Annual Report 2010

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Annual Report 2010 DiGi.Com Berhad part of [425190-X] Annual Report 2010 Printed on 100% Post Consumer Waste (PCW) Recycled Paper. An initiative by DiGi’s Deep Green programme DiGi.Com Berhad (425190-X) Lot 10, digi.com.myJalan Delima 1/1, Subang Hi-Tech Industrial Park, 40000 Shah Alam Selangor. Tel: 03-5721 1800 contents corporate profile 6 accolades 2010 7 performance at a glance 8 chairman’s statement 12 CEO’s review 16 corporate information 22 board of directors 24 directors’ profiles 26 management 28 management profiles 30 highlights 2010 34 corporate responsibility 36 corporate governance statement 40 statement of internal control 50 risk management 55 audit committee report 57 appendices - terms of reference 60 additional compliance information 66 financial statements 82 list of properties 125 disclosure of recurrent related party transactions 128 statement of directors’ shareholdings 129 statistics on shareholdings 130 notice of annual general meeting 133 design form of proxy rationale corporate directory In 2010, we started a journey to bring about holistic changes that ride on the wave of growth in the future of communications. This reflects DiGi’s aspiration to grow faster by being smarter and leaner. changing the game A unique energy and focus that creates momentum and defines the direction for DiGi grow faster than the industry A clear aspiration that enables us to seek more opportunities and develop faster than our competitors by being smarter and leaner our customer promise “Always the Smarter Choice” The attitude that drives how we think of our products and services, and engage our customers, at every touch point revenue growth Focusing on the key drivers of growth with a sharper segment approach and relevant mobile internet propositions 6 | DiGi.COM BERHAD 2010 [425190-X] corporate DiGi.Com Berhad is listed on the Main Market of Bursa Malaysia Securities Berhad and is part profile of the global telecommunications provider, Telenor Group. DiGi continues to be a game-changer for the Malaysian telecommunications industry. It has a solid history of product and service innovation, and is a leader in driving progressive and responsible business practices in the provision of mobile voice, internet and broadband services. The Group is committed to driving Malaysia’s growth by building a mobile internet and broadband ecosystem that enables true connectivity and creates socio-economic development. corporate structure DiGi.Com Berhad DiGi Telecommunications Pay by Mobile Sdn Bhd Sdn Bhd DiGi Services Djuice.Com Sdn Bhd Sdn Bhd accolades 2010 Asian Sustainability KPMG Shareholder Value Malaysia Corporate Governance Ranking 2010 Award 2010 Index 2010 > No. 1 Company in Malaysia > Information & Communication > Distinction Award > No. 1 Telco in Asia Technology Category Winner by Minority Shareholder Watchdog > No. 11 overall in Asia > Information & Communication Group (MSWG) by Asian Sustainability Rating (ASR™) Technology Category Sectoral Winner by KPMG National Award for Management 2010 Malaysia Effie Awards Accounting (NAfMA) 2010 > Silver Award for Viral GEW MSC 2010 Awards > Best Practice Award in Non-Listed Campaign Category > Outstanding Domain Catalyst Partner Company Category by Malaysian Advertising Association by Warisan Global and MSC Malaysia by the Chartered Institute of (MAA), Association of Accredited Management Accountants (CIMA) Advertising Agents Malaysia (4As) Telenor Group Awards 2010 Malaysia Division and the Malaysian and Media Specialists Association Institute of Accountants (MIA) > Innovation Award (MSA), in association with the by Telenor Malaysia External Trade Development Ethical Business Excellence Corporation (MATRADE) Award 2010/2011 Billion Ringgit Club 2010 > Highest Recognition in the Large > Top 10 Companies of the Year MSOSH Occupational Safety & Enterprise Category by The EDGE Malaysia Health 2010 by Ministry of Domestic Trade, > Silver Recognition Award Cooperatives and Consumerism PC.Com Product Awards 2010 by Malaysian Society of Occupational Safety & Health > Winner for Best Prepaid Telco 2010 Kancil Awards > Runner-up for Best > Advertiser of the Year Wireless Broadband ACCA Malaysia Sustainability by Association of Accredited by PC.Com Malaysia Reporting Awards 2010 Advertising Agents Malaysia (4As) > Best First Time Reporter by the Association of Certified Chartered Accountants 8 | DiGi.COM BERHAD 2010 [425190-X] performance Data driving revenue growth at a glance Efficiency focus resulted in margin improvement Well-planned network investment programme resulted in strong operating cash-flow Committed to enhancing shareholders’ returns DiGi.COM BERHAD 2010 [425190-X] | 9 Group Financial Summary (for the year ended 31 December) 2010 2009 2008 2007 2006 RM’000 RM’000 RM’000 RM’000 RM’000 Revenue 5,406,457 4,909,565 4,814,475 4,362,635 3,652,536 Profit before tax 1,597,248 1,366,455 1,546,896 1,445,314 1,087,139 Profit after taxation 1,178,004 1,000,471 1,140,715 