Company No V ANNUAL REPORT

Transcription

1 ANNUAL REPORT

2 Contents Corporate Information 2-3 Chairman s Statement and Management Discussion and Analysis 4-5 Profile of Directors 6-7 Corporate Governance Statement 8-13 Audit Committee Report Statement on Risk Management and Internal Control Directors Report Statement by Directors 24 Statutory Declaration 25 Report of the Independent Auditors Statements of Financial Position Statements of Profit or Loss and Other Comprehensive Income 35 Statements of Changes in Equity Statements of Cash Flows 38 Notes to the Financial Statements Analysis of Shareholdings Notice of Annual General Meeting 77 Statement Accompanying Notice of Annual General Meeting 78 Proxy Form

3 Corporate Information BOARD OF DIRECTORS Dr. Folk Jee Yoong (Executive Director) Dr. Teh Chee Ghee (Independent Non-Executive Director) Low Meng Choon (Independent Non-Executive Director) Goik Kenzu (Independent Non-Executive Director) AUDIT COMMITTEE Chairman: Dr. Teh Chee Ghee Member: Low Meng Choon Member: Goik Kenzu REMUNERATION COMMITTEE Chairman: Dr. Teh Chee Ghee Member: Dr. Folk Jee Yoong Member: Low Meng Choon NOMINATION COMMITTEE Chairman: Dr. Teh Chee Ghee Member: Low Meng Choon Member: Goik Kenzu COMPANY SECRETARY Jauhari Bin Hassan LS REGISTERED OFFICE Ground Floor, 8, Lorong Universiti B Section 16, Petaling Jaya Selangor Darul Ehsan Tel: Fax:

4 Corporate Information PRINCIPAL PLACE OF BUSINESS , Level 4, Wisma UOA Damansara 50, Jalan Dungun Damansara Heights Kuala Lumpur Tel: Fax: SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel: Fax: PRINCIPAL BANKERS Malayan Banking Berhad AUDITORS Siew Boon Yeong & Associates (AF:0660) Chartered Accountants 3C, Jalan Medan Tunku Medan Tunku Kuala Lumpur Tel: Fax: SPONSOR TA Securities Holdings Berhad 32nd Floor, Menara TA One, 22, Jalan P. Ramlee, Kuala Lumpur Tel: Fax: STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad STOCK CODE

5 Chairman s Statement and Management Discussion and Analysis On behalf of the Board of the Directors, I hereby present the Annual Report and Audited Financial Statements of Cybertowers Berhad for the financial year ended 31 December 2016 together with the Management Discussion and Analysis. Corporate Profile Cybertowers Berhad ( CTB ) was listed on the ACE Market of Bursa Securities on 21 November On 31 October 2013, Cybertowers was classified as a GN 3 company and is now undergoing corporate exercise involving a proposed regularisation plan to strengthen its financial position. Financial Review In the financial year ended 2016, the group recorded nil turnover as compared to RM million in The Group is not generating any revenue as the loss-making hosting segment was disposed off in 2015 to put a stop to further losses as a result of the unfavourable operating conditions faced by the hosting industry in There was no business conducted in The Group reported an operating loss of RM million for the current financial year as compared to an operating loss of RM million for the previous financial year. The operating loss arose mainly due to professional fees associated with the corporate exercise and administrative cost. The net loss of the Group attributable to the owners of the Company was RM million and this translated to a loss per share of 1.81 sen for the financial year ended 31 December 2016 as compared to a loss per share of 0.86 sen for the financial year ended 31 December Pursuant to Guidance Note 3 ( GN3 ) of the ACE Market Listing Requirements ( ACE LR ) of Bursa Malaysia Securities Berhad ( Bursa Securities ), the Company had on 31 October 2013, made the First Announcement to Bursa as a GN3 Company as it had triggered paragraph 2.1 (a) & (b) of the Guidance Note. In the First Announcement, the Company indicated the status of its endeavours to formulate a regularisation plan to regularise the Group s financial condition. Due to circumstances not within our control, an earlier proposed regularisation plan involving, among others, the proposed acquisition of Bsmart Technology Sdn Bhd, was discontinued on 15 December 2015 and the Company had since submitted a new proposed regularisation plan to Bursa Securities on 29 April Operational Review The Group no longer has any business but is seeking to restructure itself by the injection of a new travel management and services business as per the below mentioned ongoing corporate exercise. Outlook for 2017 and Future Prospects The Group is in the midst of undertaking a proposed regularisation plan to acquire Parlo Tours Sdn Bhd, the new white knight. Parlo Tours Sdn Bhd has been in the business of travel management and services for more than 30 years. The new proposed regularisation plan was submitted to Bursa Securities on 29 April Bursa Securities had vide its letter dated 25 October 2016 approved the new proposed regularisation plan. 4

