INTEGRATING. Technology. Financial Statements

Transcription

1 INTEGRATING Technology Financial Statements

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3 VOLUME 2 financial STATEMENTS What's inside Directors Report Statement by Directors Statutory Declaration Independent Auditors Report 17 Consolidated Statement of Changes In Equity Statements of Financial Position 18 Statement of Changes in Equity 22 Notes to the Financial Statements Visit for more information Statements of Profit or Loss and other Comprehensive Income 19 Statements of Cash Flows

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5 Directors Report The Directors hereby submit their report and the audited financial statements of the and of the Company for the financial year ended. PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding activities. The principal activities and the details of the subsidiaries are disclosed in Note 7 to the financial statements. There have been no significant changes in the nature of these activities of the and of the Company during the financial year. RESULTS Company Loss for the financial year 2,250,310 39,568,509 Attributable to: Owners of the parent 2,248,029 39,568,509 Non-controlling interest 2,281 DIVIDENDS 2,250,310 39,568,509 No dividend has been proposed, declared or paid by the Company since the end of the previous financial year. The Directors do not recommend any dividend payment 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. ISSUE OF SHARES AND DEBENTURES The Company did not issue any new shares or debentures during the financial year. OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued ordinary shares of the Company during the financial year. 1

6 Directors Report (Cont d.) DIRECTORS The Directors who have held office since the date of the last report are: Diversified Gateway Solutions Berhad Dato Mah Siew Kwok Dato Dr. Tan Seng Chuan (appointed on 10 November 2017) Monteiro Gerard Clair (appointed on 10 November 2017) Dr. Tang Pen San (appointed on 16 April 2018) Chow Seck Kai (appointed on 16 April 2018) Wan Mai Gan (appointed on 16 April 2018) Lau Chi Chiang (retired on 14 September 2017) Hoe Kah Soon (resigned on 16 April 2018) Hj Ahmad Bin Khalid (resigned on 16 April 2018) Mah Yong Sun (resigned on 16 April 2018) Subsidiaries of Diversified Gateway Solutions Berhad Lau Chi Chiang Neo Poh Lian Robin Lim Jin Hee Wisit Wirayagorn Dato Wong Gian Kui (appointed on 18 April 2018) DIRECTORS INTERESTS The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares and options over ordinary shares of the Company and of its related corporations during the financial year ended 31 March 2018 as recorded in the Register of Directors Shareholdings kept by the Company under Section 59 of the Companies Act 2016 in Malaysia were as follows: < Number of ordinary shares > Balance as at / *date of appointment Bought Sold Balance as at Shares in the Company 1 Direct interests Dato Dr. Tan Seng Chuan* 15,000,000 15,000,000 Dato Mah Siew Kwok 8,763,892 8,763,892 Hj Ahmad Bin Khalid 30,001 30,001 Indirect interests Dato Mah Siew Kwok 2 738,490,001 (738,490,001) 2

7 Directors Report (Cont d.) DIRECTORS INTERESTS (Cont d.) Shares in the related corporation Omesti Berhad < Number of ordinary shares > Balance as at / *date of appointment Bought Sold Balance as at Direct interests Dato Mah Siew Kwok 88,896,424 (6,765,000) 82,131,424 Hj Ahmad Bin Khalid 50,001 50,001 Mah Yong Sun 4,621,300 4,621,300 Monteiro Gerard Clair* 8,464, ,400 9,238,800 Indirect interests Monteiro Gerard Clair* 3 68,431,300 (289,000) 68,142,300 Warrants 2013/2018 in the related corporation Omesti Berhad < Number of warrants 2013/ > Balance as at / *date of appointment Bought Sold Balance as at Direct interests Dato Mah Siew Kwok 26,244,135 26,244,135 Mah Yong Sun 750, ,000 Monteiro Gerard Clair* 71, , ,500 Indirect interests Monteiro Gerard Clair* 3 20,382,500 (20,382,500) 3

8 Directors Report (Cont d.) DIRECTORS INTERESTS (Cont d.) Shares in the related corporation Microlink Solutions Berhad < Number of ordinary shares > Balance as at / *date of appointment Bought Sold Balance as at Direct interests Dato Mah Siew Kwok 1,271,536 (92,600) 1,178,936 Mah Yong Sun 3,850,213 (2,676,800) 1,173,413 Monteiro Gerard Clair* 2,481, ,900 3,218,847 Indirect interests Dato Mah Siew Kwok 4 97,052,093 2,169,700 99,221,793 Employees Shares Option Scheme ( ESOS ) in the related corporation Microlink Solutions Berhad < Number of options > Balance as at / *date of appointment Bought Sold Balance as at Direct interests Monteiro Gerard Clair* 1,000,200 1,000,200 1 Cessation as subsidiary of Omesti Berhad on 7 March Disposal of equity interest by Omesti Holdings Berhad during financial period from 1 April 2017 to 31 October 2017 and cessation of deemed interest in the Company pursuant to Section 8(4) of the Companies Act 2016 on 31 October Deemed interest by virtue of his substantial interest in H2O Holdings Sdn Bhd (Formerly known as Red Zone Development Sdn Bhd) pursuant to Section 8(4) of the Companies Act Deemed interest by virtue of his substantial interest in Omesti Berhad, pursuant to Section 8(4) of the Companies Act

9 Directors Report (Cont d.) DIRECTORS BENEFITS Since the end of the previous financial year, none of the Directors have received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by the Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than the transactions entered into in the ordinary course of business with companies in which the Directors of the Company have substantial financial interests as disclosed in Note 26 to the financial statements. There were no arrangements during and at the end of the financial year, to which the Company is a party, which had the object of enabling the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. DIRECTORS REMUNERATION The details of Directors remuneration are disclosed in Note 25 to the financial statements. INDEMNITY AND INSURANCE FOR OFFICERS AND AUDITORS There were no indemnity given to or insurance effected for the officers and auditors of the and of the Company during the financial year. OTHER STATUTORY INFOATION REGARDING THE GROUP AND THE COMPANY (I) AS AT THE END OF THE FINANCIAL YEAR (a) Before the financial statements of the and of the Company were prepared, the Directors took reasonable steps: (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and to ensure that any current assets other than debt which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. (b) In the opinion of the Directors, the results of operations of the and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. (II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (c) The Directors are not aware of any circumstances: (i) (ii) (iii) which would render the amount of bad debts written off or the amount of provision for doubtful debts in the financial statements of the and of the Company inadequate to any material extent; which would render the values attributed to current assets in the financial statements of the and of the Company misleading; and which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the and of the Company misleading or inappropriate. 5

10 Directors Report (Cont d.) OTHER STATUTORY INFOATION REGARDING THE GROUP AND THE COMPANY (Cont d.) (II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (Cont d.) (d) In the opinion of the Directors: (i) (ii) there has not arisen any item, transaction or event of a material and unusual nature which is likely to affect substantially the results of operations of the and of the Company for the financial year in which this report is made; and no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve (12) months after the end of the financial year which would or may affect the ability of the and of the Company to meet their obligations as and when they fall due. (III) AS AT THE DATE OF THIS REPORT (e) There are no charges on the assets of the and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person. (f) (g) There are no contingent liabilities of the and of the Company which have arisen since the end of the financial year. The Directors are not aware of any circumstances not otherwise dealt with in the report or the financial statements which would render any amount stated in the financial statements of the and of the Company misleading. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR Significant event during the financial year is disclosed in Note 29 to the financial statements. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD Significant event subsequent to the end of the reporting period is disclosed in Note 30 to the financial statements. AUDITORS The auditors, BDO, have expressed their willingness to continue in office. Auditors remuneration of the Company and its subsidiaries for the financial year ended amounted to 46,000 and 208,685 respectively. Signed on behalf of the Board in accordance with a resolution of the Directors. Dato Mah Siew Kwok Director Dato Dr. Tan Seng Chuan Director Kuala Lumpur 13 July

11 Statement By Directors In the opinion of the Directors, the financial statements as set out on pages 13 to 61 have been drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, and the provisions of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the and of the Company as at and of the financial performance and cash flows of the and of the Company for the financial year then ended. On behalf of the Board Dato Mah Siew Kwok Director Dato Dr. Tan Seng Chuan Director Kuala Lumpur 13 July 2018 Statutory Declaration I, Thoo W y-kit, being the officer primarily responsible for the financial management of Diversified Gateway Solutions Berhad, do solemnly and sincerely declare that the financial statements as set out on pages 13 to 61 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly ) declared by the abovenamed at ) Kuala Lumpur this ) 13 July 2018 ) Thoo W y-kit ca Before me: BALOO A/L T. PICHAI (W 663) Commissioner of Oaths 7

12 Independent Auditors Report To the Members of Diversified Gateway Solutions Berhad (Incorporated in Malaysia) Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Diversified Gateway Solutions Berhad, which comprise the statements of financial position as at of the 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 and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 13 to 61. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the and of the Company as at and of their financial performance and their cash flows for the financial year ended in accordance with Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRSs) and the requirements of the Companies Act 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (By-Laws) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 1. Recoverability of trade receivables As at, the has trade receivables of 30.8 million which include debts that are past due but not impaired of 11.9 million. The details of trade receivables and its credit risk have been disclosed in Note 9 to the financial statements. We have focused on the recoverability of trade receivables as it requires a high level of management judgement and the amounts are material. Management recognised impairment losses on trade receivables based on specific known facts or circumstances on customers abilities to pay. 8

