CONTENTS
Corporate Information - 1 -
Corporate Structure - 3 -
Group Financial Highlights - 5 -
Media Highlights - 6 -
Chairman’s Statement - 8 -
Profile of Directors - 11 -
Audit Committee Report - 20 -
Statement of Corporate Governance - 23 -
Statement of Risk Management and Internal Control - 30 -
Other Disclosures - 32 -
Financial Statements - 35 -
Analysis of Securities Holdings - 161 -
Notice of Annual General Meeting ENCLOSED
Form of Proxy ENCLOSED
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CORPORATE INFORMATION
BOARD OF DIRECTORS
Independent Non-Executive Chairman: • Y. BHG DATO’ OTHMAN BIN JUSOH
Executive Directors: • HIEW WAI YOON (appointed on 18 April 2016) • CHEONG TZE WAI (appointed on 18 April 2016) • CHEONG CHIA CHIEH @ CHANG CHIA CHIEH (Group Managing Director, Demised on 27 February 2016 )
Non Independent Non-Executive Directors: • CHEUNG SHUEN LUNG (appointed on 11 August 2015) • CHEONG CHIA CHOU (appointed on 14 April 2016)
Independent Non-Executive Directors: • TUNKU AFWIDA BINTI TUNKU A. MALEK • LIEW PENG CHUEN@ LIEW AH CHOY • CHOW KAH SUNG • NATHANIEL GRANT DAVID SHERICK
GROUP CHIEF EXECUTIVE OFFICER • HIEW WAI YOON (appointed on 18 April 2016)
AUDIT COMMITTEE • NATHANIEL GRANT DAVID SHERICK - Chairman • Y. BHG DATO’ OTHMAN BIN JUSOH - Member • TUNKU AFWIDA BINTI TUNKU A. MALEK - Member • LIEW PENG CHUEN@ LIEW AH CHOY - Member
REMUNERATION COMMITTEE • Y. BHG DATO’ OTHMAN BIN JUSOH - Chairman • LIEW PENG CHUEN@ LIEW AH CHOY - Member • CHEONG CHIA CHIEH @ CHANG CHIA CHIEH – Member (Demised on 27 February 2016)
NOMINATION COMMITTEE • LIEW PENG CHUEN@ LIEW AH CHOY- Chairman • Y. BHG DATO’ OTHMAN BIN JUSOH - Member • TUNKU AFWIDA BINTI TUNKU A. MALEK - Member
COMPANY SECRETARIES • LIM SECK WAH (MAICSA 0799845) • TANG CHI HOE (KEVIN) (MAICSA 7045754)
REGISTERED OFFICE Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur Tel: (603) 2692 4271 Fax: (603) 2732 5388
MANAGEMENT OFFICE Unit C-2-01, Level 2, Capital 3, Oasis Square, No.2, Jalan PJU 1A/7A, Ara Damansara, PJU 1A, 47301 Petaling Jaya, Selangor Darul Ehsan Tel: (603) 7651 0188 Fax: (603) 7651 0088
SHARE REGISTRAR MEGA CORPORATE SERVICES SDN BHD (Co. No. 187984-H) Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur Tel: (603) 2692 4271 Fax: (603) 2732 5388
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PRINCIPAL BANKERS • ALLIANCE BANK MALAYSIA BERHAD • CIMB BANK BERHAD
AUDITORS Messrs. UHY (AF 1411) Suite 11.05, Level 11, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur Tel: (603) 2279 3088 Fax: (603) 2279 3099
STOCK EXCHANGE LISTING ACE MARKET OF BURSA MALAYSIA SECURITIES BERHAD Stock Name: PUC Stock Code: 0007
SPONSOR KENANGA INVESTMENT BANK BERHAD 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur Tel: (603) 2027 5555 Fax: (603) 2164 6690
COMPANY WEBSITE/ COMPANY EMAIL ADDRESS • http://www.founder.com.my • [email protected]
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CORPORATE STRUCTURE
The corporate structure of PUC Founder (MSC) Berhad (“ PUCF ”) and its subsidiary companies (collectively “PUCF Group ” or the “Group ”) as at 31 March 2016 is shown in the chart below:
PUCF
100% 100% 100% 100% 100% 100% 80% 100% 100% EPP RHM FQ FP RMA AT GTMF MESB MGE2
100% 100% 70% RHMG WP OWA
100% 100% 100%
RHIS AllChina FEGL
100%
FE
Agenda: Investment holdings Renewable energy related activities E-payment solution related activities Advertising and media related activities Financial services related activities
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ABBREVIATION FULL NAME OF ENTITY PRINCIPAL ACTIVITIES AllChina AllChina.cn Ltd Advertising and media activities
AT Ausscar Technology Sdn Bhd e-Commerce and software development for financial related services
EPP EPP Solution Sdn Bhd Payment solutions, trading and merchandising of goods
FE Founder Energy Sdn Bhd Renewable energy projects FEGL Founder Energy Global Limited Investment holding, renewable energy projects (formerly known as RedHot Media (HK) Limited FP Founder Pay SdnBhd Money lending business FQ Founder Qube Sdn Bhd e-Content, e-Commence and e-Merchant business, and end-to-end media and advertising solutions
GTMF GreenTech Malaysia Founder Renewable energy projects SdnBhd (formerly known as PUC Founder Technology Sdn Bhd) MESB MaxGreen Energy Sdn Bhd Renewable energy projects MGE2 MaxGreen Energy 2 Sdn Bhd Renewable energy projects (formerly known as Face ID Worldwide Sdn Bhd)
OWA Oscar Wealth Advisory Sdn Financial planning and advisory services Bhd
RHIS RedHot Media International Advertising and media activities (Shanghai) Co Ltd
RHM RedHot Media Sdn Bhd Advertising and media activities, and research and development of electronic advertising services RHMG RH Media Group Sdn Bhd Investment holding RMA Red Media Asia Ltd Investment holding WP Wealth Pursuit Sdn Bhd Money lending business
Note: 100% owned-subsidiary unless otherwise indicated in chart
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GROUP FINANCIAL HIGHLIGHTS
RM'000 2011 2012 2013* 2014* 2015* REVENUE 16,018 19,291 49,106 53,429 27,376
NET PROFIT AFTER TAX 1,530 1,380 10,960 9,849 2,211 (ATTRIBUTABLE TO OWNERS OF THE COMPANY) TOTAL EQUITY 14,852 15,283 78,683 125,355 128,979
TOTAL ASSETS 16,620 16,957 95,798 138,765 143,729
Note:
*The figures for financial year ended 31 December 2013 are prepared and restated based on reverse acquisition method and RMA Group is a legal accounting acquirer (please refer to Note 3(a) of the financial statements), thus the comparative financial information for the financial year ended 31 December 2013 are presented based on RMA and its subsidiaries figures. Financial year ended 31 December 2014 and 31 December 2015 are presented based on the enlarged PUCF Group.
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MEDIA HIGHLIGHTS
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CHAIRMAN’S STATEMENT
Dear Shareholders,
First and foremost, on behalf of the Board of Directors (the “ Board ”) of PUCF, the Group expresses its deepest sorrow over the death of late Mr. Cheong Chia Chieh @ Chang Chia Chieh and conveys its condolences to his family. The Board would like to express our appreciation and deepest gratitude for his earnest commitment and versatility in leading the Group to face new challenges.
On behalf of the Board, it is my pleasure to present herewith a copy of the Annual Report and Audited Financial Statements of PUCF Group for the financial year ended 31 December 2015.
Group Performance
For the year ended 31 December 2015, the Group earned total revenue of RM27.4 million and profit before taxation of RM2.5 million as compared to revenue of RM53.4 million and profit before taxation of RM10.1 million in the preceding year.
The lower revenue was mainly due to a decreased revenue contribution from the biometric segment. In addition, the Group's financial performance was also affected by cautious business and consumer sentiment, which arose from the depreciation of the Malaysia Ringgit, volatility in global oil prices and the rising cost of living.
The Group's decrease in profit before taxation during the current financial year as compared to the preceding financial year was mainly due to the decrease in profit contributions from the biometric and advertising and media segments in the current financial year.
During the financial year, the advertising and media segment was the Group’s major revenue contributor, accounting for 93.2% of the Group revenue.
Dividend
During the financial year ended 31 December 2015, no dividend was declared.
Industry Trend and Development
2015 turned out to be a turbulent year for the Group. Based on Bank Negara Malaysia Annual Report 2015, the Malaysian economy grew by 5.0% in 2015 (2014: 6.0%), supported by the continued expansion of domestic demand (2015: 5.1%, 2014: 5.9%). Domestic demand was primarily driven by the private sector. Modest improvements in external demand in the second half of the year also provided additional impetus to economic growth. The Malaysian economy is expected to grow by 4.0 – 4.5% in 2016. In an environment of prolonged uncertainties and cautious business sentiments, private sector investment growth is projected to be slower compared to its performance in the past five years.
In order to enhance the Group’s revenue and profitability, we continue to look for new business opportunities. We have completed the acquisition of the RMA Group on 2 January 2014 and have obtained shareholders’ approval for the proposed diversification of the Group’s existing business to include the provision of energy utility services during the Extraordinary General Meeting held on 29 December 2015.
In view of the above, we will continue to take steps to expand in line with our recent diversification approval but believe that financial year of 2016 will remain a challenging year.
-Energy Utility Services-
As per the Annual Report 2014 of Sustainable Energy Development Authority Malaysia (“ SEDA ”), there were 1,557 Feed-in Approval Holders (“FiAH(s)”) that achieved commercial operation (95.43 megawatt (“ MW ”)) last year. This translated to a cumulative of 2,984 FiAH applications that have achieved commercial operation since 2012 with a cumulative renewable energy (“RE ”) capacity of 243.36 MW. Out of this total operational RE capacity, solar Photovoltaic (“ PV ”) contributed the most (160.03 MW), followed by biomass (55.9 MW), small hydro (15.7 MW) and lastly, biogas (11.73 MW).
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Apart from expanding the solar power energy business, the company has also entered into a Memorandum of Understanding with PWF Consolidated Berhad (formerly known as PW Consolidated Bhd) to explore the possibility of biogas energy production.
On 13 January 2016, GTMF, a subsidiary of PUCF, had entered into a joint venture agreement with Greentech Malaysia Alliances Sdn Bhd (“ GTMA ”), which is wholly-owned by Malaysian Green Technology Corporation (“ GreenTech Malaysia ”). GreenTech Malaysia is an organisation under the purview of the Ministry of Energy, Green Technology and Water (“ KeTTHA ”), charged with catalyzing green technology deployment as a strategic engine for socio-economic growth in Malaysia in line with the National Green Technology Policy 2009. Pursuant to the joint venture agreement, 20% of GTMF will be held by GTMA. The purpose of the joint venture is to jointly bid for renewable energy projects in government or government-linked corporations.
-Media and Advertising-
According to the Industry Performance Report 2014 issued by Malaysian Communications and Multimedia Commission, Malaysia advertising expenses rose 5% to RM14.1 billion in 2014 from RM13.4 billion in 2013. The growth was partially due to World Cup related promotional campaigns and generally positive market sentiment, especially in the first half of the year. In terms of market share, television recorded the highest share of 61.3% (2013: 60.3%), followed by newspapers (2014: 33.1%; 2013: 34.1%) and radio (2014: 3.3%, 2013: 3.5%). Advertisers spent RM8.6 billion on television advertising in 2014, compared with RM8.1 billion in 2013.
In addition, due to the paradigm shift of viewing behaviour from traditional television to online and social networking platforms, more brands are placing digital options in their advertising planning and there is increasing competition to provide new and alternative advertising agency services to suit market needs. We will position ourselves to be more innovative and creative and to seek alternative media marketing solutions to increase our market shares.
-Electronic Payment Solutions-
We also focus in providing electronic payment processing services and easy payment solutions that is supported by nine (9) Malaysian financial institutions to help clients improve their product sales and customer demand. Our subsidiary, EPP, is specialised in the provision of electronic payments and is regulated by Bank Negara Malaysia.
We have been exploring various business opportunities to expand our e-payment solutions business. On 28 December 2015, EPP entered into a collaboration agreement with Lakala Payment Co., Ltd, to represent them as the sole authorised agent in Malaysia to provide online financial and payment services for its strategic partner, China UnionPay.
-Biometrics-
The revenue contribution from the biometric division has declined 96.5% for the financial year ended 31 December 2015 as we had disposed the biometric division during the financial year.
Rights Issue
On 4 August 2015, we announced that the company proposed to undertake a renounceable rights issue of up to RM127,589,899.80 nominal value of three (3)-year, 4%, irredeemable convertible unsecured loan stocks (“ ICULS ”) at 100% of the nominal value of RM0.05 each on the basis of two (2) RM0.05 nominal value of the rights ICULS for every one (1) PUCF Share held on the entitlement date together with up to 318,974,750 free detachable warrants on the basis of one (1) free detachable warrant (“ Warrant(s)-B”) for every eight (8) rights ICULS subscribed (“ Rights Issue of ICULS with Warrants ”).
On 12 October 2015, we announced that the Board had deliberated and resolved to revise the Rights Issue of ICULS with Warrants to a proposed renounceable rights issue of up to RM83,901,476.75 nominal value of three (3)-year, 4%, ICULS at 100% of the nominal value of RM0.05 each on the basis of twenty eight (28) RM0.05 nominal value of the Rights ICULS for every twenty (20) PUCF shares held by the entitled shareholders on the entitlement date together with up to 419,507,384 Warrants-B on the basis of seven (7) Warrants-B for every twenty eight (28) rights ICULS subscribed.
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On 18 February 2016, PUCF has announced that as at the close of acceptance and payment for the Rights Issue of ICULS with Warrants, total valid acceptances and excess applications received were RM42.65 million nominal value of the rights ICULS together with 213,266,257 free Warrants-B.
We will utilise the funds raised from the Rights Issue of ICULS with Warrants accordingly and continue to apply for renewable energy quota and explore business opportunities in this business segment.
Prospect
The Group has an experienced management team and most of them have been with the Group for years, during which they have already familiarised themselves with the Group’s operations. On 18 April 2016, Mr. Hiew Wai Yoon was appointed as the Executive Director and Group Chief Executive Officer, and Mr. Cheong Tze Wai was appointed as the Executive Director and Group Chief Operating Officer. The Board therefore remains confident with the management's abilities to continue with the Group’s initiatives and plans.
The proceeds raised from the Rights Issue of ICULS with Warrants are sufficient to construct solar PV plants with capacities of 4.5MW, which is part of the Group’s action plan to achieve its ultimate objective of expanding its solar PV plant’s aggregate capacity. PUCF plans to secure more projects and contracts in the future to supply renewable energy to Tenaga Nasional Berhad in the long run.
It is very exciting to take a big leap forward for our Group as we step into the renewable energy industry. By going into the renewable energy sector, it will bring positive growth for our Group during the concession periods.
Appreciation
We wish to express the Board’s appreciation to the late Mr. Cheong Chia Chieh @ Chang Chia Chieh for his leadership, dedication and commitment to the Group. We also thank the management and staff of the Group for their efforts, commitment and diligence during the year. Our sincere appreciation is also extended to our valued customers, business associates and stakeholders for their unwavering trust and confidence in us. My appreciation also goes to the Board of Directors for their dedication, guidance and invaluable insights.
Last but not least, on behalf of the Board and management of the Group, we wish to thank our shareholders for their confidence in our business prospects, and we hope to have their constant support as we overcome the challenges and bring the company to greater heights.
Y. BHG. DATO’ OTHMAN BIN JUSOH Independent Non-Executive Chairman
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PROFILE OF DIRECTORS
Y. Bhg. Dato’ Othman Bin Jusoh (Independent Non-Executive Chairman)
Y. Bhg. Dato’ Othman Bin Jusoh (“ Dato’ Othman ”), age 67, Malaysian, was appointed as an Independent Non-Executive Chairman of PUCF on 1 January 2014. He is also a member of the Audit Committee, Nomination Committee and Remuneration Committee. Dato’ Othman obtained his Bachelor of Economics (Honours) in Analytical Economics from the University of Malaya in 1972 and Masters in Business Administration (Finance) from University of Oregon, United States of America, in 1981.
Upon his graduation, Dato’ Othman was with the Malaysian Ministry of Finance (“ MOF ”) from 1972 until 1995 where he held the following positions:
(i) Assistant secretary of the Finance Division (1972 to 1975);
(ii) Principal assistant secretary of the Finance Division (1975 to 1979 and 1981 to 1985);
(iii) Deputy secretary of the Finance Division (1985 to 1995); and
(iv) Deputy secretary of the Economic and International Division (from 1992 to 1993).
From 1995 to 1998, he joined Malaysia Kuwaiti Investment Co. Sdn Bhd as the Group Chief Executive. He joined Asian Development Bank as an Executive Director from 2000 to 2013. Dato’ Othman re-joined MOF, as the Secretary in the Finance, Debt and Investment Management Division from 1998 to 2000 and was the Secretary of the Loan Management and Financial Policy Division from 2003 to 2004. He joined the National Higher Education Fund as its Chief Executive Officer from 2005 to 2006.
Dato’ Othman is currently a director of RHB Asset Management Sdn Bhd and RHB Islamic International Asset Management Bhd since 2008 and 2011, respectively, as well as the Chairman of TH Technologies Sdn Bhd, a wholly-owned subsidiary of Lembaga Tabung Haji, since 2005 and he retired in June 2011. He has also served as a member of the Group Audit Committee of RHB Bank Berhad from 2004, a Non- Executive Director of Asia Media Growth Berhad from 2009 until 2011 and currently also served as a member of RHB Islamic International Asset Management Bhd and RHB Asset Management Sdn Bhd.
Dato’ Othman is a director of RHM, OWA, EPP, MESB, MGE2, WP, FQ and AT. He does not hold any directorship in other public companies in Malaysia.
Dato’ Othman attended 6 out of the 6 board meetings held during the financial year ended 31 December 2015.
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Hiew Wai Yoon (Executive Director & Group Chief Executive Officer)
Hiew Wai Yoon (“ Mr. Hiew ”), age 41, Malaysian, was appointed as the Executive Director cum Group Chief Executive Officer of PUCF on 18 April 2016. Mr. Hiew was awarded First Class Degree Honour in Bachelor of Business Administration from Universiti Putra Malaysia in 2007 and completed his Master of Business Administration from Universiti Utara Malaysia in 2010.
Mr. Hiew joined RHM and EPP from April 2006 till present. He leads the operations and strategic direction with full responsibility for bottom line factors including long range planning and restructuring and streamlines the current business activities and identify new business opportunities. He was appointed as Acting Group Deputy Chief Executive Officer in March 2016 till April 2016.
Mr. Hiew is a director of MGE2, RHM, EPP, FQ, MESB, GTMF, FP, AllChina, FEGL, FE, RHMG and RMA. He does not hold any directorship in other public companies in Malaysia.
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Cheong Tze Wai (Executive Director & Group Chief Operating Officer)
Cheong Tze Wai (“ Mr. Cheong ”), age 35, Malaysian, was appointed as the Executive Director cum Group Chief Operating Officer of PUCF on 18 April 2016. Mr. Cheong graduated in 2000, holding a Bachelor of Science (Honours) degree in Computing and Information Systems, from Staffordshire University, United Kingdom.
Mr. Cheong joined Nanyang Online Sdn Bhd in 2003 as Senior Executive of Business Development, and was transferred to RHM in June 2004 as part of the management buy-out of Nanyang Online by RHMG and promoted to Business Development Manager in 2005 where he played a key role in the strategic formation and development of the company’s new business units and profit centres such as its public relations and new media divisions, and the development of the AxChange business model.
In 2007, Mr. Cheong was appointed as Assistant Vice President, Corporate Development of RHMG, where he was primarily responsible for assisting the directors in RHML’s listing on the AIM Market, London Stock Exchange. After the listing of RHML in September 2008, he was promoted to Vice President, Corporate Development and subsequently to Senior Vice President, Corporate Development in 2011, a position he held until 2013.
Following the completion of PUCF’s reverse takeover by RHML in January 2014, Mr. Cheong was appointed as the Group Senior Vice President of both RHML and PUCF where he has been principally involved in the strategic planning and implementation of the Group’s business growth and expansion under the direction of the Group Managing Director. Mr. Cheong also plays a key role in all corporate activities of both RHML and PUCF and oversees new business developments. Mr. Cheong was also appointed as Chief Executive Officer for FE, a wholly- owned subsidiary of PUCF from January till present.
Mr. Cheong is a director of MGE2, RHM, EPP, FQ, MESB, GTMF, FE, RHMG and RMA. He does not hold any directorship in other public companies in Malaysia.
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Nathaniel Grant David Sherick (Independent Non-Executive Director)
Nathaniel Grant David Sherick (“ Mr. David ”), aged 72, British, was appointed as an Independent Non-Executive Director on 12 June 2014. He is also the Chairman of the Audit Committee. He has vast experience in both external and internal audit and corporate risk management. He worked in public accounting firms in various positions, including positions of Senior Manager and Partner from 1961 to 1982.
Mr. David served as the Director Group Fraud Control & Revenue Assurance in Cable & Wireless Plc (“ C&W ”). He served as worldwide Regional Chief of Internal Audit and Security Asia Pacific in C&W and Chief of Group Internal Audit & Security in Hong Kong Telecommunications Ltd from 1981 to 1999. He has extensive experience in general audit and specialised in the audit of computerised systems and more particularly in recent years has further specialised in Telecoms Fraud and Revenue Assurance. He served as Director of Risk Management and Legal Services in Thus Group Plc from 2001 to 2008.
He is a member of the Institute of Internal Auditors where he was the North Pacific Regional Director for four (4) years. He also served on the Advanced Technology Committee and the International Relations Committee of the Institute of Internal Auditors. He was founder and Chairman of the Forum for International Irregular Network Access.
Mr. David held several posts at various academic institutions in United Kingdom and Hong Kong. In the field of law enforcement, Mr. David progressed through the ranks to become a Senior Superintendent in the Royal Hong Kong Auxiliary Police Force. He was also an examiner for various professional bodies for auditing and investigation papers. Mr David has also published various articles and books on Revenue Assurance and Fraud for the telecommunications industry.
Mr. David is a fellow of the Institute of Chartered Accountants in England and Wales, a member of the Institute of Internal Auditors, a member of the Association of Certified Fraud Examiners and a member of the Hong Kong Chapter of American Society for Industrial Security. He was also a fellow of the Hong Kong Society of Accountants and resigned in 1999.
Mr. David was an Independent Non-Executive Director of Macromac Plc since March 2013 and was re-designated as an Independent Non-Executive Chairman from February 2015. He has served as a Non-Executive Director of RHIL since 1 July 2014. Since September 2007, he has been a Non-Executive Director of RHML. He does not hold any directorships in any other public listed company in Malaysia.
Mr David attended 6 out of the 6 board meetings held during the financial year ended 31 December 2015.
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Tunku Afwida Binti Tunku A. Malek (Independent Non-Executive Director)
Tunku Afwida Binti Tunku A. Malek (“ Tunku Afwida ”), aged 50, Malaysian, was appointed as an Independent Non-Executive Director on 1 January 2014. She is also a member of the Audit Committee and Nomination Committee. Tunku Afwida graduated in 1988 holding a Bachelor of Science (Honours) degree in Economics and Accountancy from the City University, London, United Kingdom and is a qualified Chartered Accountant of the Institute of Chartered Accountants in England and Wales since 1992 and is a member of the Malaysian Institute of Accountants.
From 1995 to 2003, she was with Commerce Asset Fund Managers Sdn Bhd as an Executive Director and Chief Investment Officer. She was the Chief Executive Officer and Executive Director of Malaysian International Merchant Bankers Berhad from 2003 to 2006 and was also appointed the same position in Kenanga Investment Bank Berhad from 2006 to 2008.
She was formerly a Non-Executive Director of Cagamas Berhad and Transnational Insurance Brokers Sdn Bhd. She resigned from both positions since March 2013. She is currently a director and shareholder of Bernih Semaian Sdn Bhd, a funding advisory company and an Independent Director of Gamuda Berhad, University Tun Abdul Razak Sdn Bhd and i-VCAP Management Sdn Bhd, a subsidiary of Valuecap Sdn Bhd.
Save for her directorships in Gamuda Berhad and Export-Import Bank of Malaysia Berhad, Tunku Afwida does not hold any other directorships in other public listed companies in Malaysia.
Tunku Afwida attended 3 out of the 6 board meetings held during the financial year ended 31 December 2015.
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Liew Peng Chuen @ Liew Ah Choy (Independent Non-Executive Director)
Liew Peng Chuen @ Liew Ah Choy (“ Mr. Liew ”), aged 68, Malaysian, was appointed as an Independent Non- Executive Director on 1 January 2014 and is a member of the Audit Committee, Remuneration Committee and Nomination Committee. He was a founding director of RHMG and its subsidiaries. He is currently an Independent Non-Executive Director of RHML and holds a direct shareholding interest of 30,018 ordinary shares in RHML.
Mr. Liew has more than thirty (30) years of experience in the Malaysian media industry. He began his media career in the New Straits Times in 1969 and joined The Star in 1977, where he became Group Chief Editor in 1983. He left The Star in 1986 to pursue his law studies in London. He obtained his Malaysian Certificate in Legal Practice in 1988 and was admitted as an Advocate and Solicitor of the High Court of Malaya in 1989.
After his call to the Bar, he rejoined The Star as Editorial Consultant in 1989. He left in 1992 to join the Westmont Group, where he was appointed as an Executive Director of Westmont Land (Asia) Berhad. In 1995, he returned to the publishing industry by joining Nanyang Press Holdings Bhd (“ NPHB ”) as Senior General Manager (later re-designated as Chief Operating Officer).
The following year, he joined the Sin Chew Media Group, where he became Group Chief Executive Officer. In 2001, he was appointed as Group Managing Director of NPHB until he retired in 2006. He has been in legal practice as a partner in Messrs CH Yeoh & Yiew since 2007.
Mr. Liew is a director of RHML, RHM Ltd and RHIL and is also a director of the Group’s subsidiaries including RHIS, WP, RHMG and FE. He is also a director of Sin Chew Media Corporation Berhad. He does not hold any directorships in other public companies in Malaysia.
Mr Liew attended 6 out of the 6 board meetings held during the financial year ended 31 December 2015.
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Chow Kah Sung (Independent Non-Executive Director)
Chow Kah Sung (“ Mr. Chow ”), aged 49, Malaysian, was appointed as our Independent Non-Executive Director on 1 March 2014.
Mr. Chow graduated with a Bachelor of Laws with Honours from University of Warwick, England in 1988. He was admitted to Lincoln’s Inn in 1987 and called to the English Bar as a Barrister-at-Law in 1989. He was admitted as an Advocate and Solicitor of the High Court of Malaysia in 1990. In 1993, he obtained a Master of Business Administration in Financial Studies from the University of Nottingham, England.
Mr. Chow has served a number of merchant and investment banks in various senior capacity. He was previously appointed as General Manager of RHB Sakura Merchant Bankers Berhad (currently known as RHB Investment Bank Berhad) and Senior Vice President of Alliance Investment Bank Berhad. He has also served in Kenanga Investment Bank Berhad as Head of Corporate Finance. He is currently Director of Corporate Finance in Mercury Securities Sdn Bhd. He has over 20 years experience in the investment banking industry and has wide experience structuring and managing acquisitions, fund raising, take-over transactions, restructuring transactions and flotations. He also has three (3) years experience in legal practice in the area of corporate, commercial and banking law.
At present, Mr. Chow also sits on the board of Geohan Corporation Berhad, a public company (unlisted), as a director. He does not hold any directorship in other public companies in Malaysia.
Mr Chow attended 6 out of the 6 board meetings held during the financial year ended 31 December 2015.