6 Chairman s Statement and Management Discussion and Analysis The SC had vide its letter dated 1 November 2016 approved the application for the resultant equity structure of Cybertowers under the equity requirement for public listed companies pursuant to its proposed regularisation plan. The said approval is subject to Cybertowers ensuring that at least 12.5% of its enlarged number of issued shares is allocated to or held by Bumiputera investors recognized by Ministry of International Trade and Industry within one year after registering a profit and or 3 years after the implementation of the proposed regularisation plan, whichever is earlier. We are in the midst of obtaining the Securities Commission s consent for the independent advice letter to the non-interested shareholders of Cybertowers Berhad in relation to the proposed exemption. The said letter shall form part of the circular to shareholders for the proposed regularisation plan. We are hopeful that this corporate restructuring exercise can be completed by the third quarter of Further details can be obtained from Bursa Securities website. The Board is mindful of the various challenges facing the Group and is working diligently to address them. We are of the view that overall global travel and tourism industry is expected to witness positive growth in terms of the number of tourist arrivals worldwide for 2017 although the degree of uncertainty and volatility may differ between regions. This will augur well for our new business injection going forward. Acknowledgement and Appreciation I wish to record a vote of thanks to our fellow Directors for their advice and contributions to the Group during their tenure of office. On behalf of the Board, I would also take this opportunity to express our appreciation to our shareholders and business associates for their continuous support during the year. Dr. Folk Jee Yoong Executive Director 28 April

7 Profile of Directors DR. FOLK JEE YOONG Dr. Folk Jee Yoong, a Malaysian, aged 55, was appointed to the Board on 8 April Dr. Folk received his Bachelor of Business degree in Accounting and Secretarial Administration from the Curtin University of Technology in Perth, Western Australia, Bachelor of Economics degree from the University of Western Australia, Master of Commerce degree in Accounting from the University of Auckland, New Zealand, Doctor of Business Administration from the University of South Australia and Doctor of Philosophy from the University of Malaya. He is a Fellow of the Australian Society of Certified Practising Accountants and the Malaysian Institute of Accountants. He also holds a Certificate in Investor Relations from the IR Society, United Kingdom. Dr. Folk has over 20 years of experience in academia, corporate finance, restructuring, audit and financial management in diversified industries such as mortgage banking, property development, construction, seafood trawling and processing, pulp and paper, jewellery, office furniture, multi-level marketing, plastic injection moulding, timber plantation and processing, hospitality and thermovacuum forming. Between 1984 and 1990, amongst other public accounting firms, he was attached, to Deloitte, Haskins & Sells, New Zealand and McLaren & Stewart, Perth, Australia. He has also worked with multi-national firms such as Sinar Mas Group, Raja Garuda Mas Group and Fletcher Challenge Group in various countries such as New Zealand, India and Indonesia. Dr Folk is also a Director of Lion Corporation Berhad, an unlisted public company and AHB Holdings Berhad, which is a public listed company. He does not have any family relationship with any director and/or substantial shareholder of Cybertowers Berhad, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences, other than traffic offences, within the past ten years. DR. TEH CHEE GHEE Dr. Teh Chee Ghee, a Malaysian, aged 50, was appointed to the Board on 20 March Dr. Teh holds a Doctor of Philosophy degree in Credit Management, a Master of Business Administration degree and an Honours Degree in Accounting, all from University of Malaya. He is a Council Member of the Malaysian Institute of Certified Public Accountants ( MICPA ) and a member of the Malaysia Institute of Accountants. He is a fellow member of the Chartered Association of Certified Accountants ( FCCA ), United Kingdom and the Chartered Tax Institute of Malaysia. Dr. Teh commenced his career in 1990 in Arthur Andersen-HRM (Management Services) Sdn Bhd as an Associate Consultant. He also served in the audit and business advisory division of Arthur Andersen & Co. between the years 1990 to He joined CWS Hygiene Sdn Bhd ( CWS ) as the Finance & Administration Manager in 1994 and when the Zuellig Group acquired CWS in 1995, he was appointed the Regional Financial Controller of Gold Coin Feedmills (M) Sdn Bhd. He joined Engtex Sdn Berhad as the Group Financial Controller in 1996 and was the Personal Assistant to the Group Managing Director and Company Secretary of Engtex Group Berhad between September 2002 and May He served TH Group Berhad from June 2006 to October 2010 as the Personal Assistant to the Group Managing Director. He was also the Acting Chief Operating Officer of NCI Hospital (now known as Nilai Medical Centre, owned by Asiaprise Biotech Sdn Bhd, a wholly-owned subsidiary of TH Group Berhad) in Nilai from February 2010 to October