13 INDEPENDENT AUDITORS REPORT (Cont d.) To the Members of Diversified Gateway Solutions Berhad (Incorporated in Malaysia) Report on the Audit of the Financial Statements (Cont d.) Key Audit Matters (cont d.) 1. Recoverability of trade receivables (Cont d.) Audit response Our audit procedures, with the involvement of the component auditors included the following: (i) (ii) Assessed recoverability of receivables that were past due but not impaired by reviewing their historical bad debt expense, ageing profiles of the counter parties and past historical repayment trends; Inquired management on the action plans to recover overdue amounts; and (iii) Assessed cash receipts subsequent to the end of the reporting period for its effect in reducing amounts outstanding as at the end of the reporting period. 2. Recognition of deferred tax assets The carrying amount of the deferred tax assets as at amounted to 3.9 million, as disclosed in Note 8 to the financial statements. We have focused on this deferred tax assets recognition assessment as it requires significant judgements and estimates about the future results and key assumptions applied to profit forecast and projections in determining whether the deferred tax assets can be utilised. These key assumptions include forecast growth in future revenues and operating profit margins and growth rates. Audit response Our audit procedures, with the involvement of the component auditors included the following: (i) (ii) Evaluated whether it is probable that the future taxable profits will be available by comparing taxable profit projections against recent performance, as well as assessed and challenged the assumptions used in projecting revenues and operating profit margins; and Performed sensitivity analysis to stress test the key assumptions used in the profit projections. 3. Impairment assessment on the carrying amounts of investments in subsidiaries As at, investments in subsidiaries of the Company was 49.9 million as disclosed in Note 7 to the financial statements. The Company had made an impairment loss of 60.6 million in respect of the carrying amounts of investments in subsidiaries during the financial year. The determination of recoverable amounts requires significant judgements and estimates about the future results and key assumptions applied to cash flow projections of the subsidiaries in determining the recoverable amounts. In this instance, the recoverable amount is based on value-in-use. These key assumptions include different budgeted operating profit margins, growth rates, terminal values as well as determining an appropriate pre-tax discount rate. 9

14 INDEPENDENT AUDITORS REPORT (Cont d.) To the Members of Diversified Gateway Solutions Berhad (Incorporated in Malaysia) Report on the Audit of the Financial Statements (Cont d.) Key Audit Matters (cont d.) 3. Impairment assessment on the carrying amounts of investments in subsidiaries (Cont d.) Audit response Our audit procedures included the following: (i) (ii) Compared prior period projections to actual outcomes to assess reliability of management s forecasting process; Assessed and challenged the key assumptions used in forecasting revenues, operating profit margins and growth rates; (iii) Assessed appropriateness of pre-tax discount rates used by management by comparing to the market data, weighted average cost of capital of the and relevant risk factors; and (iv) Performed sensitivity analysis of our own to stress test the key assumptions used in the forecast. Information Other than the Financial Statements and Auditors Report Thereon The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements of the and of the Company and our auditors report thereon. Our opinion on the financial statements of the and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements of the and of the Company that give a true and fair view in accordance with MFRSs, IFRSs, and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the and of the Company, the Directors are responsible for assessing the ability of the and of the Company to continue as going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the or the Company or to cease operations, or have no realistic alternative but to do so. 10

15 INDEPENDENT AUDITORS REPORT (Cont d.) To the Members of Diversified Gateway Solutions Berhad (Incorporated in Malaysia) Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit conducted in accordance with approved standards on auditing in Malaysia and ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements of the and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the s and of the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. Conclude on the appropriateness of the Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the and of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the or the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the and of the Company, including the disclosures, and whether the financial statements of the and of the Company represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the to express an opinion on the financial statements of the. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 11

16 INDEPENDENT AUDITORS REPORT (Cont d.) To the Members of Diversified Gateway Solutions Berhad (Incorporated in Malaysia) Auditors Responsibilities for the Audit of the Financial Statements (Cont d.) From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors are disclosed in Note 7 to the financial statements. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. BDO AF: 0206 Chartered Accountants Tan Yeong Tat 03315/07/2019 J Chartered Accountant Kuala Lumpur 13 July

17 Statements of Financial Position As at ASSETS Non-current assets Company Note Property, plant and equipment 5 3,770,756 4,713,465 Goodwill 6 5,737,704 5,737,704 Investments in subsidiaries 7 49,912, ,542,301 Deferred tax assets 8 3,872,122 3,623,261 Trade and other receivables 9 11,522,509 6,272,462 Current assets 24,903,091 20,346,892 49,912, ,542,301 Inventories 10 2,616,522 2,444,670 Trade and other receivables 9 36,659,347 39,791,701 54,797 84,657 Current tax assets 5,619,178 5,202,147 Cash and bank balances 11 18,420,633 17,663,321 4,480 61,589 63,315,680 65,101,839 59, ,246 TOTAL ASSETS 88,218,771 85,448,731 49,971, ,688,547 13

18 STATEMENTS OF FINANCIAL POSITION (Cont d.) As at EQUITY AND LIABILITIES Company Note Equity attributable to owners of the parent Share capital ,833, ,833, ,833, ,833,829 Reserves 13 (108,482,657) (106,358,354) (102,608,616) (63,040,107) 42,351,172 44,475,475 48,225,213 87,793,722 Non-controlling interest 87,051 89,332 TOTAL EQUITY 42,438,223 44,564,807 48,225,213 87,793,722 LIABILITIES Non-current liabilities Borrowings 14 19, ,424 Provision for post-employment benefits 17 4,164,246 1,238,977 Deferred tax liabilities 8 146, ,426 Current liabilities 4,330,604 2,143,827 Trade and other payables 18 40,543,348 35,795,188 1,746,365 22,894,825 Borrowings ,596 2,944,909 41,449,944 38,740,097 1,746,365 22,894,825 TOTAL LIABILITIES 45,780,548 40,883,924 1,746,365 22,894,825 TOTAL EQUITY AND LIABILITIES 88,218,771 85,448,731 49,971, ,688,547 The accompanying notes form an integral part of the financial statements. 14

19 Statements of Profit or Loss and other Comprehensive Income For the financial year ended Continuing operations Company Note Revenue 20 83,943,468 74,160,042 22,030,000 1,500,000 Changes in inventories 942,714 (1,249,776) Purchases (29,786,561) (28,762,138) Direct expenses (1,569,001) (1,762,952) Other operating income 2,683,578 2,208,838 24, ,108 Depreciation of property, plant and equipment (1,648,278) (1,634,078) Employee benefits 25 (44,090,221) (32,737,007) (560,982) (408,372) Other operating expenses (11,546,363) (6,446,392) (61,062,244) (720,717) Finance costs 21 (124,083) (308,637) (139,401) (Loss)/Profit before tax (1,194,747) 3,467,900 (39,568,509) 364,618 Tax expense 22 (1,055,563) (1,635,850) (Loss)/Profit from continuing operations (2,250,310) 1,832,050 (39,568,509) 364,618 Discontinued operation Loss from discontinued operation, net of tax 23 (1,402,413) (Loss)/Profit for the year (2,250,310) 429,637 (39,568,509) 364,618 Other comprehensive income, net of tax Items that may be reclassified subsequently to profit or loss Foreign currency translations for foreign operations, net of tax , ,971 Total comprehensive (loss)/income (2,126,584) 1,304,608 (39,568,509) 364,618 15

20 Statements of Profit or Loss and other Comprehensive Income (Cont d.) For the financial year ended Company Note (Loss)/Profit attributable to: Owners of the parent (2,248,029) 416,603 (39,568,509) 364,618 Non-controlling interest (2,281) 13,034 (2,250,310) 429,637 (39,568,509) 364,618 Total comprehensive (loss)/profit attributable to: Owners of the Company (2,124,303) 1,291,574 (39,568,509) 364,618 Non-controlling interest (2,281) 13,034 (2,126,584) 1,304,608 (39,568,509) 364,618 Earnings per ordinary share attributable to owners of the parent (sen): Basic and diluted Continuing operations 24 (0.17) 0.13 Discontinued operation 24 (0.10) 24 (0.17) 0.03 The accompanying notes form an integral part of the financial statements. 16

21 Consolidated Statement of Changes In Equity For the financial year ended Non-distributable Distributable Total Reverse Exchange attributable Non- Share acquisition translation Retained to owners of controlling Total capital reserve reserve earnings the parent interest equity Balance as at 1 April ,587,709 (115,766,900) (1,497,175) 24,860,267 43,183,901 76,298 43,260,199 Profit for the financial year 416, ,603 13, ,637 Foreign currency translations for foreign operations, net of tax 874, , ,971 Total comprehensive income 874, ,603 1,291,574 13,034 1,304,608 Effects of the new Companies Act 2016 (Note 12) 15,246,120 (15,246,120) Balance as at 31 March ,833,829 (131,013,020) (622,204) 25,276,870 44,475,475 89,332 44,564,807 Balance as at 1 April ,833,829 (131,013,020) (622,204) 25,276,870 44,475,475 89,332 44,564,807 Loss for the financial year (2,248,029) (2,248,029) (2,281) (2,250,310) Foreign currency translations for foreign operations, net of tax 123, , ,726 Total comprehensive income/(loss) 123,726 (2,248,029) (2,124,303) (2,281) (2,126,584) Balance as at 150,833,829 (131,013,020) (498,478) 23,028,841 42,351,172 87,051 42,438,223 The accompanying notes form an integral part of the financial statements. 17

