT AN FOR AIA BHD.5 CITIGROUP NOMINEES (ASING) SDN BHD 9,664,700 2.63

EXEMPT AN FOR CITIBANK NEW YORK (NORGES BANK 14)6 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 4,304,800 1.17

EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD (TSTAC/CLNT)7 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 4,160,400 1.13

EXEMPT AN FOR AIA PUBLIC TAKAFUL BHD.8 RONIE TAN CHOO SENG 4,000,000 1.09 9 MAYBANK NOMINEES (TEMPATAN) SDN BHD 3,877,400 1.06

ETIQA LIFE INSURANCE BERHAD (GROWTH)10 MAYBANK NOMINEES (TEMPATAN) SDN BHD 3,254,700 0.89

ETIQA LIFE INSURANCE BERHAD (DANA EKT PRIMA)11 TAN KEAN HEAN 3,032,895 0.83 12 AMANAHRAYA TRUSTEES BERHAD 2,685,100 0.73

PUBLIC SELECT TREASURES EQUITY FUND13 KOH YOKE CHAI 2,560,000 0.70 14 AMANAHRAYA TRUSTEES BERHAD 2,100,000 0.57

PB ISLAMIC SMALLCAP FUND15 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 2,033,300 0.55 EMPLOYEES PROVIDENT FUND BOARD16 CGS-CIMB NOMINEES (TEMPATAN) SDN BHD 2,000,000 0.55

PLEDGED SECURITIES ACCOUNT FOR RONIE TAN CHOO SENG17 MAYBANK NOMINEES (TEMPATAN) SDN BHD 1,691,000 0.46

ETIQA LIFE INSURANCE BERHAD (BALANCE)18 CHIA HIANG NOOI 1,500,000 0.41 19 AMANAHRAYA TRUSTEES BERHAD 1,385,100 0.38

PUBLIC EHSAN MIXED ASSET CONSERVATIVE FUND20 CIMSEC NOMINEES (TEMPATAN) SDN BHD 1,330,000 0.36

CIMB FOR LIM KA KIAN (PB)21 TOKIO MARINE LIFE INSURANCE MALAYSIA BHD 1,210,000 0.33

AS BENEFICIAL OWNER (PF)22 CIMB GROUP NOMINEES (TEMPATAN) SDN BHD 1,128,900 0.31

CIMB COMMERCE TRUSTEE BERHAD-MAYBANK SMALLCAP TRUST FUND23 RONIE TAN CHOO SENG 1,000,000 0.27 24 RONIE TAN CHOO SENG 1,000,000 0.27 25 YAYASAN BUMIPUTRA PULAU PINANG BHD. 1,000,000 0.27 26 HSBC NOMINEES (ASING) SDN BHD 742,800 0.20

EXEMPT AN FOR CREDIT SUISSE SECURITIES (EUROPE) LIMITED27 KEY SHARE SDN. BHD. 656,500 0.18 28 LIM WEI HON 640,000 0.17 29 UNIVERSAL TRUSTEE (MALAYSIA) BERHAD 625,000 0.17

TA ISLAMIC FUND30 AFFIN HWANG INVESTMENT BANK BERHAD 600,000 0.16

PDT (028-570) TAN CHIANG POH

114 UWC BERHAD (201801012223) (1274239-A)

NOTICE OF SECOND ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Second Annual General Meeting (“AGM”) of UWC BERHAD (“UWC” or “the Company”) will be held at Evergreen Laurel Hotel, 53 Persiaran Gurney, 10250 Penang, Malaysia on Friday, 10 January 2020 at 2.30 p.m. for the transaction of the following business:

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 July 2019 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of a final single-tier dividend of 3.0 sen per share in respect of the financial year ended 31 July 2019. Ordinary Resolution 1

3. To approve the payment of Directors’ fees of not exceeding RM144,000.00 to the Non-Executive Directors for the financial year ending 31 July 2020. Ordinary Resolution 2

4. To approve the payment of benefits of not exceeding RM12,000.00 to the Non-Executive Directors from 11 January 2020 until the next AGM of the Company. Ordinary Resolution 3