1,062,595 805,653 Total assets 5,136,633 4,732,444 4,655,852 3,877,491 4,123,031 Shareholders’ equity 1,346,622 1,521,468 1,897,172 1,577,645 1,752,401 Non-current liabilities 1,518,422 1,185,190 491,557 573,791 685,105 Profit after tax as % of revenue 21.8% 20.4% 23.7% 24.4% 22.1% Earnings per share (sen) 151.5 128.7 148.5 141.7 107.4 Net assets per share (RM) 1.73 1.96 2.44 2.10 2.34 Note : The above group financial summary has been prepared to conform with the current year’s presentation of the financial statements. Stellar operational performance Enhancing shareholders value > DiGi continues to deliver another year of > DiGi’s guiding principle in creating and solid financial performance in 2010 enhancing good shareholders returns is to ensure that the Group > Improved commercial focus and continues to return to shareholders execution resulted in a compounded all excess cash that are not required to annual revenue and net profit growth fund our operations and fulfil our in excess of 8% in the 5-year period financial obligations between 2006 - 2010 > Cost focus efforts continue to show > In additional, the Group is also positive results resulting in margin committed to become a leader in improvement in 2010 sustainable and ethical business practices; from our product offerings, > Cash generation remained strong and to the well-being of our employees and this augurs well for the Group as we the development of the communities continue to expand our business and that we serve through our products grow our network substantially going and services forward > Since 2005, the Group has returned in excess of RM6.8 billion in cash to all our shareholders as a result of our strong capital discipline in ensuring that we generate strong operational cash- flow to fund our investment activities > Long-term shareholders would have enjoyed total capital returns close to 300% since 2005 operational excellence Fundamentally transform how we manage our network and take distribution to the next level 12 | DiGi.COM BERHAD 2010 [425190-X] chairman’s statement DiGi continued to invest in expanding the footprint of our mobile internet and mobile “ broadband network Dear Shareholders, On behalf of the Board of Directors, I am Our continuous investment in expanding pleased to report that DiGi performed our footprint has helped to meet the ” very well in 2010. DiGi continued to country’s ambition of 53% household strengthen its market position and market broadband penetration rate set out under share increased to 25.6%. This is all more the National Broadband Plan. commendable given the competitiveness and maturity of the industry. Operational and customer Our strong top line growth was driven experience excellence mostly by data growth and the strong In the past 2 years, DiGi has established a uptake of smart bundled offerings. The strong platform to operate more efficiently. Group’s bottom line also improved, Aside from internal cost efficiency buoyed by strong revenue growth and initiatives, DiGi has embarked on a more effective cost saving measures. ambitious effort to lower our cost base. On this note, I am pleased that DiGi has Mobile internet driving growth entered into a network collaboration A substantial part of the industry’s growth agreement with Celcom-Axiata. This move in the past year was driven by the higher is geared towards addressing the increase uptake of mobile internet and mobile of data capacity requirements with the broadband services. Similarly for DiGi, a objectives of sharing investment, reducing big part of our revenue growth in 2010 cost and better asset utilisation. This is a mirrored this trend and I believe that it strategic move for the telecommunications will only grow stronger in coming years. industry to be operationally efficient. Malaysians today are increasingly a part of I believe more telecommunication the connected global community. As such, companies around the world will focus they will continue to demand improved on such efforts. Whilst these may take stability, and a consistent mobile internet on different forms to suit the unique experience at more competitive prices, requirements of each particular country, on par with countries with advanced ICT what is certain is that this is a proven long- ecosystems. term strategy moving forward. Throughout the year in review, DiGi I believe DiGi has found the right partner in continued to invest in expanding the Celcom-Axiata. Our consolidated network footprint of our mobile internet and mobile strength will enable our customers to broadband network which now have be the ultimate beneficiary of improved reached 50% coverage of populated service quality. areas. DiGi aims to increase our coverage footprint to over 60% by the end of 2011. 14 | DiGi.COM BERHAD 2010 [425190-X] People driving change making steady progress towards reducing our carbon footprint by 50% in 2012. In 2010, Henrik Clausen joined DiGi as This can be achieved through continuous Chief Executive Officer.
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