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Cheung Shuen Lung (Non Independent Non-Executive Director)
Cheung Shuen Lung (“ Mr. Cheung ”), aged 59, Chinese, was appointed as a Non Independent Non-Executive Director on 11 August 2015 and is also a current Director of Peking University Founder Group Company Limited (“ Founder Group ”). He was previously the Chairman of Founder Holdings Limited. He is one of the founders of Founder Group and a co-founder of Kingsoft Corporation Limited. Mr. Cheung is a research fellow at the Enterprise Research Institute at Peking University and he has extensive experience in the information technology industry in China. He does not hold any directorship in other public companies in Malaysia.
Mr Cheung attended 2 out of the 2 board meetings held during the financial year ended 31 December 2015 since his appointment to the Board.
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Cheong Chia Chou (Non Independent Non-Executive Director)
Mr. Cheong Chia Chou, aged 40, Singaporean, was appointed as a Non Independent Non-Executive Director on 14 April 2016. He graduated with Masters in Computer Science, National University of Singapore (“ NUS ”).
Mr. Cheong Chia Chou started his first venture with GeoFoto Pte Ltd in 1999, with aims to commercialise various technologies developed from NUS. Subsequently, he sold an online photo printing solution to Fujifilm in 2001.
He joined Systems@Work Pte Ltd (later acquired by WireCard) as the Solution Director which focuses on developing and enhancing mobile application for online payment.
Mr. Cheong Chia Chou is the founder, director and major shareholder of Pictureworks Holdings (M) Sdn Bhd and its subsidiaries where he is responsible for the strategic direction of the Company, which has operations in seven (7) countries and its headquarters in Singapore.
Mr. Cheong Chia Chou is the brother to the late Mr. Cheong Chia Chieh @ Chang Chia Chieh who passed away on 27 February 2016.
He does not hold any directorship in other public companies in Malaysia.
Notes:-
All the Directors do not have any: 1. family relationship with any Director and/or major shareholder of PUCF; 2. conflict of interest with PUCF; and 3. convictions for offences within the past ten (10) years other than traffic offences, if any.
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AUDIT COMMITTEE REPORT
The principal objective of the Audit Committee is to assist the Board in discharging its statutory duties and responsibilities in relation to the Company’s financial, accounting and reporting practices and to ensure proper disclosure to the shareholders of the Company.
COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE
The Audit Committee (“ AC ”) comprises the following members:
Nathaniel Grant David Sherick Chairman, Independent Non-Executive Director
Y. Bhg Dato’ Othman Bin Jusoh Member, Independent Non-Executive Chairman
Tunku Afwida Binti Tunku A. Malek Member, Independent Non-Executive Director
Liew Peng Chuen @ Liew Ah Choy Member, Independent Non-Executive Director
AUTHORITY
The AC shall have unlimited access to financial and other relevant information and documents, to the external and internal auditors and to senior management of the Company. The AC shall also have the authority to investigate any matter within its term of reference.
MEETINGS
Meetings shall be held at least four (4) times a year or a frequency to be decided by the AC. The quorum for each meeting shall be at least two (2) members. The AC may invite any person to be in attendance to assist in its deliberations.
There were five (5) meetings held during the financial year and the attendance record is as follows:
Meetings attended Nathaniel Grant David Sherick 5
Y. Bhg. Dato’ Othman Bin Jusoh 5
Tunku Afwida Binti Tunku A. Malek 2
Liew Peng Chuen @ Liew Ah Choy 5
KEY FUNCTIONS AND RESPONSIBILITIES
The key functions and responsibilities of the AC are as follows:- • To oversee matters relating to external audit including the review of the audit plan, auditor’s management letter and the audit report; • To review the quarterly and annual financial statements focusing on compliance with the latest accounting standards, statutory and regulatory disclosure requirements; • To review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; • To review any related party transactions that may arise within the Company or the Group; • To recommend to the Board the appointment of the external auditors and internal auditors and the audit fee thereof; • To review and assess the professionalism, independence and capability of the external auditors, if they are suitable for re-appointment; • To verify the ESOS allocation on yearly basis; and • To consider other issues, as authorised by the Board.
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ACTIVITIES
The activities of the AC for the financial year under review were as follows:- • Reviewed the unaudited quarterly reports and annual financial statements prior to submission to the Board for consideration and approval and subsequent release to Bursa Malaysia Securities Berhad (“ Bursa Securities ”); • Reviewed the audit planning memorandum for the financial year ended 31 December 2015; • Reviewed the external auditor’s scope of work and audit plan for the Group; • Reviewed the internal audit plan and internal audit findings; and • Reviewed and recommended to the Board for approval of the Audit Committee Report and Statement on Risk Management and Internal Control for inclusion in the Annual Report.
INTERNAL AUDIT FUNCTION
During the financial year, the AC was supported by the outsourced internal audit service whose internal audit function is independent of the activities of operations of its auditees. The AC is aware that this internal audit function is essential to assist in obtaining the assurance it requires regarding the effectiveness of the system of internal control. The cost incurred for the internal audit service for the financial year was RM40,000. The main role of the internal audit function is to review the effectiveness of the system of risk management and internal control and this is performed with impartiality, proficiency and due professional care. During the financial year ended 31 December 2015, the internal audit has covered some key areas and the necessary follow-up and rectification measures were put in place to enhance the internal control system: i. Related party transactions ii. Corporate disclosure iii. Payments and account payables iv. Sales and account receivables
The Internal Audit reports directly to the AC. There was no material loss during the current financial year as a result of risk management or internal control failures. The Board and management are firm on implementing continuous measures to further strengthen the current risk management and internal control system.
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)
The Company’s ESOS is governed by the By-laws approved by the shareholders at an Extraordinary General Meeting held on 18 June 2009. The ESOS was established on 9 July 2009 and will be in force for a period of ten (10) years.
The allocation of ESOS options was reviewed by the AC to ensure compliance with the allocation criteria determined by the ESOS Options Committee and in accordance with the By-laws of the ESOS.
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The options granted to the Directors pursuant to the ESOS during the financial year under review were as follows:-
Number of options over ordinary shares of RM0.10 each Options pursuant to ESOS Balance as at 1 Balance as at 7 of the Company January 2015 Granted Exercised October 2015 * Y. Bhg. Dato’ Othman Bin Jusoh - 1,000,000 - 1,000,000 Cheong Chia Chieh @ Chang Chia Chieh - 21,125,906 - 21,125,906 Liew Peng Chuen @ Liew Ah Choy - 5,000,000 (2,500,000) 2,500,000 Tunku Afwida Binti Tunku A. Malek - 1,000,000 - 1,000,000
Chow Kah Sung - 5,000,000 - 5,000,000 Nathaniel Grant David Sherick - 4,000,000 - 4,000,000
Pursuant to the Company’s ESOS By-laws, not more than 50% of the Company’s shares available under the scheme shall be allocated to Directors and senior management. During the financial year under review, the Company has granted 7.72% of ESOS to its Directors and senior management.
* On 7 October 2015, the Company announced that the total outstanding 77,112,173 ESOS options were cancelled upon mutual agreement with the respective ESOS option holders.
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STATEMENT OF CORPORATE GOVERNANCE
The Board of PUCF recognises the importance of the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (“ MCCG 2012 ” or the “ Code ”) and remains committed to adopting good corporate governance in order to safeguard stakeholders’ interests as well as enhance shareholders’ value.
The Board is pleased to provide the following statement, made pursuant to Rule 15.25 of the ACE Market Listing Requirements (“ Listing Requirements ”) of Bursa Securities, on how the Group has applied the principles and recommendations set out in the Code throughout the financial year.
Principle 1 - Establish clear Roles and Responsibilities of the Board and Management The Board recognises the key role it plays in charting the strategic direction of the Group and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions: reviewing and adopting a strategic plan for the Group, addressing the sustainability of its business; overseeing the conduct of the Group’s business and evaluating whether or not its businesses are being properly managed; identifying principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and mitigating measures to address such risks; ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the orderly succession of senior management personnel; overseeing the development and implementation of an investor relations programme for the Company to facilitate better communication between the Group and its shareholders and other stakeholders; and reviewing the adequacy and integrity of the Group’s internal control and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.
To assist in the discharge of its stewardship role, the Board has established three (3) Board Committees, namely the Audit Committee, Nomination Committee and Remuneration Committee, to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.
Sustainability of Business The Board is mindful of the importance of business sustainability and in conducting the Group’s business, the impact on the environmental, social and governance aspects are taken into consideration. Accordingly, appropriate steps and actions were taken to diversify the Group into renewable energy sector as one of the Company’s sustainability policy and embedded the environment, social and governance elements in its corporate strategy.
Supply of, and Access to, Information The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board papers or upon specific requests, for decisions to be made on an informed basis and effective discharge of the Board’s responsibilities. Good practices have been observed for timely dissemination of meeting agenda, including the relevant Board and Board Committee papers to all Directors prior to the Board and Board Committee meetings, to give effect to Board’s decisions and to deal with matters arising from such meetings. All Board members are furnished with comprehensive explanation and recommendations on pertinent issues by management. The issues are then deliberated and discussed thoroughly by the Board prior to decision making.
In addition, Board members are updated on the Company’s activities and operations on a regular basis. All Directors have access to all information of the Company on a timely basis in an appropriate manner and quality necessary to enable them to discharge their duties and responsibilities. Senior management of the Group and external advisers are invited to attend Board meetings to provide additional insights and professional views, advice and explanations on specific items on the meeting agenda. Besides direct access to management, Directors may obtain independent professional advice at the Company’s expense, if considered necessary, in furtherance of their duties.
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All Directors have access to the advice and services of the Company Secretaries and to obtain independent professional advice, whenever necessary, at the expense of the Company.
The Company Secretary is a qualified Chartered Secretary by profession. The Company Secretary sits in all Board and Committee meetings. She advises the Board pertaining to the Listing Requirements of Bursa Securities and provisions of the Companies Act, 1965. She is responsible for the secretarial functions such as ensuring compliance with all statutory and regulatory requirements, recording the proceedings of all Board meetings and Committee meetings, and proper maintenance of secretarial records.
The appointment and removal of the Company Secretary is under the purview of Board.
The Company Secretary also updates the Board at regular intervals regarding changes to the regulatory requirements.
Principle 2 - Strengthen Composition of the Board
The Board comprises of nine (9) members led by an Independent Non-Executive Chairman, with two (2) Non- Independent Non-Executive Director, four (4) Independent Non-Executive Directors and two (2) Executive Directors. The current Board composition complies with the Listing Requirements of Bursa Securities.
The composition of the Board is made up of Non-Executive Directors and Executive Directors. The late Group Managing Director contributed significantly in performance monitoring, allocation of resources as well as improving governance and controls. The Non-Executive Directors fulfil an independent role in corporate accountability through their participation in the deliberations to provide a check & balance and the exercise of independent judgement in all of the Board’s deliberations.
The Board has, within it, professionals from various backgrounds, bringing diversity in experience, expertise and perspectives to the Group’s operations. The Board members’ profiles are set out in pages 11 to 19 of this Annual Report. a) Nomination Committee
The Nomination Committee (“ NC ”), which was established in May 2007, meets at least once a year and comprises three (3) members, all of whom are Independent Non-Executive Directors:
Liew Peng Chuen @ Liew Ah Choy Chairman, Independent Non-Executive Director
Y. Bhg Dato’ Othman Bin Jusoh Member, Independent Non-Executive Chairman
Tunku Afwida Binti Tunku A. Malek Member, Independent Non-Executive Director
The NC is empowered by the Board and carries out its terms of reference to consider and evaluate the proposed appointment of new Directors and the appointment of Directors to Board Committees of the Company. The NC will recommend suitable and eligible candidates to the Board for formal appointment. The NC also keeps under review the Board structure, size and composition and the mix of skills and core competencies required for the Board to discharge its duties effectively.
The appointment of any additional Director is made as and when it is deemed necessary by the existing Board upon recommendation from NC with due consideration given to the mix of expertise and relevant experience in the respective industry.
The NC also assesses the effectiveness of the Board based on merits as a whole, the Board Committees and the contributions of each individual Director. The NC undertakes an annual assessment of independent directors and executive directors. The Board is supportive of gender diversity in the Board composition. The Board through the NC will consider the gender diversity as part of its future selection process.
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b) Remuneration Committee
The Remuneration Committee (“ RC ”), which was established in May 2007, comprises of two (2) members, majority of whom are Independent Non-Executive Directors. The RC is granted the authority to recommend to the Board, the remuneration packages of the Executive Directors. The remuneration packages of Non- Executive Directors should be determined by the Board as a whole.
Y. Bhg Dato’ Othman Bin Jusoh Chairman, Independent Non-Executive Chairman
Liew Peng Chuen @ Liew Ah Choy Member, Independent Non-Executive Director
Cheong Chia Chieh @ Chang Chia Chieh Member, Group Managing Director (demised on 27 February 2016)
The RC recommends to the Board the remuneration package for the Executive Director. It is, nevertheless, the ultimate responsibility of the entire Board to approve the remuneration of the Executive Director.
The determination of the remuneration of the non-executive Directors is a matter for the Board as a whole with the Director concerned abstaining from deliberations and voting on decisions in respect of his individual remuneration.
Directors’ Remuneration
The level and make-up of remuneration – The aggregate remuneration of the Directors for the financial year ended 31 December 2015 are as follows:
Directors’ Benefits-in- fees Salaries Bonuses kind Total RM Executive Directors 24,000 272,378 - - 296,378 Non- Executive Directors 139,144 - - - 139,144 Total 163,144 272,378 - - 435,522
The numbers of Directors whose remuneration fall into the following bands are as follows:-
Range of Remuneration Executive Non-Executive RM50,000 and below - 6 RM50,001 – RM100,000 - - RM100,001 – RM150,000 - - RM150,001 – RM200,000 - - RM200,001 – RM250,000 - - RM250,001 – RM300,000 1 -
Principle 3 – Reinforce Independence of the Board The roles of the Chairman and the Executive Directors are distinct and separated with a clear division of responsibilities to ensure the balance of power and authority so that no single individual has absolute power within the Group. The Chairman leads and guides the Board to ensure its effectiveness whereas the Executive Directors and his management team are responsible for the efficient and effective management of the business and operations of the Company.
The Chairman is responsible for ensuring the adequacy and effectiveness of the Board’s governance process and acts as a facilitator at Board meetings to ensure that contributions from Directors are forthcoming on matters being deliberated and that no Board member dominates discussion.
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The Executive Directors implement the Group’s strategies, policies and decision adopted by the Board and oversees the operations and business development of the Group.
The Independent Non-Executive Directors bring to bear objective and independent views, advice and judgment on interests, not only of the Group, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential for protecting the interests of shareholders and can make significant contributions to the Company’s decision-making by bringing in the quality of detached impartiality. The Board feels that there is no necessity on the appointment of Senior Independent Non-Executive Director for the time being as shareholders and other stakeholders can convey their concern to the Independent Non-Executive Chairman.
The Board recognises the importance of establishing criteria on independence to be used in the annual assessment of its Independent Non-Executive Directors. The Board will consider the NC’s recommendations on the re- appointment / new appointment of Board members, inter-alia , include the nine (9)-years tenure for Independent Non-Executive Directors.
At the date of this statement, none of the Company’s Independent Non-Executive Directors has reached the nine (9)-years limit.
Principle 4 – Foster commitment of Directors Board Meetings – The Board meets regularly on a quarterly basis and as and when required. There were six (6) meetings held during the financial year and the attendance record is as follows:-
Meetings attended Y. Bhg. Dato’ Othman Bin Jusoh 6
Cheong Chia Chieh @ Chang Chia Chieh 6
Nathaniel Grant David Sherick 6
Tunku Afwida Binti Tunku A. Malek 3
Liew Peng Chuen @ Liew Ah Choy 6
Chow Kah Sung 6
Cheung Shuen Lung (appointed on 11 August 2015) 2
* Cheong Chia Chou, Hiew Wai Yoon and Cheong Tze Wai were appointed to the Board in 2016. It is the practice of the Company for Directors to devote sufficient time and effort to carry out their responsibilities and to require Directors to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements of Bursa Securities allow a Director to sit on the boards of five (5) listed issuers. Such notification is expected to include an indication of time that will be spent on the new appointment.
Directors’ Training – Continuing Education Programmes The Board is mindful of the importance for its members to undergo continuous training to be apprised on changes to regulatory requirements and the impact such regulatory requirements have on the Group.
All the Directors of the Company, save for the newly appointed directors, namely Cheong Chia Chou, Hiew Wai Yoon and Cheong Tze Wai, have attended the Mandatory Accreditation Programme within the stipulated timeframe as prescribed by the Listing Requirements of Bursa Securities.
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During the year, Board members have attended pertinent training as follows:
Y. Bhg. Dato’ Othman Bin Jusoh • Board Chairman Series Part 2: Leadership Excellence from the Chair; • Capital Market Director Programme for Fund Management (Modules 1, 2B, 3 & 4); and • Risk Management and Internal Control Workshop: Is our Line of Defence Adequate and Effective.
Cheong Chia Chieh @ Chang Chia Chieh • None.
Tunku Afwida Binti Tunku A. Malek • ICLIF - FIDE Core Programme; • MIA - Mastering FRS on Financial Instruments-W3: Derivative Valuation Methodologies; • MIA International Accountants Conference 2015; • AMLATFPUAA For Directors; • Capital Market Directors Programme (CMDP) Module 1; and • Capital Market Directors Programme (CMDP) Module 2B
Liew Peng Chuen @ Liew Ah Choy • Directors Corporate Governance Series – Building Effective Finance Function: From Reporting to Analytics to Strategic Input; and • Risk Management and Internal Control Workshop: Is our Line of Defence Adequate and Effective.
Chow Kah Sung • Bursa Malaysia CG Breakfast Series with Directors – “ How to Maximise Internal Audit”.
Nathaniel Grant David Sherick • Directors Corporate Governance Series – Building Effective Finance Function: From Reporting to Analytics to Strategic Input; and • Risk Management and Internal Control Workshop: Is our Line of Defence Adequate and Effective.
Cheung Shuen Lung • None. Most of the time in Beijing, China. (appointed on 11 August 2015)
* Cheong Chia Chou, Hiew Wai Yoon and Cheong Tze Wai were appointed to the Board in 2016.
Throughout the year, Directors also received updates and briefings, particularly on regulatory, industry and legal developments, including information on significant changes in business and procedures instituted to mitigate such risks.
The external auditors also briefed the Board members on any changes to the Malaysian Financial Reporting Standards that would affect the Group’s financial statements during the financial year under review. The Directors will continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role.
The Company Secretary updates the Board on any change in the regulatory requirements on a timely basis.
Re-election of Directors – In accordance with the Company’s Articles of Association, one-third (1/3) of the Directors shall retire from office, at least once in three (3) years. Retiring Directors can offer themselves for re- election. Directors who are appointed by the Board during the financial year are subject to re-election by shareholders at the next Annual General Meeting held following their appointments. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
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For the forthcoming Annual General Meeting, the following Directors will retire in accordance with the Company’s Articles of Association and being eligible, offered themselves for re-election:-
i) Y. Bhg. Dato’ Othman Bin Jusoh (Article 85) ii) Hiew Wai Yoon (Article 92) iii) Cheong Tze Wai (Article 92) iv) Cheung Shuen Lung (Article 92) v) Cheong Chia Chou (Article 92)
Tunku Afwida Binti Tunku A. Malek is also subject to retire at the forthcoming AGM but she does not wish to seek for re-election. She will vacate the office upon conclusion of the Eighteenth AGM.
Principle 5 – Uphold integrity in financial reporting by Company It is the Board’s commitment to present a true and fair Group’s financial performance and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement of Group’s results to Bursa, the annual financial statements of the Group and Company as well as the Chairman’s statement and review of the Group’s operations in the Annual Report, where relevant. A statement by the Directors of their responsibilities in the preparation of financial statements are set out in the ensuing paragraph.
Statement of Directors’ Responsibility for Preparing Financial Statements
The Board is responsible for ensuring that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group as at the end of the financial year and of the results and cash flows of the Group for the financial year then ended.
The Directors are satisfied that in preparing the financial statements of the Group for the year ended 31 December 2015, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also considered that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis.
The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, 1965.
Audit Committee
In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee, comprising wholly Independent Non-Executive Directors, with Mr. Nathaniel Grant David Sherick as the Committee Chairman. The composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report of this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa and the annual statutory financial statements.
As the Board understands its role in upholding the integrity of financial reporting by the Company, the Board has established the Audit Committee’s terms of reference by formalizing a policy on the types of non-audit services permitted to be provided by the external auditors of the Company so as not to compromise their independence and objectivity, including the need for the Audit Committee’s approval in writing before such services can be provided by the external auditors.
In assessing the independence of the external auditors, the Audit Committee will require written assurance by the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants.
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Principle 6 – Recognise and manage risks of the Group The Board has overall responsibility for maintaining a sound system of internal controls and risk framework to manage risks which provides reasonable assessments of effective and efficient operations, internal controls and compliance with laws and regulations.
The internal audit function of the Group is outsourced to an independent professional firm, whose work is performed with impartiality, proficiency and with due professional care and in accordance with the International Professional Practices Framework of the Institute of Internal Auditors, Incorporated, which sets out professional standards on internal audit. It undertakes regular reviews of the adequacy and effectiveness of the Group’s system of internal controls and risk management process, as well as appropriateness and effectiveness of the corporate governance practices. The Internal Audit reports directly to the Audit Committee. Further details on the internal audit function can be seen in the Audit Committee Report and the Statement on Risk Management and Internal Control of this Annual Report.
Principle 7 – Ensure timely and high quality disclosure The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. On this basis, the Board will formalise pertinent policies and procedures not only to comply with the disclosure requirements as stipulated in the Listing Requirements of Bursa Securities but also setting out the persons authorised and responsible to approve and disclose material information to regulators, shareholders and stakeholders.
Principle 8 – Strengthen relationship between the Company and its shareholders
Shareholders’ participation at general meetings
AGM, which is the principal forum for shareholders’ dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general. At the previous AGM, a question and answer session was held where the Chairman invited shareholders to raise questions with responses from the Board.
The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to the Group’s operations in general. All the resolutions set out in the Notice of the previous AGM were put to vote by show of hands and duly passed. The outcome of the AGM was announced to Bursa Securities on the same meeting day. Going forward, the Board will adopt poll voting for related party transactions, if any, which require specific approvals, including the announcement of the detailed results showing the number of votes cast for and against each resolution.
Communication and engagement with shareholders
The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such, has various channels to maintain communication with them. The various channels of communications are through the quarterly announcements on financial results to Bursa, relevant announcements and circulars, the Annual and Extraordinary General Meetings and through the Group’s website where shareholders can access pertinent information concerning the Group.
A) CORPORATE SOCIAL RESPONSIBILITY
The Company has improved its working environment and provisions for staff welfare. The Company’s advocates energy savings and going green. The Company contributed donations to certain local community groups in the society.
B) STATEMENT OF COMPLIANCE
The Board strives to ensure that the Company complies with the Principles and Best Practices of the Code and will endeavour to improve and enhance the procedures from time to time.
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STATEMENT OF RISK MANAGEMENT AND INTERNAL CONTROL
Introduction
The Malaysian Code on Corporate Governance (“MCCG”) 2012 requires listed companies to maintain a sound risk management framework and internal control system to reasonably safeguard shareholders’ investments and the Group’s assets. The Listing Requirements of Bursa Securities require the Board of public listed companies to include a statement in their annual report on the state of their risk management and internal control. Pursuant to Paragraph 15.26(b) of the Listing Requirements of Bursa Securities and the MCCG 2012, the Board of PUCF, is pleased to provide the following Statement on Risk Management and Internal Control for the financial year ended 31 December 2015 prepared in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.
Board Responsibilities
The Board recognises the importance of a sound risk management framework and internal control system for good corporate governance and acknowledges its responsibility to maintain a sound risk management framework and internal control system. The Board also recognises that internal control not only provide coverage to financial control, operational control but compliance control and risk management to ensure reasonable assurance in achieving objectives in terms of operation efficiency and effectiveness, financial reporting reliability and compliance with laws and regulations.
Due to inherent limitations in any risk management and internal control system, such system put into effect by the management is designed to manage rather than eliminate risks that may impede the achievement of the Group’s business objectives. Therefore, the risk management and internal control system can only provide reasonable but not absolute assurance against material misstatement or loss, contingencies, fraud or any irregularities.
The Board confirms that there is an on-going process for identifying, evaluating and managing the significant risks faced by the Group as follows:-
1. The operating units, headed by the Directors and senior management in the respective fields of specialisation. 2. The provision to the Board and the management of comprehensive information on monthly and quarterly financial performance, key businesses and production indicators, including customers’ feedback on the level as well as quality of services. 3. The management regularly evaluates the actions taken by operating units in mitigating or overcoming the impact of the risks identified to the operation of the Group. 4. Monitoring of the monthly results by the management as against the budget and in the event of major variances, to take appropriate remedial actions.
Key Elements of Internal Control
The management of the Group is delegated to the Executive Directors, who are involved in the day-to-day business operations where informal operational and management meeting are held regularly with senior management to identify, discuss and resolve businesses and operational issues. Their responsibilities and authority limits are set by the Board; An organisation structure that supports businesses and operational requirements, with well-defined delegation of authority, level of responsibilities, line of accountability with appropriate reporting procedures; The Group has a framework for recruitment activities to maintain a capable workforce. On-going trainings are conducted to enhance the skills and knowledge of the workforce, which aids in maintaining a risk conscious culture within the Group. Comprehensive guidelines for the employment retention of employees are in place; Documented guidelines on operating procedures have been adopted by the Group to ensure clear accountability and control procedures are in place for all operating departments; and Timely financial reporting in providing relevant financial information for management review. Quarterly financial results are reviewed by the Audit Committee prior to Board’s approval and announcements. Statutory auditors’ advice is sought as and when required.
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Internal Audit Function
The Group’s internal audit function is outsourced to an independent professional firm to assist the Board and Audit Committee in providing an independent assessment on the adequacy, efficiency and effectiveness of the Group’s internal control system.
Total cost incurred for the Internal Audit Services for the financial year ended 31 December 2015 was RM40,000.
An internal audit report is submitted to the Audit Committee on a quarterly basis. Criteria to be addressed in the report include risk identification and mitigation, corrective and preventive action plans and implementation of the plans by the management.
Follow-up visits were carried out to ensure weaknesses identified have been or are being addressed. Periodic internal audit reports and status reports on follow up actions were tabled to the Audit Committee and Board during its quarterly meetings.
Review of this Statement by External Auditors
As required by Paragraph 15.23 of the ACE Market Listing Requirements of Bursa Securities, the External Auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Recommended Practice Guide (“RPG”) 5 (Revised): Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report, issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.
Based on their review, the External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of risk management and internal control of the Group.
Conclusion
The Board has reviewed the risk management and internal control system and is satisfied that no material losses, deficiencies or errors arising from any inadequacy or failure of the Group’s internal control system that will require disclosure in the Annual Report. The Board has also received assurance from Executive Directors and Financial Controller that the Group’s risk management and internal control systems are operating adequately and effectively, in all material respects.
The Board will continue to take measures to strengthen the system of internal control maintained by the Group to ensure shareholders’ investment and the Group’s assets are consistently safeguarded.
This Statement is made in accordance with a resolution of the Board of Directors dated 21 April 2016.
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OTHER DISCLOSURES
PURSUANT TO THE LISTING REQUIREMENTS OF BURSA SECURITIES
1. SHARE BUY-BACKS There were no share repurchases during the financial year under review.
2. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
Warrants
(i) Warrants-A
On 26 December 2014, the Company issued 132,791,321 free warrants in PUCF (“ Warrant(s)-A”) on the basis of one (1) Warrant-A for every seven (7) existing ordinary shares of RM0.10 each in PUCF held on 26 December 2014.
4,285 Warrants-A were exercised during the financial year under review.
(ii) Warrants-B
Subsequent to the financial year end, on 18 February 2016, the Company issued 213,266,257 Warrants-B on the basis of seven (7) Warrants-B for every twenty eight (28) rights ICULS subscribed.