5. To re-elect the following Directors who retire by rotation in accordance with Clause 165.1 of the Company’s Constitution and who, being eligible, offer themselves for re-election :-

(i) Dato’ Ng Chai Eng Ordinary Resolution 4

(ii) Mr. Lau Chee Kheong. Ordinary Resolution 5

6. To re-appoint Messrs. BDO PLT as Auditors of the Company for the ensuing year and to authorise the Directors to determine their remuneration. Ordinary Resolution 6

SPECIAL BUSINESS

To consider and, if thought fit, to pass the following resolution, with or without modification, as an Ordinary Resolution:

7. AUTHORITY UNDER SECTIONS 75 AND 76 OF THE COMPANIES ACT, 2016 FOR THE DIRECTORS TO ISSUE SHARES

“THAT, subject always to the Companies Act, 2016 (“the Act”), the Company’s Constitution and the approvals of the relevant government and/or regulatory authorities, the Directors be and are hereby authorised, pursuant to Sections 75 and 76 of the Act, to allot and issue shares in the Company at any time until the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is the earlier and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deemed fit, provided that the aggregate of the shares to be issued does not exceed 10% of the total number of issued shares of the Company and that the Directors are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares to be issued.” Ordinary Resolution 7

8. To transact any other business of which due notice shall have been given in accordance with the Company’s Constitution and the Companies Act, 2016.

Annual Report 2019

115UWC BERHAD (201801012223) (1274239-A)

NOTICE OF SECOND ANNUAL GENERAL MEETING (cont'd)

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT subject to the shareholders’ approval for the payment of a final single-tier dividend of 3.0 sen per share in respect of the financial year ended 31 July 2019 (“Dividend”) under Resolution 1 at the Second AGM of the Company, the Dividend will be paid to the shareholders on 30 January 2020. The entitlement date for the Dividend shall be 15 January 2020.

BY ORDER OF THE BOARD

OOI YOONG YOONG (MAICSA 7020753) Secretary


Notes :-

Appointment of Proxy

1. A proxy need not be a member and a member may appoint any person to be his proxy without limitation save that the proxy must be of full age.

2. A member of the Company entitled to attend, participate, speak and vote at the meeting is entitled to appoint one (1) or more proxies (who need not be shareholders) to attend, participate, speak and vote at the same meeting.

3. Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either (a)under the corporation’s seal or (b) signed under the hand of an officer or attorney duly authorized, and in the case of (b) be supported by a certified true copy of the resolution appointing such officer or certified true copy of the power of attorney.

5. Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least 1 proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

6. Where a member is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in 1 securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

7. The instrument appointing a proxy may be made in a hard copy form or by electronic means in the following manner and must be received by the Company not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the appointment the proxies:-

i. In hard copy form In the case of an appointment made in hard copy form, the proxy form must be deposited at the office of the Share

Registrar, Tricor Investor & Issuing House Services Sdn. Bhd. at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or its Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur.

ii. By electronic means via facsimile In the case of an appointment made by facsimile transmission, this proxy form must be received via facsimile at 03-2783 9222.

iii. By electronic means via email In the case of an appointment made via email transmission, this proxy form must be received via email at is.enquiry@

my.tricorglobal.com

116 UWC BERHAD (201801012223) (1274239-A)


Notes :- (cont'd)

Appointment of Proxy (cont'd)

7. For option (ii) and (iii), the Company will require the member to deposit the original executed proxy form as in (i) above no later than Wednesday, 8 January 2020 at 2.30 p.m. for verification purpose.

i. Online In the case of an appointment made via online lodgement facility, please login to the link website at https://tiih.online

and select “e-Services” to login. Please refer to the Annexure To Proxy Form in the Administrative Details on how to register to TIIH Online and submit your proxy form electronically.

General Meeting Record of Depositors

8. Only a depositor whose name appears on the Record of Depositors of the Company as at 31 December 2019 shall be entitled to attend this AGM or appoint proxies to attend, participate, speak and/or vote on his/her behalf.

Ordinary Business

9. Audited Financial Statements for financial year ended 31 July 2019 The audited financial statements are laid in accordance with Section 340(1)(a) of the Companies Act 2016 for discussion only

under Agenda 1. They do not require shareholders’ approval and hence, will not be put for voting.

