ExpandingOur Horizons. Ekuiti Nasional Berhad

Transcription

1 ExpandingOur Horizons Ekuiti Nasional Berhad Financial Statements Annual Report 2016

2 Reports and Statutory FINANCIAL STATEMENTS

3 4-7 Directors Report 8 Statement By Directors 8 Statutory Declaration 9-12 Independent Auditors Report 13 Statement Of Comprehensive Income 14 Statement Of Financial Position 15 Statement Of Changes In Equity 16 Statement Of Cash Flows 17-33

4 Ekuiti Nasional Berhad ( U) Directors Report The Directors have pleasure in submitting their report and the audited financial statements of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The Company is principally engaged in providing investment management, financial, corporate and management advisory services to a Government-linked private equity fund to promote equitable and sustainable Bumiputera economic participation via the creation of Malaysia s next generation of leading companies. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Net profit for the financial year 19,093,811 DIVIDEND No dividend has been paid, declared or proposed since the end of the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December ISSUE OF SHARES There were no changes in the authorised, issued and fully paid capital of the Company during the financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements and notes to the financial statements. 4

5 Ekuiti Nasional Berhad ( U) Directors Report DIRECTORS The Directors who have held office since the date of last report are as follows: Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda Datuk Noriyah binti Ahmad Tan Sri Mohamed Jawhar bin Hassan Tan Sri Mohamed Azman bin Yahya Datuk Seri Dr Rahamat Bivi binti Yusoff Datuk Ali bin Abdul Kadir Syed Yasir Arafat bin Syed Abd Kadir Johan bin Johan Mahmood Merican (Resigned on 1st July 2016 and appointed as an alternate director to Datuk Seri Dr Rahamat Bivi Binti Yusoff on 14th October 2016) In accordance with Article 65 of the Company s Articles of Association, Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda and Datuk Ali bin Abdul Kadir shall retire from the Board at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. DIRECTORS REMUNERATION Details of Directors remuneration are set out in Note 13.2 to the financial statements. DIRECTORS INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors Shareholdings maintained by the Company in accordance with Section 59 of the Companies Act, 2016, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporations during the financial year. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the date of last report, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by a Director as the fixed salary of a full-time employee of the Company 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. Financial Statements Annual Report

6 Ekuiti Nasional Berhad ( U) Directors Report STATUTORY INFOATION ON THE FINANCIAL STATEMENTS Before the financial statements of the Company were made out, the Directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there are no known bad debts that had been written off and that allowance need not be made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) (d) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Company misleading. 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, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Company which has arisen since the end of the financial year. In the opinion of the Directors: (a) (b) the results of the Company s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the financial year in which this report is made. 6

7 Ekuiti Nasional Berhad ( U) Directors Report HOLDING FOUNDATION The Directors regard Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company s holding foundation. SUBSIDIARIES During and at the end of the financial year, the Company has no subsidiary. AUDITORS REMUNERATION Details of auditors remuneration are set out in Note 6 to the financial statements. Then were no indemnity given or insurance effected for any auditor of the Company. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution. RAJA TAN SRI DATO SERI ARSHAD BIN RAJA TUN UDA DIRECTOR SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR Kuala Lumpur 14 March 2017 Financial Statements Annual Report

8 Ekuiti Nasional Berhad ( U) Statement By Directors Pursuant To Section 251(2) Of The Companies Act, 2016 We, Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda and Syed Yasir Arafat bin Syed Abd Kadir, being two of the Directors of Ekuiti Nasional Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 13 to 33 have been properly drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2016 and of the results and cash flows of the Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Signed on behalf of the Board of Directors in accordance with their resolution. RAJA TAN SRI DATO SERI ARSHAD BIN RAJA TUN UDA DIRECTOR SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR Kuala Lumpur 14 March 2017 Statutory Declaration Pursuant To Section 251(1) Of The Companies Act, 2016 I, Mazhairul bin Jamaludin, being the Officer primarily responsible for the financial management of Ekuiti Nasional Berhad, do solemnly and sincerely declare that the financial statements set out on pages 13 to 33 are, in my opinion, 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, MAZHAIRUL BIN JAMALUDIN GROUP CHIEF FINANCIAL OFFICER Subscribed and solemnly declared by the abovenamed Mazhairul bin Jamaludin at Kuala Lumpur before me, on 14 March COMMISSIONER FOR OATHS 8

9 Ekuiti Nasional Berhad ( U) Independent Auditors Report The Member Of Ekuiti Nasional Berhad (Incorporated In Malaysia) (Company No: U) REPORT ON THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of Ekuiti Nasional Berhad ( the Company ) give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. What we have audited We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 13 to 33. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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 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. Financial Statements Annual Report

10 Ekuiti Nasional Berhad ( U) Independent Auditors Report The Member Of Ekuiti Nasional Berhad (Incorporated In Malaysia) (Company No: U) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Information other than the financial statements and auditors report thereon The Directors are responsible for the other information. The other information comprises: Directors Report; Statement by Directors; and Statutory Declaration; which we obtained prior to the date of this auditors report, and the 2016 annual report, which is expected to be made available to us after that date. Other information does not include the financial statements of the Company and our auditors report thereon. Our opinion on the financial statements 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 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 this 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 the financial statements of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Company, the directors are responsible for assessing the Company s ability to continue as a 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 Company or to cease operations, or have no realistic alternative but to do so. 10

11 Ekuiti Nasional Berhad ( U) Independent Auditors Report The Member Of Ekuiti Nasional Berhad (Incorporated In Malaysia) (Company No: U) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements 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 International Standards on Auditing 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 in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) Identify and assess the risks of material misstatement of the financial statements 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 Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. (d) 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 Company s ability 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 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 Company to cease to continue as a going concern. (e) Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Financial Statements Annual Report