8 Profile of Directors He was the General Manager - Strategic Planning and Operations of TSH Resources Berhad from October 2010 to October He joined Monash University Malaysia in October 2012 and is currently the Deputy Director of MBA Program and a Senior Lecturer in accounting and finance in the School of Business. From January 2014 to February 2016, Dr. Teh was appointed as the Head of Research of the Socio-Economic Research Centre, operating under SERC Sdn Bhd, an independent think tank initiated by the Associated Chinese Chambers of Commerce and Industry of Malaysia ( ACCCIM ) SERC Trust, on a yearly retainer basis under a paid-outside work arrangement with Monash University, Malaysia. Dr. Teh is also a Director of Fiamma Holdings Berhad and Engtex Group Berhad, which are public listed companies. He does not have any family relationship with any director and/or substantial shareholder of Cybertowers Berhad, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences, other than traffic offences, within the past ten years. MR. LOW MENG CHOON Low Meng Choon, a Malaysian, aged 63, was appointed to the Board on 8 April He received his Bachelor of Commerce degree from the University of Canterbury, New Zealand in He started his career working in Chartered Accounting firms before switching to become an Accountant in various companies based in Western Australia from 1980 to His last appointment in Australia was with the National Australia Financial Management Limited, a subsidiary of National Australia Bank before accepting an appointment as an Associate Director of the National Australia Merchant Bank (Singapore) Limited to promote merchant banking services in the Asia Pacific region. He left Singapore in 1991 to return to Malaysia holding managerial positions with various financial institutions. He was a former member of the Securities Institute of Australia, Australian Society of CPA and Malaysian Institute of Accountants. He does not have any family relationship with any director and/or substantial shareholder of Cybertowers Berhad, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences, other than traffic offences, within the past ten years. MR. GOIK KENZU Goik Kenzu, a Malaysian, aged 45, was appointed to the Board on 8 April He received his Bachelors of Law degree with honours from the University of London, U.K. in Kenzu was admitted as a member of the Honourable Society of Lincoln s Inn, London and was duly called to the English Bar in He was called to the Malaysian Bar in He runs a successful partnership of Nasir, Kenzin and Tan since He has successfully litigated numerous high profile civil cases at Supreme and Federal Court. He has also been actively involved in arbitration and construction disputes cases. He does not have any family relationship with any director and/or substantial shareholder of Cybertowers Berhad, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences, other than traffic offences, within the past ten years. 7

9 Corporate Governance Statement The Board of Directors of Cybertowers Berhad ( the Board ) recognises the importance of the Principles and Recommendations of the Malaysian Code on Corporate Governance 2012 ( the Code ). The following statement describes the application of the principles and extent of compliance with the Code s recommendations for the year ended 31 December A. BOARD OF DIRECTORS (a) Board Composition and Balance The Board of Cybertowers consists of four (4) members with one Executive Director and three (3) Independent Non-Executive Directors. The Executive Director is responsible for making and implementing operational and corporate decisions, the day-to-day management of the business as well as the implementation of decisions of the Board. Non-Executive Directors play a pivotal role in corporate accountability by providing unbiased and independent views in the sharing of knowledge and experiences towards the formulation of policies and the decision-making process. The current Board, which comprise of business entrepreneurs and professionals drawn from various backgrounds, with wide experience and knowledge, provides the relevant skills, expertise and experience for making sound investment decisions and manage the Group's business operations. The Board will appoint a Managing Director soon after the regularisation plan is completed. The Managing Director will be responsible for setting and implementing the Group policy and running of the business operation. The Executive Director is responsible for making and implementing operational decisions and running the Group's day-to-day business. The Non-Executive Directors are independent of management and are free from any business or other relationships that could materially interfere with the exercise of independent judgment. They scrutinize the decisions taken by the Board and provide objective challenges to the management. While the Board is responsible for creating the framework and policies within which the Group should be operating, the management is accountable for the execution of the expressed policies and attainment of the Group s expressed corporate objectives. This demarcation reinforces the supervisory role of the Board. The Board also assumes various functions and responsibilities that are required of them by regulatory authorities, as specified in the guidelines and directives issued from time to time. The current Board brings a broad range of business, financial and technical background. The balance enables the Board to provide clear and effective leadership to the Company and independent judgment to many aspects of the Company s strategy and performance. (b) Board Meetings and Supply of Information The Boards meets every quarter, and additional meetings are held as and when necessary. During the financial year, the Board has met four (4) times and their attendance at Board meetings are set out in the Statement Accompanying Notice of Annual General Meeting. The Directors are provided with the agenda and information necessary for them to review prior to Board meetings. Management staff is also invited to attend Board meetings when necessary to provide the Board with further explanation and clarification on matters being tabled for consideration by the Board. 8