10. Ordinary Resolution 1 - To approve the payment of a final single-tier dividend of 3.0 sen per share in respect of the financial year ended 31 July 2019

With reference to Section 131 of the Companies Act 2016, a company may only to make a distribution to the shareholders out of profits of the company available if the company is solvent. On 15 November 2019, the Board had considered the amount of dividend and decided to recommend the same for the shareholders’ approval.

The Directors of the Company are satisfied that the Company will be solvent as it will be able to pay its debts as and when the debts become due within twelve (12) months immediately after the distribution is made on 30 January 2020 in accordance with the requirements under Section 132(2) and (3) of the Companies Act 2016.

11. Ordinary Resolution 2 – To approve the payment of Directors’ Fees of not exceeding RM144,000.00 to the Non-Executive Directors for the financial year ending 31 July 2020

The proposed Ordinary Resolution 2 is to facilitate the payment of Directors’ fees on current year basis. In the event, the Directors’ fees proposed is insufficient, the Board will seek the approval from the shareholders at the next AGM for additional fees to meet the shortfall.

12. Ordinary Resolution 3 – To approve the payment of benefits of not exceeding RM12,000.00 to the Non-Executive Directors from 11 January 2020 until the next AGM of the Company

The proposed Ordinary Resolution 3, if passed, will enable the Company to pay meeting allowance and other benefits to the Non-Executive Directors of the Company. The total estimated amount of meeting allowance and benefits payable to the Directors of the Company is calculated based on the number of scheduled Board’s and Board Committees’ meetings from 11 January 2020 until the next AGM. This authority, unless revoked or varied by the Company in a general meeting will expire at the conclusion of the next AGM of the Company.

13. Ordinary Resolutions 4 and 5 – Re-election of Directors Clause 165.1 of the Company’s Constitution provides that 1/3 of the Directors of the Company shall retire by rotation at an

Annual General Meeting. With the current Board size of five, two Directors are to retire in accordance with the Clause 165.1 of the Company’s Constitution.

A retiring director shall be eligible for re-election and shall retain office until the close of the meeting at which he retires.

In determining the eligibility of the Directors to stand for re-election at this AGM, the Nominating Committee has assessed the Directors and satisfied with the assessment.

The Board approved the Nomination Committee’s recommendation for the re-election of the retiring Directors pursuant to Clause 165.1 of the Company’s Constitution at this AGM of the Company. All the retiring Directors had consented to their re-election and abstained from deliberation and decision on their own eligibility to stand for re-election at the relevant Board meeting.

Annual Report 2019

117UWC BERHAD (201801012223) (1274239-A)

Notes :- (cont'd)

Ordinary Business

14. Ordinary Resolution 6 – Re-appointment of Auditors The Audit Committee has assessed the suitability and independence of the external auditors and recommended the re-

appointment of Messrs. BDO PLT as external auditors of the Company. The Board has in turn at its meeting held on 15 November 2019, reviewed the recommendation of the Audit Committee and recommended the same to be tabled to the shareholders for approval at this AGM of the Company. The Board and the Audit Committee collectively agreed that Messrs. BDO PLT have met the relevant criteria prescribed by Paragraph 15.21 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Special Business

15. Ordinary Resolution 7 - Authority under Sections 75 and 76 of the Companies Act, 2016 for the Directors to issue shares

The proposed Ordinary Resolution 7, if passed, will give authority to the Board of Directors to issue and allot ordinary shares in the Company at any time in their absolute discretion and that such authority shall continue in force until the conclusion of the next AGM of the Company or the expiration of the period within which the next AGM is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is the earlier.

This new general mandate will provide flexibility to the Company for any possible fund-raising activities, including but not limited to placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

Voting at Second AGM

16. Pursuant to Paragraph 8.29A of Bursa Malaysia Securities Berhad Main Market Listing Requirements, all resolutions set out in the Notice of Second AGM will be put to vote by poll.


118 UWC BERHAD (201801012223) (1274239-A)

STATEMENT ACCOMPANYING NOTICE OF SECOND ANNUAL GENERAL MEETING

PURSUANT TO PARAGRAPH 8.27(2) OF BURSA MALAYSIA SECURITIES BERHAD’S MAIN MARKET LISTING REQUIREMENTS

No individual is standing for election as a Director at the forthcoming Annual General Meeting of the Company.