12 Ekuiti Nasional Berhad ( U) Independent Auditors Report The Member Of Ekuiti Nasional Berhad (Incorporated In Malaysia) (Company No: U) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements (continued) 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. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. OTHER MATTERS This report is made solely to the member of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants DATO MOHAMMAD FAIZ BIN MOHAMMAD AZMI (No. 2025/03/18 (J)) Chartered Accountant Kuala Lumpur 14 March

13 Ekuiti Nasional Berhad ( U) Statement Of Comprehensive Income INCOME Management fees ,139,700 56,755,372 Treasury fees ,657,540 10,575,344 Note OTHER INCOME Interest income 3,803,835 2,688,580 Other income - 501,089 TOTAL INCOME 66,601,075 70,520,385 EXPENSES Employee benefit costs 5 (24,283,170) (21,721,385) Occupancy costs (1,442,136) (1,287,610) Consultancy fees (6,515,668) (5,740,669) Corporate social responsibility expense (4,759,480) (6,949,826) Other expenses (7,856,810) (8,446,115) Profit before taxation and zakat 6 21,743,811 26,374,780 Taxation Zakat (2,650,000) - TOTAL COMPREHENSIVE INCOME AND NET PROFIT FOR THE FINANCIAL YEAR 19,093,811 26,374,780 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

14 Ekuiti Nasional Berhad ( U) Statement Of Financial Position As At 31 December 2016 NON-CURRENT ASSET Plant and equipment 8 1,919,150 2,117,169 Note CURRENT ASSETS Deposits, prepayments and other receivables 9 618, ,674 Amount due from holding foundation , Amount due from related companies ,462,496 2,739,272 Tax recoverable - 5,772 Cash and cash equivalents ,184,795 82,541, ,285,501 86,104,206 CURRENT LIABILITIES Accruals and other payables 11 15,949,512 11,478,484 Amount due to related companies ,563 15,949,512 12,060,047 NET CURRENT ASSETS 93,335,989 74,044,159 95,255,139 76,161,328 FINANCED BY: Share capital 12 9,900,002 9,900,002 Retained earnings 85,355,137 66,261,326 95,255,139 76,161,328 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

15 Ekuiti Nasional Berhad ( U) Statement Of Changes In Equity Issued and fully paid ordinary shares of 1 each Number of shares Share capital Distributable Retained earnings At 1 January ,900,002 9,900,002 66,261,326 76,161,328 Total comprehensive income for the financial year ,093,811 19,093,811 At 31 December ,900,002 9,900,002 85,355,137 95,255,139 Total At 1 January ,900,002 9,900,002 39,886,546 49,786,548 Total comprehensive income for the financial year ,374,780 26,374,780 At 31 December ,900,002 9,900,002 66,261,326 76,161,328 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

16 Ekuiti Nasional Berhad ( U) Statement Of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Profit for the financial year 19,093,811 26,374,780 Note Adjustments for: Depreciation of plant and equipment 8 925, ,834 Loss/(gain) on disposal of plant and equipment 40,234 (1,089) Interest income (3,803,835) (2,688,580) Zakat 2,650,000 - Operating profit before working capital changes 18,905,354 24,483,945 Changes in working capital: Deposits, prepayments and other receivables 199, ,634 Amount due from holding foundation (19,518) (198) Amount due (to)/from related companies (254,787) 583,443 Accruals and other payables 1,821,028 (1,898,413) Cash generated from operations 20,651,377 23,967,411 Tax refund 5,772 - Interest received 3,803,835 2,688,580 Net cash flows generated from operating activities 24,460,984 26,655,991 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment 8 (822,459) (1,597,904) Proceeds from disposal of plant and equipment 5,100 1,100 Net cash flows used in investing activities (817,359) (1,596,804) NET DECREASE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR 23,643,625 25,059,187 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 82,541,170 57,481,983 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR ,184,795 82,541,170 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 16

17 Ekuiti Nasional Berhad ( U) The principal activities of the Company are to provide investment management, financial, corporate and management advisory services to a Government-linked private equity fund to promote equitable and sustainable Bumiputera economic participation via the creation of Malaysia s next generation of leading companies. There have been no significant changes in the nature of these activities during the financial year. The Company is a private limited company, incorporated and domiciled in Malaysia. The address of the registered office of the Company is: Tingkat 7, Bangunan Setia 1, 15 Lorong Dungun, Bukit Damansara, Kuala Lumpur. The principal place of business of the Company is: Level 13, Surian Tower, No 1, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan. The principal accounting policies applied in preparing the financial statements are set out below. These policies have been applied to all years presented, unless otherwise stated. 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act, 1965 in Malaysia. The financial statements have been prepared under the historical cost convention, unless otherwise stated in the notes to the financial statements. The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Company s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. Financial Statements Annual Report

18 Ekuiti Nasional Berhad ( U) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.1 Standards, amendments to published standards and interpretations that are applicable and effective The new accounting standards, amendments and improvements to published standards and interpretations that are effective and applicable for the Company s financial year beginning on or after 1 January 2016 are as follows: Amendments to MFRS 116 & MFRS 138 Clarification of Acceptance Methods of Depreciation and Amortisation Annual Improvements to MFRSs Cycle Amendments to MFRS 101 Presentation of financial statement Disclosure Initiative Apart from the new presentation and disclosure requirements as disclosed in the financial statements, the adoption of the above standards and amendments to published standards does not have any other material impact on the Company s financial statements. 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (i) Financial year beginning on/after 1 January 2017 Amendments to MFRS 107 Statement of Cash Flows Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities. Amendments to MFRS 112 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value. In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences. 18

19 Ekuiti Nasional Berhad ( U) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (continued) (ii) Financial year beginning on/after 1 January 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. The complete version of MFRS 9 was issued in November MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. MFRS 15 Revenue from Contracts with Customers (effective from 1 January 2018) replaces MFRS 118 Revenue and MFRS 111 Construction Contracts and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Unless otherwise disclosed, the above standards, amendments to published standards and interpretations to existing standards are not anticipated to have any significant impact on the Company s financial statements in the year of initial application. Financial Statements Annual Report

