2019 Annual Report
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Integrated Annual Report 2019 Digi.Com Berhad Connecting You To What Matters Most Our Heroes Keeping Customers Connected At All Times Digi.Com Berhad Reg. No. 199701009694 (425190-X) Lot 10, Jalan Delima 1/1, Subang Hi-Tech Industrial Park, 40000 Subang Jaya, Selangor, Malaysia Email: Investor_Relati [email protected] Digi.Com Berhad Printed on Environmental Friendly Paper. Reg. No. 199701009694 (425190-X) Integrated Annual Report 2019 OUR COVER This report was produced over the course of the Movement Control Order, with full adherence to safety measures and our business continuity plan guidelines. Our cover is a salute to all dedicated Digizens who continue to serve and connect customers when it matters most, as the nation and world combat the Covid-19 pandemic. WHAT’S INSIDE SECTION 1: AT A GLANCE SECTION 5: GOVERNANCE 1 About This Report 54 Board of Directors’ Profiles 2 About Digi 59 Management Profiles 3 Corporate Structure 62 Corporate Governance Overview Statement 5 Key Highlights 70 Statement on Risk Management and Internal Control 75 Audit and Risk Committee Report SECTION 2: MESSAGE TO SHAREHOLDERS 78 Nomination Committee Report 84 Additional Compliance Information 8 Chair of the Board’s Statement 85 Statement on Responsibility by Directors 10 Chief Executive Officer’s Statement SECTION 6: AUDITED FINANCIAL STATEMENTS SECTION 3: STRATEGIES TO CREATE VALUE 86 Directors’ Report 14 Our Value Creation Model 90 Statement by Directors 16 Our Operating Landscape 90 Statutory Declaration 18 Our Emerging Opportunities 91 Independent Auditors’ Report 19 Our Strategy Framework 94 Statements of Comprehensive Income 20 Our Key Relationships 95 Statements of Financial Position 22 Our Materiality Assessment 96 Statements of Changes in Equity 24 Our Identified Key Risks 97 Statements of Cash Flows 99 Notes to the Financial Statements SECTION 4: MANAGEMENT DISCUSSION AND ANALYSIS 28 The Year in Review SECTION 7: OTHER INFORMATION 29 Financial Review 157 Independent Limited Assurance Report 35 Summarised Statement of Financial Position 159 Corporate Information 36 5-Year Financial Summary 161 Corporate Directory 37 Investor Information 163 List of Properties 39 Operational Review 165 Disclosure of Recurrent Related Party Transactions 39 Best for Internet Network 166 Statistics on Shareholdings 40 5G-Ready Network for the Future 167 Statement of Directors’ Shareholdings 41 Driving New Growth Opportunities and Value from 168 List of Thirty (30) Largest Shareholders Existing Customer Base 170 Notice of Annual General Meeting 42 A Trusted Digital Partner for Corporates and SMEs 175 Form of Proxy 43 Digital as a New Growth Engine 45 People and Workplace Modernisation 49 Managing Our Environmental Footprint ONLINE VERSION 51 Impacting Local Community and Industry www.digi.com.my/annualreport ABOUT THIS REPORT REPORTING SUITE This is Digi.Com Berhad’s inaugural Integrated Annual Report (IAR) 2019, prepared in accordance with the principles prescribed by the International Integrated Reporting Council (IIRC). Embarking on the integrated Our Reporting Suite comprises the reporting (IR) journey is an important step for us, in terms Integrated Annual Report 2019, of setting our approach towards value creation and the supplementary Sustainability Data management. This report is a credible medium to disseminate Book 2019 and Corporate Governance information critical to our business and growth, and to Report 2019. communicate with our stakeholders with integrity and transparency. Integrated Annual Report (IAR) 2019 – Our IAR 2019 serves to communicate Reporting Period to our stakeholders information that is critical to our business. This includes our The report covers our financial and non-financial performance key financial and non-financial performance in relation to our strategy, and from 1 January 2019 to 31 December 2019, unless stated corporate governance commitments. This IAR 2019 also presents stakeholders otherwise. with the Financial Statement for the year ended 31 December 2019. Scope and Reporting Boundaries Sustainability Data Book 2019 – Our Sustainability Data Book 2019 reports our This IAR 2019 covers the activities of our wholly owned annual performance in managing economic, environmental, social and governance subsidiary, Digi Telecommunications Sdn Bhd, which is the related matters. It showcases programmes and initiatives implemented to create core of our business operations, unless stated otherwise. shared value and positive impact in our ecosystem. Integrated Reporting Approach Corporate Governance Report 2019 – Our Corporate Governance Report presents The reporting approach and framework adopted by Digi for a set of practices implemented during the year as part