Number of shares held

CDS account number

PROXY FORM

I / We (NRIC No./ Company No ) (Full Name in Block Letters)

of (Full Address)

being a member of UWC BERHAD hereby appoint (Full Name in Block Letters)

(NRIC No. ) of (Full Address)

or failing him/ her, (Full Address) (Full Name in Block Letters)

(NRIC No. ) of (Full Address)

(Full Address)

or failing him/her, the Chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the Second Annual General Meeting of the Company to be held at Evergreen Laurel Hotel, 53 Persiaran Gurney, 10250 Penang, Malaysia on Friday, 10 January 2020 at 2.30 p.m. and at any adjournment thereof, on the following resolutions referred to in the notice of Second Annual General Meeting. My/our proxy is to vote as indicated below:

No. Resolutions For Against1. To approve the payment of a final single-tier dividend of 3.0 sen per share

in respect of the financial year ended 31 July 2019.Ordinary Resolution 1

2. To approve the payment of Directors’ fees of not exceeding RM144,000.00 to the Non-Executive Directors for the financial year ending 31 July 2020.

Ordinary Resolution 2

3. To approve the payment of benefits of not exceeding RM12,000.00 to the Non-Executive Directors from 11 January 2020 until the next AGM of the Company.


4. To re-elect Dato’ Ng Chai Eng as Director of the Company. Ordinary Resolution 4

5. To re-elect Mr. Lau Chee Kheong as Director of the Company. Ordinary Resolution 5

6. To re-appoint Messrs. BDO PLT as Auditors of the Company and to authorise the Directors to determine their remuneration.


7. Authority under Sections 75 and 76 of the Companies Act, 2016 for the Directors to issue shares


Please indicate with an “X” in the appropriate space provided above on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

For appointment of two proxies, the proportion of shareholdings to be represented by my proxies:

No. of shares Percentage

Proxy 1

Proxy 2

Total 100%

Dated this day of 20 Signature of Member(s)/ Common SealContact No : Notes:1. A proxy need not be a member and a member may appoint any person to

be his proxy without limitation save that the proxy must be of full age. 2. A member of the Company entitled to attend, participate, speak and vote at

the meeting is entitled to appoint one (1) or more proxies (who need not be shareholders) to attend, participate, speak and vote at the same meeting.

3. Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either (a)under the corporation’s seal or (b) signed under the hand of an officer or attorney duly authorized, and in the case of (b) be supported by a certified true copy of the resolution appointing such officer or certified true copy of the power of attorney.

5. Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least 1 proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

6. Where a member is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in 1 securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

7. The instrument appointing a proxy may be made in a hard copy form or by electronic means in the following manner and must be received by the Company not less than forty-eight (48) hours before the time appointed for

holding the meeting or adjourned meeting at which the person named in the appointment the proxies:- i. In hard copy form In the case of an appointment made in hard copy form, the proxy

form must be deposited at the office of the Share Registrar, Tricor Investor & Issuing House Services Sdn. Bhd. at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or its Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur.

ii. By electronic means via facsimile In the case of an appointment made by facsimile transmission, this

proxy form must be received via facsimile at 03-2783 9222.iii. By electronic means via email In the case of an appointment made via email transmission, this proxy

form must be received via email at [email protected] For option (ii) and (iii), the Company will require the member to

deposit the original executed proxy form as in (i) above no later than Wednesday, 8 January 2020 at 2.30 p.m. for verification purpose.i. Online In the case of an appointment made via online lodgement facility,

please login to the link website at https://tiih.online and select “e-Services” to login. Please refer to the Annexure To Proxy Form in the Administrative Details on how to register to TIIH Online and submit your proxy form electronically.

8. Only a depositor whose name appears on the Record of Depositors of the Company as at 31 December 2019 shall be entitled to attend the Annual General Meeting or appoint proxies to attend, participate, speak and/or vote on his/her behalf.