20 Ekuiti Nasional Berhad ( U) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 PLANT AND EQUIPMENT Plant and equipment are stated at cost, net of the amount of goods and services tax (GST), less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. When significant parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment. Where the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the acquisition cost of the plant and equipment. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is de-recognised to the income statement. All other repairs and maintenance costs are charged to the income statement during the financial year in which they are incurred. Plant and equipment are depreciated on the straight line basis to write off the cost of the assets, or their revalued amounts, to their residual values over their estimated useful lives, summarised as follows: Motor vehicles Furniture and fittings Office equipment Renovation Computer equipment 5 years 5 years 5 years 5 years 3 years Depreciation methods, useful lives and residual values are reviewed and adjusted as appropriate at the end of the reporting year. At the end of each reporting year, the Company assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note 2.2 on impairment of non-financial assets. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the income statement from operations in the financial year the asset is de-recognised. 20

21 Ekuiti Nasional Berhad ( U) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.2 IMPAIENT OF NON-FINANCIAL ASSETS Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indications exist, the asset s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or group of assets ( the cash generating units ). An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. The impairment loss is charged to the income statement and any subsequent increase in recoverable amount is recognised in the income statement. Any reversal is credited to the income statement to the extent of a previously recognised impairment loss. 2.3 FINANCIAL ASSETS Loans and receivables Classification Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve (12) months after the end of the reporting year. These are classified as non-current assets. The Company s loans and receivables comprise of deposits and other receivables, amount due from holding foundation, amount due from related companies and cash and cash equivalents in the statement of financial position Recognition and initial measurement Loans and receivables are initially recognised at fair value plus transaction costs that are directly attributable to its acquisition Subsequent measurement Loans and receivables are subsequently carried at amortised cost using the effective interest method Subsequent measurement impairment of loans and receivables The Company assesses at the end of the reporting year whether there is objective evidence that loans and receivables are impaired. Loans and receivables are impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the loans and receivables that can be reliably estimated. Financial Statements Annual Report

22 Ekuiti Nasional Berhad ( U) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.3 FINANCIAL ASSETS (CONTINUED) Loans and receivables (continued) Subsequent measurement impairment of loans and receivables (continued) If in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement. As at the end of the reporting year, there is no recognition of impairment in the income statement De-recognition Loans and receivables are de-recognised when the rights to receive cash flows from loans and receivables have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. 2.4 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise of cash at bank and deposits that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. 2.5 PROVISIONS Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligations, and when a reliable estimate of the amount can be made. 2.6 FINANCIAL LIABILITIES Classification Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. 22

23 Ekuiti Nasional Berhad ( U) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.6 FINANCIAL LIABILITIES (CONTINUED) Classification (continued) Financial liabilities, within the scope of MFRS 139 Financial Instruments: Recognition and Measurement, are recognised in the statement of financial position when, and only when, the Company becomes party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The Company s financial liabilities include accruals and other payables and amount due to related companies in the statement of financial position Recognition and measurement Financial liabilities are recognised initially at fair value plus directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method De-recognition A financial liability is de-recognised when the obligation under the liability is extinguished when an existing financial liability is replaced by another from the same party on substantially different terms, or the term of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. 2.7 SHARE CAPITAL Ordinary shares are classified as equity. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity. 2.8 REVENUE RECOGNITION Management fees and treasury fees Management fees and treasury fees are recognised on an accrual basis when services are rendered and net of goods and services tax (GST) Interest income Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income shall accrue to the Company. Financial Statements Annual Report

24 Ekuiti Nasional Berhad ( U) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.9 EMPLOYEE BENEFITS Short term employee benefits Wages, salaries, bonuses and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the Company Defined contribution plan The Company contributes to the Employees Provident Fund, the mutual defined contribution plan. Once the contributions have been paid, the Company has no further payment obligations. The Company s contributions to the Employees Provident Fund are charged to the income statement in the financial year to which they relate INCOME TAXES Current tax expense is determined according to Malaysian tax laws and includes all taxes based upon the taxable profits. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates enacted or substantively enacted by the reporting year end are used to determine deferred income tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised ZAKAT The Company only pays zakat on its business. Zakat is calculated based on the net adjusted working capital and it is recognised as an expense in income statement. 24

25 Ekuiti Nasional Berhad ( U) 3 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of the Company s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting year. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liabilities affected in the future. In the process of applying the Company s accounting policies, the Directors and management have made the following judgements, which have the most significant effect on the amounts recognised in the financial statements: Deferred tax As at the end of the financial year, the Company has not recognised a deferred tax asset of 993,932 (2015: 312,879) arising from taxable temporary differences in relation to plant and equipment, based on management s estimates that the temporary differences will reverse during the year of the tax exemption as disclosed in Note 7. 4 FINANCIAL RISK MANAGEMENT 4.1 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Company s overall financial risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Company s financial risk management policies. The Board of Directors reviews these risks based on the approved treasury policies and investment guidelines, which cover the management of these risks. The Company is exposed to interest rate risk, credit risk and liquidity risk. 4.2 INTEREST RATE RISK The Company s exposure to interest rate risk is mainly attributable to its interest bearing assets which are deposits with licensed financial institutions (Note 10). The Company closely monitors the movement of interest rate to reduce the Company s interest rate exposure. At 31 December 2016, if interest rates on deposits with licensed financial institutions had been 100 basis points higher/lower with all other variables held constant, post-tax profit for the year would have been 1,055,000 (2015: 783,000) higher/lower. 4.3 CREDIT RISK The Company s exposure to credit risk is limited as the Company is an investment management company. The Company s exposure to credit risk is on the carrying amount of deposits and other receivables, amount due from holding foundation, amount due from related companies and cash and cash equivalents which are repayable upon demand. Financial Statements Annual Report