22 Statement of Changes in Equity For the financial year ended Nondistributable Share Share Accumulated Total capital premium losses equity Company Balance as at 1 April ,587,709 15,246,120 (63,404,725) 87,429,104 Profit for the financial year 364, ,618 Other comprehensive income, net of tax Total comprehensive income 364, ,618 Effects of the new Companies Act 2016 (Note 12) 15,246,120 (15,246,120) Balance as at 31 March 2017/1 April ,833,829 (63,040,107) 87,793,722 Loss for the financial year (39,568,509) (39,568,509) Other comprehensive income, net of tax Total comprehensive loss (39,568,509) (39,568,509) Balance as at 150,833,829 (102,608,616) 48,225,213 The accompanying notes form an integral part of the financial statements. 18

23 Statements of Cash Flows For the financial year ended CASH FLOWS FROM OPERATING ACTIVITIES Company Note (Loss)/Profit before tax from continuing operations (1,194,747) 3,467,900 (39,568,509) 364,618 Loss before tax from discontinued operation 23 (1,392,036) (Loss)/Profit before tax (1,194,747) 2,075,864 (39,568,509) 364,618 Adjustments for: Bad debt written-off 58,059 Depreciation of property, plant and equipment 5 1,648,278 1,646,338 Dividend income 20 (22,030,000) Fair value adjustment on non-current trade receivables 9(c) 1,351, ,121 Impairment losses on: trade receivables 9(e) 2,614,594 1,020,823 investments in subsidiaries 7(b) 60,630,000 Interest expense , , ,401 Interest income (292,907) (353,130) Inventories written off 368,779 Inventories written down 402,083 Loss/(Gain) on disposal of property, plant and equipment 8,000 (3,231) Reversal of impairment losses on: trade receivables 9(e) (1,180,400) (207,569) Waiver of debt of amount owing to a subsidiary (91,725) Property, plant and equipment written-off ,811 Net movement for post-employment benefits 17 3,026, ,767 Net unrealised loss on foreign exchange 218,762 34,483 Net unrealised gain on foreign exchange (298,378) Operating profit/(loss) before changes in working capital 7,152,711 4,948,053 (934,026) 412,294 Changes in working capital: Inventories (942,714) 1,249,776 Trade and other receivables (5,180,144) 1,359,317 29,860 Trade and other payables 6,584,733 2,765,533 72,448 (62,913) Cash generated from/(used in) operations 7,614,586 10,322,679 (831,718) 349,381 Income tax paid (2,383,900) (2,067,850) Income tax refunded 37,888 Net cash from/(used in) operating activities 5,268,574 8,254,829 (831,718) 349,381 19

24 Statements Of Cash Flows (Cont d.) For the financial year ended CASH FLOWS FROM INVESTING ACTIVITIES Company Note Repayments to related companies (1,537,904) (54,136) Repayments to related parties (1,836,573) (1,341,350) Advances from/(repayments to) subsidiaries 2,115,959 (110,191) Advances from/(repayments to) former ultimate holding company 2,412,998 (1,240) Repayments to former immediate holding company (106,441) Interest received 292, ,130 (Placements)/Withdrawal of deposits pledged to licensed banks (247,041) 2,840,653 Placements of deposits with licensed banks with maturity more than three (3) months (70,906) Purchase of property, plant and equipment 5 (776,491) (877,307) Proceeds from disposal of property, plant and equipment 41,800 3,556 Net cash (used in)/from investing activities (2,596,304) 3,088, ,609 (165,567) CASH FLOWS FROM FINANCING ACTIVITIES Interest paid (124,083) (308,637) (139,401) Repayments of hire purchase creditors (334,872) (310,712) Net cash used in financing activities (458,955) (619,349) (139,401) Net increase/(decrease) in cash and cash equivalents 2,213,315 10,724,165 (57,109) 44,413 20

25 Statements Of Cash Flows (Cont d.) For the financial year ended Cash and cash equivalents at beginning of financial year Company Note As previously reported 3,474,127 (7,223,268) 61,589 17,176 Effect of changes in exchange rates 161,931 (26,770) 3,636,058 (7,250,038) 61,589 17,176 Cash and cash equivalents at end of financial year 11 5,849,373 3,474,127 4,480 61,589 RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES Hire purchase creditors (Note 16) At 1 April ,086 Non-cash flows interest expense 28,180 Cash flows (363,052) At 195,214 The accompanying notes form an integral part of the financial statements. 21

26 Notes to the Financial Statements 1. CORPORATE INFOATION 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 registered office of the Company is located at 16th Floor, KH Tower, 8 Lorong P. Ramlee, Kuala Lumpur. The principal place of business of the Company is located at Level 16, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, Kuala Lumpur. The financial statements are presented in Ringgit Malaysia (), which is also the functional currency of the Company. The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 13 July PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding activities. The principal activities and the details of the subsidiaries are disclosed in Note 7 to the financial statements. There have been no significant changes in the nature of these activities of the Company and of its subsidiaries during the financial year. 3. BASIS OF PREPARATION The financial statements of the and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRSs) and the provisions of the Companies Act 2016 in Malaysia. The accounting policies adopted are consistent with those of the previous financial year except for the effects of adoption of new MFRSs during the financial year. The new MFRSs and amendments to MFRSs adopted during the financial year are set out in Note 31 to the financial statements. The financial statements of the and of the Company have been prepared under the historical cost convention except as otherwise stated in the financial statements. 4. OPERATING SEGMENTS The has arrived at three (3) reportable segments that are organised and managed separately according to the nature of products and services, specific expertise and technological requirements, which requires different business and marketing strategies. The reportable segments are summarised as follows: Business Performance Services : Provision of business performance improvement related services. Trading and Distribution Services : Distribution and reselling of hardware and software and related services. Digital and Infrastructure Services : Provision of a comprehensive range of tele/data communication, networking, solutions and related services. Other segments comprise operations related to investment holding activities and subsidiaries that have ceased operations and remained inactive. 22

27 4. OPERATING SEGMENTS (Cont d.) The evaluates performance on the basis of profit or loss from operations before tax. Inter-segment revenue is priced along the same lines as sales to external customers and is eliminated in the consolidated financial statements. These policies have been applied consistently throughout the financial years. The inter-segment assets are adjusted against the segment assets to arrive at total assets reported in the statements of financial position. The inter-segment liabilities are adjusted against the segment liabilities to arrive at total liabilities reported in the statements of financial position. (a) Operating segments 2018 Business Performance Services Trading and Distribution Services Digital and Infrastructure Services Others Elimination Consolidation Revenue External sales 69,618,060 14,312,498 12,910 83,943,468 Inter-segment sales 111,422 22,030,000 (22,141,422) Total 69,618, ,422 14,312,498 22,042,910 (22,141,422) 83,943,468 Interest income 97, , ,907 Finance costs (12,350) (41,810) (111,733) 41,810 (124,083) Net finance income/(expense) 85,207 (41,810) 83,617 41, ,824 Depreciation of property, plant and equipment 294,723 24,234 1,329,321 1,648,278 Segment profit/(loss) before tax 3,196,644 (78,726) (3,044,092) (46,035,740) 44,767,167 (1,194,747) Other material non-cash items: Fair value adjustment on long term trade receivables 1,351,436 1,351,436 Inventories written off 368, ,779 Inventories written down 402, ,083 Impairment losses on trade receivables 614,594 2,000,000 2,614,594 Reversal of impairment losses on trade receivables (1,167,027) (13,373) (1,180,400) Capital expenditure 538, , ,491 Segment assets 47,100,856 76,004 57,721,998 89,625,874 (106,305,961) 88,218,771 Segment liabilities 33,265, ,301 33,091,344 23,063,418 (43,844,066) 45,780,548 23

28 4. OPERATING SEGMENTS (Cont d.) (a) Operating segments (Cont d.) 2017 Business Performance Services Trading and Distribution Services Digital and Infrastructure Services Others Discontinued operation Elimination/ Adjustment for discontinued operation Consolidation Revenue External sales 51,425,583 61,547 22,672,912 2,339,525 (2,339,525) 74,160,042 Inter-segment sales 2,941 3,301,718 1,500,000 (4,804,659) Total 51,425,583 64,488 25,974,630 1,500,000 2,339,525 (7,144,184) 74,160,042 Interest income 341, ,340 Finance costs (33,258) (82,190) (135,978) (139,401) 82,190 (308,637) Net finance income/ (expense) (33,258) (82,190) 205,362 (139,401) 82,190 32,703 Depreciation of property, plant equipment 205,252 24,233 1,405,344 12,260 (13,011) 1,634,078 Segment profit/(loss) before tax 2,864,533 (203,732) 1,928,894 1,056,568 1,392,036 (3,570,399) 3,467,900 Other material non-cash items: Fair value adjustment on long term trade receivables 107, ,121 Impairment losses on trade receivables 1,020,823 1,020,823 Reversal of impairment losses on trade receivables (180,823) (26,746) (207,569) Capital expenditure 438, ,785 (2,250) 877,307 Segment assets 35,950, ,601 84,344, ,801,421 (153,879,108) 85,448,731 Segment liabilities 24,534, ,172 33,889,082 46,685,969 (64,506,550) 40,883,924 24