ICULS
Subsequent to the financial year end, on 18 February 2016, the Company issued 853,065,729 three (3) years, 4% ICULS at 100% of the nominal value of RM0.05 each on the basis of twenty eight (28) RM0.05 nominal value of rights ICULS for every twenty (20) ordinary shares of RM0.10 each in PUCF held on 19 January 2016.
ESOS
77,112,173 outstanding ESOS options granted were cancelled on 7 October 2015.
3. DEPOSITORY RECEIPT The Company did not sponsor any Depository Receipt programme during the financial year under review.
4. IMPOSITION OF SANCTIONS/PENALTIES There was no public imposition of sanction or penalties imposed on the Company and its subsidiaries, directors or management by the regulatory bodies during the financial year under review.
5. NON-AUDIT FEES There was no non-audit fees paid to the external auditors by the Group for the financial year ended 31 December 2015.
6. VARIATION OF RESULTS The Company did not release any profit estimate, forecast or projection for the financial year under review, and audited results did not differ by 10% or more against the unaudited results announced.
7. PROFIT GUARANTEE The Company did not receive any profit guarantee during the financial year under review.
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8. PROPERTIES
Net book value as Age of building Date of at 31 December Address Existing use Land area Tenure (years) acquisitions 2015 (RM) Unit C-2-01, Level 2, Capital 3, Building - 8,612 Freehold Approximately 14 January 2015 5,417,500 Oasis Square, No. 2, Jalan PJU Operational square feet 2 years 1A/7A, Ara Damansara, PJU 1A, office 47301 Petaling Jaya, Selangor Darul Ehsan
H.S.(D) 52052, PT 30506, Bandar Land - Solar 108,900 78 years Less than 1 year 22 January 2015 9,589,770 Sungai Petani, Kuala Muda, photovoltaic square feet lease Kedah Darul Aman structure and expiring plant in 2094
9. MATERIAL CONTRACTS
Recurrent related party transaction of a revenue nature
During the financial year ended 31 December 2015, the PUCF Group had, in the ordinary course of business, entered into normal purchase transaction with certain related parties of PUCF (“ RRPT ”). The RRPT was made by the PUCF Group at arms’ length, on the PUCF Group’s normal commercial terms, which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of PUCF.
The details of the RRPT are set out below:-
Amount transacted Date Related Party Nature of transaction (RM) Licensing of AllChina’s location PictureWorks (M) based mobile application software to Sdn Bhd PictureWorks for a period of 24 30 January 2015 (“ PictureWorks ”) months from 30 January 2015 2,400,000
The late Cheong Chia Chieh @ Chang Chia Chieh was the Group Managing Director and major shareholder of PUCF as well as a Director of AllChina prior to his demise in February 2016. He was also the brother of Cheong Chia Chou who is a Non Independent Non-Executive Director of PUCF as well as the major shareholder of PictureWorks.
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- 34 -
10. UTILISATION OF PROCEEDS The status of the utilisation of proceeds arising from the three (3)-year, 4%, ICULS as at 31 March 2016 is as follows:-
Proposed Actual Balance utilisation Utilisation unutilised Expected time frame RM('000) RM('000) RM('000) for utilisation
Capital expenditure for construction within 12 months to 36 of solar photovoltaic plants 35,415 - 35,415 months
Working capital 6,238 - 6,238 within 36 months
Defrayment of expenses incurred for the corporate exercise 1,000 1,000 - within 6 months 42,653 1,000 41,653
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Company No. 451734 A - 35 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
DIRECTORS’ REPORT
The Directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2015.
Principal Activities
The principal activity of the Company is that of investment holding.
The principal activities of its subsidiary companies are disclosed in Note 6 to the financial statements.
There have been no significant changes in the nature of these activities during the financial year.
Financial Results
Group Company RM RM
Profit/(Loss) for the financial year 2,298,290 (2,666,057)
Attributable to: Owners of the parent 2,210,584 Non-controlling interests 87,706 2,298,290
Dividends
There were no dividends proposed, declared or paid by the Company since the end of the previous financial year. The Directors do not recommend any dividend in respect of the current financial year.
Reserves and Provisions
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. Company No. 451734 A - 36 -
Issue of Shares and Debentures
During the current financial year, the Company increased its issued and paid-up share capital from 1,062,330,571 to 1,065,805,489 through the issuance of 3,474,918 new ordinary shares of RM0.10 each as follows:
(a) 4,285 new ordinary shares of RM0.10 each for cash arising from the conversion of warrants at exercise price of RM0.10 per ordinary share; and
(b) 3,470,633 new ordinary shares of RM0.10 each for cash arising from the exercise of employees’ share options (“ESOS”) at exercise price of RM0.12 per ordinary share.
The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.
There was no issuance of debentures during the financial year.
Warrants
The warrants were constituted under the Deed Poll dated 6 November 2014 as disclosed in Note 19(f) to the financial statements.
As at 31 December 2015, the total number of warrants that remain unexercised were 132,787,036.
Options Granted Over Unissued Shares
No options were granted to any person to take up unissued shares of the Company during the financial year apart from the issue of options pursuant to the ESOS.
At an extraordinary general meeting held on 18 June 2009, the Company’s shareholders approved the establishment of ESOS of not more than twenty five percent (25%) of the total and issued paid up share capital of the Company at any point of time during the existence of the ESOS to eligible Directors and employees of the Company. On 4 June 2014, the Board announced that the Company will extend its existing ESOS for another 5 years from 8 July 2014 to 8 July 2019 in accordance with the terms of the ESOS Bylaws. On 7 October 2015, all the outstanding ESOS granted has been cancelled upon mutual agreement with the respective ESOS option holders.
The salient features and other terms of the ESOS are disclosed in the Note 30 to the financial statements. Company No. 451734 A - 37 -
Options Granted Over Unissued Shares (Cont’d) As at 31 December 2015, the options offered to take up unissued ordinary shares of RM0.10 each and the exercise prices are as follows:
Number of options granted over ordinary shares of RM0.10 each Exercise At At Grant date price 01.01.2015 Granted Exercised Lapsed Cancelled 31.12.2015 RM 12 January 2015 0.12 - 63,237,406 (3,470,633) (2,654,600) (57,112,173) - 18 June 2015 0.12 - 18,000,000 - - (18,000,000) - 24 July 2015 0.12 - 2,000,000 - - (2,000,000) - - 83,237,406 (3,470,633) (2,654,600) (77,112,173) -
Details of options granted to Directors are disclosed in the section of Directors’ report. The list of employees who have been granted option to subscribe for ordinary shares of RM0.10 each during the financial year are disclosed in Note 30 to the financial statements.
Directors The Directors in office since the date of the last report are:
Dato’ Othman Bin Jusoh Tunku Afwida Binti Tunku A. Malek Liew Peng Chuen @ Liew Ah Choy Nathaniel Grant David Sherick Chow Kah Sung Cheung Shuen Lung (appointed on 11.08.2015) Cheong Chia Chou (appointed on 14.04.2016) Cheong Tze Wai (appointed on 18.04.2016) Hiew Wai Yoon (appointed on 18.04.2016) Professor Wei Xin (retired on 09.06.2015) Cheong Chia Chieh @ Chang Chia Chieh (deceased on 27.02.2016)
Directors’ Interests The interests and deemed interests in the shares, warrants and options over shares of the Company or its related corporations (other than wholly owned subsidiary companies) of those who were Directors at financial year end (including their spouses or children) according to the Register of Directors’ Shareholdings are as follows:
Number of ordinary shares of RM0.10 each At 01.01.2015 / ^ Date of At appointment Exercised Sold 31.12.2015 Interests in the Company Direct interest Liew Peng Chuen @ Liew Ah Choy - 2,500,000 - 2,500,000 ^ Cheung Shuen Lung 5,091,428 - - 5,091,428 Company No. 451734 A - 38 -
Directors’ Interests (Cont’d)
The interests and deemed interests in the shares, warrants and options over shares of the Company or its related corporations (other than wholly owned subsidiary companies) of those who were Directors at financial year end (including their spouses or children) according to the Register of Directors’ Shareholdings are as follows: (Cont’d)
Number of ordinary shares of RM0.10 each At At 01.01.2015 Acquired Sold 31.12.2015 Interests in the Company Indirect interest * Estate of late Cheong Chia Chieh @ Chang Chia Chieh 585,968,402 - (142,800,000) 443,168,402
Number of warrants At At 01.01.2015 Acquired Sold 31.12.2015 Interests in the Company Indirect interest * Estate of late Cheong Chia Chieh @ Chang Chia Chieh 73,247,296 - (37,031,456) 36,215,840
Number of options granted over ordinary shares of RM0.10 each At At 01.01.2015 Granted Exercised Cancelled # 31.12.2015
Interests in the Company Dato’ Othman Bin Jusoh - 1,000,000 - (1,000,000) - Tunku Afwida Binti Tunku A. Malek - 1,000,000 - (1,000,000) - Liew Peng Chuen @ Liew Ah Choy - 5,000,000 (2,500,000) (2,500,000) - Nathaniel Grant David Sherick - 4,000,000 - (4,000,000) - Chow Kah Sung - 5,000,000 - (5,000,000) - Cheong Chia Chieh @ Chang Chia Chieh - 21,125,906 - (21,125,906) -
# On 7 October 2015, all the outstanding ESOS granted has been cancelled upon mutual agreement with the respective Directors.
* Deemed interested pursuant to Section 6A of the Companies Act, 1965 by virtue of his substantial shareholdings in Resource Holding Management Limited.
None of the other Directors in office at the end of the financial year had any interest in the ordinary shares of the Company and of its related corporations during the financial year. Company No. 451734 A - 39 -
Directors’ Benefits
Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by 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.
Neither during nor at the end of the financial year, was the Company a party to any arrangement whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate other than arising from the share options granted under ESOS and warrants.
Other Statutory Information
(a) Before the statements of financial position and statements of profit or loss and other comprehensive income of the Group and of the Company were made out, the Directors took reasonable steps:
(i) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the Directors are not aware of any circumstances:
(i) which would render the amounts write off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or
(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(iii) not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading; or
(iv) 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. Company No. 451734 A - 40 -
Other Statutory Information (Cont’d)
(c) At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liability of any other person; or
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(d) In the opinion of the Directors:
(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations when they fall due;
(ii) the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in the notes to financial statements; and
(iii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.
Significant Events
The significant events are disclosed in Note 35 to the financial statements.
Subsequent Events
The subsequent events are disclosed in Note 36 to the financial statements.
Ultimate Holding Company
The ultimate holding company is Resource Holding Management Limited (“RHML”), a company incorporated in Cayman Islands and quoted on the Alternative Investment Market of the London Stock Exchange (“AIM”). On 5 February 2016, RHML had officially cancelled the admission of its ordinary shares to trading on AIM. Company No. 451734 A - 41 -
Auditors
The Auditors, Messrs UHY, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 21 April 2016.
DATO’ OTHMAN BIN JUSOH LIEW PENG CHUEN @ LIEW AH CHOY
KUALA LUMPUR Company No. 451734 A - 42 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENT BY DIRECTORS Pursuant to Section 169(15) of the Companies Act, 1965
We, the undersigned, being two of the Directors of the Company, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 47 to 159 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2015 and of their financial performance and cash flows for the financial year then ended.
The supplementary information set out in Note 39 to the financial statements on page 160 have been compiled in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 21 April 2016.
DATO’ OTHMAN BIN JUSOH LIEW PENG CHUEN @ LIEW AH CHOY
KUALA LUMPUR Company No. 451734 A - 43 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATUTORY DECLARATION Pursuant to Section 169(16) of the Companies Act, 1965
I, CHO MEE LIN, being the Officer primarily responsible for the financial management of PUC FOUNDER (MSC) BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 47 to 160 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the ) abovenamed at KUALA LUMPUR in the ) state of Federal Territory on 21 April 2016 ) CHO MEE LIN
Before me,
NO. W 521 MOHAN A.S. MANIAM
COMMISSIONER FOR OATHS - 44 -
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PUC FOUNDER (MSC) BERHAD (Company No.: 451734-A) (Incorporated in Malaysia)
Report on the Financial Statements
We have audited the financial statements of PUC Founder (MSC) Berhad, which comprise the statements of financial position as at 31 December 2015 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 a summary of significant accounting policies and other explanatory information, as set out on pages 47 to 159.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. - 45 -
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PUC FOUNDER (MSC) BERHAD (CONT’D) (Company No.: 451734-A) (Incorporated in Malaysia)
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2015 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the financial statements and the auditors’ reports of all the subsidiary companies of which we have not acted as auditors, which are indicated in Note 6 to the financial statements.
(c) We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.
(d) The audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174 (3) of the Act. - 46 -
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PUC FOUNDER (MSC) BERHAD (CONT’D) (Company No.: 451734-A) (Incorporated in Malaysia)
Other Reporting Responsibilities
The supplementary information set out in Note 39 on page 160 is solely disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
UHY Firm Number: AF 1411 Chartered Accountants
NG WEE TEIK Approved Number: 1817/12/16 (J) Chartered Accountant
KUALA LUMPUR
21 April 2016 Company No. 451734 A - 47 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2015
Group Company 2015 2014 2015 2014 Note RM RM RM RM
ASSETS Non-Current Assets Property, plant and equipment 4 16,913,384 1,317,936 1,536,893 713,685 Software development expenditure 5 1,295,988 10,912,210 - - Investment in subsidiary companies 6 - - 101,799,095 93,576,077 Intangible assets 7 63,595,480 50,011,069 - - Other investments 8 1,114 674 10 10 Deferred tax assets 9 129,506 142,425 - - Trade receivables 10 2,362,569 3,313,154 - - 84,298,041 65,697,468 103,335,998 94,289,772
Current Assets Inventories 11 820,915 23,127 - - Other investments 8 844,620 3,883,448 - - Trade receivables 10 39,459,927 41,794,906 - - Other receivables 12 5,671,802 5,672,290 610,534 291,256 Amount due from ultimate holding company 13 490,070 586,582 490,070 678,820 Amount due from holding company 14 9,038 - 9,038 - Amount due from subsidiary companies 15 - - 24,685,135 33,922,532 Tax recoverable 124,985 38,621 12,258 12,258 Fixed deposits with licensed banks 16 6,135,601 13,870,595 29,000 - Cash and bank balances 5,873,603 7,198,412 488,405 1,236,508 59,430,561 73,067,981 26,324,440 36,141,374 Total Assets 143,728,602 138,765,449 129,660,438 130,431,146 Company No. 451734 A - 48 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia) STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 (CONT’D)
Group Company 2015 2014 2015 2014 Note RM RM RM RM
EQUITY Share capital 17 106,580,549 106,233,057 106,580,549 106,233,057 Convertible Preference Shares 18 - 544,596 - - Reserves 19 22,211,509 18,482,007 7,009,416 9,498,470 Total equity attributable to owners of the parent 128,792,058 125,259,660 113,589,965 115,731,527 Non-controlling interests 187,346 95,636 - - Total equity 128,979,404 125,355,296 113,589,965 115,731,527
LIABILITIES Non-Current Liabilities Finance lease liability 20 42,152 103,135 - - Bank borrowings 21 4,434,318 - Deferred tax liabilities 9 34,137 8,817 - - 4,510,607 111,952 - -
Current Liabilities Trade payables 22 3,726,033 5,666,996 - - Other payables 23 5,515,658 6,554,523 578,403 224,189 Amount due to ultimate holding company 13 - 189,000 - - Amount due to subsidiary companies 15 - - 15,492,070 14,475,430 Finance lease liability 20 60,983 58,302 - - Bank borrowings 21 828,952 593,868 - - Provision for taxation 106,965 235,512 - - 10,238,591 13,298,201 16,070,473 14,699,619 Total Liabilities 14,749,198 13,410,153 16,070,473 14,699,619 Total Equity and Liabilities 143,728,602 138,765,449 129,660,438 130,431,146
The accompanying notes form an integral part of the financial statements. Company No. 451734 A - 49 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
Group Company 2015 2014 2015 2014 Note RM RM RM RM
Revenue 24 27,375,831 53,428,857 70,510 -
Cost of sales (13,727,966) (31,062,355) (59,935) -
Gross profit 13,647,865 22,366,502 10,575 -
Other income 7,401,188 10,483,349 604,345 2,661,380
Administrative and selling expenses (18,059,324) (21,975,612) (3,280,977) (3,393,626)
Other expenses (187,712) (34,526) - -
Finance costs 25 (283,438) (778,892) - -
Profit/(Loss) before tax 26 2,518,579 10,060,821 (2,666,057) (732,246)
Taxation 27 (220,289) (222,714) - (36,657)
Profit/(Loss) for the financial year 2,298,290 9,838,107 (2,666,057) (768,903) Company No. 451734 A - 50 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
Group Company 2015 2014 2015 2014 Note RM RM RM RM
Other comprehensive income Items that are or may be reclassified subsequently to profit or loss Available-for-sale financial assets - current year gain 440 528 - - Reclassification adjustment - foreign currency translation reserve 692,888 - - - Exchange translation differences for foreign operations 103,991 72,463 - -
Total other comprehensive income for the financial year 797,319 72,991 - -
Total comprehensive income for the financial year 3,095,609 9,911,098 (2,666,057) (768,903)
Profit/(Loss) for the financial year attributable to: Owners of the parent 2,210,584 9,849,300 (2,666,057) (768,903) Non-controlling interests 87,706 (11,193) - - 2,298,290 9,838,107 (2,666,057) (768,903)
Total comprehensive income for the financial year attributable to: Owners of the parent 3,007,903 9,922,291 (2,666,057) (768,903) Non-controlling interests 87,706 (11,193) - - 3,095,609 9,911,098 (2,666,057) (768,903)
Earnings per share
Basic (sen) 28(a) 0.21 1.09
Diluted (sen) 28(b) 0.20 1.05
The accompanying notes form an integral part of the financial statements. Company No. 451734 A - 51 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
Attributable to Owners of the Parent Non-Distributable Distributable Foreign Employee Currency Fair Value Reverse Share Non- Share Share Other Translation Adjustment Acquisition Warrants Option Retained Controlling Total Capital CPS Premium Reserve Reserve Reserve Debit Reserve Reserve Earnings Total Interests Equity RM RM RM RM RM RM RM RM RM RM RM RM RM Group 2015 At 1 January 2015 106,233,057 544,596 9,273,758 (15,293,239) (931,505) 528 (36,809,064) 16,718,427 - 45,523,102 125,259,660 95,636 125,355,296
Profit for the financial year ------2,210,584 2,210,584 87,706 2,298,290 Other comprehensive income for the financial year - - - - 796,879 440 - - - - 797,319 - 797,319 Total comprehensive income for the financial year - - - - 796,879 440 - - - 2,210,584 3,007,903 87,706 3,095,609
Transactions with owners:
Issue of ordinary shares: - conversion of warrants 429 - - 539 - - - (539) - - 429 - 429 [Note 17, 19(f)] - exercise of ESOS (Notes 17, 19) 347,063 - 177,003 - - - - - (107,590) - 416,476 - 416,476 Shares options granted under ESOS [Note 19(g)] ------107,590 - 107,590 - 107,590 Redemption of CPS - (544,596) - 544,596 ------Disposal of subsidiary companies ------4,004 4,004 Total transactions with owners 347,492 (544,596) 177,003 545,135 - - - (539) - - 524,495 4,004 528,499 At 31 December 2015 106,580,549 - 9,450,761 (14,748,104) (134,626) 968 (36,809,064) 16,717,888 - 47,733,686 128,792,058 187,346 128,979,404 Company No. 451734 A - 52 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
Attributable to Owners of the Legal Parent Non-Distributable Distributable Foreign Redeemable Currency Fair Value Reverse Non- Share Preference Share Other Translation Adjustment Acquisition Warrants Retained Controlling Total Capital Shares CPS Premium Reserve Reserve Reserve Debit Reserve Earnings Total Interests Equity RM RM RM RM RM RM RM RM RM RM RM RM RM Group 2014 At 1 January 2014 84,503,625 2,250,000 544,596 10,879,497 1,350,044 (1,003,968) - (56,922,805) - 37,098,995 78,699,984 (17,171) 78,682,813 Reverse acquisition adjusments - - - 4,120,503 75,144 - - 20,113,741 - (1,425,193) 22,884,195 - 22,884,195
Profit for the financial year ------9,849,300 9,849,300 (11,193) 9,838,107 Other comprehensive income for the financial year - - - - - 72,463 528 - - - 72,991 - 72,991 Total comprehensive income for the financial year - - - - - 72,463 528 - - 9,849,300 9,922,291 (11,193) 9,911,098
Increase in equity interests in a subsidiary company by non-controlling interests ------124,000 124,000
Transactions with owners Issue of ordinary shares: - Private placement 21,729,432 - - 7,552,890 ------29,282,322 - 29,282,322 - Bonus issue - - (13,279,132) ------(13,279,132) - (13,279,132) Issued of warrants [Note 19(f)] - - - - (16,718,427) - - - 16,718,427 - - - - Cancellation of RCPS - (2,000,000) ------(2,000,000) - (2,000,000) Redemption of RCCPS - (250,000) ------(250,000) - (250,000) Total transactions with owners 21,729,432 (2,250,000) - (5,726,242) (16,718,427) - - - 16,718,427 - 13,753,190 - 13,753,190 At 31 December 2014 106,233,057 - 544,596 9,273,758 (15,293,239) (931,505) 528 (36,809,064) 16,718,427 45,523,102 125,259,660 95,636 125,355,296 Company No. 451734 A - 53 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
Non-Distributable Employee Share Share Other Warrant Share Option Accumulated Total Capital Premium Reserve Reserve Reserve Losses Equity Note RM RM RM RM RM RM RM Company
At 1 January 2015 106,233,057 13,106,513 (16,718,427) 16,718,427 - (3,608,043) 115,731,527
Loss for the financial year, representing total comprehensive income for the financial year - - - - - (2,666,057) (2,666,057)
Transactions with owners:
Issue of ordinary shares: - conversion of warrants 17, 19(f) 429 - 539 (539) - - 429 - exercise of ESOS 17, 19 347,063 177,003 - - (107,590) - 416,476 Shares options granted under ESOS 19(g) - - - - 107,590 - 107,590
Total transactions with owners 347,492 177,003 539 (539) - - 524,495
At 31 December 2015 106,580,549 13,283,516 (16,717,888) 16,717,888 - (6,274,100) 113,589,965 Company No. 451734 A - 54 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
Non-Distributable Employee Share Share Other Warrant Share Option Accumulated Total Capital Premium Reserve Reserve Reserve Losses Equity Note RM RM RM RM RM RM RM Company
At 1 January 2014 84,503,625 18,832,755 - - - (2,839,140) 100,497,240
Loss for the financial year, representing total comprehensive income for the financial year - - - - - (768,903) (768,903)
Transactions with owners: Issue of ordinary shares: - Private placement 17 8,450,300 7,552,890 - - - - 16,003,190 - Bonus issue 17 13,279,132 (13,279,132) - - - - - Issued of warrants 19(f) - - (16,718,427) 16,718,427 - - -
Total transactions with owners 21,729,432 (5,726,242) (16,718,427) 16,718,427 - - 16,003,190
At 31 December 2014 106,233,057 13,106,513 (16,718,427) 16,718,427 - (3,608,043) 115,731,527
The accompanying notes form an integral part of the financial statements. Company No. 451734 A - 55 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
Group Company 2015 2014 2015 2014 RM RM RM RM
Cash Flows From Operating Activities Profit/(Loss) before tax 2,518,579 10,060,821 (2,666,057) (732,246)
Adjustments for: Amortisation of software development expenditure 899,417 1,046,989 - - Amortisation of intangible assets 304,687 - - - Bad debts written off - trade receivables 5,862,410 1,892,057 - - - other receivables - 5,000 - - Depreciation of property, plant and equipment 635,379 621,929 328,828 231,682 Fair value adjustment on trade receivables 105,135 - - - Finance costs 283,438 778,892 - - Impairment on trade receivables 1,945,465 5,888,320 - - Inventories written off 7,637 1,020,325 - - Loss/(Gain) on disposal of property, plant and equipment 2,371 (1,014,777) (4,674) - Loss on disposal of subsidiary companies 132,810 - - - Loss on winding up of a subsidiary company 37,858 - - - Property, plant and equipment written off 19,436 - - - Share-based payment expenses 107,590 - 107,590 - Dividend income (53,446) (93,508) - - Gain on cancellation of RCPS - (2,000,000) - - Gain on foreign exchange (10,696) (43,319) - - - unrealised Gain on redemption on RCCPS - (4,422,932) - - Government grant income (180,500) (178,996) - - Operating profit/(loss) before working capital changes carried forward 12,617,570 13,560,801 (2,234,313) (500,564) Company No. 451734 A - 56 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
Group Company 2015 2014 2015 2014 RM RM RM RM
Cash Flows From Operating Activities (Cont'd) Operating profit/(loss) before working capital changes carried forward 12,617,570 13,560,801 (2,234,313) (500,564) Interest income (297,494) (191,418) - (5,323) Reversal of impairment on trade receivables (5,804,429) (1,272,343) - - Operating profit/(loss) before working capital changes 6,515,647 12,097,040 (2,234,313) (505,887)
Changes in working capital Inventories (806,749) 3,085,478 - - Trade receivables 1,025,419 (13,867,471) - 3,426 Other receivables (521,848) 9,830,355 (319,278) (231,324) Trade payables (1,765,518) 2,330,947 - - Other payables (117,313) (4,437,631) 354,214 (1,480,020) Amount due from/to ultimate holding company (92,488) 1,592,214 188,750 (678,820) Amount due to holding company (9,038) - (9,038) - Amount due from/to subsidiary companies - - 2,031,017 (10,465,734) (2,287,535) (1,466,108) 2,245,665 (12,852,472) Cash generated from/(used in) operations 4,228,112 10,630,932 11,352 (13,358,359)
Interest received 297,494 191,418 - 5,323 Interest paid (283,438) (778,892) - - Tax refund 22,473 1,769 - 16,149 Tax paid (417,229) (649,583) - (15,000) Exchange translation differences 80,840 64,642 - - (299,860) (1,170,646) - 6,472 Net cash from/(used in) operating activities 3,928,252 9,460,286 11,352 (13,351,887) Company No. 451734 A - 57 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
Group Company 2015 2014 2015 2014 RM RM RM RM
Cash Flows From Investing Activities Acquisition of subsidiary companies [Note 6(b)(iv)] - - 2 (2,556,067) Addition of intangible assets (5,400,000) - - - Addition of software development expenditure - (8,604,000) - - Capital contribution from non-controlling interests - 124,000 - - Dividend received 104 60 - - Investment in financial assets at fair value through profit or loss (6,620,000) (15,690,000) - - Net cash inflows on disposal of subsidiary companies [Note 6(d)] 549,617 - - - Net cash outflows on winding up of a subsidiary company [Note 6(c)] (2,699) - - - Purchase of property, plant and equipment [Note 4(a)] (11,608,130) (635,127) (1,167,362) (148,345) Purchase of other investment - (10) - (10) Proceeds from disposal of investment in associate companies - 1 - - Proceeds from disposal of investment in financial assets at fair value through profit or loss 9,712,170 11,900,000 - - Proceeds from disposal of property, plant and equipment 27,878 3,675,839 20,000 - Proceeds from government grant [Note 23(b)] - 45,125 - - Net cash used in investing activities (13,341,060) (9,184,112) (1,147,360) (2,704,422) Company No. 451734 A - 58 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
Group Company 2015 2014 2015 2014 RM RM RM RM
Cash Flows From Financing Activities Increase in fixed deposits pledged (4,279,961) (95,020) - - Proceeds from issue of shares (Notes 17, 19) 416,905 16,003,190 416,905 16,003,190 Repayment of finance lease liability (58,302) (55,619) - - Repayment of term loan (90,284) - - - Net cash (used in)/from financing activities (4,011,642) 15,852,551 416,905 16,003,190
Net (decrease)/increase in cash and cash equivalents (13,424,450) 16,128,725 (719,103) (53,119) Effect of exchange translation differences on cash and cash equivalents - 72 - - Cash and cash equivalents at the beginning of the financial year 18,648,499 2,519,702 1,236,508 1,289,627 Cash and cash equivalents at the end of the financial year 5,224,049 18,648,499 517,405 1,236,508
Cash and cash equivalents at the end of the financial year comprises: Fixed deposits with licensed banks 6,135,601 13,870,595 29,000 - Cash and bank balances 5,873,603 7,198,412 488,405 1,236,508 Bank overdraft (678,554) (593,868) - - 11,330,650 20,475,139 517,405 1,236,508 Less: Fixed deposits pledged with licensed banks (Note 16) (6,106,601) (1,826,640) - - 5,224,049 18,648,499 517,405 1,236,508
The accompanying notes form an integral part of the financial statements. Company No. 451734 A - 59 -
PUC FOUNDER (MSC) BERHAD (Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
1. Corporate Information
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the ACE Market of Bursa Malaysia Securities Berhad.