26 Ekuiti Nasional Berhad ( U) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.4 LIQUIDITY RISK The Company s exposure to liquidity risk is on the undiscounted contractual payments of accruals and other payables which are short-term and repayable within one year. The Company maintains a level of cash and cash equivalents deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due. 4.5 CAPITAL MANAGEMENT The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to provide returns to the shareholder and to maintain an optimal capital structure to reduce the cost of capital. The Company is not subject to any externally imposed capital requirements. 4.6 FAIR VALUE ESTIMATION OF THE FINANCIAL INSTRUMENTS Financial instruments comprise of financial assets and financial liabilities. Fair value is the amount at which a financial asset could be exchanged or a financial liability settled, between knowledgeable and willing parties in an arm s length transaction. The information presented herein represents the estimated fair values as at the end of the financial year. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. The carrying amounts of current assets and current liabilities approximate their fair value due to the relatively short term nature of these financial instruments. 4.7 FAIR VALUE HIERARCHY Fair value hierarchy disclosure is not applicable to the Company as the Company s assets and liabilities are short term financial instruments for which the carrying amount approximates the fair values. 5 EMPLOYEE BENEFIT COSTS Wages and salaries 14,044,552 13,878,217 Defined contribution plan 2,486,256 2,355,095 Other employee benefits 7,752,362 5,488,073 24,283,170 21,721,385 Included in wages and salaries is Directors emoluments amounting to 2,074,240 (2015: 2,220,341)

27 Ekuiti Nasional Berhad ( U) 6 PROFIT BEFORE TAXATION AND ZAKAT Profit before taxation and zakat is arrived at after charging: Auditors remuneration: - Statutory audit 44,450 43,550 - Non-audit related fees 14,650 13,850 Directors remuneration 2,867,598 2,957,472 Depreciation of plant and equipment 925, ,834 Rental of premises 1,162, ,922 Loss on disposal of plant and equipment 40, and after crediting: Gain on disposal of plant and equipment - 1,089 7 TAXATION Current tax: Malaysian taxation Reconciliation between tax expense and the product of accounting profit multiplied by the Malaysian tax rate is as follows: Profit before taxation and zakat 21,743,811 26,374, Tax calculated at rate of 24% (2015: 25%) 5,218,515 6,593,695 Income not subject to tax (5,899,568) (7,232,008) Effect of temporary differences not recognised* 681, ,313 Taxation - - On 26 November 2010, the Ministry of Finance granted income tax exemption for all statutory business income for a period of five (5) years commencing from year of assessment 2009 until 2013 for the Company. On 5 August 2013, the exemption was extended for an additional period of 5 years commencing from year of assessment 2014 until * No deferred tax liability has been recognised in respect of the temporary differences arising from plant and equipment, based on management s estimates that the temporary differences will reverse during the period of the tax exemption described above. Financial Statements Annual Report

28 Ekuiti Nasional Berhad ( U) 8 PLANT AND EQUIPMENT Motor vehicles Furniture and fittings Office equipment Renovation Computer equipment Total Cost At 1 January , , ,017 1,878,672 2,877,505 6,495,879 Additions - 395,176 14, , ,459 Disposal - - (1,570) (106,060) (182,956) (290,586) At 31 December ,465 1,251, ,627 1,772,612 3,107,652 7,027,752 Accumulated depreciation At 1 January , , ,359 1,084,764 2,202,301 4,378,710 Charge for the financial year 144,696 34,040 17, , , ,144 Disposal - - (211) (30,273) (164,768) (195,252) At 31 December , , ,234 1,234,078 2,587,268 5,108,602 Net book value At 31 December , ,979 45, , ,384 1,919,150 28

29 Ekuiti Nasional Berhad ( U) 8 PLANT AND EQUIPMENT (CONTINUED) Motor vehicles Furniture and fittings Office equipment Renovation Computer equipment Total Cost At 1 January , , , ,403 2,605,292 4,927,864 Additions 314,803 21,570 58, , ,102 1,597,904 Disposal (29,889) (29,889) At 31 December , , ,017 1,878,672 2,877,505 6,495,879 Accumulated depreciation At 1 January , , , ,869 1,778,190 3,609,754 Charge for the financial year 128,362 48,742 13, , , ,834 Disposal (29,878) (29,878) At 31 December , , ,359 1,084,764 2,202,301 4,378,710 Net book value At 31 December ,556 88,843 49, , ,204 2,117,169 Financial Statements Annual Report

30 Ekuiti Nasional Berhad ( U) 9 DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES Deposits 393, ,891 Prepayments 224, ,519 Other receivables , , , CASH AND CASH EQUIVALENTS Cash and bank balances 675,669 4,232,236 Deposits with licensed financial institutions 105,509,126 78,308,934 Bank balances are deposits held at call with licensed financial institutions ,184,795 82,541,170 The weighted average effective interest rate per annum of the deposits with licensed financial institutions as at 31 December 2016 is 3.62% (2015: 3.95%) with an average maturity period of 92 days (2015: 96 days). 11 ACCRUALS AND OTHER PAYABLES Accruals - Corporate social responsibility 926,991 3,068,406 - Professional fees: capacity building 4,206,564 2,253,641 - Communications and annual report 868, ,000 - Zakat 2,650, Employee benefit costs 5,197,212 3,275,157 - Others 1,465,024 2,086,810 Other payables 635, ,470 15,949,512 11,478,