29 4. OPERATING SEGMENTS (Cont d.) (b) Geographical segments Segment Segment Revenue assets liabilities Depreciation 2018 Malaysia 14,312,498 40,521,699 7,061,918 1,353,555 Singapore 12,910 87,934 9,133,618 Thailand 69,618,060 46,981,001 28,697, ,723 Indonesia 628, ,556 83,943,468 88,218,771 45,780,548 1,648, Malaysia 22,734,459 41,709,226 5,318,109 1,428,826 Singapore (discontinued operation) 2,339,525 7,047,013 10,841,192 12,260 Thailand 51,425,583 35,950,351 23,675, ,252 Indonesia 742,141 1,048, PROPERTY, PLANT & EQUIPMENT 76,499,567 85,448,731 40,883,924 1,646,338 Depreciation Balance charge for Balance as at the financial Translation as at Additions Disposal Write-off year adjustments Carrying amount Computer hardware and software 762, ,340 (14) (339,274) (19,322) 970,221 Furniture and fittings 45,044 5,392 (436) (11,246) (1,350) 37,404 Motor vehicles 208,899 (49,800) (132,705) 26,394 Office equipment and computer equipment 3,626, ,559 (1,142,856) 2,667,239 Renovation 70,495 21,200 (22,197) 69,498 4,713, ,491 (49,800) (450) (1,648,278) (20,672) 3,770,756 25

30 5. PROPERTY, PLANT & EQUIPMENT (Cont d.) < As at > Accumulated Carrying Cost depreciation amount Computer hardware and software 3,291,605 (2,321,384) 970,221 Furniture and fittings 393,358 (355,954) 37,404 Motor vehicles 568,431 (542,037) 26,394 Office equipment and computer equipment 8,695,268 (6,028,029) 2,667,239 Renovation 218,939 (149,441) 69,498 13,167,601 (9,396,845) 3,770,756 Depreciation Balance charge for Balance as at the financial Translation as at Additions Disposal Write - off year* adjustments Carrying amount Computer hardware and software 548, ,955 (25,074) (256,472) 49, ,491 Furniture and fittings 30,031 10,742 (3,500) (11,357) 19,128 45,044 Motor vehicles 405,994 (197,095) 208,899 Office equipment and computer equipment 4,382, ,610 (325) (237) (1,162,397) (13,832) 3,626,536 Renovation 89,512 (19,017) 70,495 5,457, ,307 (325) (28,811) (1,646,338) 54,587 4,713,465 < As at > Accumulated Carrying Cost depreciation amount Computer hardware and software 3,307,567 (2,545,076) 762,491 Furniture and fittings 400,047 (355,003) 45,044 Motor vehicles 1,066,430 (857,531) 208,899 Office equipment and computer equipment 8,511,710 (4,885,174) 3,626,536 Renovation 197,739 (127,244) 70,495 13,483,493 (8,770,028) 4,713,465 * Included depreciation for discontinued operation as disclosed in Note

31 5. PROPERTY, PLANT & EQUIPMENT (Cont d.) (a) (b) Each class of property, plant and equipment are measured after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is calculated to write off the cost of the assets to their residual values on a straight line basis over their estimated useful lives. The principal annual depreciation rates are as follows: Computer hardware and software 20% Furniture and fittings 10% 15% Motor vehicles 20% Office equipment and computer equipment 15% 20% Renovation 10% 15% (c) Directors estimate the useful lives of these property, plant and equipment to be within the periods mentioned above. These are common life expectancies applied in the industry in which the operates. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. A ten percent (10%) difference in the average useful lives of these assets from Director s estimates would result in approximately a 164,828 (2017: 164,634) variance in profit for the financial year. (d) Included in property, plant and equipment of the are certain motor vehicles acquired under hire purchase and lease arrangements with carrying amounts of 76,194 (2017: 191,006). 6. GOODWILL As at 1 April 2017/2016 5,737,704 5,737,704 Less: Impairment losses for the financial year As at /2017 5,737,704 5,737,704 (a) (b) Goodwill recognised in a business combination is an asset at the acquisition date and is initially measured at cost. After initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill has been allocated to a Cash Generating Unit (CGU) of the, which has been identified based on the following reportable segment: Business Performance Services 5,737,704 5,737,704 27

32 6. GOODWILL (Cont d.) (c) Impairment assessment on the carrying amount of goodwill is performed at least on an annual basis. The Directors have made estimates about the future results and key assumptions applied to cash flow forecasts of the CGU in determining its recoverable amount. Recoverable amount of goodwill for both financial years have been determined based on the value-in-use of the CGU, using the following assumptions: (i) (ii) Cash flow forecasts based on approved financial budgets covering five (5) years period; Pre-tax discount rate of the of 9.9% (2017:11.9%) per annum; (iii) Forecasted growth rates ranging from 1% to 3% (2017: 1% to 3%) based on past performance of the segment; and (iv) Terminal value based on the fifth year cash flow without incorporating any growth rate. Management believes that there is no reasonably possible change in the key assumptions on which management has based its determination of the CGU s recoverable amounts, which would cause the CGU s carrying amount to materially exceed its recoverable amount. Based on these assumptions, the Directors are at the view that no impairment loss is required as the recoverable amount determined is higher than the carrying amount of the CGU. 7. INVESTMENTS IN SUBSIDIARIES Company Unquoted shares, at cost 155,973, ,973,329 Less: Accumulated impairment losses (106,061,028) (45,431,028) 49,912, ,542,301 (a) Investments in subsidiaries which are eliminated on consolidation, are stated in the separate financial statements of the Company at cost less impairment losses, if any. All components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by MFRSs. The choice of measurement basis is made on a combinationby-combination basis. Subsequent to initial recognition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests shares of subsequent changes in equity. 28

33 7. INVESTMENTS IN SUBSIDIARIES (Cont d.) (b) The reconciliation of movements in impairment losses are as follows: Company As at 1 April 2017/ ,431,028 45,431,028 Impairment losses for the financial year 60,630,000 As at / ,061,028 45,431,028 (c) Details of the subsidiaries are as follows: Name of company Country of incorporation/ Principal place of business Effective equity interest % % Principal activities Direct subsidiaries ISS Consulting (Malaysia) Sdn Bhd Malaysia Computer networking and digital media solutions and services. ISS Consulting (Thailand) Ltd Thailand Advisers and consultants for computer software solutions. Diversified Gateway Berhad Malaysia Provision of computer network solutions and system integration. Rangkaian Ringkas Sdn Bhd Malaysia Computer distribution and maintenance of computer networking, network security storage and network management solutions. Cogent Consulting Sdn Bhd Malaysia Inactive. ISS Consulting (S) Pte Ltd^# Ledge Consulting Pte Ltd^ Cogent Business Solutions (S) Pte Ltd^ The Republic of Singapore The Republic of Singapore The Republic of Singapore Inactive Inactive Inactive. PT ISS Consulting Indonesia^ Indonesia Inactive. ^ Subsidiaries not audited by BDO Malaysia or BDO member firm. # Classified as discontinued operation in previous financial year. 29

34 7. INVESTMENTS IN SUBSIDIARIES (Cont d.) (d) (e) Summarised financial information of a subsidiary that has non-controlling interest as at the end of each reporting period prior to intra-group elimination is not disclosed as it is not material to the. The Company assessed whether there were any indicators of impairment during the financial year. In doing this, management considered the current environments and performance of the subsidiaries. Management has considered the losses in certain subsidiaries in the current financial year as impairment indicators. An impairment loss on investments in subsidiaries amounting to 60,630,000 relating to a subsidiary, Diversified Gateway Berhad, has been recognised during the financial year due to declining business operations as a result of intense competition. The recoverable amount was determined based on a value-in-use calculation using cash flow projections based on financial budgets approved by the management covering a five (5)-year period. The discount rate applied to the cash flow projections was 9.9% based on the weighted average cost of capital of the. Management believes that there is no reasonably possible change in the key assumptions on which management has based its determination of the recoverable amounts of the investments in subsidiaries, which would cause the carrying amounts of the investments in subsidiaries to materially exceed their recoverable amounts. 8. DEFERRED TAX (a) Deferred tax assets and liabilities are made up of the following: As at 1 April 2017/2016 (2,970,835) (3,461,460) Recognised in profit or loss (Note 22) (784,042) 680,254 Translation adjustments 29,129 (189,629) As at /2017 (3,725,748) (2,970,835) Presented after appropriate offsetting: Deferred tax assets, net (3,872,122) (3,623,261) Deferred tax liabilities, net 146, ,426 (3,725,748) (2,970,835) 30