10 Corporate Governance Statement (c) Nomination Committee The Nomination Committee of the Company, which was established on 11 November 2003, recommends to the Board, with the objective of providing assistance to the Board in determining the Board s adequacy requirement and appointment of Independent Directors. The Committee also decides on the training needs of the Directors as reflected in Item (d) below. In accordance with the Company s Article of Association, all Directors who are appointed by the Board are subject to re-election by shareholders at the Annual General Meeting subsequent to their appointment and one-third of the remaining Directors are subject to re-election by rotation at each Annual General Meeting thereafter. In any case, each Director shall retire from office at least once in every three (3) years. (d) Directors Training All Board members have attended the Mandatory Accreditation Program ( MAP ) pursuant to Bursa Securities guidelines on training for Directors. The Directors will continue to undergo other relevant training programmes to enhance their skills and knowledge where relevant. Although optional, the majority of Directors have proactively undertaken various training or workshops except for one Director, Mr. Goik Kenzu, who is an experienced lawyer and as his major contribution is on legal matters, the Nomination Committee felt that he has sufficient legal knowledge to make a positive contribution. Description of the types of training attended by the Directors for the financial year ended 31 December 2016 are as follows:- Director Training Programmes Date Attended Audit Oversight Board: New Auditor s Report Dr. Folk Jee Yoong Sharing The UK Experience 13 Jan 2016 Finance for Non Finance Finance Language in the Boardroom Ring The Bell for Gender Equality Listing in London Workshop Future of Auditor Reporting The Bursa Game Changer for Boardroom Creativity and Your Competitive Edge Global Goals for Sustainable Development What does Brexit mean to the Accounting & Finance profession? Advocacy Sessions on Management Discussion and Analysis Integrated Reporting Conference 20 Jan Mar Mar June June Aug Aug Sept Oct

11 Dr. Teh Chee Ghee Low Meng Choon Colored Brain Communication for Accountants 2017 Management Budget Seminar Cybersecurity Threat and How Board Should Mitigate the Risks New Company Law How it affects Small- Medium Practices. Trans-Pacific Partnership (TPPA): Winners and Losers Realising Sustainable Water Management in Cities Update on Companies Bill 2015 Mental Health First Aid (MHFA) Training Course Changing Small and Medium-sized Practitioners (SMPs) Business Model Learning by Doing: The Power of Experiential Learning in Management Education Summit Bursa Malaysia Risk Management Programme for Audit and Risk Committee - I Am Ready to Manage Risks! Seminar on Budget 2017 Insider Trading, Financial Fraud, Investor Relations and Financial Media AMLATFPUAA in the Capital Market 19 Oct Nov Nov Dec March May May June July Aug Sept Nov Aug Oct 2016 (e) Directors Remuneration The Remuneration Committee of the Company, which was established on 11 November 2003, recommends to the Board, with the objective of providing assistance to the Board in determining the remuneration of Executive Directors. In the case of Non-Executive Directors, the Board as a whole will decide on that, with the Director concerned abstaining from deliberations and voting on the decision in respect of his remuneration. The following are the members of the Remuneration Committee: Dr. Teh Chee Ghee (Chairman) Dr. Folk Jee Yoong Low Meng Choon Independent Non- Executive Director Executive Director Independent Non- Executive Director 10

12 The number of Directors whose aggregate remuneration for the financial year ended 31 December 2016 is as follows:- Executive (RM 000) Non-Executive (RM 000) Salaries and allowance - - Other emoluments Total The number of Directors in each remuneration band is as follows:- Executive Non-Executive RM0-RM50, Total 1 3 B. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS The Annual General Meeting ( AGM ) and Extraordinary General Meeting ( EGM ) are the principal forums for dialogue with public shareholders. Shareholders may enquire about the resolutions being proposed at the meeting and the financial performance and business operations in general during the open question and answer session. The annual report, circulars and announcements made to Bursa Securities are the substantial means of communicating with its shareholders, institutional and potential investors. C. ACCOUNTABILITY AND AUDIT (a) Financial Reporting The Board has ensured that the annual financial statements presented to the shareholders and the quarterly results announced to Bursa Securities present a fair assessment of the Company s position and prospects. The Audit Committee assists the Board in ensuring the accuracy, adequacy and completeness of information for disclosure. (b) Internal Control In discharging its duties in ensuring the effectiveness of the Group s internal control systems, the Board has delegated the duty to the Audit Committee. The scope and results of the review are detailed in Statement on Risk Management and Internal Control set out on page 18 of the Annual Report. (c) Relationship with Auditors The Board has maintained a formal and transparent relationship with the Auditors. The role of the Audit Committee in relation to the external auditors is stated in the Audit Committee Report. D. STATEMENT OF DIRECTORS RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS Directors are required by company law to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company. Such information is communicated to shareholders and investors through various disclosures and announcements to Bursa Securities, including the quarterly financial results, annual reports and where appropriate. 11