31 Ekuiti Nasional Berhad ( U) 12 SHARE CAPITAL Authorised: Ordinary shares of 1 each At 1 January/31 December 100,000, ,000, Issued and fully paid: Ordinary shares of 1 each At 1 January/31 December 9,900,002 9,900, SIGNIFICANT RELATED PARTY DISCLOSURES Parties are considered related if the party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions The related parties of, and their relationships with the Company as at 31 December 2016, are as follows: Related party Yayasan Ekuiti Nasional Ekuinas Capital Sdn Bhd E-Cap (Internal) One Sdn Bhd E-Cap (Internal) Two Sdn Bhd E-Cap (Internal) Three Sdn Bhd E-Cap (External) One Sdn Bhd E-Cap (External) Two Sdn Bhd Sempena Fokus Sdn Bhd Bendahara 1 Sdn Bhd Integrated Food Group Sdn Bhd Awana Setia Sdn Bhd Prinsip Lagenda Sdn Bhd Simbol Minda Sdn Bhd Ilmu Education Group Sdn Bhd Hallmark Odyssey Sdn Bhd PrimaBaguz Sdn Bhd Tetap Kuasa Sdn Bhd Nexus Leap Sdn Bhd Premier Share Sdn Bhd Premier Agenda Sdn Bhd Icon Offshore Berhad Cosmopoint Sdn Bhd Tenby Educare Sdn Bhd Relationship Holding foundation which is formed by the Government of Malaysia Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Related company Financial Statements Annual Report

32 Ekuiti Nasional Berhad ( U) 13 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED) 13.1 The related parties of, and their relationships with the Company as at 31 December 2016, are as follows: (continued) Related party APIIT Sdn Bhd Orkim Sdn Bhd Coolblog Sdn Bhd PMCare Sdn Bhd Relationship Related company Related company Related company Related company 13.2 Key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel of the Company include all the Directors of the Company who make certain critical decisions in relation to the strategic direction of the Company. Directors remuneration Directors fees 722, ,328 Directors emoluments* 2,074,240 2,220,341 Directors indemnity and insurance 71, ,803 2,867,598 2,957,472 * Included in the Directors emoluments are benefits-in-kind for the Company of 156,000 (2015: 72,000) 13.3 Significant related party transactions In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions. Management fees income E-Cap (Internal) One Sdn Bhd 11,891,314 13,545,830 E-Cap (External) One Sdn Bhd 1,663,293 1,685,625 E-Cap (Internal) Two Sdn Bhd 12,111,163 15,239,247 E-Cap (External) Two Sdn Bhd 709,779 1,149,057 E-Cap (Internal) Three Sdn Bhd 24,764,151 25,135,613 51,139,700 56,755,372 Treasury fees income Ekuinas Capital Sdn Bhd 11,486,845 10,575,302 E-Cap (Internal) One Sdn Bhd - 42 Hallmark Odyssey Sdn Bhd 170,695-11,657,540 10,575,

33 Ekuiti Nasional Berhad ( U) 13 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED) 13.4 Significant related party balances In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are significant related party balances: Amount due from holding foundation Yayasan Ekuiti Nasional 19, Amount due from related companies Ekuinas Capital Sdn Bhd 1,523,832 - Ilmu Education Group Sdn Bhd 180, ,931 E-Cap (Internal) One Sdn Bhd - 62 E-Cap (Internal) Two Sdn Bhd - 643,504 Coolblog Sdn Bhd 31,450 - Lyndarahim Ventures Sdn Bhd - 28,448 Icon Offshore Berhad 82,863 1,319 Cosmopoint Sdn Bhd 50,000 44,752 PrimaBaguz Sdn Bhd 35,640 42,400 Premier Share Sdn Bhd - 2,650 Hallmark Odyssey Sdn Bhd 180,935 - Tenby Educare Sdn Bhd 132,140 39,600 APIIT Sdn Bhd 79,379 76,731 Simbol Minda Sdn Bhd - 877,875 Orkim Sdn Bhd 146,280 - PMCare Sdn Bhd 19,027-2,462,496 2,739,272 Amount due to related companies Ekuinas Capital Sdn Bhd - 544,026 Hallmark Odyssey Sdn Bhd - 37, ,563 The above outstanding balances are unsecured, interest-free and repayable upon demand. 14 AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS The financial statements have been authorised for issue in accordance with a resolution of the Board of Directors. Financial Statements Annual Report

34

35 ExpandingOur Horizons E-Cap (Internal) One Sdn Bhd Financial Statements Annual Report 2016

36 Reports and Statutory FINANCIAL STATEMENTS

37 4-7 Directors Report 8 Statement By Directors 8 Statutory Declaration 9-11 Independent Auditors Report 12 Statement Of Comprehensive Income 13 Statement Of Financial Position 14 Statement Of Changes In Equity 15 Statement Of Cash Flows 16-37

38 E-Cap (Internal) One Sdn Bhd ( M) Directors Report The Directors hereby submit their report and the audited financial statements of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Net loss for the financial year 141,210,672 DIVIDEND No dividend has been paid, declared or proposed since the end of the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December ISSUE OF SHARES During the financial year, the Company issued 92 ordinary shares at par value of 1 each and 126,047 redeemable preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company during the financial year from ended 31 December 2016 is as follows: Type of share Purpose of issue Number of shares Par value Premium Terms of issue Date of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 32, Cash, at June 2016 Ordinary Working capital Cash, at par 30 June 2016 Preference Working capital 32, Cash, at September 2016 Ordinary Working capital Cash, at par 30 December 2016 Preference Working capital 23, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 38, Cash, at 100 The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. The new preference shares issued during the financial year rank pari passu in all respects with the existing preference shares of the Company. There were no other changes in the authorised, issued and fully paid capital of the Company during the financial year. 4

39 E-Cap (Internal) One Sdn Bhd ( M) Directors Report RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements and notes to the financial statements. DIRECTORS The Directors who have held office since the date of last report are as follows: Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda Syed Yasir Arafat Bin Syed Abd Kadir In accordance with Article 66 of the Company s Articles of Association, Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda and Syed Yasir Arafat Bin Syed Abd Kadir shall retire from the Board in the forthcoming Annual General Meeting and being eligible, offers themselves for re-election. DIRECTORS INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors Shareholdings maintained by the Company in accordance with Section 59 of the Companies Act, 2016, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporations during the financial year. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the date of last report, no Director has received or become entitled to receive a benefit 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. Financial Statements Annual Report