35 8. DEFERRED TAX (Cont d.) (b) Components and movements of deferred tax assets and deferred tax liabilities during the financial year prior to offsetting are as follows: Deferred tax assets As at 1 April 2017/2016 (3,623,261) (3,653,636) Recognised in profit or loss: Unused tax losses 931, ,792 Provisions (1,209,668) 6,212 Translation adjustments 29,129 (189,629) As at /2017 (3,872,122) (3,623,261) Deferred tax liabilities As at 1 April 2017/ , ,176 Recognised in profit or loss: Property, plant and equipment (506,052) 460,250 As at / , ,426 (c) Components of deferred tax as at the end of the reporting period comprise the tax effects of: Deferred tax assets Unused tax losses 2,501,954 3,439,844 Provisions 1,370, ,417 3,872,122 3,623,261 Deferred tax liabilities Property, plant and equipment 146, ,426 31

36 8. DEFERRED TAX (Cont d.) (d) The amount of temporary differences for which no deferred tax assets have been recognised in the statements of financial position are as follows: Unused tax losses 49,636,028 43,876,773 Unabsorbed capital allowances 111,757 87,300 49,747,785 43,964,073 Deferred tax assets of certain subsidiaries have not been recognised as it is not probable that future taxable profits of the subsidiaries would be available against which the deductible temporary differences could be utilised. The deductible temporary differences do not expire under current tax legislation. (e) Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that future taxable profit will be available against which the tax losses and capital allowances can be utilised. Significant management judgment 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. 9. TRADE & OTHER RECEIVABLES Company Non-current Trade receivables Third parties 13,522,509 6,272,462 Less: Impairment losses (2,000,000) 11,522,509 6,272,462 Current Trade receivables Third parties 17,459,460 22,564,909 Amounts owing by subsidiaries 5,159,118 5,188,978 Amounts owing by related companies 4,414,278 Amounts owing by related parties 2,238,187 19,697,647 26,979,187 5,159,118 5,188,978 32

37 9. TRADE & OTHER RECEIVABLES (Cont d.) Company Less: Impairment losses on Third parties (433,695) (246,565) Amounts owing by subsidiaries (5,104,321) (5,104,321) (433,695) (246,565) (5,104,321) (5,104,321) 19,263,952 26,732,622 54,797 84,657 Other receivables Other receivables 8,309,070 4,916,936 Deposits 345, ,847 8,654,442 5,774,783 27,918,394 32,507,405 54,797 84,657 Prepayments 8,740,953 7,284,296 36,659,347 39,791,701 54,797 84,657 Total trade and other receivables: Non-current 11,522,509 6,272,462 Current 27,918,394 32,507,405 54,797 84,657 Loans and receivables 39,440,903 38,779,867 54,797 84,657 (a) (b) Loans and receivables are measured at amortised cost using the effective interest method. Trade credit terms of trade receivables granted by the and the Company range from 30 to 120 days (2017: 30 days to 120 days) from date of invoice. They are recognised at their original amounts, which represent their fair values on initial recognition. 33

38 9. TRADE & OTHER RECEIVABLES (Cont d.) (c) Included in trade receivables is an amount totalling 13,522,509 (2017:13,085,873), which is repayable on a fixed monthly instalment basis. The repayment term has been renegotiated during the financial year. The receivable is subject to a fixed weighted average effective interest rate of 6% (2017: 8%). The instalments receivable are as follows: Gross trade receivable not later than one (1) year 7,203,934 later than one (1) year and not later than five (5) years 16,483,228 7,491,222 16,483,228 14,695,156 Less: Fair value adjustment (2,960,719) (1,609,283) Present value of trade receivable 13,522,509 13,085,873 Repayable as follows: Current assets: not later than one (1) year 6,813,411 Non-current assets: later than one (1) year but not later than five (5) years 13,522,509 6,272,462 13,522,509 13,085,873 Credit terms of this trade receivable of the is in accordance with the repayment schedules as contained in the agreement. The reconciliation of movements in fair value adjustment is as follows: As at 1 April 2017/2016 (1,609,283) (1,502,162) Fair value adjustment during the financial year (1,351,436) (107,121) As at /2017 (2,960,719) (1,609,283) 34

39 9. TRADE & OTHER RECEIVABLES (Cont d.) (d) Ageing analysis of trade receivables of the and the Company are as follows: Company Neither past due nor impaired 7,385,366 23,035,400 54,797 84,657 Past due, not impaired 1 to 30 days 3,987,647 4,271, to 60 days 5,372,283 2,518, to 90 days 1,352,814 1,760, to 120 days 549, ,213 More than 120 days 616, ,570 11,878,586 9,969,684 Past due and impaired 13,956, ,565 5,104,321 5,104,321 33,220,156 33,251,649 5,159,118 5,188,978 Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy customers with good payment records with the and the Company. Most of the trade receivables of the and of the Company arise from recurring business with the and the Company. Receivables that are past due but not impaired At the end of the reporting period, majority of the trade receivables of the are active corporate customers with healthy business relationships, in which management is of the view that the amounts are recoverable based on payment history. The trade receivables of the that are past due but not impaired are unsecured in nature. Receivables that are past due and impaired Trade receivables of the and of the Company that are past due and impaired at the end of the reporting period are as follows: Individually impaired Company Trade receivables 13,956, ,565 5,104,321 5,104,321 Less: Impairment losses (2,433,695) (246,565) (5,104,321) (5,104,321) 11,522,509 35

40 9. TRADE & OTHER RECEIVABLES (Cont d.) (e) The reconciliation of movements in impairment losses are as follows: Company As at 1 April 2017/ , ,435 5,104,321 5,104,321 Charged during the financial year 2,614,594 1,020,823 Impairment losses written-off (55,163) Reversal of impairment losses (1,180,400) (207,569) Exchange difference 808,099 (760,124) As at /2017 2,433, ,565 5,104,321 5,104,321 The and the Company make impairment of receivables based on an assessment of the recoverability of receivables. Impairment is applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical bad debts, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgment to evaluate the adequacy of impairment of receivables. Where expectations differ from the original estimates, the differences would impact the carrying amount of the receivables. Trade and other receivables that are individually determined to be impaired at the end of the reporting period relate to those receivables that exhibit significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. (f) The currency exposure profiles of trade and other receivables (excluding prepayments) are as follows: Company Ringgit Malaysia () 16,494,837 18,812,906 10,564 5,941 Singapore Dollar (SGD) 137,865 1,868,690 39,540 74,023 United States Dollar (USD) 67,959 Thai Baht (THB) 22,121,610 17,372,904 Indonesian Rupiah (IDR) 618, ,367 4,693 4,693 39,440,903 38,779,867 54,797 84,657 36

41 9. TRADE & OTHER RECEIVABLES (Cont d.) (g) The following table demonstrates the sensitivity analysis of the (loss)/profit after tax of the and of the Company to a reasonably possible change in the SGD, USD, THB and IDR exchange rates against, with all other variables held constant: Increase/(Decrease) Company (Loss)/Profit after tax SGD/ strengthened by 10% (10,478) 142,020 (3,005) 5,625 weakened by 10% 10,478 (142,020) 3,005 (5,625) USD/ strengthened by 10% (5,165) weakened by 10% 5,165 THB/ strengthened by 10% (1,681,242) 1,320,341 weakened by 10% 1,681,242 (1,320,341) IDR/ strengthened by 10% (47,016) 55,128 (357) 357 weakened by 10% 47,016 (55,128) 357 (357) (h) Credit risk concentration profile The determines concentration of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the s trade receivables at the end of the reporting period are as follows: < > % of total % of total By country Malaysia 15,472,726 50% 17,194,728 52% Singapore 1,651,524 5% Thailand 15,313,735 50% 14,158,832 43% 30,786, % 33,005, % At the end of each reporting period, approximately 37% (2017: 46%) of the trade receivables of the were due from one (1) (2017: one (1)) major customer. 37

42 10. INVENTORIES At cost Hardware and software 1,468,281 2,261,111 Hardware maintenance parts and spares 968, ,559 2,436,965 2,444,670 At net realisable value Hardware and software 179,557 2,616,522 2,444,670 (a) (b) (c) Cost of computer hardware, software and spare parts are determined on a specific identification basis while costs of other inventories are determined on the first-in-first-out basis. The cost comprises all costs of purchase, cost of conversion plus other costs incurred in bringing the inventories to their present location and condition. Cost of inventories of the recognised as an expense during the financial year amounted to 28,843,847 (2017: 10,730,653). The has written off inventories amounted to 368,779 and has written down slow-moving inventories amounted to 402,083 to their net realisable value. The writes down its obsolete or slow moving inventories based on assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses current market prices and future demand when evaluating the adequacy of the write down for obsolete or slow moving inventories. Where actual results differ from the original estimates, the differences would impact the carrying amount of inventories. 38