The register office of the Company is located at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur.
The principal place of business of the Company is located at Unit C-2-01, Level 2, Capital 3, Oasis Square, No. 2, Jalan PJU 1A/7A, Ara Damansara, PJU 1A, 47301 Petaling Jaya, Selangor Darul Ehsan.
The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies are disclosed in Note 6. There have been no significant changes in the nature of these activities of the Company and its subsidiary companies during the financial year.
The ultimate holding company is Resource Holding Management Limited (“RHML”), a company incorporated in Cayman Islands and quoted on the Alternative Investment Market of the London Stock Exchange (“AIM”). On 5 February 2016, RHML had officially cancelled the admission of its ordinary shares to trading on AIM.
2. Basis of Preparation
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise indicated in the significant accounting policies below.
Adoption of new and amended standards
During the financial year, the Group and the Company have adopted the following amendments to MFRSs issued by the Malaysian Accounting Standards Board (“MASB”) that are mandatory for current financial year: Company No. 451734 A - 60 -
2. Basis of Preparation (Cont’d)
(a) Statement of compliance (Cont’d)
Adoption of new and amended standards (Cont’d) Amendments to MFRS 119 Defined Benefits Plans: Employee Contributions Annual Improvements to MFRSs 2010 - 2012 Cycle Annual Improvements to MFRSs 2011 - 2013 Cycle
Adoption of above amendments to MFRSs did not have any significant impact on the financial statements of the Group and of the Company.
Standards issued but not yet effective
The Group and the Company have not applied the following new MFRSs and amendments to MFRSs that have been issued by the MASB but are not yet effective for the Group and for the Company:
Effective dates for financial periods beginning on or after
MFRS 14 Regulatory Deferral Accounts 1 January 2016 Amendments to Accounting for Acquisitions of 1 January 2016 MFRS 11 Interests in Joint Operations Amendments to Disclosure Initiative 1 January 2016 MFRS 101 Amendments to Clarification of Acceptable Methods 1 January 2016 MFRS 116 and of Depreciation and Amortisation MFRS 138 Amendments to Equity Method in Separate Financial 1 January 2016 MFRS 127 Statements Amendments to Sale or Contribution of Assets 1 January 2016 MFRS 10 and between an Investor and its MFRS 128 Associate or Joint Venture Annual Improvements to MFRSs 2012 - 2014 Cycle 1 January 2016 Amendments to Investment Entities: Applying the 1 January 2016 MFRS 10, Consolidation Exception MFRS 12 and MFRS 128 Amendments to Recognition of Deferred Tax Assets 1 January 2017 MFRS 112 for Unrealised Losses Amendments to Disclosure Initiative 1 January 2017 MFRS 107 MFRS 9 Financial Instruments (IFRS 9 issued 1 January 2018 by IASB in July 2014) MFRS 15 Revenue from Contracts with 1 January 2018 Customers Company No. 451734 A - 61 -
2. Basis of Preparation (Cont’d)
(a) Statement of compliance (Cont’d)
Standards issued but not yet effective (Cont’d) Effective dates for financial periods beginning on or after
MFRS 16 Leases 1 January 2018 Amendments to Sale or Contribution of Assets To be announced MFRS 10 and between an Investor and its MFRS 128 Associate or Joint Venture
The Group and the Company intend to adopt the above MFRSs when they become effective.
The initial application of the abovementioned MFRSs are not expected to have any significant impacts on the financial statements of the Group and of the Company except as mentioned below:
MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014)
MFRS 9 (IFRS 9 issued by IASB in July 2014) replaces earlier versions of MFRS 9 and introduces a package of improvements which includes a classification and measurement model, a single forward looking ‘expected loss’ impairment model and a substantially reformed approach to hedge accounting. MFRS 9 when effective will replace MFRS 139 Financial Instruments: Recognition and Measurement.
MFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income without subsequently recycling to profit or loss. There is now a new expected credit losses model that replaces the incurred loss impairment model used in MFRS 139. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. MFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under MFRS 139.
The adoption of MFRS 9 will result in a change in accounting policy. The Group is currently examining the financial impact of adopting MFRS 9. Company No. 451734 A - 62 -
2. Basis of Preparation (Cont’d)
(a) Statement of compliance (Cont’d)
Standards issued but not yet effective (Cont’d)
MFRS 15 Revenue from Contracts with Customers
MFRS 15 replaces MFRS 118 Revenue, MFRS 111 Construction Contracts and related IC Interpretations. The Group is in the process of assessing the impact of this Standard. The Standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
MFRS 16 Leases
MFRS 16, which upon the effective date will supersede MFRS 117 Leases, introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically, under MFRS 16, a lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows. Also, the right-of-use asset and the lease liability are initially measured on a present value basis. The measurement includes non- cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard, MFRS 117.
In respect of the lessor accounting, MFRS 16 substantially carries forward the lessor accounting requirements in MFRS 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.
The Directors of the Company will assess the impact of the application of MFRS 16. For the moment, it is not practicable to provide a reasonable estimate of the effect of the application of MFRS 16 until the Group performs a detailed review. Company No. 451734 A - 63 -
2. Basis of Preparation (Cont’d)
(b) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest RM except when otherwise stated.
(c) Significant accounting judgments, estimates and assumptions
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
Judgments
There are no significant areas of critical judgement in applying accounting policies that have significant effect on the amounts recognised in the financial statements.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period are set out below:
Useful lives of property, plant and equipment (Note 4)
The Group regularly review the estimated useful lives of property, plant and equipment based on factors such as business plan and strategies, expected level of usage and future technological developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction in the estimated useful lives of property, plant and equipment would increase the recorded depreciation and decrease the value of property, plant and equipment.
Impairment of goodwill on consolidation
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units to which the goodwill is allocated. Estimating the value-in-use amount requires the Group to make an estimate of the expected future cash flows from the cash- generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The key assumptions used to determine the value-in-use is disclosed in Note 7(b). Company No. 451734 A - 64 -
2. Basis of Preparation (Cont’d)
(c) Significant accounting judgments, estimates and assumptions (Cont’d)
Key sources of estimation uncertainty (Cont’d) Development costs
The Group capitalises development costs for a project in accordance with the accounting policy. Initial capitalisation of development costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generations of the project, discount rates to be applied and the expected period of benefits. The carrying amount at the reporting date for product development expenditure is disclosed in Note 5.
Deferred tax assets
Deferred tax assets are recognised for all unutilised tax losses, unabsorbed unutilised capital allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the unutilised tax losses, unutilised capital allowances and other deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of recognised and unrecognised deferred tax assets are disclosed in Note 9.
Inventories valuation
Inventories are measured at the lower of cost and net realisable value. The Group estimates the net realisable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Group’s products, the Group might be required to reduce the value of its inventories. Details of inventories are disclosed in Note 11.
Impairment of loans and receivables
The Group assesses at end of each reporting period whether there is any objective evidence that a receivable is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the receivable and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amounts at the reporting date for loans and receivables are disclosed in Note 10. Company No. 451734 A - 65 -
2. Basis of Preparation (Cont’d)
(c) Significant accounting judgments, estimates and assumptions (Cont’d)
Key sources of estimation uncertainty (Cont’d)
Income taxes
Judgment is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business.
The Group recognises liabilities for tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these tax matters is different from the amounts that were initially recognised, such differences will impact the income tax and/or deferred tax provisions in the period in which such determination is made.
Employee share options
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also require determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. Details of assumptions made in respect of the share-based payment scheme are disclosed in Notes 19(g) and 30.
3. Significant Accounting Policies
The Group and the Company apply the significant accounting policies set out below, consistently throughout all periods presented in the financial statements unless otherwise stated.
(a) Basic of consolidation
(i) Subsidiary companies
Subsidiary companies are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiary companies are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Company No. 451734 A - 66 -
3. Significant Accounting Policies
(a) Basic of consolidation (Cont’d)
(i) Subsidiary companies (Cont’d)
Business Combination - Acquisition Method
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary company is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed off in profit or loss as incurred.
If the business combination is achieved in stages, previously held equity interest in the acquiree is re-measured at its acquisition date fair value and the resulting gain or loss is recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instruments and within the scope of MFRS 139 Financial Instruments: Recognition and Measurement, is measured at fair value with the changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity. Company No. 451734 A - 67 -
3. Significant Accounting Policies (Cont’d)
(a) Basic of consolidation (Cont’d)
(i) Subsidiary companies (Cont’d)
Inter-company transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated. Unrealised losses are eliminated only if there is no indication of impairment. Where necessary, accounting policies of subsidiary companies have been changed to ensure consistency with the policies adopted by the Group.
In the Company’s separate financial statements, investments in subsidiary companies are stated at cost less accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts are recognised in profit or loss. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. Refer accounting policy Note 3(g)(i) on impairment of non-financial assets.
(ii) Change in ownership interests in subsidiary companies without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary company is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
(iii) Disposal of subsidiary companies
If the Group loses control of a subsidiary company, the assets and liabilities of the subsidiary company, including any goodwill, and non-controlling interests are derecognised at their carrying value on the date that control is lost. Any remaining investment in the entity is recognised at fair value. The difference between the fair value of consideration received and the amounts derecognised and the remaining fair value of the investment is recognised as a gain or loss on disposal in profit or loss. Any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. Company No. 451734 A - 68 -
3. Significant Accounting Policies (Cont’d)
(a) Basic of consolidation (Cont’d)
(iv) Goodwill on consolidation
The excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary company acquired (ie. a bargain purchase), the gain is recognised in profit or loss.
Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying amount may be impaired. The policy of recognition and measurement of impairment losses is in accordance with Note 3(g)(i).
Business Combination - Reverse Acquisition
In previous financial year, the Company completed the acquisition of the entire equity interest in Red Media Asia Ltd (“RMA”) via the issuance of 750,000,000 ordinary shares of RM0.10 each in the Company at an issue price of RM0.12 each.
Upon completion of the acquisition, the Company became the legal parent of RMA. Due to the relative values of RMA and the Company, the owners of RMA became the majority shareholders in the Company, and controlling about 62.48% of the issued and paid up share capital of the Company at the date of acquisition. Furthermore, the former owners dominate the management of the combined entity. Accordingly the substance of the business combination is that RMA acquired the Company in a reverse acquisition.
The acquisition of RMA is accounted for using the reverse acquisition method of accounting in accordance with MFRS 3: Business Combination.
MFRS 3 requires that the consolidated financial statements be issued under the name of the legal parent (herein called “accounting acquiree” or “the Company”), but described in the notes as a continuation of the financial statements of the legal subsidiary (herein called “accounting acquirer” or “RMA”), with one adjustment, which is to adjust retroactively the accounting acquirer’s legal capital to reflect the legal capital of accounting acquiree. Therefore, the financial statements of the Group represent the continuation of the financial statements of RMA except for its capital structure. Company No. 451734 A - 69 -
3. Significant Accounting Policies (Cont’d)
(a) Basic of consolidation (Cont’d)
Business Combination - Reverse Acquisition (Cont’d)
The following accounting treatment has been applied in the consolidated financial statements in respect of the reverse acquisition:
(i) the assets and liabilities of RMA have been recognised and measured at their pre-combination carrying amounts prior to the reverse acquisition;
(ii) the identifiable assets and liabilities of the Company were recorded in the consolidated statement of financial position at fair value on the date of reverse acquisition;
(iii) the retained earnings and reserves recognised in the consolidated statement of financial position are those of RMA immediately prior to the reverse acquisition; and
(iv) the comparative financial information presented in the consolidated financial statements is that of RMA.
(b) Foreign currency translation
(i) Foreign currency transactions and balances
Transactions in foreign currency are recorded in the functional currency of the respective Group entities using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on that date. Non- monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the end reporting date are included in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate. Company No. 451734 A - 70 -
3. Significant Accounting Policies (Cont’d)
(b) Foreign currency translation (Cont’d)
(i) Foreign currency transactions and balances (Cont’d)
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the reporting period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised in other comprehensive income.
(ii) Foreign operations
The assets and liabilities of foreign operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at the rate of exchange prevailing at the reporting date, except for goodwill and fair value adjustments arising from business combinations before 1 January 2012 (the date of transition to MFRS) which are treated as assets and liabilities of the Company. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly owned subsidiary company, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed off such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary company that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. Company No. 451734 A - 71 -
3. Significant Accounting Policies (Cont’d)
(c) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. The policy of recognition and measurement of impairment losses is in accordance with Note 3(g)(i).
(i) Recognition and measurement
Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred. Company No. 451734 A - 72 -
3. Significant Accounting Policies (Cont’d)
(c) Property, plant and equipment
(iii) Depreciation
Depreciation of property, plant and equipment is recognised in the profit or loss on straight line basis to write off the cost of each asset to its residual value over its estimated useful life. Property, plant and equipment under construction is not depreciated until it ready for its intended use.
Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:
Freehold buildings 50 years Computers 5 years Office equipment 10 years Furniture and fittings 10 years Moulds, plant and machinery 3 - 10 years Renovation 5 years Motor vehicles 5 years
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 property, plant and equipment.
(d) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specific in an arrangement.
As lessee
(i) Finance lease
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Company No. 451734 A - 73 -
3. Significant Accounting Policies (Cont’d)
(d) Leases (Cont’d)
As lessee (Cont’d)
(i) Finance lease (Cont’d)
Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as a property, plant and equipment.
(ii) Operating lease
Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
As lessor
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. Company No. 451734 A - 74 -
3. Significant Accounting Policies (Cont’d)
(e) Intangible assets
(i) Internally-generated intangible assets - research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
• the technical feasibility of completing the intangible asset so that the asset will be available for use or sale; • its intention to complete and its ability and intention to use or sell the asset; • how the asset will generate future economic benefits; • the availability of resources to complete; and • the ability to measure reliably the expenditure during development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally- generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful lives and amortisation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
(ii) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful lives and amortisation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets are amortised based on the estimated useful lives of assets as follows:
Software development expenditure 5 to 10 years Digital contents 10 years Regional software license 20 years Company No. 451734 A - 75 -
3. Significant Accounting Policies (Cont’d)
(e) Intangible assets (Cont’d)
(iii) Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair values at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
(iv) Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
The policy of recognition and measurement of impairment losses is in accordance with Note 3(g)(i).
(f) Financial assets
Financial assets are recognised on the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately in profit or loss.
The Group and the Company classify their financial assets depends on the purpose for which the financial assets were acquired at initial recognition, into the following categories:
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, contingent consideration in a business combination or financial assets that are designated into this category upon initial recognition. A financial asset is classified in this category if it is acquired principally for the purpose of selling it in the near term. Derivatives, including separated embedded derivatives, are also categorised as held for trading unless they are designated as effective hedging instruments. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current. Company No. 451734 A - 76 -
3. Significant Accounting Policies (Cont’d)
(f) Financial assets (Cont’d)
(i) Financial assets at fair value through profit or loss (Cont’d)
After initial recognition, financial assets in this category are measured at fair value with any gains or losses arising from changes in the fair values recognised in profit or loss in the period in which the changes arise.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those maturing later than 12 months after the end of the reporting period which are classified as non-current assets.
After initial recognition, financial assets categorised as loans and receivables are measured at amortised cost using the effective interest method, less impairment losses. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.
(iii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the assets within 12 months after the end of the reporting period. Company No. 451734 A - 77 -
3. Significant Accounting Policies (Cont’d)
(f) Financial assets (Cont’d)
(iii) Available-for-sale financial assets (Cont’d)
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends from an available-for-sale equity instrument are recognised in profit or loss when the Group’s and the Company's right to receive payment is established.
Investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases or sales of financial assets are recognised and derecognised on the trade date i.e. the date that the Group and the Company commit to purchase or sell the asset.
A financial asset is derecognised when the contractual rights to receive cash flows from the financial asset has expired or has been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership. On derecognition of a financial asset, the difference between the carrying amount and the sum of consideration received and any cumulative gains or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. Company No. 451734 A - 78 -
3. Significant Accounting Policies (Cont’d) (g) Impairment of assets
(i) Non-financial assets
The carrying amounts of non-financial assets (except for 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. For goodwill and intangible assets that have indefinite useful lives, or that are not yet available for use, the recoverable amount is estimated each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash- generating units that are expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs of disposal. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or cash- generating unit exceeds its estimated recoverable amount. Impairment loss is recognised in profit or loss, unless the asset is carried at a revalued amount, in which such impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (group of cash-generating units) on a pro rata basis. Company No. 451734 A - 79 -
3. Significant Accounting Policies (Cont’d)
(g) Impairment of assets (Cont’d)
(i) Non-financial assets (Cont’d)
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
(ii) Financial assets
All financial assets, other than those categorised as fair value through profit or loss and investments in subsidiary companies, are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.
Financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the receivable and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with defaults on receivables. Company No. 451734 A - 80 -
3. Significant Accounting Policies (Cont’d)
(g) Impairment of assets (Cont’d)
(ii) Financial assets (Cont’d)
Financial assets carried at amortised cost (Cont’d)
If any such evidence exists, the amount of impairment loss is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of impairment loss is recognised in profit or loss. Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised in profit or loss, the impairment loss is reversed, to the extent that the carrying amount of the asset does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of reversal is recognised in profit or loss.
Available-for-sale financial assets
Significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. A significant or prolonged decline in the fair value of investments in equity instruments below its cost is also an objective evidence of impairment.
If an available-for-sale financial asset is impaired, the amount of impairment loss is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss. When a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value of equity instrument, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss. Company No. 451734 A - 81 -
3. Significant Accounting Policies (Cont’d)
(h) Inventories
Inventories are stated at the lower of cost (determined on the first-in, first-out basis) and net realisable value.
Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the costs necessary to make the sale.
(i) Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, bank balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.
(j) Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definition of financial liabilities.
Financial liabilities are recognised on the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
The Group and the Company classify their financial liabilities at initial recognition, into financial liabilities measured at amortised cost.
The Group’s and the Company’s other financial liabilities comprise trade and other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
Gains and losses on financial liabilities measured at amortised cost are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Company No. 451734 A - 82 -
3. Significant Accounting Policies (Cont’d) (j) Financial liabilities (Cont’d) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specific payment to reimburse the holder for a loss it incurs because a specific debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation. A financial liability is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. (k) Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. (l) Share capital (i) Ordinary shares An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the nominal value of shares issued. Ordinary shares are classified as equity.
Dividend distribution to the Company’s shareholders is recognised as a liability in the period they are approved by the Board of Directors except for the final dividend which is subject to approval by the Company’s shareholders. (ii) Preference shares Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity. Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in profit or loss as accrued. Company No. 451734 A - 83 -
3. Significant Accounting Policies (Cont’d)
(m) Provisions
Provisions are recognised when there is a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.
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 economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. The relating expense relating to any provision is presented in the statements of profit or loss and other comprehensive income net of any reimbursement.
(n) Revenue
(i) Sale of goods/merchandising item
Revenue is recognised at the fair value of consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue from sale of goods is recognised when the transfer of significant risk and rewards of ownership of the goods to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.
(ii) Rendering of services
Revenue from services rendered is recognised in profit or loss based on the value of services performed and invoiced to customers during the period.
(iii) Commission income
Commission income is recognised on an accrual basis.
(iv) Sales of advertising space, public relation, database management, internet related and other electronic commerce services
Revenue from sales of advertising space, public relation, database management, internet related and other electronic commerce services rendered are recognised upon rendering of services. Company No. 451734 A - 84 -
3. Significant Accounting Policies (Cont’d)
(n) Revenue (Cont’d)
(v) Seminar income
Seminar income is recognised upon performance of services
(vi) Subscription income
Subscription income is derived from the fees which entitle the member to services during the membership period. It is recognised on a basis that reflects the timing, nature and value of the benefits provided.
(vii) Insurance commission income
Insurance commission income is recognised as revenue when the contract is underwritten by its principal.
(viii) Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.
(ix) Interest income
Interest income is recognised on accruals basis using the effective interest method.
(o) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets, which are assets that necessarily take a substantial period of time to get ready for theirs intended use or sale, are capitalised as part of the cost of those assets. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Company No. 451734 A - 85 -
3. Significant Accounting Policies (Cont’d)
(p) Income taxes
Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, at the end of the reporting period. Deferred tax assets and liabilities are not discounted.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised. Company No. 451734 A - 86 -
3. Significant Accounting Policies (Cont’d) (q) Employee benefits (i) Short term employee benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the reporting period in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur. The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period. (ii) Defined contribution plans As required by law, companies in Malaysia contribute to the state pension scheme, the Employee Provident Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred. Once the contributions have been paid, the Group have no further payment obligations. (iii) Share-based payment transactions Equity-settled share-based payment transaction The Group operates an equity-settled, share-based compensation plan for the employees of the Group. Employee services received in exchange for the grant of the share options is recognised as an expense in the profit or loss over the vesting periods of the grant with a corresponding increase in equity. For options granted to the employees of the subsidiary companies, the fair value of the options granted is recognised as cost of investment in the subsidiary companies over the vesting period with a corresponding adjustment to equity in the Company’s financial statements. The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to be vested. At the end of each reporting date, the Group revises its estimates of the number of share options that are expected to be vested. It recognises the impact of the revision of original estimates, if any, in the profit or loss, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Company No. 451734 A - 87 -
3. Significant Accounting Policies (Cont’d)
(r) Government grant
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.
When the grant relates to an expense item, it is recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Where the grant relates to an asset, it is recognised as deferred income and transferred to profit or loss on a systematic basis over the useful lives of the related asset.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.
Where the Group receives non-monetary government grants, the asset and the grant are recorded at nominal amount and transferred to profit or loss on a systematic basis over the life of the depreciable asset by way of a reduced depreciation charge.
(s) Deferred revenue
Deferred revenue represents the cash received in advance from customer and transfer of asset from customer in respect of services which are yet to be provided. Such amounts are recorded as liabilities in the statements of financial position and are only recognised in the statements of profit or loss and other comprehensive income upon the rendering of services to customers.
(t) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision- makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group’s operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different market.
(u) Contingencies
Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the asset or the obligation is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote. Company No. 451734 A - 88 -
4. Property, Plant and Equipment
Capital Furniture Moulds, Freehold work-in- Office and plant and Motor buildings progress Computers equipment fittings machinery Renovation vehicles Total RM RM RM RM RM RM RM RM RM
Group 2015 Cost At 1 January 2015 - - 840,592 432,811 306,815 279,943 781,348 1,428,413 4,069,922 Additions 5,500,000 9,589,770 70,345 101,569 266,729 - 754,717 - 16,283,130 Disposals - - (7,809) (55,402) (40,219) - - - (103,430) Written off ------(147,844) - (147,844) Disposal of subsidiary companies - - (17,409) (21,433) - - - - (38,842) Winding up of a subsidiary company - - (6,809) (1,611) - - - - (8,420) Exchange differences - - 2,710 3,324 - - - - 6,034 Reclassification - - 2,321 (8,968) (1,618) - 3,143 - (5,122) At 31 December 2015 5,500,000 9,589,770 883,941 450,290 531,707 279,943 1,391,364 1,428,413 20,055,428
Accumulated depreciation At 1 January 2015 - - 683,380 305,507 118,080 253,857 615,246 775,916 2,751,986 Charge for the financial year 82,500 - 88,275 26,191 45,902 19,747 151,715 221,049 635,379 Disposals - - (6,389) (48,442) (18,350) - - - (73,181) Written off ------(128,408) - (128,408) Disposal of subsidiary companies - - (17,409) (21,433) - - - - (38,842) Winding up of a subsidiary company - - (5,418) (384) - - - - (5,802) Exchange differences - - 2,709 3,325 - - - - 6,034 Reclassification - (1,283) (7,965) 4,005 - 121 (5,122) At 31 December 2015 82,500 - 743,865 256,799 149,637 273,604 638,674 996,965 3,142,044
Carrying amount At 31 December 2015 5,417,500 9,589,770 140,076 193,491 382,070 6,339 752,690 431,448 16,913,384 Company No. 451734 A - 89 -
4. Property, Plant and Equipment (Cont’d)
Capital Furniture Moulds, Freehold work-in Office and plant and Motor buildings progress Computers equipment fittings machinery Renovation vehicles Total RM RM RM RM RM RM RM RM RM
Group 2014 Cost At 1 January 2014 - - 638,973 228,774 258,968 - 386,275 230,000 1,742,990 Reverse acquisition 1,689,606 539,226 327,857 259,418 95,895 1,316,503 555,847 1,198,413 5,982,765 Additions 30,990 - 114,608 69,237 96,520 - 323,772 - 635,127 Disposals (2,259,822) - (241,916) (125,812) (144,568) (1,036,560) (484,546) - (4,293,224) Exchange differences - - 1,070 1,194 - - - - 2,264 Reclassification 539,226 (539,226) ------At 31 December 2014 - - 840,592 432,811 306,815 279,943 781,348 1,428,413 4,069,922
Accumulated depreciation At 1 January 2014 - - 520,398 136,384 133,608 - 277,166 19,167 1,086,723 Reverse acquisition 254,784 - 226,215 202,923 34,740 971,310 447,843 535,699 2,673,514 Charge for the financial year 25,455 - 132,999 35,373 30,690 118,028 58,334 221,050 621,929 Disposals (280,239) - (197,286) (70,101) (80,958) (835,481) (168,097) - (1,632,162) Exchange differences - - 1,054 928 - - - - 1,982 At 31 December 2014 - - 683,380 305,507 118,080 253,857 615,246 775,916 2,751,986
Carrying amount At 31 December 2014 - - 157,212 127,304 188,735 26,086 166,102 652,497 1,317,936 Company No. 451734 A - 90 -
4. Property, Plant and Equipment (Cont’d)
Furniture Moulds, Office and plant and Motor Computers equipment fittings machinery Renovation vehicles Total RM RM RM RM RM RM RM
Company 2015 Cost At 1 January 2015 369,394 309,330 141,023 69,826 562,710 832,220 2,284,503 Additions 52,609 94,307 265,729 - 754,717 - 1,167,362 Disposals - (1,760) (15,755) - - - (17,515) At 31 December 2015 422,003 401,877 390,997 69,826 1,317,427 832,220 3,434,350
Accumulated depreciation At 1 January 2015 304,496 206,698 55,053 62,326 469,837 472,408 1,570,818 Charge for the financial year 41,893 19,805 29,774 1,165 134,378 101,813 328,828 Disposals - (220) (1,969) - - - (2,189) At 31 December 2015 346,389 226,283 82,858 63,491 604,215 574,221 1,897,457
Carrying amount At 31 December 2015 75,614 175,594 308,139 6,335 713,212 257,999 1,536,893 Company No. 451734 A - 91 -
4. Property, Plant and Equipment (Cont’d)
Furniture Moulds, Office and plant and Motor Computers equipment fittings machinery Renovation vehicles Total RM RM RM RM RM RM RM
Company 2014 Cost At 1 January 2014 327,857 246,303 104,105 69,826 555,847 832,220 2,136,158 Additions 41,537 63,027 36,918 - 6,863 - 148,345 At 31 December 2014 369,394 309,330 141,023 69,826 562,710 832,220 2,284,503
Accumulated depreciation At 1 January 2014 226,216 190,415 42,906 61,161 447,843 370,595 1,339,136 Charge for the financial year 78,280 16,283 12,147 1,165 21,994 101,813 231,682 At 31 December 2014 304,496 206,698 55,053 62,326 469,837 472,408 1,570,818
Carrying amount At 31 December 2014 64,898 102,632 85,970 7,500 92,873 359,812 713,685 Company No. 451734 A - 92 -
4. Property, Plant and Equipment (Cont’d)
(a) The aggregate additional costs for property, plant and equipment of the Group and the Company during the financial year acquired under finance lease financing and by cash payments are as follows:
Group Company 2015 2014 2015 2014 RM RM RM RM
Aggregate costs 16,283,130 635,127 1,167,362 148,345 Less: Finance lease financing (4,675,000) - - - Cash payments 11,608,130 635,127 1,167,362 148,345
(b) Assets pledged as securities to a licensed bank
The carrying amount of property, plant and equipment of the Group pledged as securities for bank borrowings as disclosed in Note 21 are as follows:
Group 2015 2014 RM RM
Freehold buildings 5,417,500 -
(c) Asset held under finance lease
At 31 December 2015, the net carrying amount of leased motor vehicle of the Group was RM118,834 (2014: RM164,833). Leased asset is pledged as security for the related leased liability. Company No. 451734 A - 93 -
5. Software Development Expenditure
Group Advertising Financial and Media Services Total (Note a) (Note b) RM RM RM
2015 Cost At 1 January 2015 18,513,676 820,000 19,333,676 Disposal (3,643,890) - (3,643,890) Disposal of subsidiary companies (629,056) - (629,056) Reclassified to intangible assets (8,558,000) - (8,558,000) Exchange differences 97,546 - 97,546 At 31 December 2015 5,780,276 820,000 6,600,276
Accumulated amortisation At 1 January 2015 7,829,467 591,999 8,421,466 Amortisation during the financial year 851,417 48,000 899,417 Disposal (3,643,890) - (3,643,890) Disposal of subsidiary companies (435,100) - (435,100) Exchange differences 62,395 - 62,395 At 31 December 2015 4,664,289 639,999 5,304,288
Carrying amount At 31 December 2015 1,115,987 180,001 1,295,988
2014 Cost At 1 January 2014 9,888,637 820,000 10,708,637 Additions 8,604,000 - 8,604,000 Exchange differences 21,039 - 21,039 At 31 December 2014 18,513,676 820,000 19,333,676
Accumulated amortisation At 1 January 2014 6,900,978 459,999 7,360,977 Amortisation during the financial year 914,989 132,000 1,046,989 Exchange differences 13,500 - 13,500 At 31 December 2014 7,829,467 591,999 8,421,466
Carrying amount At 31 December 2014 10,684,209 228,001 10,912,210 Company No. 451734 A - 94 -
5. Software Development Expenditure (Cont’d) (a) The development costs of advertising and media consist of expenditure incurred for research and development of media and advertising technology.