13 Corporate Governance Statement In preparing the financial statements, the Directors had to:- adopt suitable accounting policies and apply them consistently made adjustments and estimates that are prudent and reasonable ensure that applicable accounting standards have been followed prepare the financial statements on the going concern basis The Directors have prepared the annual financial statements in compliance with the Companies Act (This statement is made in accordance with the resolution of the Board of Directors dated 13 April 2017) E. COMPLIANCE WITH THE CODE The Company has to the best of its ability and knowledge complied with the Principles and Recommendation of the Code. F. ADDITIONAL COMPLIANCE INFORMATION (a) Material Contracts There were no material contracts entered into by the Company involving the Company s Directors and/or substantial shareholder s interest either still subsisting at the end of the financial year, or which were entered into since the end of the previous financial year. (b) Share Buy-back There were no share buy-back exercises undertaken by the Company during the financial year under review. (c) Options, Warrants or Convertible Securities There were no options, warrants or convertible securities issued by the Company during the financial year under review. (d) American Depository Receipt (ADR) or Global Depository Receipt (GDR) There were no ADR or GDR programmers sponsored by the Company during the financial year under review. (e) Non-Audit Fees The non-statutory audit fees incurred for services rendered by the External Auditors, Messrs Siew Boon Yeong & Associates amounted to RM5, during the financial year under review. (f) Profit Guarantees There were no profit guarantees given by the Company during the financial year under review. 12

14 Corporate Governance Statement (g) Imposition of Sanctions and/or Penalties There were no sanction and/or penalties imposed on the Company, Directors or Management by any of the regulatory authorities. (h) Variation in Results There was no variation in the results (differing by 10% or more) from the unaudited results announced. (i) Recurrent Related Party Transaction of A Revenue or Trading Nature There was no recurrent related party transaction of revenue or trading nature during the financial year. The Company has complied with the Code throughout the financial year ended 31 December (j) Statement of Directors Responsibility for Preparing the financial statements In preparing the financial statements, the Directors had: adopted suitable accounting policies and applied them consistently made adjustments and estimates that are prudent and reasonable ensured that applicable accounting standards have been followed prepared the financial statements on the going concern basis The Directors have prepared the annual financial statements in compliance with the Companies Act, (k) Corporate Social Responsibility Activities and Practices The Company did not undertake any corporate social responsibility activities or practices during the financial year ended 31 December (l) Share Issuance Scheme During the year under review, the Company did not have any share issuance scheme in place. (m) Profit Estimate, Forecast or Projections The Company did not issue any profit estimate, forecast or projection in any public documents during the current financial year. 13

15 Audit Committee Report The Board of Directors of Cybertowers Berhad hereby present the report of its Audit Committee for the year ended 31 December (a) MEMBERS OF THE AUDIT COMMITTEE The Audit Committee was established by the Board on 12 August The present members of the Committee consist of :- Members Dr. Teh Chee Ghee (Chairman) Low Meng Choon Goik Kenzu Designation Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director A brief profile of each of the Audit Committee members is detailed in the Directors Profiles on page 6 and page 7 of this Annual Report. 1. TERMS OF REFERENCE 1.1 Objectives The principal objective of the Audit Committee is to assist the Board of Directors of Cybertowers Berhad ( the Board ) in discharging its statutory duties and responsibilities relating to accounting and reporting practices of Cybertowers Berhad ( the Company ) and its subsidiaries ( the Group ). In addition, the Committee shall: - a) oversee and appraise the quality of the audits conducted by both the Company s internal and external auditors; b) maintain open lines of communication between the Board of Directors, the internal auditors and the external auditors for the exchange of views and information, as well as to confirm their respective authority and responsibilities; and c) determine the adequacy of the Group s administrative, operating and accounting controls. 1.2 Composition of the Audit Committee The Audit Committee shall be appointed by the Board from among their number and shall consist of at least three (3) members of which the majority shall comprise Independent Directors. The members of the Committee shall elect a Chairman from among their number who is an Independent Non-Executive Director. 14