43 11. CASH & BANK BALANCES Company Cash and bank balances 6,580,739 6,141,374 4,480 61,589 Deposits with licensed banks 11,839,894 11,521,947 As reported in the statements of financial position 18,420,633 17,663,321 4,480 61,589 Less: Deposits pledged to licensed banks (11,768,988) (11,521,947) Deposits with licensed banks with maturity more than three (3) months (70,906) Bank overdrafts included in borrowings (Note 14) (731,366) (2,667,247) Cash and cash equivalents included in the statements of cash flows 5,849,373 3,474,127 4,480 61,589 (a) (b) Deposits with licensed banks of the amounting to 11,768,988 (2017: 11,521,947) are pledged to licensed banks for credit facilities granted to certain subsidiaries of the as disclosed in Note 15 to the financial statements. The weighted average effective interest rates of deposits of the at the end of the reporting period are as follows: Fixed rates 2.08% 3.15% Sensitivity analysis for fixed rate deposits as at the end of the reporting period was not presented as fixed rate instruments are not affected by changes in interest rates. (c) The currency exposure profiles of cash and bank balances are as follows: Company Ringgit Malaysia () 6,903,106 7,837,852 4,480 61,589 Singapore Dollar (SGD) ,956 United States Dollar (USD) 31,579 Thai Baht (THB) 11,471,148 9,272,739 Indonesian Rupiah (IDR) 14,197 16,774 18,420,633 17,663,321 4,480 61,589 39

44 11. CASH & BANK BALANCES (Cont d.) (d) The following table demonstrates the sensitivity analysis of profit or loss of the to a reasonably possible change in the SGD, THB and IDR exchange rates against, with all other variables held constant: Increase/(Decrease) (Loss)/Profit after tax SGD/ strengthened by 10% (46) 40,733 weakened by 10% 46 (40,733) USD/ strengthened by 10% (2,400) weakened by 10% 2,400 THB/ strengthened by 10% (871,807) 704,728 weakened by 10% 871,807 (704,728) IDR/ strengthened by 10% (1,079) 1,275 weakened by 10% 1,079 (1,275) 12. SHARE CAPITAL and Company Number of ordinary shares Amount Issued and fully paid-up At 1 April 1,355,877,090 1,355,877, ,833, ,587,709 Effect of new Companies Act ,246,120 At 31 March 1,355,877,090 1,355,877, ,833, ,833,829 Owners of the parent are entitled to receive dividends as and when declared by the Company and are entitled to one (1) vote per ordinary share at meetings of the Company. All ordinary shares rank pari passu with regard to the Company s residual assets. 40

45 13. RESERVES Company Non-distributable: Reverse acquisition reserve (131,013,020) (131,013,020) Exchange translation reserve (498,478) (622,204) (131,511,498) (131,635,224) Distributable: Retained earnings/(accumulated losses) 23,028,841 25,276,870 (102,608,616) (63,040,107) (108,482,657) (106,358,354) (102,608,616) (63,040,107) (a) Reverse acquisition reserve In previous financial years, the Company acquired 630,000 ordinary shares, representing the entire issued and paid-up share capital of Diversified Gateway Berhad (DGB) for a purchase consideration of 110,000,000 satisfied entirely by the issuance of 1,100,000,000 new ordinary shares in the Company at an issue price of 0.10 per share. Upon completion of the acquisition of DGB, the Company became the legal holding company of DGB whereas the former shareholders of DGB to whom the 1,100,000,000 shares were allotted became the majority shareholders of the Company, controlling about 59.6% of the issued and paid-up share capital of the Company. Furthermore, the Company s key executive management are those of DGB. In accordance with MFRS 3 Business Combinations, the substance of such business combination between the Company and DGB constituted a reverse acquisition whereby the acquirer and acquiree of the transaction for accounting purposes should be DGB (i.e. the legal subsidiary, accounting parent) and the Company (i.e. the legal holding company, the accounting subsidiary) respectively. Under reverse acquisition accounting, the consolidated financial statements, although issued under the name of the legal holding company, i.e. the Company, represent a continuation of the financial statements of the legal subsidiary, i.e. DGB. Accordingly, the consolidated financial statements together with the notes thereto cover DGB (as the accounting acquirer) and the Company together with its other subsidiaries (as the accounting acquiree). Exchange translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the s presentation currency. It is also used to record the exchange differences arising from monetary items, which form part of the net investment of the in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation. 41

46 14. BORROWINGS Non-current liabilities Hire purchase and lease creditors (Note 16) 19, ,424 Current liabilities Bank overdrafts (Note 15) 731,366 2,667,247 Hire purchase and lease creditors (Note 16) 175, , ,596 2,944, ,580 3,197,333 Total borrowings Bank overdrafts (Note 15) 731,366 2,667,247 Hire purchase and lease creditors (Note 16) 195, , ,580 3,197,333 (a) (b) Borrowings are classified as other financial liabilities, and measured at amortised cost using the effective interest method. At the end of the reporting period, the interest rate profiles of the borrowings are as follows: Fixed rate 195, ,086 Floating rate 731,366 2,667, ,580 3,197,333 (c) As the end of the reporting period, the weighted average effective interest rates for the borrowings are as follows: Fixed rate Hire purchase and lease creditors 6.34% 6.24% Floating rate Bank overdrafts 11.60% 3.65% 42

47 14. BORROWINGS (Cont d.) (d) The currency exposure profiles of borrowings are as follows: Ringgit Malaysia () 306, ,234 Thai Baht (THB) 620,490 2,675, ,580 3,197,333 (e) The following table demonstrates the sensitivity analysis of the to a reasonably possible change in the THB exchange rates against, with all other variables held constant: Increase/(Decrease) (Loss)/Profit after tax THB/ strengthened by 10% 47,157 (203,308) weakened by 10% (47,157) 203,308 (f) The table below summarises the maturity profile of the s liabilities at the end of the reporting period based on contractual undiscounted repayment obligations: On demand or within one year One to five years Total As at Hire purchase and lease creditors 182,737 20, ,734 Bank overdrafts 731, ,366 Total undiscounted financial liabilities 914,103 20, ,100 As at 31 March 2017 Hire purchase and lease creditors 306, , ,082 Bank overdrafts 2,667,247 2,667,247 Total undiscounted financial liabilities 2,973, ,999 3,235,329 43

48 14. BORROWINGS (Cont d.) (g) The following table demonstrates the sensitivity analysis of profit or loss of the if interest rates at the end of each reporting period changed by one hundred (100) basis points with all other variables held constant: Loss after tax Profit after tax 100 bp 100 bp 100 bp 100 bp increase decrease increase decrease Floating rate instruments 5,558 (5,558) (20,271) 20,271 Sensitivity analysis for fixed rate borrowings as at the end of the reporting period was not presented as fixed rate instruments are not affected by changes in interest rates. (h) Borrowings that are not carried at fair values and whose carrying amounts are reasonable approximation of fair values are as follows: Carrying Carrying amount Fair value amount Fair value Hire purchase and lease creditors 195, , , ,843 The fair value of borrowings is categorised as Level 2 in the fair value hierarchy. There is no transfer between levels in the hierarchy during the financial year. Carrying amounts of hire purchase and lease creditors are reasonable approximation of fair values due to the current rates offered to the approximate the market rates for similar borrowing of the same remaining maturities. 15. BANK OVERDRAFTS Bank overdrafts of the bear effective interest rates ranging from 8.70% to 12.12% (2017: 2.80% to 4.55%) per annum and are secured by the following: (a) (b) (c) Pledge of fixed deposits as disclosed in Note 11 to the financial statements; Personal guarantee of certain Directors of the Company; and Corporate guarantees of the related corporations. 44

49 16. HIRE PURCHASE & LEASE CREDITORS Minimum hire purchase and lease payments: not later than one (1) year 182, ,083 later than one (1) year and not later than five (5) years 20, , , ,082 Less: Future interest charges (8,520) (37,996) Present value of hire purchase and lease creditors 195, ,086 Repayable as follows: Current liabilities not later than one (1) year 175, ,662 Non-current liabilities later than one (1) year and not later than five (5) years 19, , PROVISION FOR POST-EMPLOYMENT BENEFITS 195, ,086 The operates an unfunded defined Retirement Benefit Scheme (the Scheme) for eligible employees. Under the Scheme, eligible employees are entitled to post-employment benefits calculated by reference to their length of services and earnings. The amount recognised in the statements of financial position is as follows: Present value of unfunded defined benefit obligations 4,164,246 1,238,977 Analysed as follows: Non-current liabilities more than five (5) years 4,164,246 1,238,977 45

50 17. PROVISION FOR POST-EMPLOYMENT BENEFITS (Cont d.) Movements during the financial year in the amount recognised in the statements of financial position in respect of the Scheme are as follows: Balance as at 1 April 2017/2016 1,238, ,126 Net service cost recognised in profit or loss 3,026, ,767 Exchange difference (100,972) 121,084 Balance as at /2017 4,164,246 1,238,977 Certain assumptions are used in the actuarial valuation and due to the long term nature of this Scheme, such estimates are subject to uncertainty. Key assumptions used for this valuation (presented by weighted average) are as follows: Discount rate 3.51% 3.51% Salary increase rate 5.00% 5.00% Annual voluntary resignation rate 0.00% 15.74% 0.00% 18.87% Mortality rate Thai Mortality table of 2008 Thai Mortality table of 2008 Normal retirement age 55 years 55 years 46