(b) The development costs of financial services consist of expenditure incurred for research and development of financial advisory software.
6. Investment in Subsidiary Companies
Company 2015 2014 RM RM
Unquoted shares, at cost 101,799,095 93,576,077
Details of subsidiary companies are as follows:
Country of Name of company incorporation Effective interest Principal activities 2015 2014 % %
Direct holding:
Red Media Asia Ltd British Virgin 100 100 Investment holding Islands
Ausscar Technology Malaysia 100 - Dormant Sdn. Bhd.
Founder Pay Malaysia 100 100 Money lending business Sdn. Bhd.
Greentech Founder Malaysia 100 100 Development and/or operation of Malaysia Sdn. Bhd power generation from renewable energy, solar and other renewable (formerly known as energy projects PUC Founder Technology Sdn. Bhd.) Company No. 451734 A - 95 -
6. Investment in Subsidiary Companies (Cont’d)
Country of Name of company incorporation Effective interest Principal activities 2015 2014 % %
MaxGreen Energy 2 Malaysia 100 100 Development and/or operation of Sdn. Bhd. (formerly power generation from renewable known as Face ID energy, solar and other renewable energy projects Worldwide Sdn. Bhd.)
RedHot Media Malaysia 100 - Advertising agency which principally Sdn. Bhd. involved in advertisement, media content distributions and trading, information and data management, research and development of electronic advertising services, and other advertising services through portals, branding and creative services, public relations, public affairs and events
EPP Solution Malaysia 100 - Provision of financial and payment Sdn. Bhd. solutions to customers, trading and merchandising of goods
Founder Qube Malaysia 100 - E-Content, E-Commerce and Sdn. Bhd. E-Merchant business, and end-to-end media and advertising solutions
MaxGreen Energy Malaysia 100 - Development and/or operation of Sdn. Bhd. power generation from renewable energy, solar and other renewable energy projects
Held through Red Media Asia Ltd
RH Media Group Malaysia 100 100 Investment holding Sdn. Bhd. Company No. 451734 A - 96 -
6. Investment in Subsidiary Companies (Cont’d)
Country of Name of company incorporation Effective interest Principal activities 2015 2014 % %
Held through RH Media Group Sdn. Bhd.
# Redhot Media China - 100 Advertising and media activities International (China) Ltd
* Founder Energy Hong Kong 100 100 Investment holding Global Ltd (formerly known as Redhot Media (HK) Limited)
# Redhot Media China 100 100 In the process of members' International voluntarily winding up (Shanghai) Ltd
AllChina.cn Ltd British Virgin 100 100 Provision of advertisement and Islands media services
Held through MaxGreen Energy Sdn. Bhd.
Oscar Wealth Advisory Malaysia 70 70 Provision of financial Sdn. Bhd. planning and advisory services, and related training, and event management and other support services
Wealth Pursuit Malaysia 100 100 Money lending business Sdn. Bhd. Company No. 451734 A - 97 -
6. Investment in Subsidiary Companies (Cont’d)
Country of Name of company incorporation Effective interest Principal activities 2015 2014 % %
Held through MaxGreen Energy Sdn. Bhd.
Ausscar Academy Malaysia - 70 Development of web portal Sdn. Bhd. and software relating to financial planning products and services, provision of financial planning and advisory services, and related training, and event management and other support and services
Held through Founder Energy Global Ltd (formerly known as Redhot Media (HK) Limited)
Founder Energy Malaysia 100 - Development and/or operation of Sdn. Bhd. power generation from renewable energy, solar and other renewable energy projects
Held through Founder Energy Sdn. Bhd.
RedHot Media Malaysia - 100 Advertising agency which principally Sdn. Bhd. involved in advertisement, media content distributions and trading, information and data management, research and development of electronic advertising services, and other advertising services through portals, branding and creative services, public relations, public affairs and events Company No. 451734 A - 98 -
6. Investment in Subsidiary Companies (Cont’d)
Country of Name of company incorporation Effective interest Principal activities 2015 2014 % %
Held through Founder Energy Sdn. Bhd.
EPP Solution Malaysia - 100 Provision of financial and payment Sdn. Bhd. solutions to customers, trading and merchandising of goods
Founder Qube Malaysia - 100 Dormant Sdn. Bhd.
* Audited by member firm of UHY International Limited # Not audited by UHY
(a) Acquisition of Red Media Asia Ltd (“RMA”)
As disclosed in previous financial year, the Company (or “PUCF”) acquired 100% equity interest in RMA, a wholly-owned subsidiary company of Resources Holding Management Limited (“RHML”), for a total consideration of RM90,000,000 satisfied via the issuance of 750,000,000 new ordinary shares in the Company at an issue price of RM0.12 each, after obtaining approval from the shareholders of PUCF at the Extraordinary General Meeting held on 6 November 2013. The acquisition of RMA was completed on 1 January 2014. Upon completion of the acquisition of RMA, the Company became legal parent of the RMA. RMA has been identified as the accounting acquirer under the principles of MFRS 3 since the substance of the business combination is that RMA acquired the Company in a reverse acquisition.
On consolidation, the reverse acquisition debit comprises:
Group 2014 RM
Issued equity of the Company before acquisition 9,503,625 Issued equity of the Company for the acquisition (comprising 750,000,000 new ordinary shares of RM0.10 each at an issue price of RM0.12 each) 90,000,000 99,503,625 Less: Issued equity of RMA (27,580,820) Less: Share premium of RMA (10,879,497) Less: Cost of business combination (24,234,244) Reverse acquisition debit 36,809,064 Company No. 451734 A - 99 -
6. Investment in Subsidiary Companies (Cont’d)
(a) Acquisition of Red Media Asia Ltd (“RMA”) (Cont’d)
The fair value of the identified assets and liabilities acquired in the abovementioned reverse acquisition of the Company are as follows:
Group 2014 RM
Property, plant and equipment 3,309,251 Inventories 3,184,868 Trade and other receivables 4,156,811 Tax recoverable 13,407 Fixed deposits with licensed banks 1,014,861 Cash and bank balances 4,368,410 Total identifiable assets 16,047,608
Trade and other payables 2,875,508 Tax payable 285,884 Deferred tax liabilities 57,686 Total identifiable liabilities 3,219,078 Total identified net assets 12,828,530 Cost of business combination 24,234,244 Goodwill arising from acquisition (Note 7) 11,405,714
(b) Increase in investment/Incorporation of subsidiary companies
(i) During the financial year, a wholly-owned subsidiary company, Founder Pay Sdn. Bhd. (“FPSB”) increased its issued and paid up ordinary share capital from RM1,000,000 to RM2,000,000 by the issue of 10,000,000 ordinary shares of RM0.10 each at par for cash. PUCF has subscribed for the entire increased in the issued and paid up ordinary share capital of FPSB.
(ii) During the financial year, a wholly-owned subsidiary company, MaxGreen Energy 2 Sdn. Bhd. (formerly known as Face ID Worldwide Sdn. Bhd.) (“MGE 2”) increased its issued and paid up ordinary share capital from RM20,000 to RM50,000 by the issue of 30,000 ordinary shares of RM1.00 each at par for cash. PUCF has subscribed for the entire increased in the issued and paid up ordinary share capital of MGE 2.
(iii) During the financial year, a indirect wholly-owned subsidiary company, Wealth Pursuit Sdn. Bhd. (“WP”) increased its issued and paid up ordinary share capital from RM1,300,002 to RM2,000,002 by the issue of 700,000 ordinary shares of RM1.00 each at par for cash. MaxGreen Energy Sdn. Bhd., a direct wholly-owned subsidiary company of PUCF has subscribed for the entire increased in the issued and paid up ordinary share capital of WP. Company No. 451734 A - 100 -
6. Investment in Subsidiary Companies (Cont’d)
(b) Increase in investment/Incorporation of subsidiary companies (Cont’d)
(iv) On 23 September 2015, the Company has incorporated a wholly-owned subsidiary company, namely Ausscar Technology Sdn. Bhd. (“ATSB”) with its intended principal activities as e-commerce and software development for financial related services. ATSB has an authorised capital of RM400,000 comprising 400,000 ordinary shares of RM1.00 each and an issued and paid-up capital of RM2.00.
(c) Winding up of a subsidiary company
RH Marketing (GZ) Ltd (“RHMGZ”) was completely wound up by way of members’ voluntary winding up following the approval granted by the People’s Republic of China’s (“PRC”) State Administration of Foreign Exchange via its letter dated 6 May 2015.
The effect of winding up of RHMGZ on the financial position of the Group as at the date of winding up as follows:
2015 RM
Property, plant and equipment (2,618) Inventories (1,324) Trade and other receivables (113) Cash and cash equivalents (2,699) Trade and other payables 55,321 Foreign exchange reserve reclassfied to profit or loss (86,425) Total net assets (37,858) Loss on winding up 37,858 - Less: Cash and cash equivalents 2,699 Net cash outflows from winding up 2,699
(d) Disposal of subsidiary companies
(i) On 21 August 2015, a wholly-owned subsidiary company, MaxGreen Energy Sdn. Bhd. has disposed of its 70% equity interest in Ausscar Academy Sdn. Bhd. (“AA”) for a cash consideration of RM3,000, which had resulted a loss of RM55,107. The disposal of AA has been completed during the financial year. This subsidiary company was previously under financial services segment. Company No. 451734 A - 101 -
6. Investment in Subsidiary Companies (Cont’d)
(d) Disposal of subsidiary companies (Cont’d)
(ii) On 10 December 2014, the Company entered into a conditional sale of shares agreement to dispose of its entire equity interest in Redhot Media International (China) Co Ltd (“RHIC”) for a cash consideration of USD146,790, which had resulted a loss of RM77,703. The disposal of RHIC has been completed on 31 December 2015 following the approval of the Sale of Shares Agreement by the Foreign Trade & Economy Commission of the PRC. This subsidiary company was previously under advertising and media segment.
The effect of disposal of the above subsidiary companies on the financial position of the Group as at the date of disposal was as follows:
2015 RM
Software development expenditure (193,956) Trade and other receivables (673,787) Cash and cash equivalents (82,910) Trade and other payables 863,024 Provision for taxation 1,661 Foreign exchange reserve reclassfied to profit or loss (606,463) Goodwill on consolidation (68,902) Non-controlling interests (4,004) Total net assets disposed (765,337) Loss on disposal 132,810 Proceeds from disposal (632,527) Less: Cash and cash equivalents disposed 82,910 Net cash inflows from disposal (549,617)
(e) Internal Reorganisation
During the financial year, the Company reorganised its group structure by undertaking the following:
(i) disposal of 12,630,431 ordinary shares of RM1.00 each, representing the entire share capital in Founder Energy Sdn. Bhd. (“FESB”) by Red Media Asia Ltd (“RMA”) to Founder Energy Global Limited (formerly known as RedHot Media (HK) Limited) (“FEGL”) for a cash consideration of RM9,317,833;
(ii) disposal of 5,100,000 ordinary shares of RM1.00 each in RedHot Media Sdn. Bhd. (“RHM”), representing the entire ordinary share capital in RHM by FESB to PUCF for a cash consideration of RM6,552,045; Company No. 451734 A - 102 -
6. Investment in Subsidiary Companies (Cont’d)
(e) Internal Reorganisation (Cont’d)
During the financial year, the Group reorganised its group structure by undertaking the following: (Cont’d)
(iii) disposal of 300,000 ordinary shares of RM1.00 each in EPP Solution Sdn. Bhd. (“EPP”), representing the entire ordinary share capital in EPP by FESB to PUCF for a cash consideration of RM638,971; and
(iv) disposal of 2 ordinary shares of RM1.00 each in Founder Qube Sdn. Bhd. (“FQSB”), representing the entire ordinary share capital in FQSB by FESB to PUCF for a cash consideration of RM2,000.
Upon completion of the Internal Reorganisation:
(a) FESB became a wholly-owned subsidiary company of FEGL; (b) RHM became a wholly-owned subsidiary company of PUCF; (c) EPP became a wholly-owned subsidiary company of PUCF; and (d) FQSB became a wholly-owned subsidiary company of PUCF.
The Internal Reorganisation is part of the PUCF’s intention to realign the businesses within the PUCF group of companies to achieve the operational efficiencies.
In previous financial year, the Company reorganised its group structure by acquired the issued and paid-up share capital in MESB, a wholly-owned subsidiary company of RMA, comprising the following:
(i) 1,920,002 ordinary shares of RM1.00 each in MESB representing the entire ordinary share capital in MESB; and
(ii) 822,800 convertible preference shares of RM1.00 each in MESB representing the entire convertible preference share capital in MESB from Solid Wealth Management Sdn. Bhd.,
for a total cash consideration of RM2,556,077. Consequently, MESB becomes a direct wholly-owned subsidiary company of PUCF.
There are no significant restrictions on the ability of the subsidiary companies to transfer funds to the Group in the form of cash dividends or repayment of advances. Company No. 451734 A - 103 -
7. Intangible Assets
Group Acquisition of Goodwill on Digital Regional Business Assets Consolidation Contents Software License Total Note (a) Note (b) Note (c) Note (d) RM RM RM RM RM 2015 Cost At 1 January 2015 32,583,291 17,427,778 - - 50,011,069 Addition - - - 5,400,000 5,400,000 Arising from disposal of subsidiary companies - (68,902) - - (68,902) Reclassified from software development expenditure - - 8,558,000 - 8,558,000 At 31 December 2015 32,583,291 17,358,876 8,558,000 5,400,000 63,900,167
Accumulated amortisation At 1 January 2015 - - - - - Amortisation during the financial year - - 214,687 90,000 304,687 At 31 December 2015 - - 214,687 90,000 304,687
Carrying amount At 31 December 2015 32,583,291 17,358,876 8,343,313 5,310,000 63,595,480
2014 Cost/Carrying amount At 1 January 2014 32,583,291 6,022,064 - - 38,605,355 Arising from reverse acquisition - 11,405,714 - - 11,405,714 At 31 December 2014 32,583,291 17,427,778 - - 50,011,069 Company No. 451734 A - 104 -
7. Intangible Assets (Cont’d)
(a) Goodwill on acquisition of business assets
This represents goodwill arose from the acquisition of business assets of China Media Mart Information Technology Co. Ltd (“CMIT”), China MediaMart Advertising Co. Ltd. (“CMAD”) and In Motion Media & Ad Co. Limited (“IMM”).
Goodwill acquired in business combinations is allocated, at acquisition, to the cash generating units (“CGUs”) that are expected to benefit from the business combinations. The carrying amount of goodwill have been allocated as follows:
Group 2015 2014 RM RM
CMAD and CMIT business 9,232,269 9,232,269 IMM Business 23,351,022 23,351,022 32,583,291 32,583,291
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGU’s are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast period. Management estimates pre-tax discount rates of 10% that reflect current market assessments of the time value of money and the risks specific to the CGU’s. Future cash flows are derived from the most recent financial budget approved by management for the next five years, beyond that period cash flows are extrapolated using a growth rate of 3%. The growth rates of 3% are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
The Group has applied sensitivity analysis to the goodwill impairment test and increasing the discount rate by 3% and removing the 3% growth rate does not result in any impairment of the goodwill for the CGUs.
The Group has conducted a sensitivity analysis on the impairment test of each CGU’s carrying value with the following results:
• The discount rate would need to increase to 17% to remove the headroom IMM. • Reducing the long term growth rate to 0% does not create an impairment charge. • Cash flows over the next five years would need to reduce by 19% to remove the headroom in IMM. Company No. 451734 A - 105 -
7. Intangible Assets (Cont’d)
(b) Goodwill on consolidation
For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest CGU level within the Group at which the goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each unit are as follows:
Group 2015 2014 RM RM
Biometrics, renewable energy, solar and other renewable projects 11,405,714 11,405,714 Advertising and media 3,298,506 3,298,506 Financial services 2,654,656 2,723,558 17,358,876 17,427,778
The recoverable amount of CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by the Directors covering a five-year period. The key assumptions used for value-in-use calculations are based on future projection of the Group as follows:
Gross margin 30% Growth rate 3% Pre-tax discount rate 10%
(i) Gross margin - Budgeted value based on the average margins achieved in the year immediately before the budgeted year, increased for expected efficiency improvements and market development.
(ii) Growth rate - Not applicable as the cash flow projections made is for a period of 5 years, in accordance with the expected lifecycle of the CGU.
(iii) Pre-tax discount rate – Rate that reflect specific risks relating to the relevant CGU.
The values assigned to the key assumptions represent the management’s assessment of future trends in the industry and are based on both external sources and internal sources. Company No. 451734 A - 106 -
7. Intangible Assets (Cont’d)
(c) Digital contents
The Group had acquired audio visual film content in digital format with limited rights to distribute, resell or reassign display or broadcast rights of the said content to any third party on privately owned internet sites and closed circuit digital screens. The digital contents are amortised on straight line basis over its estimated useful life of 10 years.
The Group acquired the audio visual film content for enhancing its range of services for its media and advertising businesses.
(d) Regional software license
The Group had acquired an exclusive license to use proprietary mobile application software in designated territories. The mobile application is a GPS-based geographical navigation application program for smartphones and tablets with GPS support and display screens which provides information about malls and its merchants and which allows the malls and merchants to place advertisements and promotional displays, and enables end-users to interact with the software and access information. The regional software license are amortised on straight line basis over its estimated useful life of 20 years.
The Group acquired the license for enhancing its range of services for its media and advertising businesses and to propel its mobile application business.
8. Other Investments
Group Company 2015 2014 2015 2014 RM RM RM RM
Non-current Available-for-sale financial assets At cost Unquoted shares 10 10 10 10
At fair value Quoted shares 1,104 664 - - 1,114 674 10 10
Current Financial assets at fair value through profit or loss Investment in mutual fund 844,620 3,883,448 - -
The fair value of the listed equity securities was determined by reference to the quoted prices in an active market. Company No. 451734 A - 107 -
9. Deferred Tax Assets/(Liabilities)
(a) Deferred tax assets
Group Company 2015 2014 2015 2014 RM RM RM RM
At 1 January 142,425 - - 36,657 Arising from reverse acquisition - 44,644 - - Recognised in profit or loss (12,919) 131,217 - (3,221) Over provision in prior years - (33,436) - (33,436) At 31 December 129,506 142,425 - -
Presented after approporiate offsetting as follows:
Deferred tax liability (9,630) (83,905) - (72,134) Deferred tax assets 139,136 226,330 - 72,134 129,506 142,425 - -
The components and movements of deferred tax liability and deferred tax assets of the Group and of the Company are as follows:
Deferred tax liability:
Group Company 2015 2014 2015 2014 RM RM RM RM
Accelerated capital allowances At 1 January 83,905 - 72,134 62,635 Arising from reverse acquisition - 54,648 - - Recognised in profit or loss (2,141) (11,643) - (23,937) (Over)/Under provision in prior years (72,134) 40,900 (72,134) 33,436 At 31 December 9,630 83,905 - 72,134 Company No. 451734 A - 108 -
9. Deferred Tax Assets/(Liabilities)
(a) Deferred tax assets (Cont’d)
The components and movements of deferred tax liability and deferred tax assets of the Group and of the Company are as follows: (Cont’d)
Deferred tax assets:
Group Company 2015 2014 2015 2014 RM RM RM RM
Unutilised capital allowances At 1 January 34,826 - 14,740 - Recognised in profit or loss (2,483) 8,351 - (11,735) (Over)/Under provision in prior years (14,041) 26,475 (14,740) 26,475 At 31 December 18,302 34,826 - 14,740
Unutilised tax losses At 1 January 191,504 - 57,394 99,292 Arising from reverse acquisition - 99,292 - - Recognised in profit or loss (12,577) 111,223 - (15,423) Over provision in the prior years (58,093) (19,011) (57,394) (26,475) At 31 December 120,834 191,504 - 57,394 139,136 226,330 - 72,134 Company No. 451734 A - 109 -
9. Deferred Tax Assets/(Liabilities) (Cont’d)
(b) Deferred tax liabilities
Group Company 2015 2014 2015 2014 RM RM RM RM
At 1 January 8,817 141,100 - - Arising from reverse acquisition - 102,331 - - Recognised in profit or loss 21,907 (236,214) - - Under provision in prior years 3,413 1,600 - - At 31 December 34,137 8,817 - -
Presented after approporiate offsetting as follows:
Deferred tax liability 258,099 123,527 84,330 - Deferred tax assets (223,962) (114,710) (84,330) - 34,137 8,817 - -
The components and movements of deferred tax liability and deferred tax assets of the Group and of the Company are as follows:
Deferred tax liability:
Group Company 2015 2014 2015 2014 RM RM RM RM
Accelerated capital allowances At 1 January 123,527 174,800 - - Arising from reverse acquisition - 102,331 - - Recognised in profit or loss 68,153 (150,404) 14,860 - Under/(Over) provision in prior years 66,419 (3,200) 69,470 - At 31 December 258,099 123,527 84,330 - Company No. 451734 A - 110 -
9. Deferred Tax Assets/(Liabilities) (Cont’d)
(b) Deferred tax liabilities (Cont’d)
The components and movements of deferred tax liability and deferred tax assets of the Group and of the Company are as follows: (Cont’d)
Deferred tax assets:
Group Company 2015 2014 2015 2014 RM RM RM RM
Unutilised capital allowances At 1 January 114,710 13,000 - - Recognised in profit or loss 60,596 112,810 38,410 - (Over)/Under provision in the prior years (59,424) (11,100) 45,920 - At 31 December 115,882 114,710 84,330 -
Unutilised tax losses At 1 January - 20,700 - - Recognised in profit or loss (14,350) (27,000) (23,550) - Under provision in the prior years 122,430 6,300 23,550 - At 31 December 108,080 - - - 223,962 114,710 84,330 -
The deferred tax assets have not been recognised in respect of the following items:
Group Company 2015 2014 2015 2014 RM RM RM RM
Accelerated capital allowances 19,880 - - - Unutilised capital allowances 120,130 37,220 61,080 - Unutilised tax losses 6,744,115 4,716,602 2,500,935 906,480 6,884,125 4,753,822 2,562,015 906,480
Deferred tax assets have not been recognised in respect of these items as they may not have sufficient taxable profits to be used to offset or they have arisen in subsidiary companies that have a recent history of losses. Company No. 451734 A - 111 -
10. Trade Receivables
Group 2015 2014 RM RM
Non-current Trade receivables 2,362,569 3,313,154
Current Trade receivables 41,783,907 47,977,850 Less: Accumulated impairment losses (2,323,980) (6,182,944) 39,459,927 41,794,906 41,822,496 45,108,060
Trade receivables of the Group and of the Company are non-interest bearing and are generally on 30 to 180 days (2014: 30 to 180 days) and 30 to 60 days (2014: 30 to 60 days) term. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
Included in non-current and current trade receivables of the Group is outstanding balance of RM6,562,569 (2014: RM7,043,694) due from a debtor, who had entered into a settlement agreement with the subsidiary companies during the financial year. The total outstanding balance will be settled over 20 monthly instalment begin on 15 December 2015 until the debt is satisfied in full.
The Group’s credit exposures are concentrated mainly on 4 (2014: 6) debtors, which accounted for 70% (2014: 92%) of the total trade receivables as at 31 December 2015.
Movements in allowance for impairment losses of trade receivables are as follows:
Group 2015 2014 RM RM
At 1 January 6,182,944 1,566,967 Impairment losses recognised 1,945,465 5,888,320 Reversal of impairment losses (1,000) - Amount written off (5,803,429) (1,272,343) At 31 December 2,323,980 6,182,944 Company No. 451734 A - 112 -
10. Trade Receivables (Cont’d)
Reversal of impairment were made during the financial year when related amounts were collected or written off amounting to RM1,000 and RM5,803,429 (2014: RMNil and RM1,272,343) respectively.
Analysis of the trade receivables ageing as at the end of the financial year are as follow:
Group 2015 2014 RM RM
Neither past due nor impaired 5,909,102 8,886,351 Past due not impaired: Less than 30 days 1,034,789 1,795,865 31 to 60 days 38,787 1,010,950 61 to 90 days 126,365 1,068,066 More than 90 days 34,713,453 32,346,828 35,913,394 36,221,709 41,822,496 45,108,060 Impaired 2,323,980 6,182,944 44,146,476 51,291,004
Trade receivables that are neither past due nor impaired are creditworthy receivables with good payment records with the Group.
As at 31 December 2015, trade receivables of the Group of RM35,913,394 (2014: RM36,221,709) were past due but not impaired. Based on past experience and no adverse information to date, the Directors of the Company are of the opinion that no allowance for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.