of our commitment to IAR 2019 is primarily based on the Integrated Reporting meet and strengthen our high corporate governance standards. Framework by IIRC, Main Market Listing Requirements (MMLR) on Corporate Reporting and Sustainability Reporting NAVIGATION ICONS by Bursa Malaysia Securities Berhad, the Malaysian Code on Corporate Governance (MCCG) by the Securities Commission Malaysia and the Companies Act 2016. Our Capitals Our Stakeholder Groups Our financial statement is prepared and assured in accordance Financial Capital Government and Regulators with the Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS) and the Intellectual Capital Customers Companies Act 2016. Manufactured Capital Employees We have also engaged an external auditor to provide a Social and Relationship Capital Shareholders, Analysts and Investors limited external assurance of selected non-financial indicators. The independent limited assurance statement can be found Natural Capital Suppliers and Business Partners on pages 157 to 158 of this Integrated Annual Report. Human Capital Media Forward-looking Statements Communities, Sustainability Partners and NGOs This report may contain forward-looking statements regarding Digi’s future performance and prospects. While these Our Strategic Priorities statements represent our judgements and future expectations at the time of preparing this report, a number of emerging Growth Winning Team risks, uncertainties and other important factors could cause actual results to differ materially from our expectations. Efficiency & Simplification Responsible Business These include factors that could adversely affect our business and financial performance. 2 DIGI.COM BERHAD INTEGRATED ANNUAL REPORT 2019 ABOUT DIGI WHO WE ARE Digi is a company focused on growth and creating value for the long-term, delivered through a well-defined strategy to connect customers to what matters most. In connecting Malaysians and businesses for the last 25 years, we have built strong capabilities and expertise in future-ready networks, digitalisation, customer experience, workplace and people development, and responsible business practices – shaped by a culture of innovation. Our focus on remaining agile and innovating our business to capture growth opportunities presented by the digital revolution has transformed us into the trusted digital company we are today, empowering 11.3 million customers on our advanced 4G LTE network. Being customer-obsessed, we are driven to continuously innovate and deliver personalised, engaging and safe digital products and services to enhance Malaysians’ digital lifestyles. We believe connectivity empowers everyone to improve their lives, builds societies and secures a better future for all. Building on these strong fundamentals, we believe we are well positioned for the future to unlock the full benefits of advanced connectivity technologies such as 5G, AI and IoT for all Malaysians. OUR VALUES WAY OF WORK Always Explore Customer Obsessed We believe growth comes from learning every day. We’re Putting our customers at the heart of everything we do. curious and we dare to challenge, test, fail fast and pivot. Create Together Innovation 360 Exploring ways to do things differently and to do different We believe diverse teams find better solutions. We seek different things that serve to improve the lives of our customers. perspectives, share, involve, and help each other succeed. Keep Promises We believe that trust is key in all our relationships. We take ownership and pride in delivering with precision and integrity. Be Respectful We believe in the unique human ability to understand what matters for people. We meet everyone at eye level, listen and show that we care. 3 01 AT A GLANCE 02 CORPORATE STRUCTURE Digi.Com Berhad [Registration No. 199701009694 (425190-X)] MESSAGE TO SHAREHOLDERS 100% 100% Digi Telecommunications Sdn Bhd Y3llownation Sdn Bhd 03 [Registration No. 199001009711 (201283-M)] [Registration No. 200901003326 (846253-D)] CREATE VALUE STRATEGIES TO 100% 100% Y3llowlabs Sdn Bhd Digi Services Sdn Bhd 04 [Registration No. 200001032596 (535203-H)] [Registration No. 199201012386 (243889-T)] ANALYSIS MANAGEMENT DISCUSSION AND 05 GOVERNANCE 06 STATEMENTS AUDITED FINANCIAL 07 OTHER INFORMATION 4 DIGI.COM BERHAD INTEGRATED ANNUAL REPORT 2019 ABOUT DIGI OUR PURPOSE Connecting you to what matters most Our number one priority is to deliver connectivity in a safe, reliable and efficient way to as many Malaysians across the country, which is what our customers have come to expect of us. To do this requires a dedicated focus on transforming and modernising our organisation to enable growth and create efficiencies, while innovating on our core services and customer experiences, and delivering them in a responsible