51 18. TRADE & OTHER PAYABLES Company Trade payables Third parties 10,996,182 8,724,702 Other payables Other payables and accruals 7,579,892 4,742, , ,690 Amount owing to a subsidiary 19,879,558 Amounts owing to related companies 1,556,793 22,177 Amounts owing to related parties 11,117,288 1,182,137 Amount owing to former immediate holding company 3,828, ,500 Amount owing to former ultimate holding company 7,568,166 1,970,900 18,697,180 17,696,598 1,746,365 22,894,825 Other financial liabilities 29,693,362 26,421,300 1,746,365 22,894,825 Unearned revenue 10,849,986 9,373,888 40,543,348 35,795,188 1,746,365 22,894,825 (a) (b) (c) (d) (e) Trade and other payables (excluding unearned revenue) are classified as other financial liabilities, and measured at amortised cost using the effective interest method. Trade payables are non-interest bearing and the normal trade credit terms granted to the range from 30 to 60 days (2017: 30 to 60 days) from date of invoice. Unearned revenue represents advance billings for contract works and maintenance services. Amounts owing to a subsidiary represented advances and payments made on behalf, which were unsecured, interest-free and repayable on demand in cash and cash equivalents. Amounts owing to related companies, former immediate and ultimate holding companies and related parties represent advances, management fees and payments made on behalf, which are unsecured, interest-free and repayable on demand in cash and cash equivalents. 47

52 18. TRADE & OTHER PAYABLES (Cont d.) (f) The currency exposure profiles of trade and other payables (excluding unearned revenue) are as follows: Company Ringgit Malaysia () 12,480,678 6,723,784 1,746,365 22,894,825 Singapore Dollar (SGD) 85,553 7,444,749 United States Dollar (USD) 511,256 Thai Baht (THB) 15,728,319 12,243,458 Indonesian Rupiah (IDR) 887,556 9,309 29,693,362 26,421,300 1,746,365 22,894,825 (g) The following table demonstrates the sensitivity analysis of the to a reasonably possible change in the SGD, USD, THB and IDR exchange rates against, with all other variables held constant: Increase/(Decrease) (Loss)/Profit after tax SGD/ strengthened by 10% 6,502 (565,801) weakened by 10% (6,502) 565,801 USD/ strengthened by 10% 38,855 weakened by 10% (38,855) THB/ strengthened by 10% 1,195,352 (930,502) weakened by 10% (1,195,352) 930,502 IDR/ strengthened by 10% 67,454 (707) weakened by 10% (67,454) 707 (h) The maturity profile of the trade and other payables of the and of the Company at the end of the reporting period based on contractual undiscounted repayment obligation is repayable on demand or within one year. 48

53 19. CONTINGENT LIABILITIES Company Corporate guarantees given to financial institutions and leasing corporation for credit facilities granted to a subsidiary 18,600,000 18,600,000 Bank guarantees given by financial institutions in respect of projects of the 2,472, ,277 The and the Company designate corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance contracts as defined in MFRS 4 Insurance Contracts. The Directors are of the view that the chances of the financial institutions and leasing corporation to call upon the guarantees are remote. Accordingly, the fair values of the above guarantees are negligible. 20. REVENUE Company Sale of computer, hardware, software and accessories 52,452,319 44,297,992 Project management, consultancy, maintenance and software support services 31,491,149 29,862,050 Dividend income 22,030,000 1,500,000 83,943,468 74,160,042 22,030,000 1,500,000 49

54 20. REVENUE (Cont d.) Revenue is measured at the fair value of the consideration received or receivables, net of discounts and rebates: (i) Sale of computer hardware, software and accessories Revenue from sale of computer hardware, software and accessories is recognised when the significant risks and rewards of ownership of the goods have been transferred to the customer and where the does not have continuing managerial involvement over the goods, which coincides with delivery of goods and acceptance by customers. (ii) Project management and consultancy services Revenue is recognised upon the rendering of services and when the outcome of the transaction can be estimated reliably. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable. (iii) Maintenance and software support services Revenue from provision management maintenance and software support services is allocated evenly throughout the period of contracts. Income for the expired period is recognised in the profit or loss on accrual basis and income relating to the unexpired period is carried forward as unearned revenue. (iv) Dividend income Dividend income is recognised when the right to receive payment is established. 21. FINANCE COSTS Company Interest expense on: overdrafts 92, ,933 trust receipts 3,558 2,679 hire purchase and leases 28,180 40,025 amounts owing to subsidiaries 139, , , ,401 50

55 22. TAX EXPENSE Current income tax continuing operations: Malaysian income tax 291,208 81,922 Foreign income tax 1,542, ,794 Under/(Over) provision in prior years 5,601 (120) 1,839, ,596 Deferred tax continuing operations (Note 8): Relating to originating and reversal of temporary differences (614,253) 674,042 (Over)/Under provision in prior years (169,789) 6,212 (784,042) 680,254 1,055,563 1,635,850 Income tax expense attributable to: Continuing operations 1,055,563 1,635,850 Discontinued operation (Note 23) 10,377 1,055,563 1,646,227 (a) (b) Malaysian income tax is calculated at the statutory tax rate of 24% (2017: 24%) of the estimated taxable (loss)/profit for the fiscal year. Tax expense for other taxation authorities are calculated at the rates prevailing in those respective jurisdictions. 51

56 22. TAX EXPENSE (Cont d.) (c) Numerical reconciliation between the tax expense and the product of accounting (loss)/profit multiplied by applicable tax rates of the and of the Company are as follows: Company (Loss)/Profit before tax (1,194,747) 3,467,900 (39,568,509) 364,618 Tax at Malaysian statutory tax rate of 24% (2017: 24%) (286,739) 832,296 (9,496,442) 87,508 Tax effects in respect of: Non-allowable expenses 442,706 1,030,735 24,047, ,772 Non-taxable income (9,456) (14,551,200) (339,147) Unused tax losses and unabsorbed capital allowances not recognised 1,388,091 5,869 42,867 Utilisation of tax losses and capital allowances not recognised in prior years (160,500) Differential in tax rates (324,307) (69,186) 1,219,751 1,629,758 (Over)/Under provision of tax expense in prior years 5,601 (120) (Over)/Under provision of deferred tax in prior years (169,789) 6,212 1,055,563 1,635,850 (d) Tax on each component of other comprehensive income is as follows: Before tax Tax effect After tax Items that may be reclassified subsequently to profit or loss: 2018 Foreign currency translations 123, , Foreign currency translations 874, ,971 52

57 23. DISCONTINUED OPERATION On 11 January 2017, ISS Consulting (S) Pte Ltd (ISS(S)), a wholly owned subsidiary of the Company has ceased its operations following a management buyout of certain business operations at a cash consideration of 112,000. This transaction is to strengthen the financial position of the and does not have any material financial effect to the. Loss attributable to the discontinued operation was as follows: Note 2017 Results of discontinued operation Revenue 2,339,525 Direct expenses (2,382,032) Gross loss (42,507) Other operating income 249,037 Other operating expenses (1,598,566) Loss before tax (1,392,036) Tax expense 22 (10,377) Loss for the year (1,402,413) Other comprehensive income, net of tax Total comprehensive loss for the year (1,402,413) The following items have been charged in arriving loss before tax from discontinued operation: 2017 Depreciation of property, plant and equipment 12,260 Property, plant and equipment written off 28,811 Rental of office 243,106 Cash flows attributable to the discontinued operation are as follows: 2017 Inflow/(Outflow) Operating activities (2,200,668) Investing activities (192,021) Financing activities 2,228,864 53

58 24. EARNINGS PER ORDINARY SHARE (a) Basic earnings per ordinary share (Loss)/profit attributable to owners of the parent used in the computation of basic earnings per share () Continuing operations (2,248,029) 1,819,016 Discontinued operation (1,402,413) Total group (2,248,029) 416,603 Weighted average number of ordinary shares in issue 1,355,877,090 1,355,877,090 Basic earnings per ordinary share (sen) Continuing operations (0.17) 0.13 Discontinued operation (0.10) Total group (0.17) 0.03 (b) Diluted earnings per ordinary share Diluted earnings per ordinary share equals basic earnings per ordinary share as there are no potential dilutive equity instruments. 25. EMPLOYEE BENEFITS Total employee benefits recognised in profit or loss are as follows: Company Salaries, wages, bonuses and allowances 36,262,206 29,471,135 Defined contribution plans 1,304,890 1,315,389 Net movement for post-employment benefits 3,026, ,767 Other employee benefits 3,496,884 1,327, , ,372 44,090,221 32,737, , ,372 (a) (b) Included in the employee benefits of the are remuneration paid to Executive and Non-Executive Directors amounting to 821,280 (2017: 1,520,772). The estimated monetary value of benefits-in-kind received by the Directors otherwise than in cash from the amounted to 31,371 (2017: 41,350). 54

59 25. EMPLOYEE BENEFITS (Cont d.) (c) Remuneration of Directors and other key management personnel during the financial year are as follows: Company Directors fees 481, , , ,000 Salaries, and other short term employee benefits: Directors 821,280 1,520,772 44, Other key management personnel 641,178 1,385,013 1,462,458 2,905,785 44, RELATED PARTY DISCLOSURES (a) Identities of related parties Parties are considered to be related to the if the has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. The Company has controlling related party relationships with its subsidiaries, related corporations and their subsidiaries. (b) In addition to transactions detailed elsewhere in the financial statements, the and the Company had the following transactions with related parties during the financial year: Sale of goods and services to related parties/companies 2,317,424 5,989,792 Purchase of goods and services from related parties/companies 370, ,146 Corporate secretarial services fees paid/payable to a related party/ company 63,436 49,623 Management fees paid/payable to a related party/former ultimate holding company 450, ,000 55