The trade receivables of the Group that are individually assessed to be impaired amounting to RM2,323,980 (2014: RM6,182,944), related to customers that are in financial difficulties, have defaulted on payments. These balances are expected to be recovered through the debts recovery process. Company No. 451734 A - 113 -
11. Inventories
Group 2015 2014 RM RM
At cost Airtime 815,000 - Finished goods - 13,253 Merchandise items 5,915 9,874 820,915 23,127
Recognised in profit or loss: Inventories written off 7,637 1,020,325 Inventories recognised in profit or loss 385,000 -
12. Other Receivables
Group Company 2015 2014 2015 2014 RM RM RM RM
Other receivables 1,906,060 1,385,283 95,465 45,057 Deposits 212,570 907,326 3,045 2,405 Prepayments 3,555,047 3,381,556 512,024 243,794 5,673,677 5,674,165 610,534 291,256 Less: Accumulated impairment losses - other receivables (1,875) (1,875) - - 5,671,802 5,672,290 610,534 291,256
Included in the prepayments for financial year ended 31 December 2015, are consultancy fee of RM1,500,000 and RM650,000 paid for the application of money lending license and solar project respectively.
The subsidiary company, Founder Pay Sdn. Bhd. has obtained the money lending license on 1 November 2015. The application of money lending license by Wealth Pursuit Sdn. Bhd. is currently pending approval from relevant authority.
13. Amount Due from/to Ultimate Holding Company
These represent unsecured, non-interest bearing non-trade balances and repayable on demand. Company No. 451734 A - 114 -
14. Amount Due from Holding Company
This represents unsecured, non-interest bearing non-trade balances and repayable on demand.
15. Amount Due from/to Subsidiary Companies
These represent unsecured, non-interest bearing trade and non-trade balances and repayable on demand.
16. Fixed Deposits with Licensed Banks
Included in the fixed deposits with licensed banks are amount of RM6,106,601 (2014: RM1,826,640) pledged to licensed banks for bank borrowings and bank guarantee facilities granted to subsidiary companies as disclosed in Note 21.
The interest rates and maturities of deposits of the Group at the reporting date are 3.15% to 3.30% (2014: 3.15% to 3.40%) per annum and 1 to 365 days (2014: 1 to 365 days) respectively.
17. Share Capital
Group and Company Number of shares Amount 2015 2014 2015 2014 Units Units RM RM
Ordinary shares of RM0.10 each
Authorised A1 1 January/31 December 5,000,000,000 5,000,000,000 500,000,000 500,000,000
Issued anf fully paid up A1 1 January 1,062,330,571 845,036,250 106,233,057 84,503,625 Bonus issue - 132,791,321 - 13,279,132 Conversion of warrants 4,285 - 429 - Exercise of ESOS 3,470,633 - 347,063 - Private placement - 84,503,000 - 8,450,300 At 31 December 1,065,805,489 1,062,330,571 106,580,549 106,233,057 Company No. 451734 A - 115 -
17. Share Capital (Cont’d)
During the current financial year, the Company increased its issued and paid-up share capital from 1,062,330,571 to 1,065,805,489 through the issuance of 3,474,918 new ordinary shares of RM0.10 each as follows:
(a) 4,285 new ordinary shares of RM0.10 each for cash arising from the conversion of warrants at exercise price of RM0.10 per ordinary share; and
(b) 3,470,633 new ordinary shares of RM0.10 each for cash arising from the exercise of employees’ share options (“ESOS”) at exercise price of RM0.12 per ordinary share.
The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.
18. Cumulative Preference Shares
Group Number of shares Amount 2015 2014 2015 2014 Units Units RM RM
Convertible preference shares of USD1.00 each:
Authorised At 1 January/31 December - Unlimited - Unlimited
Issued and fully paid up At 1 January 156,000 156,000 544,596 544,596 Redeemed during the financial year (156,000) - (544,596) - At 31 December - 156,000 - 544,596
On 26 October 2010, a subsidiary company entered into a letter of agreement with the holders of 156,000 convertible preference shares of USD1.00 each in AllChina.cn Ltd (“AllChina”), with a subscription value of USD156,000 (“AllChina CPS”), whereby the holders of AllChina CPS had agreed that the maturity date for the AllChina CPS shall be extended to 10 January 2013 and the conversion of the AllChina CPS can only be exercised with the consent of AllChina. Company No. 451734 A - 116 -
18. Cumulative Preference Shares (Cont’d)
The CPS carry the following rights:
(a) The subscriber has the right at any time prior to the maturity date, being thirty six (36) months from the date of issuance, in respect of all or any of the AllChina CPS, to convert one (1) AllChina CPS into one (1) ordinary share in AllChina upon the occurrence of liquidation, winding up, merger, acquisition consolidation of company; or a sale or transfer of all or substantially all of the company, or in the case one of its subsidiary companies, the said subsidiary’s assets or business; or an initial public offering in respect of shares in AllChina or any of its subsidiary.
(b) The holders of AllChina CPS had agreed that the maturity date for the AllChina CPS shall be extended to 10 January 2013 and the conversion of the AllChina CPS can only be exercised with the consent of the ordinary shareholders of AllChina.
The holders of AllChina CPS had completely transferred AllChina CPS to its immediate holding company, RH Media Group Sdn. Bhd..
19. Reserves
Group Company 2015 2014 2015 2014 Note RM RM RM RM Non-distributable: Share premium (a) 9,450,761 9,273,758 13,283,516 13,106,513 Other reserve (b) (14,748,104) (15,293,239) (16,717,888) (16,718,427) Foreign currency translation reserve (c) (134,626) (931,505) - - Fair value adjustment reserve (d) 968 528 - - Reverse acquisition debit (e) (36,809,064) (36,809,064) - - Warrant reserve (f) 16,717,888 16,718,427 16,717,888 16,718,427 (25,522,177) (27,041,095) 13,283,516 13,106,513 Retained earnings/ (Accumulated losses) 47,733,686 45,523,102 (6,274,100) (3,608,043) 22,211,509 18,482,007 7,009,416 9,498,470
(a) Share premium
Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the shares.
The share premium is not distributable by way of cash dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act, 1965. Company No. 451734 A - 117 -
19. Reserves (Cont’d)
(b) Other reserve
Other reserve arising from the issue of cumulative preference shares and warrants.
(c) Foreign currency translation reserve
Foreign currency translation reserve represents the exchange differences arising from the translation of the financial statements of foreign operations whose functional currency is different from that of the Group’s presentation currency.
(d) Fair value adjustment reserve
Fair value adjustment reserve represents the cumulative net change in the fair value of available-for-sale financial assets until they are derecognised or impaired.
(e) Reverse acquisition debit
The difference between the issued equity of the Company and issued equity and share premium of RMA, the accounting acquirer, was recorded as reverse acquisition debit of RM36,809,064 as disclosed in Note 6(a).
(f) Warrant reserve
Group and Company 2015 2014 RM RM
At 1 January 16,718,427 - Issue of warrants - 16,718,427 Exercise of warrants (539) - At 31 December 16,717,888 16,718,427
Warrant reserve represents reserve allocated to free detachable warrants issued with bonus issue.
The Warrants were constituted under the Deed Poll dated 6 November 2014.
On 26 December 2014, the Company issued 132,791,321 free warrants in PUCF (“Warrants”) on the basis of one (1) Warrant for every seven (7) existing ordinary shares of RM0.10 each in PUCF held at the same entitlement date of the Bonus Issue of Shares. Company No. 451734 A - 118 -
19. Reserves (Cont’d)
(f) Warrant reserve (Cont’d)
The salient terms of the Warrants are set out as follows:
(i) The exercise price of the Warrants has been fixed by the Board at RM0.10 each. Each Warrant entitles the Warrant holder to subscribe for one (1) new PUCF Share at any time during the exercise period at the exercise price (subject to adjustments in accordance with the provisions of the Deed Poll).
(ii) The period commencing on, and including the first date of issue of the Warrants and ending at the close of business at 5.00 pm in Malaysia on the date which is ten (10) years from the date of issue of the Warrants. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid.
(iii) The Warrant holders are not entitled to any voting rights in any general meeting of the Company or to participate in any form of distribution and/or offer of securities in the Company until and unless such Warrant holders exercise their Warrants into new PUCF Shares.
As at 31 December 2015, the total numbers of warrants that remain unexercised were 132,787,036.
(g) ESOS reserve
Group and Company 2015 2014 RM RM
At 1 January - - ESOS granted 2,428,360 - ESOS exercised (107,590) - ESOS lapsed (82,293) - ESOS cancelled (2,238,477) - At 31 December - -
ESOS reserve represents the equity-settled share options granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options. Employees Share Option Scheme is disclosed in Note 30. Company No. 451734 A - 119 -
20. Finance Lease Liability
Group 2015 2014 RM RM Minimum lease payments: Within one year 64,224 64,224 Later than one year and not later than two years 42,822 64,224 Later than two years and not later than five years - 42,822 107,046 171,270 Less: Future finance charges (3,911) (9,833) Present value of minimum lease payments 103,135 161,437 Present value of minimum lease payments: Within one year 60,983 58,302 Later than one year and not later than two years 42,152 60,983 Later than two years and not later than five years - 42,152 103,135 161,437
Analysed as: Repayable within twelve months 60,983 58,302 Repayable after twelve months 42,152 103,135 103,135 161,437
This obligation is secured by a charge over the leased asset as disclosed in Note 4(c). The interest rate for the lease is 2.33% (2014: 2.33%) per annum. Company No. 451734 A - 120 -
21. Bank Borrowings
Group 2015 2014 RM RM
Current Secured Bank overdraft 678,554 593,868 Term loan 150,398 - 828,952 593,868 Non-Current Secured Term loan 4,434,318 - 5,263,270 593,868
The bank overdraft obtained from a licensed bank is secured by the following:
(a) pledge of fixed deposits of a subsidiary company as disclosed in Note 16; and (b) certificate of Guarantee from Credit Guarantee Corporation Malaysia Berhad under Enchancer Scheme for RM800,000.
The term loan obtained from a licensed bank is secured by the following:
(a) legal charge over freehold buildings as disclosed in Note 4(b); and
(b) corporate guarantee from the Company.
The weighted average interest rates per annum are as follows:
Group 2015 2014 % %
Bank overdraft 8.65% 8.65% Term loan 4.55% -
The Group has unutilised bank guarantee facility of RM750,000 (2014: RM750,000). The said facility is secured by fixed deposit placement of RM500,000 (2014: RM500,000) as disclosed in Note 16.
22. Trade Payables
The normal trade credit terms granted to the Group range from 30 to 90 days (2014: 30 to 90 days). Company No. 451734 A - 121 -
23. Other Payables
Group Company 2015 2014 2015 2014 Note RM RM RM RM
Other payables 1,802,684 1,387,398 294,235 5,562 Accruals 671,422 2,427,559 284,168 218,627 Deposits 216,646 216,499 - - Amount owing to a Director (a) 659,238 657,011 - - Government grant (b) 543,004 723,504 - - Deferred revenue (c) 1,622,664 1,142,552 - - 5,515,658 6,554,523 578,403 224,189
(a) Amount owing to a Director
This represents unsecured, non-interest bearing advances and repayable on demand.
(b) Government grant
Group 2015 2014 RM RM
At 1 January 723,504 857,375 Grant received during the financial year - 45,125 Amortised during the financial year (180,500) (178,996) At 31 December 543,004 723,504
A subsidiary company has received a TechnoFund grant amounted to RM902,500 from the Ministry of Science, Technology and Innovations.
The grant is being amortised over the useful life of the intellectual property and recognised as other income in statements of profit or loss and other comprehensive income.
(c) Deferred revenue
Deferred revenue represents subscription fees received/receivable from the members. Subscription income is recognised in profit or loss on a time progressive basis over the subscription period. Company No. 451734 A - 122 -
24. Revenue
Group Company 2015 2014 2015 2014 RM RM RM RM
Annual subscription 153,586 252,070 - - Commission income 397,773 486,323 - - In change service - 72,048 - - Financial advisory 204,000 - - - Renewable energy 81,300 - - - Sale of advertising space and marketing brand 15,987,985 30,164,005 - - Sale of regional software license 5,500,000 - - - Sale of software 2,000,000 - - - Sale of digital contents 1,200,000 - - - Service fee income - 6,057,140 - - Sales - biometrics 372,748 14,970,226 70,510 - Sales - Electronic Publishing System and Management Information System 158,339 354,295 - - Seminar income 634,485 103,435 - - Transactions fee 574,467 648,237 - - Tradex 109,569 279,172 - - Others 1,579 41,906 - - 27,375,831 53,428,857 70,510 -
25. Finance Costs
Group 2015 2014 RM RM
Interest expenses on: Bank overdraft 100,473 121,606 Finance lease 5,922 8,604 RCCPS - 648,682 Term loan 177,043 - 283,438 778,892 Company No. 451734 A - 123 -
26. Profit/(Loss) before Tax
Group Company 2015 2014 2015 2014 RM RM RM RM
Auditors' remuneration - current year 159,227 161,425 45,000 40,000 - under provision in prior years 400 1,100 - - - other 5,000 - 5,000 - Amortisation of software development expenditure 899,417 1,046,989 - - Amortisation of intangible assets 304,687 - - - Bad debts written off - trade receivables 5,862,410 1,892,057 - - - other receivables - 5,000 - - Non-executive Directors' remuneration 139,144 129,200 139,144 129,200 Depreciation of property, plant and equipment 635,379 621,929 328,828 231,682 Fair value adjustment on trade receivables 105,135 - - - Impairment on trade receivables 1,945,465 5,888,320 - - Inventories written off 7,637 1,020,325 - - Loss on disposal of subsidiary companies 132,810 - - - Loss on winding up of a subsidary company 37,858 - - - Property, plant and equipment written off 19,436 - - - Rental of equipment 22,269 45,957 3,738 12,159 Rental of premises 204,888 101,694 251,318 101,479 Loss/(Gain) on foreign exchange - Realised (38,947) 68,437 - - - Unrealised (10,696) (43,319) - - Company No. 451734 A - 124 -
26. Profit/(Loss) before Tax
Group Company 2015 2014 2015 2014 RM RM RM RM
Dividend income (53,446) (93,508) Bank interest income (297,494) (191,418) - (5,323) Government grant income (180,500) (178,996) - - Gain on cancellation of RCPS - (2,000,000) - - Gain on redemption of RCCPS - (4,422,932) - - Loss/(Gain) on disposal of property, plant and equipment 2,371 (1,014,777) (4,674) - Rental income - (10,000) - - Reversal of impairment on trade receivables (5,804,429) (1,272,343) - -
27. Taxation
Group Company 2015 2014 2015 2014 RM RM RM RM
Tax expenses recognised in profit or loss Malaysian statutory tax - Current tax 130,623 548,438 - - - Under/(Over) provision in prior years 7,427 (40,782) - - 138,050 507,656 - -
Deferred tax: - Relating to origination and reversal of timing differences 34,826 (367,431) - 3,221 - Under provision in prior years 3,413 35,036 - 33,436 38,239 (332,395) - 36,657
Real property gain tax 44,000 47,453 - - 220,289 222,714 - 36,657
Malaysian income tax is calculated at the statutory tax rate of 25% (2014: 25%) of the estimated assessable profits for the financial year. Taxation for other jurisdiction is calculated at the rates prevailing in the respective jurisdictions. Company No. 451734 A - 125 -
27. Taxation (Cont’d)
A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:
Group Company 2015 2014 2015 2014 RM RM RM RM
Profit/(Loss) before tax 2,518,579 10,060,821 (2,666,057) (732,246)
At Malaysian statutory tax rate of 25% (2014: 25%) 629,645 2,515,205 (666,514) (183,062) Income tax not subject to tax (81,953) (2,395,117) - - Expenses not deductible for tax purposes 1,116,130 1,026,444 252,634 170,860 Income exempted under pioneer status (54,000) (20,500) - - Tax exemption on foreign income (1,976,947) (1,559,850) - - Deferred tax assets not recognised 533,174 621,925 413,880 15,423 Deferred tax liabilities not recognised (600) (7,100) - - Real property gain tax 44,000 47,453 - - Under/(Over) provision of income tax in prior years 7,427 (40,782) - - Under provision of deferred tax in prior years 3,413 35,036 - 33,436 Tax expense for the financial year 220,289 222,714 - 36,657
Income tax savings arising from tax losses:
Group 2015 2014 RM RM
Income tax savings arising from utilisation of prior year tax losses previously not recognised 40,100 25,090 Company No. 451734 A - 126 -
27. Taxation (Cont’d)
The subsidiary companies, namely Redhot Media Sdn. Bhd. (“RHM”) and EPP Solution Sdn. Bhd. (“EPP”) were awarded with the Multimedia Super Corridor (“MSC”) status by the Government on 15 September 2005 and 25 June 2008 respectively. The financial incentive awarded to the subsidiary companies under the MSC status is “Pioneer Status” under Section 4A of the Promotion of Investment Act, 1986. RHM and EPP has been granted pioneer status by the Ministry of International Trade and Industry for services under the Promotion of Investment Act 1986 in which the statutory income are exempted from tax for a period of 5 years since 15 September 2005 and 25 June 2008 respectively.
The extensions of Pioneer Status of RHM and EPP have been approved for another 5 years from the date of expiry of first five year period, which expiring on 15 September 2015 and 27 June 2018 respectively.
On 25 November 2015, RHM has notified the Ministry of International Trade and Industry that RHM no longer able to maintain office premise in MSC location and thus surrendering the MSC Malaysia Status. With effective from 22 February 2016, the MSC Malaysia Status and the Pioneer Status granted to RHM is withdrawn and RHM shall henceforth no longer enjoy the benefits, incentives and privileges granted by Multimedia Development Corporation and/or relevant government authorities pursuant to the grant of MSC Malaysia Status.
The Group and the Company have the following estimated unutilised capital allowances and unutilised tax losses available for carry forward to set-off against future taxable profits. The said amounts are subject to approval by the tax authorities.
Group Company 2015 2014 2015 2014 RM RM RM RM
Unutilised capital allowances 656,870 504,910 398,410 183,660 Unutilised tax losses 7,659,755 5,731,747 2,500,935 1,000,687 8,316,625 6,236,657 2,899,345 1,184,347 Company No. 451734 A - 127 -
28. Earnings per Share
(a) Basic earnings per share
The basic earnings per share are calculated based on the consolidated profit for the financial year attributable to owners of the parent and the weighted average number of ordinary shares in issue during the financial year as follows:
Group 2015 2014
Profit attributable to owners of the parent (RM) 2,210,584 9,849,300
Weighted average number of ordinary shares in issue (in shares) Issued ordinary shares at 1 January 1,062,330,571 750,000,000 Bonus issue - 132,791,321 Effect of ordinary shares issued during the financial year 2,403,191 21,846,770 Weighted average number of ordinary shares in issue in 31 December 1,064,733,762 904,638,091
Basic earnings per share (sen) 0.21 1.09
(b) Diluted earnings per share
Diluted earnings per share are calculated based on the adjusted consolidated profit for the financial year attributable to the owners of the parent and the weighted average number of ordinary shares in issue during the financial year have been adjusted for the dilutive effects of all potential ordinary shares as follows:
Group 2015 2014
Profit attributable to owners of the parent (RM) 2,210,584 9,849,300
Weighted average number of ordinary shares used in the calculation of basic earnings per share (in shares) 1,064,733,762 904,638,091 Effect of conversion of free warrants 27,609,303 30,644,151 Weighted average number of ordinary shares at 31 December (diluted) 1,092,343,065 935,282,242
Diluted earnings per share (sen) . 0.20 1.05 Company No. 451734 A - 128 -
29. Staff Costs
Group Company 2015 2014 2015 2014 RM RM RM RM
Fee 32,000 64,000 24,000 24,000 Salaries and other emoluments 3,571,368 6,822,890 1,200,693 1,141,032 Defined contribution plans 337,002 704,005 128,966 129,865 Social security costs 23,530 42,850 9,429 7,265 Share-based payment expenses 107,590 - 107,590 - Benefit-in-kind - 5,300 - 5,300 Other benefits 97,243 103,423 - - 4,168,733 7,742,468 1,470,678 1,307,462
Included in the staff costs is aggregate amount of remuneration received and receivable by the Executive Directors of the Company and of the subsidiary companies during the financial year as below:
Group Company 2015 2014 2015 2014 RM RM RM RM
Executive Directors of the Company Fee 24,000 44,000 24,000 24,000 Salaries and other emoluments 260,076 796,798 36,000 303,758 Defined contribution plans 12,302 85,785 4,680 36,780 Benefit-in-kind - 5,300 - 5,300 296,378 931,883 64,680 369,838
Executive Directors of the subsidiary company Fee 8,000 20,000 - - Salaries and other emoluments 60,620 59,391 - - Defined contribution plans 7,800 7,424 - - 76,420 86,815 - - 372,798 1,018,698 64,680 369,838 Company No. 451734 A - 129 -
30. Employees Share Option Scheme (“ESOS”)
At an extraordinary general meeting held on 18 June 2009, the Company’s shareholders approved the establishment of ESOS for eligible Directors and employees of the Company.
The salient features of the ESOS are as follows:
(a) the total number of new shares which may be made available under the scheme shall not exceed twenty five percent (25%) of the total issued and paid up share capital of the Company at any point of time during the existence of the ESOS. On 4 June 2014, the Board announced that the Company will extend its existing ESOS for another 5 years from 8 July 2014 to 8 July 2019 in accordance with the terms of the ESOS Bylaws;
(b) eligible persons are confirmed employees including executive directors of the Group and have been in the employment of the Group for a period of at least twelve (12) months of continuous service on prior to the date of allocation. However, where the employee/executive director is serving under an employment contract, the contract should be for a duration of at least two (2) years and in addition, a foreign employee of the Group, serving on a full-time capacity and whose contribution is vital to the Group may be considered for participation, provided that no foreign employee who is serving under an employment contract may be considered for participation unless the employment contract is for duration of at least two (2) years or such other period as may be required by the relevant authority;
(c) not more than fifty percent (50%) of the shares under the ESOS will be granted to the directors and senior management. In addition, not more than ten percent (10%) of the shares under the ESOS will be granted to individual staff. No option shall be granted for than 1,000 shares;
(d) the option price may be at a discount of not more than ten percent (10%) from the five (5) days weighted average market price of the underlying shares preceding the date of offer or at par value of the ordinary shares of the Company, whichever s higher;
(e) the ESOS shall be in force for a period for ten (10) years, and became effective on 9 July 2009; and
(f) the options granted may be exercised in full immediately or in parts within the duration of the scheme. Company No. 451734 A - 130 -
30. Employees Share Option Scheme (“ESOS”) (Cont’d)
Movement in the number of share options and the weighted average exercise prices are as follows:
Number of options granted over ordinary shares of RM0.10 each Exercise At At Grant date price 01.01.2015 Granted Exercised Lapsed Cancelled 31.12.2015 RM 12 January 2015 0.12 - 63,237,406 (3,470,633) (2,654,600) (57,112,173) - 18 June 2015 0.12 - 18,000,000 - - (18,000,000) - 24 July 2015 0.12 - 2,000,000 - - (2,000,000) - - 83,237,406 (3,470,633) (2,654,600) (77,112,173) -
During the financial year, 3,470,633 share options were exercised. The weighted average share price at the date of exercise for the financial year was RM0.12.
The list of employees (details of options granted to the Directors are disclosed in the section of Directors’ interest in this report) who have been granted options to subscribe for ordinary shares of RM0.10 each during the financial year are disclosed as follows:
Number of options over ordinary shares of RM0.10 each
Cheong Tze Wai 20,000,000 Cho Mee Lin 5,000,000 Oh Chong Peng 5,000,000 Hiew Wai Yoon 5,000,000 Chua Siew Ling 4,000,000 Loi Pei Ying 1,000,000 Zhou Qi 1,000,000 Soo Yee Fern 1,000,000 Tan Bee Cheing 173,600 Chong Wern Keong 155,000 Looi Li Chen 152,000 Lee Lai Ming 141,300 Chiew Yaw Yi 129,100 Ziela Binti Che Ismail 124,700 Mah Weng Khin 124,600 Tan Leng Thung 120,000 Lee Ai Ling 116,300 Company No. 451734 A - 131 -
30. Employees Share Option Scheme (“ESOS”) (Cont’d)
The list of employees (details of options granted to the Directors are disclosed in the section of Directors’ interest in this report) who have been granted options to subscribe for ordinary shares of RM0.10 each during the financial year are disclosed as follows: (Cont’d)
Number of Options over ordinary shares of RM0.10 each
Zhang Bin 96,000 Azizi Bin Mahadin @ Mahmudin 95,500 Chua Yee Ling 81,600 Suzanna Ng Wey Wey 69,600 Anne Yee Shet Mei 39,900 Choo Ping Sein 32,000
On 7 October 2015, the Group had announced that all the outstanding ESOS granted has been cancelled upon mutual agreement with the respective ESOS option holders.
31. Related Party Disclosures
(a) Identifying related parties
For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.
Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel comprise the Directors and management personnel of the Group, having authority and responsibility for planning, directing and controlling the activities of the Group entities directly or indirectly. Company No. 451734 A - 132 -
31. Related Party Disclosures (Cont’d) (b) In addition to related party balances disclosed elsewhere in the financial statements, the significant related party transactions of the Group and of the Company are as follows:
2015 2014 RM RM
Group Transaction with a related party Purchase of the cards named PictureAir - 2,000,000
Company Transactions with subsidiary companies Management fee received/receivable 593,072 250,000 Rental of premises paid/payable 219,240 - Management fee paid/payable - 30,000
(c) Compensation of key management personnel
Remuneration of Directors and key management personnel are as follows:
Group Company 2015 2014 2015 2014 RM RM RM RM
Fee 171,144 44,000 163,144 24,000 Salaries and other emoluments 643,995 653,858 36,000 36,000 Defined contribution plans 59,414 68,595 4,680 4,680 874,553 766,453 203,824 64,680 Company No. 451734 A - 133 -
32. Segment Information
For management purposes, the Group is organised into business unit based on their products and services provided, as follows:
Biometrics, renewable Fingerprint verification products, information technology energy, solar and other solutions provider of electronic publishing system, development renewable projects and/or operation of power generation from renewable energy, (“Biometrics and solar and other renewable energy projects renewable energy”)
Advertising and media Advertising and media brokerage and consultancy
Financial services Provision of financial planning and advisory services, and related training and event management and agency of insurance and selling of software solution related to financial products
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements.
Transactions between segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation. The measurement basis and classification are consistent with those adopted in the previous financial year.
Information about segment assets and liabilities are neither included in the internal management reports nor provided regularly to the management. Hence, no disclosures are made on segment assets and liabilities.
Biometrics Per consolidated and renewable Advertising Financial financial energy and media services Eliminations statements RM RM RM RM RM
2015 Revenue External customers 612,387 25,527,186 1,236,258 - 27,375,831 Inter segment 6,476,625 16,758 - (6,493,383) - Total revenue 7,089,012 25,543,944 1,236,258 (6,493,383) 27,375,831
Segment results Interest income 193,533 92,108 11,853 - 297,494 Finance costs (177,043) (106,395) - - (283,438) Depreciation and amortisation (528,714) (1,253,981) (56,788) - (1,839,483) Company No. 451734 A - 134 -
32. Segment Information (Cont’d)
Biometrics Per consolidated and renewable Advertising Financial financial energy and media services Eliminations statements RM RM RM RM RM
2015 Segment results (Cont'd) Other non-cash item (297,905) (1,937,878) - - (2,235,783) Segments profit/(loss) before tax (1,391,754) 5,155,085 305,166 (1,549,918) 2,518,579
Assets Capital expenditure 6,610,149 5,411,824 9,661,157 - 21,683,130
2014 Revenue External customers 15,324,521 37,405,830 698,506 - 53,428,857 Inter segments - 1,218,514 - (1,218,514) - Total revenue 15,324,521 38,624,344 698,506 (1,218,514) 53,428,857
Segment results Interest income 25,456 130,466 35,496 - 191,418 Finance costs - (778,892) - - (778,892) Depreciation and amortisation (472,560) (1,044,025) (152,333) - (1,668,918) Other non-cash item 908,063 68,283 (893,000) - 83,346 Segments profit/(loss) before tax 2,098,523 9,244,673 (1,282,375) - 10,060,821
Assets Capital expenditure 588,388 6,657 40,082 - 635,127 Company No. 451734 A - 135 -
32. Segment Information (Cont’d)
(a) Adjustments and eliminations
Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis.