40 E-Cap (Internal) One Sdn Bhd ( M) Directors Report STATUTORY INFOATION ON THE FINANCIAL STATEMENTS Before the financial statements of the Company were made out, the Directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there are no known bad debts that had been written off and that allowance need not be made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) (d) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Company misleading. 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, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Company which has arisen since the end of the financial year. In the opinion of the Directors: (a) (b) the results of the Company s operations for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the financial year in which this report is made. 6

41 E-Cap (Internal) One Sdn Bhd ( M) Directors Report IMMEDIATE HOLDING COMPANY AND ULTIMATE HOLDING FOUNDATION The Directors regard Ekuinas Capital Sdn Bhd, a company incorporated in Malaysia as the immediate holding company. The Directors regard Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company s ultimate holding foundation. SUBSIDIARIES Details of subsidiaries are set out in Note 7 to the financial statements. AUDITORS REMUNERATION Details of auditors remuneration are set out in Note 5 to the financial statements. There were no indemnity given or insurance effected for any auditor of the Company. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution. RAJA TAN SRI DATO SERI ARSHAD BIN RAJA TUN UDA DIRECTOR SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR Kuala Lumpur 14 March 2017 Financial Statements Annual Report

42 E-Cap (Internal) One Sdn Bhd ( M) Statement By Directors Pursuant To Section 251(2) Of The Companies Act, 2016 We, Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda and Syed Yasir Arafat bin Syed Abd Kadir, being two of the Directors of E-Cap (Internal) One Sdn Bhd, state that, in the opinion of the Directors, the financial statements set out on pages 12 to 37 have been properly drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2016 and of the results and cash flows of the Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Signed on behalf of the Board of Directors in accordance with their resolution. RAJA TAN SRI DATO SERI ARSHAD BIN RAJA TUN UDA DIRECTOR SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR Kuala Lumpur 14 March 2017 Statutory Declaration Pursuant To Section 251(1) Of The Companies Act, 2016 I, Mazhairul bin Jamaludin, being the Officer primarily responsible for the financial management of E-Cap (Internal) One Sdn Bhd, do solemnly and sincerely declare that the financial statements set out on pages 12 to 37 are, in my opinion, 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, MAZHAIRUL BIN JAMALUDIN GROUP CHIEF FINANCIAL OFFICER Subscribed and solemnly declared by the above named Mazhairul bin Jamaludin at Kuala Lumpur before me, on 14 March COMMISSIONER FOR OATHS 8

43 E-Cap (Internal) One Sdn Bhd ( M) Independent Auditors Report To The Member Of E-Cap (Internal) One Sdn Bhd (Incorporated In Malaysia) (Company No: M) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of E-Cap (Internal) One Sdn Bhd ( the Company ) give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. What we have audited We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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 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 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 Directors Report, Statement by Directors and Statutory Declaration but does not include the financial statements of the Company and our auditors report thereon. Our opinion on the financial statements 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 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 this other information, we are required to report that fact. We have nothing to report in this regard. Financial Statements Annual Report

44 E-Cap (Internal) One Sdn Bhd ( M) Independent Auditors Report To The Member Of E-Cap (Internal) One Sdn Bhd (Incorporated In Malaysia) (Company No: M) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Responsibilities of the directors for the financial statements The directors of the Company are responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Company, the directors are responsible for assessing the Company s ability to continue as a 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 Company or to cease operations, or have no realistic alternative but to do so. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements 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 International Standards on Auditing 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 in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) Identify and assess the risks of material misstatement of the financial statements 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 Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. (d) 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 Company s ability 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 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 Company to cease to continue as a going concern. (e) Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. 10

45 E-Cap (Internal) One Sdn Bhd ( M) Independent Auditors Report To The Member Of E-Cap (Internal) One Sdn Bhd (Incorporated In Malaysia) (Company No: M) REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. OTHER MATTERS This report is made solely to the member of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants DATO MOHAMMAD FAIZ BIN MOHAMMAD AZMI (No. 2025/03/18 (J)) Chartered Accountant Kuala Lumpur 14 March 2017 Financial Statements Annual Report

46 E-Cap (Internal) One Sdn Bhd ( M) Statement Of Comprehensive Income INCOME Net unrealised loss on investments at fair value through profit or loss 7 (145,001,890) (104,102,720) Realised gain on disposal of investment 12,327,948 - Dividend income ,966,391 Interest income Other income 4,108,351 - (128,565,591) (102,136,051) Note EXPENSES Management fees 12.3 (12,604,794) (14,138,960) Other expenses (40,287) (15,134,659) Loss before taxation 5 (141,210,672) (131,409,670) Taxation TOTAL COMPREHENSIVE LOSS AND NET LOSS FOR THE FINANCIAL YEAR (141,210,672) (131,409,670) The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

47 E-Cap (Internal) One Sdn Bhd ( M) Statement Of Financial Position As At 31 December 2016 NON-CURRENT ASSET Investments at fair value through profit or loss 7 705,825, ,666,034 Note CURRENT ASSETS Amount due from immediate holding company ,240,086 12,689,201 Cash and cash equivalents 8 106, ,149 56,346,235 12,795,350 CURRENT LIABILITIES Provision and accruals 9 82,735,400 86,926,317 Amount due to subsidiaries ,410,883 40,903,661 Amount due to a related company ,146, ,830,040 NET CURRENT LIABILITIES (84,800,050) (115,034,690) 621,025, ,631,344 FINANCED BY: Share capital 10 42,195 40,842 Share premium ,919, ,316,364 Capital redemption reserve 78,664 78,664 Retained earnings 205,984, ,195, ,025, ,631,344 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