60 26. RELATED PARTY DISCLOSURES (Cont d.) (b) In addition to transactions detailed elsewhere in the financial statements, the and the Company had the following transactions with related parties during the financial year: (continued) Company Dividend received/receivable from a subsidiary 22,030,000 1,500,000 Corporate secretarial services fees paid/ payable to a related party/ related company 48,340 36,161 Related parties transactions described above were carried out on terms and conditions mutually agreed with the respective related parties. (c) Key management personnel are the persons who have authorities and responsibilities for planning, directing and controlling the activities of the or of the Company either directly or indirectly. This includes any Director, whether executive or otherwise, of the and of the Company. The remuneration of the Directors and other members of key management are disclosed in the Note 25 to the financial statements. 27. OPERATING LEASE COMMITMENTS The has operating lease commitments in respect of rental of premises as at the end of each reporting period, as follows: Future minimum lease payments Not later than one (1) year 607, ,317 Later than one (1) year and not later than five (5) years 36, , ,949 1,013,182 56

61 28. CAPITAL & FINANCIAL RISK MANAGEMENT (a) Capital management The primary objective of the s capital management is to ensure that entities of the would be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The overall strategy of the remains unchanged from financial year ended 31 March The manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years ended and 31 March The monitors capital using a gearing ratio, which is total borrowings divided by total equity. The has a target gearing ratio of 25% to 50% determined as the proportion of total borrowings to equity. The gearing ratios as at and 31 March 2017 are as follows: Total borrowings (Note 14) 926,580 3,197,333 Total equity 42,438,223 44,564,807 Gearing ratio 2.2% 7.2% Pursuant to the requirement of Bursa Malaysia Guidance Note No. 3/2006, the is required to maintain a consolidated shareholders equity equal to or not less than the twenty-five percent (25%) of the issued and paid-up share capital of the. The has complied with this requirement for financial year ended 31 March The is also required to maintain a maximum debt-to-equity ratio of 1.0 to comply with a bank covenant, failing which, the bank may call an event of default. The has complied with this requirement. (b) Financial risk management The s financial risk management objective is to optimise value creation for shareholders whilst minimising the potential adverse impact arising from fluctuations in foreign currency exchange and interest rates and the unpredictability of the financial markets. The operates within an established risk management framework and clearly defined guidelines that are regularly reviewed by the Board of Directors and does not trade in derivative financial instruments. Financial risk management is carried out through risk review programmes, internal control systems, and adherence to the financial risk management policies of the ultimate holding company. The is exposed mainly to credit risk, liquidity and cash flow risk, interest rate risk and foreign currency risk. 57

62 28. CAPITAL & FINANCIAL RISK MANAGEMENT (Cont d.) (b) Financial risk management (Cont d.) Information on the management of the related exposures is detailed below: (i) Credit risk Cash deposits and trade and other receivables may give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. It is the s policy to monitor the financial standing of the counter parties on an ongoing basis to ensure that the is exposed to minimal credit risk. The s primary exposure to credit risk arises through its trade receivables. The s trading terms with its customers are mainly on credit, except for new customers, where deposits in advance are normally required. The credit period is generally for a period of one (1) month, extending up to four (4) months for major customers except for one customer of which is repayable on fixed monthly basis as disclosed in Note 9(c) to the financial statements. Each customer has a maximum credit limit and the seeks to maintain strict control over its outstanding receivables via a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. The credit risk profile analysis of has been disclosed in Note 9 to the financial statements. (ii) Liquidity and cash flow risk The actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all operating, investing and financing needs are met. In liquidity risk management strategy, the measures and forecasts its cash commitments and maintains a level of cash and cash equivalents deemed adequate to finance the s activities. The is actively managing its operating cash flows to ensure all commitments and funding needs are met. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the aims at maintaining flexibility in funding by keeping committed credit lines available. The analysis of financial instruments by remaining contractual maturities has been disclosed in Notes 14 and 18 to the financial statements respectively. (iii) Interest rate risk The s exposure to risk of changes in interest rates is related primarily to the s cash deposits placed with licensed banks and borrowings. Interest rate exposure arising from the s borrowings is managed through the use of fixed and floating rates debts. The does not use derivative financial instruments to hedge these risks. The interest rate profile and sensitivity analysis of interest rate risk has been disclosed in Notes 11 and 14 to the financial statements respectively. 58

63 28. CAPITAL & FINANCIAL RISK MANAGEMENT (Cont d.) (b) Financial risk management (Cont d.) Information on the management of the related exposures is detailed below: (Cont d.) (iv) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates. The and the Company are exposed to foreign currency risk as a result of the foreign currency denominated transactions entered into by the and the Company during the course of business. The foreign currencies primarily involved are United States Dollar (USD), Singapore Dollar (SGD), Thai Baht (THB), and Indonesia Rupiah (IDR) respectively. Transactions in all other currencies are minimal. The monitors the movement in foreign currency exchange rates closely to ensure their exposure is minimised. The does not use derivative financial instruments to hedge these risks. The sensitivity analysis for foreign currency risk has been disclosed in Notes 9, 11, 14 and 18 to the financial statements respectively. 29. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR On 2 November 2017, Insas Technology Berhad (ITB), a wholly-owned subsidiary of Insas Berhad, a company listed in the Main Market of Bursa Malaysia Securities Berhad, had acquired a total of 270,000,000 ordinary shares, representing 19.91% of the total issued share capital of the Company via direct business transaction from Omesti Berhad, a company listed in the Main Market of Bursa Malaysia Securities Berhad for a total cash consideration of 12,825,000, which represents a purchase price of per share of the Company. 30. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD Proposed private placement of up to 10% of the total number of issued shares of the Company (Proposed Private Placement) On 21 March 2018, the Company announced that M&A Securities Sdn Bhd proposes to undertake a private placement of up to 10% of the issued shares of the Company. The additional listing application to Bursa Malaysia Securities Berhad (Bursa Securities) in relation to the Proposed Private Placement has been submitted on the same. Subsequently, on 26 March 2018, the Company announced that Bursa Securities had, vide its letter dated 26 March 2018, approved the listing of and quotation for up to 135,587,700 new ordinary shares in the Company to be issued pursuant to the Proposed Private Placement on the ACE Market of Bursa Securities subject to the following conditions: (a) (b) (c) the Company and M&A Securities Sdn Bhd must fully comply with the relevant provisions under the ACE Market Listing Requirements pertaining to the implementation of the Proposed Private Placement; the Company and M&A Securities Sdn Bhd to inform Bursa Securities upon the completion of the Proposed Private Placement; and the Company to furnish Bursa Securities with a written confirmation of its compliance with the terms and conditions of Bursa Securities approval once the Proposed Private Placement is completed. 59

64 30. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD (Cont d.) On 26 June 2018, the Company announced that M&A Securities Sdn Bhd has fixed the issue price at per placement share to be issued pursuant to the private placement. The aforementioned issue price of per placement share represents a discount of approximately 9.69% or to the five (5)-day weighted average market price of the Company s shares from 20 June 2018 to 26 June 2018 of approximately ADOPTION OF NEW MFRSs & AMENDMENT TO MFRSs 31.1 New MFRSs adopted during the financial year The and Company adopted the following Standards of the MFRS Framework that were issued by the Malaysian Accounting Standards Board (MASB) during the financial year: Title Effective Date Amendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised 1 January 2017 Losses Amendments to MFRS 107 Disclosure Initiative 1 January 2017 Amendments to MFRS 12 Annual Improvements to MFRS Standards January 2017 Cycle Adoption of the above Standards did not have any material effect on the financial performance or position of the and of the Company. 60

65 31. ADOPTION OF NEW MFRSs & AMENDMENT TO MFRSs (Cont d.) 31.2 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2018 The following are Standards of the MFRS Framework that have been issued by the MASB but have not been early adopted by the and the Company: Title Effective Date Amendments to MFRS 1 Annual Improvements to MFRS Standards January 2018 Cycle MFRS 15 Revenue from Contracts with Customers 1 January 2018 Clarification to MFRS 15 1 January 2018 MFRS 9 Financial Instruments (IFRS as issued by IASB in July 2014) 1 January 2018 Amendments to MFRS 2 Classification and Measurement of Share-based Payment 1 January 2018 Transactions Amendments to MFRS 128 Annual Improvements to MFRS Standards January 2018 Cycle IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018 Amendments to MFRS 140 Transfers of Investment Property 1 January 2018 Amendments to MFRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts See MFRS 4 Paragraphs 46 and 48 MFRS 16 Leases 1 January 2019 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures 1 January 2019 Amendments to MFRS 9 Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 3 Annual Improvements to MFRS Standards January 2019 Cycle Amendments to MFRS 11 Annual Improvements to MFRS Standards January 2019 Cycle Amendments to MFRS 112 Annual Improvements to MFRS Standards January 2019 Cycle Amendments to MFRS 123 Annual Improvements to MFRS Standards January 2019 Cycle Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement 1 January 2019 Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020 MFRS 17 Insurance Contracts 1 January 2021 Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred The and Company are in the process of assessing the impact of implementing these Standards and Amendments, as the effects would only be observable in future financial years. 61

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