Capital expenditure consists of additions of property, plant and equipment and intangible assets, ie: digital contents and regional software license.
Inter-segment revenues are eliminated on consolidation.
(b) Other non-cash items consists of the following as presented in the respective notes to financial statements.
2015 2014 RM RM
Bad debts written off - trade receivables (5,862,410) (1,892,057) - other receivables - (5,000) Impairment on trade receivables (1,945,465) (5,888,320) (Loss)/Gain on disposal of property, plant and equipment (2,371) 1,014,777 Inventories written off (7,637) (1,020,325) Fair value adjustment trade receivables (105,135) - Loss of disposal of subsidiary companies (132,810) - Loss of winding up of a subsidiary company (37,858) - Property, plant and equipment written off (19,436) - Gain on cancellation of RCPS - 2,000,000 Gain on redemption on RCCPS - 4,422,932 Government grant income 180,500 178,996 Share-based payment expenses (107,590) - Reversal of impairment on trade receivables 5,804,429 1,272,343 (2,235,783) 83,346 Company No. 451734 A - 136 -
32. Segment Information (Cont’d)
(c) Geographic information
Revenue information based on the geographical location of customers respectively are as follow:
2015 2014 RM RM
Malaysia 22,984,041 3,479,709 China and Hong Kong 3,959,441 37,405,829 Asia (excluding Malaysia) 432,349 10,407,285 North and South America - 706,878 Africa - 1,073,684 Europe - 303,077 Oceania - 52,395 27,375,831 53,428,857
(d) Major customers
Revenue from 2 (2014: 4) major customer amount to RM7,574,074 (2014: RM23,307,194), arising from sales in the media and advertising segment.
Revenue from major customers with revenue equal or more than 10% of the Group’s revenue are as follows:
2015 2014 RM RM
Customer A 4,274,074 - Customer B 3,300,000 - Customer C - 7,043,694 Customer D - 6,057,140 Customer E - 5,120,700 Customer F - 5,085,660 7,574,074 23,307,194 Company No. 451734 A - 137 -
33. Financial Instruments
(a) Classification of financial instruments
Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expense, including fair value gains and losses, are recognised.
The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:
Fair value Financial Available through profit Loans and liabilities at -for-sale or loss receivables amortised cost Total RM RM RM RM RM
Group 2015 Financial Assets Other investments 1,114 844,620 - - 845,734 Trade receivables - - 41,822,496 - 41,822,496 Other receivables - - 2,116,755 - 2,116,755 Amount due from ultimate holding company - - 490,070 - 490,070 Amount due from holding company - - 9,038 - 9,038 Fixed deposits with licnsed banks - - 6,135,601 - 6,135,601 Cash and bank balances - - 5,873,603 - 5,873,603 1,114 844,620 56,447,563 - 57,293,297
Financial Liabilities Trade payables - - - 3,726,033 3,726,033 Other payables - - - 5,515,658 5,515,658 Finance lease liability - - - 103,135 103,135 Bank borrowings - - - 5,263,270 5,263,270 - - - 14,608,096 14,608,096 Company No. 451734 A - 138 -
33. Financial Instruments (Cont’d)
(a) Classification of financial instruments (Cont’d)
Fair value Financial Available through profit Loans and liabilities at -for-sale or loss receivables amortised cost Total RM RM RM RM RM
Group 2014 Financial Assets Other investments 674 3,883,448 - - 3,884,122 Trade receivables - - 45,108,060 - 45,108,060 Other receivables - - 2,290,734 - 2,290,734 Amount due from ultimate holding company - - 586,582 - 586,582 Fixed deposits with licnsed banks - - 13,870,595 - 13,870,595 Cash and bank balances - - 7,198,412 - 7,198,412 674 3,883,448 69,054,383 - 72,938,505
Financial Liabilities Trade payables - - - 5,666,996 5,666,996 Other payables - - - 6,554,523 6,554,523 Amount due to ultimate holding company - - - 189,000 189,000 Finance lease liability - - - 161,437 161,437 Bank borrowings - - - 593,868 593,868 - - - 13,165,824 13,165,824 Company No. 451734 A - 139 -
33. Financial Instruments (Cont’d)
(a) Classification of financial instruments (Cont’d)
Financial Available Loans and liabilities at -for-sale receivables amortised cost Total RM RM RM RM
Company 2015 Financial Assets Other investment 10 - - 10 Other receivables - 98,510 - 98,510 Amount due from ultimate holding company - 490,070 - 490,070 Amount due from holding company - 9,038 - 9,038 Amount due from subsidiary companies - 24,685,135 - 24,685,135 Fixed deposits with licensed banks - 29,000 - 29,000 Cash and bank balances - 488,405 - 488,405 10 25,800,158 - 25,800,168
Financial Liabilities Other payables - - 578,403 578,403 Amount due to subsidiary companies - - 15,492,070 15,492,070 - - 16,070,473 16,070,473
2014 Financial Assets Other investment 10 - - 10 Other receivables - 47,462 - 47,462 Amount due from ultimate holding company - 678,820 - 678,820 Amount due from subsidiary companies - 33,922,532 - 33,922,532 Cash and bank balances - 1,236,508 - 1,236,508 10 35,885,322 - 35,885,332 Company No. 451734 A - 140 -
33. Financial Instruments (Cont’d)
(a) Classification of financial instruments (Cont’d)
Financial Available Loans and liabilities at -for-sale receivables amortised cost Total RM RM RM RM
Company 2014 Financial Liabilities Other payables - - 224,189 224,189 Amount due to subsidiary companies - - 14,475,430 14,475,430 - - 14,699,619 14,699,619
(b) Financial risk management objectives and policies
The Group’s financial risk management policy is to ensure that adequate financial resources are available for the development of the Group’s operations whilst managing its credit, liquidity, foreign currency, interest rate and market price risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.
The following sections provide details regarding the Group and the Company’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.
(i) Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and deposits with banks and financial institutions. The Company’s exposure to credit risk arises principally from advances to holding companies and subsidiary companies.
The Group has adopted a policy of only dealing with creditworthy counterparties. Management has a credit policy in place to control credit risk by dealing with creditworthy counterparties and deposit with banks and financial institutions with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts. Company No. 451734 A - 141 -
33. Financial Instruments (Cont’d)
(b) Financial risk management objectives and policies (Cont’d)
(ii) Credit risk (Cont’d)
The Company provides unsecured advances to its holding companies and subsidiary companies. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies.
The carrying amounts of the financial assets recorded on the statements of financial position at the end of the financial year represents the Group’s and the Company’s maximum exposure to credit risk except for financial guarantee provided to a licensed bank for banking facility granted to a subsidiary company. The Company’s maximum exposure in this respect is RM4,584,716 (2014: RMNil), representing the outstanding banking facility of the subsidiary company as at the end of the reporting period. There was no indication that the subsidiary company would default on repayment as at the end of the reporting period.
The Group has no significant concentration to credit risk except as disclosed in Note 10. The Company has no significant concentration of credits risks except for advances to its holding companies and subsidiary companies where risks of default have been assessed to be low.
(ii) Liquidity risk
Liquidity risk refers to the risk that the Group or the Company will encounter difficulty in meeting its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.
The Group’s and the Company’s funding requirements and liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group finances its liquidity through internally generated cash flows and minimises liquidity risk by keeping committed credit lines available. Company No. 451734 A - 142 -
33. Financial Instruments (Cont’d)
(b) Financial risk management objectives and policies (Cont’d)
(ii) Liquidity risk (Cont’d)
The following table analyses the remaining contractual maturity for financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay.
On demand Total Total or within 1 1 to 2 2 to 5 After 5 contractual carrying year years years years cash flows amount RM RM RM RM RM RM
Group 2015 Non-derivative financial liabilities Trade payables 3,726,033 - - - 3,726,033 3,726,033 Other payables 5,515,658 - - - 5,515,658 5,515,658 Finance lease liability 64,224 42,822 - - 107,046 103,135 Bank borrowings 1,034,990 356,436 356,436 3,938,025 5,685,887 5,263,270 10,340,905 399,258 356,436 3,938,025 15,034,624 14,608,096 Company No. 451734 A - 143 -
33. Financial Instruments (Cont’d)
(b) Financial risk management objectives and policies (Cont’d)
(ii) Liquidity risk (Cont’d)
On demand Total Total or within 1 1 to 2 2 to 5 After 5 contractual carrying year years years years cash flows amount RM RM RM RM RM RM
Group 2014 Non-derivative financial liabilities Trade payables 5,666,996 - - - 5,666,996 5,666,996 Other payables 6,554,523 - - - 6,554,523 6,554,523 Amount due to ultimate - holding company 189,000 - - - 189,000 189,000 Finance lease liability 64,224 64,224 42,822 - 171,270 161,437 Bank borrowings 593,868 - - - 593,868 593,868 13,068,611 64,224 42,822 - 13,175,657 13,165,824 Company No. 451734 A - 144 -
33. Financial Instruments (Cont’d)
(b) Financial risk management objectives and policies (Cont’d)
(ii) Liquidity risk (Cont’d)
On demand Total Total or repayable contractual carrying within 1 year cash flows amount RM RM RM
Company 2015 Other payables 578,403 578,403 578,403 Amount due to subsidiary companies 15,492,070 15,492,070 15,492,070 Financial guarantee 4,584,716 4,584,716 - 20,655,189 20,655,189 16,070,473
2014 Other payables 224,189 224,189 224,189 Amount due to subsidiary companies 14,475,430 14,475,430 14,475,430 14,699,619 14,699,619 14,699,619
(iii) Market risks
(1) Foreign currency risk
The Group is exposed to foreign currency risk on transactions that are denominated in currencies other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily Burmese Kyatt, Hong Kong Dollar (HKD), China Yuan Reminbi (RMB), Singapore Dollar (SGD) and United States Dollar (USD).
The Group has not entered into any derivative instruments for hedging or trading purposes. Where possible, the Group will apply natural hedging by selling and purchasing in the same currency. However, the exposure to foreign currency risk is monitored from time to time by management. Company No. 451734 A - 145 -
33. Financial Instruments (Cont’d)
(b) Financial risk management objectives and policies (Cont’d)
(iii) Market risks
(1) Foreign currency risk (Cont’d)
The carrying amounts of the Group’s foreign currency denominated financial assets and financial liabilities at the end of the reporting period are as follows:
Burmese Kyatt HKD RMB SGD USD Total RM RM RM RM RM RM Group 2015 Cash and bank balances 198 - 107 1 - 306
2014 Cash and bank balances 203 710,010 1,138 22 17,047 728,420
Foreign currency sensitivity analysis
Foreign currency risk arises from Group entities which have a RM functional currency. The exposure to currency risk of Group entities which do not have a RM functional currency is not material and hence, sensitivity analysis is not presented.
(2) Interest rate risk
The Group’s and the Company’s fixed rate deposits placed with licensed banks and borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.
The Group manages the interest rate risk of its deposits with licensed banks by placing them at the most competitive interest rates obtainable, which yield better returns than cash at bank and maintaining a prudent mix of short and long term deposits. Company No. 451734 A - 146 -
33. Financial Instruments (Cont’d)
(b) Financial risk management objectives and policies (Cont’d)
(iii) Market risks (Cont’d)
(2) Interest rate risk (Cont’d)
The Group manages its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes.
The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amount as at the end of the reporting period was:
Group Company 2015 2014 2015 2014 RM RM RM RM
Fixed rate instruments Financial asset 6,135,601 13,870,595 29,000 - Financial liability (103,135) (161,437) - - 6,032,466 13,709,158 29,000 -
Floating rate instruments Financial liabilities (5,263,270) (593,868) - -
Interest rate risk sensitivity analysis
Fair value sensitivity analysis for fixed rate instruments
The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss. Company No. 451734 A - 147 -
33. Financial Instruments (Cont’d)
(b) Financial risk management objectives and policies (Cont’d)
(iii) Market risks (Cont’d)
(2) Interest rate risk (Cont’d)
Interest rate risk sensitivity analysis (Cont’d)
Cash flow sensitivity analysis for floating rate instruments
A change in 1% interest rate at the end of the reporting period would have increased / (decreased) the Group’ profit before tax by RM52,633 (2014: RM5,939), arising mainly as a result of higher/ lower interest expense on floating rate loans and borrowings. This analysis assumes that all other variables remain constant. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.
(3) Market price risk
Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).
The Group is exposed to equity price risk arising from its investment in quoted instruments. These investments are listed on Bursa Malaysia Securities Berhad and are classified as fair value through profit or loss financial assets.
(c) Fair values of financial instruments
The carrying amounts of short term receivables and payables, cash and cash equivalents and short term borrowings approximate their fair value due to the relatively short term nature of these financial instruments and insignificant impact of discounting.
The carrying amount of long term floating rate loans approximates their fair value as the loans will be re-priced to market interest rate on or near reporting date.
The table below analyses financial instruments not carried at fair value for which fair value is disclosed, together with their carrying amounts shown in the statements of financial position. Company No. 451734 A - 148 -
33. Financial Instruments (Cont’d)
(c) Fair values of financial instruments (Cont’d)
Total Fair value of financial instruments carried at Fair value of financial instruments not fair Carrying fair value carried at fair value value amount Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total RM RM RM RM RM RM RM RM RM RM
Group 2015 Non-current assets Available-for-sale financial assets Quoted shares 1,104 - - 1,104 - - - - 1,104 1,104
Financial Asset Trade receivables (Note 10) - 6,562,569 - 6,562,569 - - - - 6,562,569 6,562,569
Current assets Financial assets at fair value through profit or loss Investment in mutual fund 844,620 - - 844,620 - - - - 844,620 844,620
Non-current liability Financial Liability Finance lease liability - - - - - 41,192 - 41,192 41,192 42,152 Company No. 451734 A - 149 -
33. Financial Instruments (Cont’d)
(c) Fair values of financial instruments (Cont’d)
Total Fair value of financial instruments carried at Fair value of financial instruments not fair Carrying fair value carried at fair value value amount Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total RM RM RM RM RM RM RM RM RM RM Group 2014 Non-current assets Available-for-sale financial assets Quoted shares 664 - - 664 - - - - 664 664
Current assets Financial assets at fair value through profit or loss Investment in mutual fund 3,883,448 - - 3,883,448 - - - - 3,883,448 3,883,448
Non-current liability Financial Liability Finance lease liability - - - - - 99,849 - 99,849 99,849 103,135 Company No. 451734 A - 150 -
33. Financial Instruments (Cont’d)
(c) Fair values of financial instruments (Cont’d)
(i) Policy on transfer between levels
The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.
There were no transfers between levels during current financial year and previous financial years.
(ii) Level 1 fair value
Level 1 fair value is derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
(iii) Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Non-derivative financial instruments
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. In respect of the liability component of RCPS, the market rate of interest is determined by reference to similar liabilities that do not have a conversion option.
(iv) Level 3 fair value
Level 3 fair values for the financial assets and liabilities are estimated using unobservable inputs. Company No. 451734 A - 151 -
34. Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital using a gearing ratio. The Group’s policy is to maintain a prudent level of gearing ratio that complies with debt covenants and regulatory requirements. The gearing ratios at the end of the reporting period are as follows:
Group 2015 2014 RM RM
Loans and borrowings 5,366,405 755,305 Less: Fixed deposits, cash and bank balances ^ (5,902,603) (19,242,367) Net debt (536,198) (18,487,062)
Shareholders' equity 128,792,058 125,259,660
Debt-to-equity ratio (%) # #
^ Fixed deposits, cash and bank balances excluded pledged fixed deposits.
# Gearing ratio not applicable to the Group as the cash and cash equivalents as at 31 December 2015 and 31 December 2014 is sufficient to cover the entire borrowing obligation.
There were no changes in the Group’s approach to capital management during the financial year. Company No. 451734 A - 152 -
35. Significant Events The following significant events took place for the Company and its subsidiary companies during the financial year:
(a) PUC Founder (MSC) Berhad (“the Company” or “PUCF”) (i) Bonus Issue of Shares and Warrants Issue
On behalf of the Board, TA Securities Holdings Berhad announced that the Bonus Issue of Shares has been completed on 29 December 2014 following the listing of and quotation for the 132,791,321 Bonus Shares on the ACE Market of Bursa Securities.
The Company’s 132,791,321 Warrants issued pursuant to the Free Warrants Issue was admitted to the Official List of Bursa Malaysia Securities Berhad and the listing and quotation of these Warrants on the ACE Market was granted with effect from 6 January 2015.
(ii) Employees Share Option Scheme (“ESOS”) During the financial year, the Company announced that it has made an offer of options to eligible persons to subscribe for new ordinary shares of RM0.10 each in the Company under the Company's ESOS, pursuant to Rule 9.19(51) of the ACE Market Listing Requirements of Bursa Malaysia Berhad, as follows:
Date of offer : 12 January 2015 18 June 2015 24 July 2015
Exercise price : RM0.12 RM0.12 RM0.12
Number of options offered : 63,237,406 18,000,000 2,000,000
On 7 October 2015, the Group had announced that all the outstanding ESOS granted has been cancelled upon mutual agreement with the respective ESOS option holders. Company No. 451734 A - 153 -
35. Significant Events (Cont’d)
(a) PUC Founder (MSC) Berhad (“the Company” or “PUCF”) (Cont’d)
(iii) Proposed Rights Issue of ICULS with Warrants and Proposed Diversification
On 4 August 2015, the Company announced the following:
(1) Proposed renounceable rights issue of up to RM127,589,899.80 nominal value of three (3)-year, 4%, irredeemable convertible unsecured loan stocks (“ICULS”) at 100% of the nominal value of RM0.05 each (“Rights ICULS”) on the basis of two (2) RM0.05 nominal value of the Rights ICULS for every one (1) existing ordinary share of RM0.10 each in PUCF (“PUCF Share(s)” or “Share(s)”) held by the entitled shareholders of PUCF on an entitlement date to be determined later (“Entitlement Date”) together with up to 318,974,750 free new detachable warrants (“Warrant(s)- B”) on the basis of one (1) Warrant-B for every eight (8) Rights ICULS subscribed (“Proposed Rights Issue of ICULS with Warrants”).
(2) Proposed diversification of the existing business of PUCF and its subsidiaries companies to include the provision of energy utility services (“Proposed Diversification”).
On 12 October 2015, the Company had revised the basis of entitlement of the Proposed Rights Issue of ICULS with Warrants. The revision entail the proposed renounceable rights issue of up to RM83,901,476.75 nominal value of three (3)-year, 4%, ICULS at 100% of the nominal value of RM0.05 each on the basis of twenty eight (28) RM0.05 nominal value of the Rights ICULS for every twenty (20) existing PUCF Shares held by the Entitled Shareholders of PUCF on an Entitlement Date to be determined later together with up to 419,507,384 Warrants-B on the basis of seven (7) Warrant-B for every twenty eight (28) Rights ICULS subscribed (“Proposed Revised Rights Issue of ICULS with Warrants”).
The Company has on 9 December 2015 received approval from the Securities Commission Malaysia for the Proposed Revised Rights Issues of ICULS with Warrants to raise up to RM83.9 million.
The Proposed Revised Rights Issue of ICULS with Warrants and Proposed Diversification were approved by the shareholders on Extraordinary General Meeting held on 29 December 2015. Company No. 451734 A - 154 -
35. Significant Events (Cont’d)
The following significant events took place for the Company and its subsidiary companies during the financial year: (Cont’d)
(a) PUC Founder (MSC) Berhad (“the Company” or “PUCF”) (Cont’d)
(iii) Proposed Rights Issue of ICULS with Warrants and Proposed Diversification (Cont’d)
On 18 February 2016, the Group has announced that as at the close of acceptance and payment for the Right Issue of ICULS with Warrants at 5.00pm on 5 February 2016, the total valid acceptances and excess applications received under the Right Issue of ICULS with Warrants were RM42,653,286.45 nominal value of the Right ICULS together with 213,266,257 free Warrants-B. This represents an under-subscription of RM31,953,044.35 nominal value of the Right ICULS or approximately 42.83% over the total of RM74,606,330.80 nominal value of Right ICULS together with 373,031,654 free Warrant-B available for subscription under the Right Issue of ICULS with Warrants. Notwithstanding the under subscription for the Right Issue of ICULS with Warrants, the minimum subscription level of RM28,000,000.00 nominal value of the Rights ICULS for the Right Issue of ICULS with Warrants had been achieved and the Company will proceed with the Right Issue of ICULS with Warrants.
On behalf of the Board of Directors of PUCF, Public Investment Bank Berhad announced that the Rights Issue of ICULS with Warrants has been completed on 24 February 2016 following the admission of the ICULS and Warrants-B to the Official List and the listing of and quotation for RM42,653,286.45 nominal value of ICULS together with 213,266,257 Warrants-B on the ACE Market of Bursa Securities.
(iv) PUCF had on 18 August 2015 entered into a memorandum of understanding (“MOU”) with Bioalpha Holdings Berhad (“Bioalpha”) in relation to a collaboration whereby Bioalpha intends to undertake herbs planting activities on the lands owned by PUCF and/or its subsidiary company on which PUCF’s solar photovoltaic (“PV”) plants are to be located and PUCF intends to construct and operate solar PV plants on the lands owned by Bioalpha and/or its subsidiary company on which Bioalpha currently utilised for its herbs planting activities, subject to feasibility studies.
The Company and Bioalpha have mutually agreed in writing to terminate the MOU with effect from 16 February 2016 as the Land Rights Sharing is no longer commercially viable subsequent to the feasibility study conducted. Company No. 451734 A - 155 -
35. Significant Events (Cont’d)
The following significant events took place for the Company and its subsidiary companies during the financial year: (Cont’d)
(b) Founder Energy Sdn. Bhd. (“FE”)
On 24 August 2015, FE entered into a memorandum of understanding (“MOU”) with PWF Consolidated Bhd (formerly known as PW Consolidated Bhd) in relation to the collaboration and working together to build and operate an ecotype biogas electricity plant.
Pursuant to the MOU, the Parties are now in the midst of negotiating the details of their collaboration on the Project, which includes, amongst others, determining the ratio of each Party’s investment into the Project.
(c) MaxGreen Energy Sdn. Bhd. (“MGE”)
(i) On 22 January 2015, MGE has entered into a sale and purchase agreement with RM Megamas Sdn. Bhd. for the acquisition of all that piece of industrial land held under title HS(D) 52052, PT 30506, Bandar Sungai Petani, Daerah Kuala Muda with an area measuring approximately 10,117.1 square metres for a total cash consideration of RM1,557,270.
The acquisition of land has been completed during the financial year.
(ii) On 16 March 2015, the immediate holding company, PUCF announced that MGE has been awarded as a Feed-in-Tariff (“FIT”) Approval Holder by the Sustainable Energy Development Authority Malaysia (“SEDA”) to develop and operate a solar photovoltaic (“PV”) plant with 1 megawatt power (“MWp”) capacity to produce electricity to be supplied to Tenaga Nasional Berhad (“TNB”).
Renewable Energy Purchase Agreement dated 22 June 2015 was signed between TNB and MGE as the Feed-in Approval (“FIA”) holder, where the FIA holder shall sell and deliver and TNB shall purchase and accept the Metered Renewable Energy for a concession period of twenty-one (21) years at a FIT rate as specified in the FIA or such other rate as specified in the written confirmation from SEDA.
(iii) During the financial year, the wholly-owned subsidiary company, Wealth Pursuit Sdn. Bhd. (“WP”) increased its issued and paid up share capital from RM1,300,002 to RM2,000,002 by the issue of 700,000 ordinary shares of RM1.00 each at par for cash. MGE has subscribed for the entire increased in the issued and paid up share capital of WP. Company No. 451734 A - 156 -
35. Significant Events (Cont’d)
The following significant events took place for the Company and its subsidiary companies during the financial year: (Cont’d)
(d) MaxGreen Energy 2 Sdn. Bhd. (formerly known as Face ID Worldwide Sdn. Bhd.) (“MGE 2”)
(i) On 2 December 2015, MGE 2 has entered into Sale and Purchase Agreement with Aliasgar Bin Mohamad Haniff and others for the acquisition of all piece of freehold land held under individual title GM997, Lot 694, Mukim Pinang Tunggal, Serukam, Daerah Kuala Muda, Kedah, measuring approximately 0.3746 hectares for total consideration of RM302,412.
MGE 2 had on 11 April 2016 terminated the above Sale and Purchase Agreement. The termination was necessitated as MGE 2 was not successful in the balloting by SEDA Malaysia for Non-Individual Solar Photovoltaic Installations with rated capacities above 425 kW and up to 1 MW under the FiT mechanism as indicated in SEDA Malaysia’s announcement on 11 April 2016.
(ii) On 2 December 2015, MGE 2 has entered into Sale and Purchase Agreement with Aliasgar Bin Mohamad Haniff and others for the acquisition of all piece of freehold land held under individual title GM13014, Lot 28979, Seksyen 67, Bukit Serukam, Bandar Sungai Petani, Daerah Kuala Muda, Kedah, measuring approximately 1.6128 hectares for total consideration of RM1,302,003.
MGE 2 had on 11 April 2016 terminated the above Sale and Purchase Agreement. The termination was necessitated as MGE 2 was not successful in the balloting by SEDA Malaysia for Non-Individual Solar Photovoltaic Installations with rated capacities above 425 kW and up to 1 MW under the FiT mechanism as indicated in SEDA Malaysia’s announcement on 11 April 2016.
(iii) MGE 2 has changed its name from Face ID Worldwide Sdn. Bhd. to MaxGreen Energy 2 Sdn. Bhd. on 7 October 2015.
(e) Redhot Media International (Shanghai) Co. Limited (“RHISH”)
On 24 June 2015, RHISH commenced a member's voluntary winding-up in accordance with the Laws in The People's Republic of China. The winding-up is part of the restructuring and re-alignment of the existing business exercise of PUCF.
The voluntary winding-up process is still ongoing as at the date of this report. Company No. 451734 A - 157 -
35. Significant Events (Cont’d)
The following significant events took place for the Company and its subsidiary companies during the financial year: (Cont’d)
(f) Founder Energy Global Limited (formerly known as Redhot Media (HK) Limited) (“FEGL”)
On 13 October 2015, FEGL has changed its name to Founder Energy Global Limited.
36. Subsequent Events
Subsequent to financial year, the following subsequent events took place for the Company and its subsidiary companies:
(a) PUC Founder (MSC) Berhad (“PUCF” or “the Company”)
(i) On 13 January 2016, a wholly-owned subsidiary company, Greentech Malaysia Founder Sdn. Bhd. (formerly known as PUC Founder Technology Sdn. Bhd.) (“GMFSB”) increased its issued and paid up share capital by the issuance of 99,990 new ordinary shares of RM1.00 each for a total cash consideration of RM99,990. PUCF has subscribed an additional of 79,990 ordinary shares of RM1.00 each in GMFSB. Consequently, PUCF’s shareholdings GMFSB decreased from 100% to 80%.
(ii) On 13 January 2016, the Company entered into a joint venture and shareholders’ agreement with Greentech Malaysia Alliance Sdn. Bhd. to subscribe in the equity of GMFSB in respect of joint bid for renewable energy projects in government or government linked corporations; in particular solar, biogas and biomass related projects.
(iii) On 19 February 2016, PUCF has entered into a binding term sheet with Green Forever Energy (“GFE”) for the subscription of a total of 3 million non-cumulative redeemable convertible preference shares (“RCPS”) of RM1.00 each in GFE by PUCF in cash. The term sheet sets out the understanding of the parties in relation to the proposed subscription of the RCPS, subject to the terms and conditions in the definitive conditional subscription agreement to be entered into between the parties at a later date. Company No. 451734 A - 158 -
36. Subsequent Events (Cont’d)
Subsequent to financial year, the following subsequent events took place for the Company and its subsidiary companies: (Cont’d)
(b) Greentech Malaysia Founder Sdn. Bhd. (formerly known as PUC Founder Technology Sdn. Bhd.) (“GMFSB”)
(i) On 13 January 2016, GMFSB increased its issued and paid up share capital by the issuance of 99,990 new ordinary shares of RM1.00 each for a total cash consideration of RM99,990.