16 Audit Committee Report If a member of the Committee retires, resigns, passed away and/or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board of Directors shall, within three (3) months of that event, appoint such number of new members as may be required to make up the minimum of three (3) members. 1.3 Authority Wherever necessary and reasonable for the performance of its duties, the Audit Committee shall:- (i) (ii) Investigate any activity within its terms of reference and shall have unrestricted access to the external auditors and all employees of the Company; Have the resources, which are required to perform its duties as set out in its terms of reference; (iii) Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; and (iv) Able to obtain external legal or other independent advice when necessary. 1.4 Meetings and Reporting The quorum in respect of a meeting of the Audit Committee shall be a majority of Independent Directors. Meetings shall be held not less than four (4) times a year and as and when the Committee deems necessary. The Committee may invite other directors and employees to the meetings to brief the Committee on issues that are incorporated into the agenda. The Company Secretary shall act as Secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and other supporting explanatory documents for circulation to the Committee Members prior to each meeting. The Secretary shall be responsible for keeping the minutes of the meetings, circulating them to committee members and ensuring compliance with Bursa Securities requirements. Significant results and findings from the Committee s deliberation shall be put in writing and tabled to the Board. The Committee shall submit an annual report to the Board summarizing its activities and significant findings during the year. 1.5 Duties The duties of the Audit Committee include the following:- 15

17 Audit Committee Report (i) (ii) to consider the appointment, resignation and dismissal of external auditors and the audit fee; to review the nature and scope of the audit with the external auditors before the audit commences; (iii) to review the quarterly and annual financial statements of the Company focusing particularly on:- (a) any changes in accounting policies and practices; (b) significant adjustments arising from the audit, significant and unusual events; (c) the going concern assumption; and (d) the compliance with accounting standards and other legal requirements. (iv) to review the adequacy of the scope, functions, authority and resources of the internal audit function; (v) to review the internal audit program and results, ensuring that appropriate action is taken on the recommendations of the internal audit function; (vi) to consider related party transactions and review the procedures to ensure appropriateness and adequacy and to perform any other functions as authorised by the Board. 2. Summary of Activities The Audit Committee met four (4) times during the financial year ended 31 December Details of the number of meetings attended by each member are as follows:- Members Number of meetings held during the financial year ended 31 December 2016 Number of meetings attended by members Dr. Teh Chee Ghee (Chairman) 4 4 Low Meng Choon 4 3 Goik Kenzu 4 3 During the financial year ended 31 December 2016, the Audit Committee reviewed the quarterly and yearly results and announcements of the Company and ensured compliance with approved accounting standards and adherence to other legal and regulatory requirements as well as making relevant recommendations to the Board for approval. 16

18 Audit Committee Report 3. Internal Audit Function During the financial year, the Group s internal audit function is outsourced to an independent professional firm who assesses the adequacy and integrity of the internal control system and reports directly to the Audit Committee. Its principal role is to conduct a regular and systematic review of the system of internal control so as to provide independent assurance on the adequacy and effectiveness of internal control processes. The Internal Auditor has conducted assurance review on the adequacy and effectiveness of the internal control system on certain operating units and presented its findings together with recommendation and management action to the Audit Committee for review. Some minor internal control problems were identified, all of which have been or are being addressed. None of the weaknesses has resulted in any material losses or uncertainties that would require disclosure in this Annual Report. The cost of operating the internal audit function for the financial year ended 31 December 2016 was approximately RM6, Training The training and seminars attended by the Directors during the financial year are disclosed in the Statement of Corporate Governance in the Annual Report

19 Statement on Risk Management and Internal Control The Board is pleased to provide the following Statement on Risk Management and Internal Control, which outlines the nature and features of internal controls within the Group to safeguard shareholders investments and assets for the financial year ended 31 December Responsibilities The Board recognizes the importance of maintaining a sound system of internal control and risk management. The Board acknowledges its responsibilities to: - a) Identify key risks and ensure implementation of appropriate control measures to manage the risks; and b) Review the adequacy and integrity of the internal control system. The system is designed to manage rather than eliminate the risk of failure to achieve the corporate objectives and to provide reasonable but not absolute assurance against material misstatement or loss. Risk Management Framework Key management staff and Heads of Department are delegated with the responsibility to manage risks of their respective areas of responsibilities. In the periodic management meetings, key risks and mitigating controls are deliberated. Significant risks affecting the Group s strategic and business plans are escalated to the Board at their scheduled meetings. The abovementioned risk management practices of the Group serve as the on-going process used to identify, evaluate and manage significant risks. The Board shall continue to evaluate the Group s risk management process to ensure it remains relevant to the Group s requirements. Internal Audit The Group s internal audit function is outsourced to an independent professional firm who assesses the adequacy and integrity of the internal control system and reports directly to the Audit Committee. An internal audit plan for 2016 was approved by the Audit Committee and carried out. The results of the internal audit review and the recommendations for improvement were presented to the Audit Committee. The cost of outsourcing the internal audit function for the financial year ended 31 December 2016 was RM6, Key Features of Internal Control The key features of the Group s internal control are as follows: 1. Quarterly review of the financial performance of the Group by the Board and the Audit Committee. 2. The Group has established policies and procedures. 18