48 E-Cap (Internal) One Sdn Bhd ( M) Statement Of Changes In Equity Issued and fully paid ordinary shares of 1 each Issued and fully paid redeemable preference shares of 0.01 each Non-distributable Distributable Note Number of shares Share capital Number of shares Share capital Share premium Capital redemption reserve Retained earnings At 1 January ,023,566 40, ,316,364 78, ,195, ,631,344 Issuance of shares during the financial year 10, ,047 1,261 12,603, ,604,792 Total comprehensive loss for the financial year (141,210,672) (141,210,672) At 31 December ,149,613 41, ,919,803 78, ,984, ,025,464 Total At 1 January ,852,177 38, ,179,178 78, ,605, ,902,055 Issuance of shares during the financial year 10, ,389 1,714 17,137, ,138,959 Total comprehensive loss for the financial year (131,409,670) (131,409,670) At 31 December ,023,566 40, ,316,364 78, ,195, ,631,344 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

49 E-Cap (Internal) One Sdn Bhd ( M) Statement Of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Loss before taxation Note (141,210,672) (131,409,670) Adjustment for: Dividend income - (1,966,391) Interest income - (278) Net unrealised loss on investments at fair value through profit or loss 145,001, ,102,720 Gain on disposal of investment (12,327,948) - Operating loss before working capital changes (8,536,730) (29,273,619) Changes in working capital: Provision and accruals (4,190,917) 15,028,972 Amount due from immediate holding company (43,550,885) (15,593,294) Amount due to subsidiaries 17,507,222 29,595,601 Amount due (to)/from a related company (60) 39 Cash flows used in operating activities (38,771,370) (242,301) Dividend received - 1,966,391 Interest received Net cash flows (used in)/generated from operating activities (38,771,370) 1,724,368 CASH FLOWS FROM INVESTING ACTIVITIES Additional capital call for investments 7.1 (8,833,422) (18,863,083) Proceeds from disposal of investment ,000,000 - Net cash flows generated from/(used in) investing activities 26,166,578 (18,863,083) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of ordinary shares Proceeds from the issuance of redeemable preference shares 10, 11 12,604,700 17,138,900 Net cash flows generated from financing activities 12,604,792 17,138,959 NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 106, ,905 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 8 106, ,149 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

50 E-Cap (Internal) One Sdn Bhd ( M) The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. The Company is a private limited company, incorporated and domiciled in Malaysia. The address of the registered office of the Company is: Tingkat 7, Bangunan Setia 1, 15, Lorong Dungun, Bukit Damansara, Kuala Lumpur. The principal place of business of the Company is: Level 13, Surian Tower, No 1, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan. The principal accounting policies applied in preparing the financial statements are set out below. These policies have been applied to all years presented, unless otherwise stated. 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act, 1965 in Malaysia. The financial statements have been prepared under the historical cost convention, unless otherwise stated in the notes to the financial statements. The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Company s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. The Company recorded net loss of 141,210,672 (2015: 131,409,670) for the financial year ended 31 December 2016 and as of that date, the Company recorded net current liabilities of 84,800,050 (2015: 115,034,690). The immediate holding company, Ekuinas Capital Sdn Bhd, has indicated its intention to provide continuous financial support to the Company so as to enable the Company to meet its liability as and when they fall due and to carry on its business without any significant curtailment of its operations. In view of the foregoing, the Directors consider that it is appropriate to prepare the financial statements of the Company on a going concern basis. 16

51 E-Cap (Internal) One Sdn Bhd ( M) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.1 Standards, amendments to published standards and interpretations that are applicable and effective The new accounting standards, amendments and improvements to published standards and interpretations that are effective and applicable for the Company s financial year beginning on or after 1 January 2016 are as follows: Annual Improvements to MFRSs Cycle Amendments to MFRS 101 Presentation of financial statement Disclosure Initiative Apart from the new presentation and disclosure requirements as disclosed in the financial statements, the adoption of the above standards and amendments to published standards does not have any other material impact on the Company s financial statements. 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (i) Financial year beginning on/after 1 January 2017 Amendments to MFRS 107 Statement of Cash Flows Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities. Amendments to MFRS 112 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value. In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences. (ii) Financial year beginning on/after 1 January 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. The complete version of MFRS 9 was issued in November MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Financial Statements Annual Report

52 E-Cap (Internal) One Sdn Bhd ( M) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (continued) (ii) Financial year beginning on/after 1 January 2018 (continued) For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. MFRS 15 Revenue from Contracts with Customers (effective from 1 January 2018) replaces MFRS 118 Revenue and MFRS 111 Construction Contracts and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Unless otherwise disclosed, the above standards, amendments to published standards and interpretations to existing standards are not anticipated to have any significant impact on the Company s financial statements in the year of initial application. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 INVESTMENT ENTITY AND CONSOLIDATION Investment Entity The Company has been deemed to meet the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements as the following conditions exist: (a) (b) (c) The Company obtained funds from its investor for the purpose of providing investment management services; The Company commits to its investor that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and The performance of investments made through its subsidiaries measured and evaluated on a fair value basis. The Directors have considered the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements and are satisfied that the Company meets the typical characteristics ascribed. The absence of any single characteristic does not disqualify the Company from being classified as an Investment Entity. The Company being an Investment Entity is exempted from preparing consolidated financial statements. 18