(i) GMFSB has changed its name from PUC Founder Technology Sdn. Bhd. to Greentech Malaysia Founder Sdn. Bhd. on 14 January 2016.
(c) Founder Energy Global Limited (formerly known as Redhot Media (HK) Limited) (“FEGL”)
FEGL has received a payment in kind as trade receivable payment in the form of shares in a company. This payment in kind shall subsequently be treated as other investment in this company that engages in the business of mobile messaging services, software solutions, enterprise web development and search engine optimisation services at a consideration of approximately RM1,334,000. As at the date of this report, this acquisition of shares in this company has been completed.
37. Comparative Information
The following reclassifications were made to the financial statements of prior year to be consistent with current year presentation. There was no significant impact to the financial performance in relation to the financial year ended 31 December 2014.
As previously stated Reclassification As restated RM RM RM
Group Statements of financial position Current assets Other investment - 3,883,448 3,883,448 Fixed deposits with licensed financial banks 17,754,043 (3,883,448) 13,870,595 Company No. 451734 A - 159 -
37. Comparative Information (Cont’d)
As previously stated Reclassification As restated RM RM RM
Statements of cash flows Cash flows from investing activities Adjustment for: Interest income (284,866) 93,448 (191,418) Dividend income (60) (93,448) (93,508)
Cash generated from/ (used in) operations Interest received 284,866 (93,448) 191,418
Cash flows from investing activities Investment in financial assets at fair value through profit or loss - (15,690,000) (15,690,000)
Proceeds from disposal of investment in financial assets at fair value through profit or loss - 11,900,000 11,900,000
Cash and cash equivalents at the end of the financial year 22,531,947 (3,883,448) 18,648,499
38. Date of Authorisation for Issue
The financial statements of the Group and of the Company for the financial year ended 31 December 2015 were authorised for issue in accordance with a resolution of the Board of Directors on 21 April 2016. Company No. 451734 A - 160 -
39. Supplementary Information On Disclosure of Realised and Unrealised Profits or Losses
The following analysis of realised and unrealised retained earnings /(accumulated losses) of the Group and of the Company at the end of the reporting period is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Group Company 2015 2014 2015 2014 RM RM RM RM Retained earnings/(Accumulated losses) of the Company and its subsidiary companies - Realised 51,685,472 46,476,184 (6,274,100) (3,644,700) - Unrealised 151,194 133,608 - 36,657 51,836,666 46,609,792 (6,274,100) (3,608,043) Less: Consolidation adjustments (4,102,980) (1,086,690) - -
Total retained earnings/ (Accumulated losses) 47,733,686 45,523,102 (6,274,100) (3,608,043) - 161 -
ANALYSIS OF SECURITIES SHAREHOLDINGS
ANALYSIS OF SHAREHOLDINGS
Analysis of Shareholdings as at 31 March 2016
Authorised share capital RM500,000,000.00 Issued and fully paid-up share capital RM107,860,734.90 Class of shares Ordinary shares of RM0.10 each Voting rights One vote per ordinary share
Distribution of Shareholdings
No. of shareholders No. of shares held % Less than 100 shares 250 11,314 00.001 100 to 1,000 shares 207 87,978 00.008 1,001 to 10,000 shares 1,126 6,128,838 00.568 10,001 to 100,000 shares 3,309 149,589,206 13.869 100,001 to less than 5% of issued shares 1,094 479,621,611 44.467 5% and above of issued shares 2 443,168,402 41.087 Total 5,988 1,078,607,349 100.00
Directors’ Shareholdings
No. of shares held Name Direct % Indirect % Cheung Shuen Lung 5,091,428 0.472 - - Liew Peng Chuen @ Liew Ah Choy 2,500,000 0.232 - -
Substantial Shareholders
No. of shares held Name Direct % Indirect % RHIL 443,168,402 41.087 - - RHM Ltd - - 443,168,402 (1) 41.087 RHML - - 443,168,402 (2) 41.087 Estate of the late Cheong Chia Chieh @ - - 443,168,402 (3) 41.087 Chang Chia Chieh
Notes:- (1) Deemed interest by virtue of being the holding company of RHIL. (2) Deemed interest by virtue of being the holding company of RHM Ltd which in turn is the holding company of RHIL. (3) Deemed interest by virtue of his substantial shareholding in RHML which is the holding company of RHM Ltd and which in turn is the holding company of RHIL.
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List of Thirty (30) Largest Shareholders
NO. NAME SHARES % 1 REDHOT MEDIA INTERNATIONAL LIMITED 297,168,402 27.551 2 RHB NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR REDHOT MEDIA INTERNATIONAL LIMITED 146,000,000 13.536 3 PUC FOUNDER (M) SDN BHD 30,800,000 2.856 4 KUMPULAN MODAL PERDANA SDN BHD 25,259,666 2.342 5 MERCSEC NOMINEES (ASING) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR RED CAPITAL GROUP LIMITED 19,900,000 1.845 6 CHIA TEE PENG 10,000,000 0.927 7 HLIB NOMINEES (TEMPATAN) SDN BHD - HONG LEONG BANK BHD FOR LIM OOI WAH 8,000,000 0.742 8 AFFIN HWANG NOMINEES (ASING) SDN. BHD. - EXEMPT AN FOR PHILLIP SECURITIES (HONG KONG) LTD (CLIENTS' ACCOUNT) 7,685,714 0.713 9 PUBLIC NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR LIM CHOON EEK (E-TAI/KKR) 6,521,100 0.605 10 WONG AH KUM 5,880,000 0.545 11 LU KIM YUNG @ LU KIM YEN 5,495,465 0.510 12 CHEUNG SHUEN LUNG 5,091,428 0.472 13 MAYBANK NOMINEES (TEMPATAN) SDN BHD - LIM OOI WAH 4,193,900 0.389 14 TEH HON SENG 4,061,171 0.377 15 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR CH'NG CHENG BOON (8108801) 3,091,000 0.287 16 QUEK SER HWA 3,000,000 0.278 17 JF APEX NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR TAN BOON KEONG (MARGIN) 2,720,000 0.252 18 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD. - PLEDGED SECURITIES ACCOUNT FOR YAP NYOK AI (M09) 2,700,000 0.250 19 MD.ALFEE BIN AHMAD 2,637,000 0.244 20 SEE CHIU YEUNG 2,612,500 0.242 21 LIEW PENG CHUEN @ LIEW AH CHOY 2,500,000 0.232 22 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD - EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD (EPF) 2,494,671 0.231 23 CHOR CHEE HEUNG 2,394,285 0.222 24 TEH POH GUAN 2,285,714 0.212 25 SOO SIEW SENG 2,083,600 0.193 26 LEE BENG YEOW 2,000,000 0.185 27 OH CHWEE HOE 2,000,000 0.185 28 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB BANK FOR GOALKEY SYSTEM SDN BHD (MY1461) 2,000,000 0.185 29 AMSEC NOMINEES (TEMPATAN) SDN BHD - CHOW CHONG CHEK 1,960,000 0.182 30 EDUCREST SDN BHD 1,828,571 0.170
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ANALYSIS OF WARRANT-A HOLDINGS
Analysis of Warrant-A Holdings as at 31 March 2016
No. of warrants issued as at 26 December 2014 132,791,321 No. of warrants exercised 4,285 No. of warrants unexercised 132,787,036 Expiry date of the warrants 25 December 2024 Exercise price of the warrants RM0.10 per ordinary share
Distribution of Warrant-A Holdings
No. of warrant No. of warrants % holders held Less than 100 warrants 393 16,911 0.013 100 to 1,000 warrants 636 248,606 0.187 1,001 to 10,000 warrants 1,151 4,962,950 3.737 10,001 to 100,000 warrants 598 21,614,098 16.277 100,001 to less than 5% of issued warrants 152 69,728,631 52.512 5% and above of issued warrants 1 36,215,840 27.274 Total 2,931 132,787,036 100.00
Substantial Warrant-A Holders
No. of warrants held Name Direct % Indirect % RHIL 36,215,840 27.274 - - RHM Ltd - - 36,215,840 (1) 27.274 RHML - - 36,215,840 (2) 27.274 Estate of the late Cheong Chia Chieh @ Chang - - 36,215,840 (3) 27.274 Chia Chieh
Notes:- (1) Deemed interest by virtue of being the holding company of RHIL. (2) Deemed interest by virtue of being the holding company of RHM Ltd which in turn is the holding company of RHIL. (3) Deemed interest by virtue of his substantial shareholding in RHML which is the holding company of RHM Ltd and which in turn is the holding company of RHIL.
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List of Thirty (30) Largest Warrant-A Holders
NO NAME WARRANTS % . 1 JF APEX NOMINEES (TEMPATAN) SDN BHD - AEH CAPITAL 36,215,840 27.274 SDN BHD FOR REDHOT MEDIA INTERNATIONAL LIMITED 2 KUMPULAN MODAL PERDANA SDN BHD 4,148,670 3.124 3 PUC FOUNDER (M) SDN BHD 3,850,000 2.899 4 SJ SEC NOMINEES (TEMPATAN) SDN BHD - PLEDGED 3,533,042 2.661 SECURITIES ACCOUNT FOR IN FWN SIN (SMT) 5 CHINA ASEAN VENTURE INTERNATIONAL LTD 2,799,200 2.108 6 CHU LING CHAI 2,500,000 1.883 7 LEE CHEE KEONG 2,031,800 1.530 8 CHU ENG LAI 1,700,000 1.280 9 HENG GUEK KENG 1,700,000 1.280 10 ANG GEOK KOON 1,424,000 1.072 11 LOO ENG HWA 1,352,000 1.018 12 KOH TIN SOO 1,335,000 1.005 13 LEE AI LIN 1,149,700 0.866 14 MOHD DZULKARNINE BIN ISMAIL 1,115,000 0.840 15 LIOW YIT LEE 1,100,000 0.828 16 CHOO KIAN LOO 1,012,857 0.763 17 LIM SIANG HEE 977,942 0.736 18 CHONG POH SENG 977,500 0.736 19 HLIB NOMINEES (TEMPATAN) SDN BHD - HONG LEONG 873,000 0.657 BANK BHD FOR LIM OOI WAH 20 JF APEX NOMINEES (TEMPATAN) SDN BHD - PLEDGED 850,000 0.640 SECURITIES ACCOUNT FOR LEE CHEE KEONG (STA 5) 21 NG SIEW LAN 820,000 0.618 22 DANNY LIM OON HENG 800,000 0.602 23 MAYBANK NOMINEES (TEMPATAN) SDN BHD - LIM OOI 752,800 0.567 WAH 24 LU KIM YUNG @ LU KIM YEN 749,432 0.564 25 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD. - 742,857 0.559 PLEDGED SECURITIES ACCOUNT FOR TEH POO SENG (M02) 26 LIM TOCK OOI 600,000 0.452 27 LIM TOR PING 600,000 0.452 28 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD - PLEDGED 550,000 0.414 SECURITIES ACCOUNT FOR NGU TING TONG (LBU) 29 LEONG WU CHONG 500,000 0.377 30 FOO NYUK YONG 500,000 0.377
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ANALYSIS OF WARRANT-B HOLDINGS
Analysis of Warrant-B Holdings as at 31 March 2016
No. of warrants issued as at 18 February 2016 213,266,257 No. of warrants exercised nil No. of warrants unexercised 213,266,257 Expiry date of the warrants 15 February 2019 Exercise price of the warrants RM0.10 per ordinary share
Distribution of Warrant-B Holdings
No. of warrant No. of warrants % holders held Less than 100 warrants 5 372 0.000 (1) 100 to 1,000 warrants 50 27,782 0.013 1,001 to 10,000 warrants 379 2,021,767 0.948 10,001 to 100,000 warrants 941 35,348,098 16.575 100,001 to less than 5% of issued warrants 284 124,460,363 58.359 5% and above of issued warrants 1 51,407,875 24.105 Total 1,660 213,266,257 100.00
Note:- (1) Less than 0.001%
Substantial Warrant-B Holders
No. of warrants held Name Direct % Indirect % RHIL 51,407,875 24.105 - - RHM Ltd - - 51,407,875 (1) 24.105 RHML - - 51,407,875 (2) 24.105 Estate of the late Cheong Chia Chieh @ Chang - - 51,407,875 (3) 24.105 Chia Chieh
Notes:- (1) Deemed interest by virtue of being the holding company of RHIL. (2) Deemed interest by virtue of being the holding company of RHM Ltd which is the holding company of RHIL. (3) Deemed interest by virtue of his substantial shareholding in RHML which is the holding company of RHM Ltd and which in turn is the holding company of RHIL.
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List of Thirty (30) Largest Warrant-B Holders
NO NAME WARRANTS % . 1 RHB NOMINEES (TEMPATAN) SDN BHD PLEDGED 51,407,875 24.105 SECURITIES ACCOUNT FOR REDHOT MEDIA INTERNATIONAL LIMITED 2 SU HOW GIONG 8,000,000 3.751 3 WONG AH KUM 5,040,000 2.363 4 TA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES 3,000,000 1.407 ACCOUNT FOR TAN SUN PING 5 TEH SWEE SEAH 2,822,800 1.324 6 AFFIN HWANG NOMINEES (ASING) SDN. BHD. EXEMPT AN 2,689,999 1.261 FOR PHILLIP SECURITIES (HONG KONG) LTD (CLIENTS' ACCOUNT) 7 TEO HOCK MENG 2,625,000 1.231 8 LIEW LANG KING 2,300,000 1.078 9 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB BANK 2,012,200 0.944 FOR LEN BOOK LEARN (M66002) 10 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB BANK 2,000,000 0.938 FOR TAY HOCK SOON (MY1055) 11 KEE AH LEK 1,575,000 0.739 12 MAYBANK NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,500,000 0.703 SECURITIES ACCOUNT FOR TAN SUN PING 13 CHEAH CHING MOOI 1,500,000 0.703 14 QUEK KIAH SONG 1,419,500 0.666 15 ONG LAI HOW 1,390,000 0.652 16 ONG KOK SEN 1,300,000 0.610 17 WONG JUAN JIE 1,275,000 0.598 18 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB BANK 1,240,000 0.581 FOR ONG CHIN SEAN (MP0180) 19 LOO PENG HUI 1,200,000 0.563 20 SIA YEAK KOON 1,180,000 0.553 21 MAYBANK NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,141,100 0.535 SECURITIES ACCOUNT FOR CHING KEAN LAM 22 NG HO FATT 1,021,000 0.479 23 LEE YEW THYE 1,007,000 0.472 24 NG KOO MENG 1,000,000 0.469 25 DAN YOKE PYNG 1,000,000 0.469 26 TEA AH HENG 1,000,000 0.469 27 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD - 1,000,000 0.469 PLEDGED SECURITIES ACCOUNT FOR VINCENT PHUA CHEE EE 28 HEW KIM FAH 1,000,000 0.469 29 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB BANK 1,000,000 0.469 FOR GOALKEY SYSTEM SDN BHD (MY1461) 30 TIEW DAI HUAT 1,000,000 0.469
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ANALYSIS OF ICULS HOLDINGS
Analysis of ICULS Holdings as at 31 March 2016
No. of ICULS issued as at 18 February 2016 853,065,729 No. of ICULS converted 25,603,720 No. of ICULS not converted 827,462,009 Nominal value of each ICULS RM0.05 Maturity date of the ICULS 15 February 2019 Conversion price RM0.10 per ordinary share Conversion mode 2 ICULS or 1 ICULS together with cash payment of RM0.05
Distribution of ICULS Holdings
No. of ICULS holders No. of ICULS held % Less than 100 ICULS 1 99 0.000 (1) 100 to 1,000 ICULS 6 3,554 0.000 (1) 1,001 to 10,000 ICULS 98 502,967 0.061 10,001 to 100,000 ICULS 769 36,911,311 4.461 100,001 to less than 5% of issued ICULS 521 230,044,078 27.801 5% and above of issued ICULS 1 560,000,000 67.677 Total 1,396 827,462,009 100.00
Note:- (1) Less than 0.001%
Substantial ICULS Holders
No. of ICULS held Name Direct % Indirect % RHIL 560,000,000 67.677 - - RHM Ltd - - 560,000,000 (1) 67.677 RHML - - 560,000,000 (2) 67.677 Estate of the late Cheong Chia Chieh @ Chang - - 560,000,000 (3) 67.677 Chia Chieh
Notes:- (1) Deemed interest by virtue of being the holding company of RHIL. (2) Deemed interest by virtue of being the holding company of RHM Ltd which is the holding company of RHIL. (3) Deemed interest by virtue of his substantial shareholding in RHML which is the holding company of RHM Ltd and which in turn is the holding company of RHIL.
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List of Thirty (30) Largest ICULS Holders
NO NAME NO. OF ICULS % . 1 RHB NOMINEES (TEMPATAN) SDN BHD - PLEDGED 560,000,000 67.677 SECURITIES ACCOUNT FOR REDHOT MEDIA INTERNATIONAL LIMITED 2 AFFIN HWANG NOMINEES (ASING) SDN. BHD. - EXEMPT AN 10,759,999 1.300 FOR PHILLIP SECURITIES (HONG KONG) LTD (CLIENTS' ACCOUNT) 3 NG WAI YUAN 9,934,000 1.201 4 TEO HOCK MENG 9,700,000 1.172 5 HO CHU CHAI 8,400,000 1.015 6 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB FOR 6,500,000 0.786 SOON SEONG KEAT (PB) 7 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD - 4,327,400 0.523 PLEDGED SECURITIES ACCOUNT FOR CH'NG CHENG BOON (8108801) 8 QUEK SER HWA 4,200,000 0.508 9 JF APEX NOMINEES (TEMPATAN) SDN BHD - PLEDGED 3,808,000 0.460 SECURITIES ACCOUNT FOR TAN BOON KEONG (MARGIN) 10 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD. - 3,780,000 0.457 PLEDGED SECURITIES ACCOUNT FOR YAP NYOK AI (M09) 11 OH CHWEE HOE 2,800,000 0.338 12 AMSEC NOMINEES (TEMPATAN) SDN BHD - CHOW CHONG 2,744,000 0.332 CHEK 13 SU HOW GIONG 2,700,000 0.326 14 CH'NG CHEE SENG 2,507,800 0.303 15 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD - 2,221,176 0.268 EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD (EPF) 16 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB BANK 2,000,000 0.242 FOR TAY HOCK SOON (MY1055) 17 MAYBANK NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,900,000 0.230 SECURITIES ACCOUNT FOR SOON SEONG KEAT 18 TA NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,820,000 0.220 SECURITIES ACCOUNT FOR LEONG SIEW LAN 19 SJ SEC NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,549,998 0.187 SECURITIES ACCOUNT FOR IN FWN SIN (SMT) 20 LIM TEONG KHOON 1,423,520 0.172 21 CHEE KIN @ CHEN HUN KEN 1,400,000 0.169 22 SEOW GIM BENG 1,400,000 0.169 23 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD. - 1,400,000 0.169 PLEDGED SECURITIES ACCOUNT FOR LIM BONG HANG @ LIM MOH TENG (M07) 24 HEE YUET TUCK 1,400,000 0.169 25 PUBLIC NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,400,000 0.169 SECURITIES ACCOUNT FOR SIM LEONG YEW (E-SS2) 26 CIMSEC NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,400,000 0.169 SECURITIES ACCOUNT FOR LAW WAH MING (PENANG-CL) 27 CIMSEC NOMINEES (TEMPATAN) SDN BHD - CIMB BANK 1,400,000 0.169 FOR ANG KOK SEONG (M55015) 28 LIM GAIK BWAY @ LIM CHIEW AH 1,360,000 0.164 29 MAYBANK NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,330,400 0.161 SECURITIES ACCOUNT FOR TAN SUN PING 30 JF APEX NOMINEES (TEMPATAN) SDN BHD - PLEDGED 1,288,000 0.156 SECURITIES ACCOUNT FOR CHOW HENG LAN (MARGIN)
NOTICE OF ANNUAL GENERAL MEETING
(Company No. 451734-A) (Incorporated in Malaysia under the Companies Act, 1965)
NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting (“AGM”) of the Company will be held at Kuala Lumpur Golf & Country Club, Function Room 1 & 2, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Tuesday , 28 June 2016 at 9.30 a.m. for the following purposes:
A G E N D A
As Ordinary Business
1. To receive the audited Financial Statements of the Company for the financial year ended 31 December 2015 together with the Reports of the Directors and Auditors thereon. (Please refer to Note A)
2. To approve the payment of Directors’ Fees for the financial year ended 31 December 2015. (Resolution 1)
3. To re-elect the following Directors retiring pursuant to the Company’s Articles of Association and being eligible, offer themselves for re-election.
3.1) Y. Bhg. Dato’ Othman Bin Jusoh (Article 85) (Resolution 2)
3.2) Mr. Hiew Wai Yoon (Article 92) (Resolution 3)
3.3) Mr. Cheong Tze Wai (Article 92) (Resolution 4)
3.4) Mr. Cheung Shuen Lung (Article 92) (Resolution 5)
3.5) Mr. Cheong Chia Chou (Article 92) (Resolution 6)
4. To consider and if thought fit, to pass the following resolution in accordance with Section 129 of the Companies Act, 1965:
“THAT Mr. Nathaniel Grant David Sherick, retiring pursuant to Section 129 of the Companies Act, 1965 be and is hereby re-appointed to the Board to hold office until the conclusion of the next Annual General Meeting.” (Resolution 7)
5. To re-appoint Messrs UHY as the auditors of the Company to hold office until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. (Resolution 8)
As Special Business
To consider, and if thought fit, to pass the following Ordinary Resolutions:
6. Authority to Allot and Issue Shares pursuant to Section 132D of the Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals from the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares of the Company from time to time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten (10) per cent of the issued share capital of the Company at the time of submission to the authority AND THAT the Directors be and are hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.” (Resolution 9)
7. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transaction of a Revenue or Trading Nature
“THAT subject always to the provision of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad approval be and is hereby given for the Company’s subsidiaries to enter into recurrent related party transactions of a revenue or trading nature in the ordinary course of business which are necessary for the day-to-day operations of the Company’s subsidiaries as specified in Section 2.4 of the Company’s Circular on terms not more favourable to the related parties than those generally available to the public and are not to the detrimental of the minority shareholders and that authority conferred by this resolution shall take effect immediately upon the passing of this resolution and the shareholders’ mandate shall continue to be in force until:
(a) the conclusion of the next AGM of the Company, following the AGM at which the ordinary resolution for the proposal was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;
(b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 but shall not extend to such extension as may be allowed pursuant to Section 143 (2) of the Companies Act, 1965; or
(c) revoked or varied by resolution passed by the shareholders at a general meeting;
whichever is the earlier. ” (Resolution 10)
8. To transact any other business which may properly be transacted at an AGM for which due notice shall have been given.
By Order of the Board
LIM SECK WAH (MAICSA NO. 0799845) TANG CHI HOE (KEVIN) (MAICSA NO. 7045754) Secretaries
Dated: 29 April 2016 Kuala Lumpur
Notes :-
A. This Agenda item is meant for discussion only as the provisions of the Company’s Articles of Association do not require a formal approval from shareholders, and hence, is not put forward for voting.
B. Tunku Afwida Binti Tunku A. Malek who is due for retirement in accordance with Article 85 of the Company’s Articles of Association and being eligible for re-election, does not wish to seek for re-election.
1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the Record of Depositors as at 21 June 2016. Only a depositor whose name appears on the Record of Depositors as at 21 June 2016 shall be entitled to attend, speak and vote at the said meeting or appoint proxy(ies) to attend, speak and vote on his/her behalf. 2. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy(ies) to attend, speak and vote in his/ her stead. A proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 3. A member of the Company may appoint up to two (2) proxies to attend at the same meeting. Where the member of the Company appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his/her shareholdings to be represented by each proxy. 4. Where a member is an authorised nominee, as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. 5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one 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. 6. The Proxy Form shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or if the appointer is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised. 7. The instrument appointing a proxy(ies) must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.
EXPLANATORY NOTES ON SPECIAL BUSINESS:
(i) Ordinary Resolution 9 - Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares
The proposed Ordinary Resolution 9 is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Companies Act, 1965. The Ordinary Resolution, if passed, will empower the Directors of the Company, from the date of the above AGM, to allot and issue new shares of the Company up to an amount not exceeding in total ten per centum (10%) of the issued share capital of the Company at the time of submission for such purposes as the Directors consider would be in the best interest of the Company. This authority, unless earlier revoked or varied by the Company at a general meeting, will expire at the next AGM of the Company. This mandate is sought to avoid incurring any costs or delay in convening a general meeting. The Directors would utilise the proceeds raised from this mandate for working capital or such other applications they may in their absolute discretion deem fit.
The previous mandate granted by the shareholders had not been utilised and hence no proceed was raised therefrom.
(ii) Ordinary Resolution 10 - Proposed Shareholders’ Mandate
The explanatory notes on Ordinary Resolution 10 are set out in the Circular to Shareholders dated 29 April 2016 .
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FORM OF PROXY (Before completing this form please refer to the notes below)
No. of ordinary shares held
(Company No.: 451734-A) (Incorporated in Malaysia under the Companies Act, 1965)
I/We ______[Full name in block letters] NRIC No./Passport No./Co.No./CDS No.: ______of ______[Full address] being a member(s) of PUC FOUNDER (MSC) BERHAD hereby appoint the following person(s):-
Name of proxy(ies) & NRIC No./Passport No. No. of shares to be represented by proxy(ies)
1.
2. or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Eighteenth Annual General Meeting (“AGM”) of the Company to be held at Kuala Lumpur Golf & Country Club, Function Room 1 & 2, No. 10, Jalan 1/70D, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Tuesday , 28 June 2016 at 9.30 a.m. .
My/our proxy(ies) is/are to vote as indicated below:-
FIRST PROXY SECOND PROXY Ordinary Resolution FOR AGAINST FOR AGAINST 1) Directors’ Fees 2) To re-elect Y. Bhg. Dato’ Othman Bin Jusoh as Director 3) To re-elect Mr. Hiew Wai Yoon as Director 4) To re-elect Mr. Cheong Tze Wai as Director 5) To re-elect Mr. Cheung Shuen Lung as Director 6) To re-elect Mr. Cheong Chia Chou as Director 7) To re-appoint Mr. Nathaniel Grant David Sherick as Director 8) To re-appoint Messrs UHY as Auditors Special Business 9) Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares 10) To approve the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transaction of a Revenue or Trading Nature
(Please indicate with a “X” in the space provided how you wish your vote to be cast. If no instructions as to voting is given, the proxy(ies) will vote or abstain from voting at his/her discretion. The first named proxy shall be entitled to vote on a show of hands).
Dated this ____ day of ______2016 ______Signature(s)/Common Seal Notes:-
1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the Record of Depositors as at 21 June 2016. Only a depositor whose name appears on the Record of Depositors as at 21 June 2016 shall be entitled to attend, speak and vote at the said meeting or appoint proxies to attend, speak and vote on his/her behalf. 2. A member of the Company entitled to attend, speak and vote at the meeting is entitled to appoint a proxy(ies) to attend, speak and vote in his/ her stead. A proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 3. A member of the Company may appoint up to two (2) proxies to attend at the same meeting. Where the member of the Company appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his/her shareholdings to be represented by each proxy. 4. Where a member is an authorised nominee, as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. 5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one 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. 6. The Proxy Form shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or if the appointer is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised. 7. The instrument appointing a proxy(ies) must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.
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Affix Stamp
COMPANY SECRETARY PUC FOUNDER (MSC) BERHAD (Company No. 451734-A)
Level 15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail 50250 Kuala Lumpur
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