20 Statement on Risk Management and Internal Control Pursuant to Rule of the ACE LR, the external auditors have reviewed this statement for inclusion in the Annual Report for the financial year ended 31 December 2016, in accordance with the Malaysian Approved Standard on Assurance Engagements, International Standard on Audit Engagement ( ISAE ) 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information and 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. Based on their review, the external auditors reported to the Board that nothing has come to their attention that causes them to believe that this statement intended to be included in the Annual Report for the financial year ended 31 December 2016 is not prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Controls: Guidelines for Directors of Listed Issuers to be set out, nor is factually inaccurate. RPG 5 does not require the external auditors to, and they did not, consider whether this statement covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group s risk management and internal control systems including the assessment and opinion of the board of directors and management thereon. CONCLUSION The Board, with assurance from the Executive Director, is satisfied that the nature and scope of the system of risk management and internal control of the Group have been generally adequate and effective in mitigating identified risks to achieve its business objectives. (This statement is made in accordance with the resolution of the Board of Directors dated 13 April 2017). 19

21 CYBERTOWERS BERHAD (Incorporated in Malaysia) DIRECTORS' REPORT The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activity of the Company is engaged in the business of developing and operating an internet based automatic vehicle locating system using satellite and wireless telecommunication solutions. The principal activities of the subsidiary companies are as set out in Note 8 to the financial statements. There were no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Group RM Company RM Loss attributable to:- Owners of the Company 1,812,865 1,723,179 In the opinion of the directors, 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. DIVIDEND No dividend has been paid or declared since the end of the previous financial year. The directors do not recommend the payment of any dividend in respect of the current financial year. MOVEMENTS ON 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. ISSUE OF SHARES AND DEBENTURES There was no issue of shares or debentures by the Company during the financial year. 20

22 OPTIONS No option has been granted during the financial year to take up unissued shares of the Company. DIRECTORS The directors in office since the date of the last report are: Dr. Folk Jee Yoong Dr. Teh Chee Ghee Goik Kenzu Low Meng Choon DIRECTORS' INTERESTS According to the Register of Directors' Shareholdings, particulars of interests of directors who held office at the end of the financial year in the shares in the Company and its related corporations during the financial year are as follows: No. of Ordinary Shares of RM0.10 each Balance Balance Bought Sold Indirect interest Low Meng Choon^ 10, ,000 ^ Deemed interest by virtue of shares held by his spouse pursuant to Section 6A of the Companies Act, By virtue of his interest in the shares in the Company, Mr. Low Meng Choon is also deemed to have an interest in the shares in its subsidiary companies to the extent the Company has an interest during the financial year. The other directors holding office at the end of the financial year had no interest in shares in the Company or its related corporations during the financial year. DIRECTORS' BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 20 to the financial statements or a fixed salary of a fulltime employee of the Company) 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 through the acquisition of shares in, or debentures of the Company or any other body corporate. 21

23 OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps: (a) (b) to ascertain that proper 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 there were no known bad debts to be written off and that no allowance for doubtful debts was necessary; and to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their expected realisable values. At the date of this report, the directors are not aware of any circumstances: (a) (b) which would render them necessary to write off any bad debts or to make any allowance for doubtful debts or the values attributed to current assets misleading; and which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. In the interval between the end of the financial year and the date of this report: (a) (b) no item, transaction or event of a material and unusual nature has arisen which, in the opinion of the directors, would substantially affect the results of the operations of the Group and of the Company for the current financial year except as disclosed in the financial statements; and no charge has arisen on the assets of the Group and of the Company which secures the liabilities of any other person nor has any contingent liability arisen in the Group and in the Company. No contingent or other liability of the Group and of the Company have become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the Group and of the Company to meet their obligations when they fall due. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR The significant events during the financial year are disclosed in Note 25 to the financial statements. SUBSEQUENT EVENTS AFTER THE FINANCIAL YEAR The significant events occurring after the reporting date are disclosed in Note 26 to the financial statements. 22

24 AUDITORS The auditors, Messrs Siew Boon Yeong & Associates, Chartered Accountants, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors DR. FOLK JEE YOONG Director LOW MENG CHOON Director Kuala Lumpur, Date: 13 April

25 CYBERTOWERS BERHAD (Incorporated in Malaysia) STATEMENT BY DIRECTORS Pursuant to Section 169(15) of the Companies Act, 1965 In the opinion of the directors, the financial statements set out on pages 33 to 72 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 exhibit a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2016 and of the results and cash flows of the Group and of the Company for the year ended on that date. The information set out on page 73 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Signed in Kuala Lumpur on Signed on behalf of the Board of Directors in accordance with a resolution of the Directors DR. FOLK JEE YOONG LOW MENG CHOON 24