UWC BERHAD(Company No: 201801012223) (1274239-A)(Incorporated in Malaysia)

The Share RegistrarUWC BERHAD (201801012223) (1274239-A)

c/o Tricor Investor & Issuing House Services Sdn Bhd

Unit 32-01, Level 32, Tower AVertical Business Suite

Avenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala Lumpur

Stamp

Please fold here to seal

Please fold here to seal

UWC BERHAD (201801012223) (1274239-A)

ADMINISTRATIVE DETAILS FOR THE 2nd ANNUAL GENERAL MEETING (“AGM”)

Date : 10 January 2020, Friday

Time : 2.30 p.m.

Venue : Evergreen Laurel Hotel, 53, Persiaran Gurney, 10250 Penang, Malaysia

1. REGISTRATIONa) Registration will commence at 1.15 p.m. and

shall remain open until the conclusion of the 2nd Annual General Meeting (“AGM”) or such other time as may be determined by Chairman of the meeting.

b) Please read the signage to ascertain the registration area and proceed for registration.

c) Original national identity card (IC) is required during registration for verification purposes. Upon verification of your IC and signing the attendance list, you will be given an identification wristband to be secured around your wrist.

d) Upon verification and registration:

i) please sign on the Attendance List and an identification wristband will be provided at the registration counter;

ii) if you are attending the Annual General Meeting (“AGM”) as a shareholder as well as a proxy, you will be registered once and will only be given one identification wristband; and

iii) no person will be allowed to enter the meeting hall without wearing the identification wristband. There will be no replacement in the event that you lose/misplace the identification wristband.

e) Please also note that you will not be allowed to register on behalf of another person even with the original IC of that other person.

f) The registration counters will only handle verification of identities and registration. If you have other queries, please proceed to the Help Desk.

2. DOOR GIFT Please note that the Company will not be providing any

Door Gifts or Meal Vouchers at this AGM.

3. BEVERAGES Coffee and tea will not be served before or after the

AGM.

4. PARKING (IS NOT SUBSIDISED) A flat parking fee will be charged subject to the Hotel

validation.

5. MEETING The Meeting will start promptly at 2.30 p.m.

Shareholders are reminded to be punctual.

6. RECORD OF DEPOSITORS FOR ATTENDANCE For deposited securities, the Company will be requesting

Bursa Malaysia Depository Sdn Bhd to issue a General Meeting Record of Depositors on 31 December 2019. Only members whose names appear in the Record of Depositors on 31 December 2019 shall be eligible to attend the meeting or appoint proxy to attend and/or vote on his/her behalf.

7. PROXY If you are unable to attend the meeting and wish to

appoint a proxy to attend and vote on your behalf, please submit your Form of Proxy in accordance with the notes and instructions printed therein.

8. MOBILE DEVICES Please ensure that all mobile devices i.e. phones/

pagers/other sound emitting devices are switched off or put on silent mode during the AGM to ensure smooth and uninterrupted proceedings.

9. NON-SMOKING POLICY Smoking is prohibited in the meeting hall. Your

cooperation is much appreciated.

10. PERSONAL BELONGINGS Please be reminded to take care of your personal

belongings as the Company will not be responsible for any item that has gone missing resulted in any monetary losses.

11. ANNUAL REPORT 2019 The Annual Report 2019 is available on Bursa Malaysia

Berhad’s website at www.bursamalaysia.com under the Company Announcement of UWC Berhad and the Company website at www.uwcberhad.com.my.

Limited hardcopies are available at the registration counter and will be given on a first come first serve basis.

12. QUERIES If you have any queries regarding the AGM, please

contact the following;

Contact Person : Ms Rachel Chua / Ms Vivien Khoh(Share Registrar: Tricor Investor & Issuing House Services Sdn Bhd)

Contact Number : 603-2783 9299 Ext: 9275 / 9091

ELECTRONIC LODGEMENT OF PROXY FORM FOR GENERAL MEETING

e-proxy form

1. Sign up as user of TIIH Online

2. Proceed with e-lodgement of proxy form

Lodgement of Proxy Form

Our Contact

Tricor Investor & Issuing House Services Sdn. Bhd.

ANNEXURE TO PROXY FORM

Tricor Investor & Issuing House Services Sdn Bhd

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