26 CYBERTOWERS BERHAD (Incorporated in Malaysia) STATUTORY DECLARATION Pursuant to Section 169(16) of the Companies Act, 1965 I, Dr. Folk Jee Yoong, being the director primarily responsible for the financial management of Cybertowers Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief the financial statements set out on pages 33 to 72 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, Subscribed and solemnly declared in Kuala Lumpur on 13 April 2017 Before me: DR. FOLK JEE YOONG KAPT. (B) JASNI BIN YUSOFF W465 Commissioner for Oaths 25

27 Chartered Accountants [AF: 0660] 9-C, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur, Malaysia. Tel: Fax: Website: Company No V INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CYBERTOWERS BERHAD (Incorporated in Malaysia) Report on the Audit of the Financial Statements We have audited the financial statements of Cybertowers Berhad, which comprise the statements of financial position as at 31 December 2016 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 for the year then ended, including a summary of significant accounting policies, as set out on pages 33 to 72. Disclaimer of Opinion Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidences to provide a basis for an audit opinion on the financial statements. We do not express our opinion on the accompanying financial statements of the Group and of the Company. Basis for Disclaimer of Opinion The Group and the Company incurred losses of RM1,812,865 and RM1,723,179 respectively for the year ended 31 December 2016 and, as of that date, the Group s and the Company s current liabilities exceeded their current assets by approximately RM9.27 million and RM9.06 million respectively, and the Group s and the Company s capital deficiency were approximately RM9.27 million and RM9.06 million respectively, thereby indicating the existence of material uncertainties which may cast significant doubt on the ability of the Group and of the Company to continue as going concerns and therefore they may be unable to realise their assets and discharge their liabilities in the normal course of business. On 31 October 2013, the Company announced that it became an Affected Listed Company pursuant to Guidance Note No. 3 ( GN3 ) of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) for the ACE Market. On 5 December 2014, the Company announced to undertake a Proposed Regularisation Plan to regularise the financial position of the Company. The Proposed Regularisation Plan comprises the following: i) Proposed Capital Reduction; ii) Proposed Share Consolidation; iii) Proposed Acquisition; iv) Proposed Exemption; v) Proposed Debt Settlement; vi) Proposed Private Placement; vii) Proposed Increase in Authorised Share Capital; and viii) Proposed Amendments. 26

28 Chartered Accountants [AF: 0660] Company No V On 30 January 2015, the Company announced that the application of Proposed Regularisation Plan had been submitted to Bursa Securities for approval. On 12 August 2015, the Company announced that the Board of Directors wished to review certain terms and conditions and to update certain information on the Proposed Regularisation Plan and has therefore decided to withdraw the application as announced on 30 January The Company intends to re-submit the application in due course and on the same date submitted an application to Bursa Securities seeking an extension of time up to 31 December 2015 for the re-submission of the application. On 15 December 2015, the Company announced to discontinue the Proposed Regularisation Plan announced on 5 December At the same time, the Company announced that the Company had entered into a Memorandum of Agreement with three vendors to implement a new Proposed Regularisation Plan involving the following proposals: i) Proposed Capital Reduction; ii) Proposed Share Consolidation; iii) Proposed Acquisition; iv) Proposed Exemption; v) Proposed Private Placement; vi) Proposed Increase in Authorised Share Capital; and vii) Proposed Amendments. On 19 January 2016, the Company announced that Bursa Securities has rejected the Company s application for an extension of time announced on 17 December As such, the trading of the Company s securities will be suspended pursuant to Rule 8.04(5) of the ACE Market Listing Requirements with effect from 28 January 2016 and the Company s securities will be de-listed on 2 February 2016 unless an appeal against the de-listing is submitted to Bursa Securities on or before 27 January On 27 January 2016, the Company appealed to Bursa Securities against the commencement of delisting procedures on the securities of the Company. On 8 March 2016, the Company announced that Bursa Securities has decided to grant the Company an extension of time until 29 April 2016 to submit a new regularisation plan to the relevant authorities for approval. On 18 March 2016, the Company announced to undertake a Proposed Regularisation Plan to regularise the financial position of the Company. The Proposed Regularisation Plan comprises the following: i) Proposed Capital Reduction; ii) Proposed Share Consolidation; iii) Proposed Acquisition; iv) Proposed Exemption; v) Proposed Debt Settlement; vi) Proposed Private Placement; vii) Proposed Increase in Authorised Share Capital; and viii) Proposed Amendments. 27