53 E-Cap (Internal) One Sdn Bhd ( M) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 INVESTMENT ENTITY AND CONSOLIDATION (CONTINUED) Subsidiaries The Company does not have any other subsidiaries other than those determined to be controlled subsidiary investments. Controlled subsidiary investments are measured at fair value through profit or loss and not consolidated, in accordance with MFRS 10. The fair value of controlled subsidiary investments is determined on a consistent basis to all other investments measured at fair value through profit or loss as described in Note 4.7. Controlled subsidiary investments include the special purpose entities (SPEs) over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding of an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies. The SPEs are incorporated for the purpose of holding underlying investments (the portfolio companies ) on behalf of the Company; as new SPEs are incorporated for each investment, there are no business combinations. The SPEs have no operations other than their respective investment in portfolio companies and providing a vehicle for the onward sale of a portfolio investment. The SPEs are also reflected at fair value, with the key fair value driver being the investment in the underlying portfolio company investments that the SPEs hold on behalf of the Company. None of the SPEs required consolidation as the SPEs are not deemed to be providing investment related services, as defined by MFRS 10. Where the Company is deemed to control an underlying portfolio company, whereby the control be via voting rights or through the ability to direct the relevant activities in return for access to a significant portion of the variable gains and losses derived from those relevant activities, the underlying portfolio company and its results are also not consolidated and are instead reflected at fair value through the profit or loss (through the reflection of the respective SPE that holds the underlying portfolio company value in the Company s financial statements). Movements in the fair value of the Company s portfolio companies may expose the Company to potential gains or losses in the income statement. A subsidiary is derecognised on its disposal. The difference between the net disposal proceeds and the carrying fair value is recognised in the income statement. Financial Statements Annual Report

54 E-Cap (Internal) One Sdn Bhd ( M) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 INVESTMENT ENTITY AND CONSOLIDATION (CONTINUED) Associates An associate is an entity, including an unincorporated entity such as partnership, over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Investments that are held as part of the Company s investment portfolio are carried in the statement of financial position at fair value through profit or loss even though the Company may have significant influence over those companies. This treatment is permitted by MFRS 128, Investment in Associates, which allows investments that are held by Investment Entities to be recognised and measured as at fair value through profit or loss in accordance with MFRS 139 and MFRS 13, Fair Value Measurement, with changes in fair value recognised in the income statement in the period of the change. An associate is derecognised on its disposal. The difference between the net disposal proceeds and the carrying fair value is recognised in the income statement. 2.2 FINANCIAL ASSETS Financial assets designated at fair value through profit or loss Classification Financial assets designated at fair value through profit or loss at inception are financial assets that are acquired as part of the principal activities of the Company. They are presented as non-current asset. The Company s financial assets designated at fair value through profit or loss comprise of investments at fair value through profit or loss in the statement of financial position Recognition and initial measurement Financial assets designated at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed as incurred in the income statement Subsequent measurement Subsequent to initial recognition, all financial assets designated at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value are presented in the income statement in the year in which they arise De-recognition A financial asset is de-recognised when the rights to receive cash flows from financial assets designated at fair value through profit or loss have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. 20

55 E-Cap (Internal) One Sdn Bhd ( M) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.2 FINANCIAL ASSETS (CONTINUED) Loans and receivables Classification Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve (12) months after the end of the reporting year. These are classified as non-current assets. The Company s loans and receivables comprise of amount due from immediate holding company and cash and cash equivalents in the statement of financial position Recognition and initial measurement Loans and receivables are initially recognised at fair value plus transaction costs that are directly attributable to its acquisition Subsequent measurement Loans and receivables are subsequently carried at amortised cost using the effective interest method Subsequent measurement impairment of loans and receivables The Company assesses at the end of the reporting year whether there is objective evidence that the loans and receivables are impaired. Loan and receivables are impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the loans and receivables that can be reliably estimated. If in a subsequent year, the amount of the impairment loss decrease and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement. As at the end of the reporting year, there is no recognition at impairment in the income statement De-recognition Loans and receivables are de-recognised when the rights to receive cash flows from loans and receivables have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial Statements Annual Report

56 E-Cap (Internal) One Sdn Bhd ( M) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.3 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise of bank balances that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. 2.4 PROVISIONS Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligations, and when a reliable estimate of the amount can be made. 2.5 FINANCIAL LIABILITIES Classification Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Company becomes party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The Company s financial liabilities include provision and accruals, amount due to subsidiaries and amount due to a related company in the statement of financial position Recognition and measurement Financial liabilities are recognised initially at fair value plus directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method De-recognition A financial liability is de-recognised when the obligation under the liability is extinguished when an existing financial liability is replaced by another from the same party on substantially different terms, or the term of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. the difference in the respective carrying amounts is recognised in the income statement. 2.6 SHARE CAPITAL Ordinary shares are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity. 22

57 E-Cap (Internal) One Sdn Bhd ( M) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.7 REVENUE RECOGNITION Dividend income Dividend income is recognised when the right to receive payment is established Interest income Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income shall accrue to the Company. 2.8 CARRIED INTEREST Carried interest represents the fees payable to the Fund Management Company and is computed and provided for at each financial year end based on the valuation of the investments in the Fund s portfolio of companies, after accounting for appropriate outflow payments/inflow receipts in accordance with the terms stated in the Global Fund Management Agreement. Any increase or decrease in carried interest is recognised in the income statement. 2.9 INCOME TAXES Current tax expense is determined according to Malaysian tax laws and includes all taxes based upon the taxable profits. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates enacted or substantively enacted by the reporting year are used to determine deferred income tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Financial Statements Annual Report

58 E-Cap (Internal) One Sdn Bhd ( M) 3 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of the Company s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting year. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. In the process of applying the Company s accounting policies, the Directors and management have made the following judgements which have the most significant effect on the amounts recognised in the financial statements: (a) Valuation of unquoted investments The Company carries its investments at fair value, with changes in fair values being recognised in the income statement. The Company estimates the fair values of its unquoted investments based on the net assets valuation method and enterprise valuation method as recommended by the International Private Equity and Venture Capital Valuation Guidelines. The Directors believe that net asset valuation method is a fair representation of fair value per MFRS 13 for certain unquoted investments as the net assets of the Company s investments have been adjusted to approximate fair value. Where expectations differ from original estimates, the difference will impact the fair value of the unquoted investments. Under the enterprise valuation method, the Company applied a marketability and liquidity discount rate on the selected comparable companies earning multiples in deriving the fair value of the unquoted investments. (b) Carried interest Carried interest represents the amount payable to Ekuiti Nasional Berhad, the Fund Management Company, based on the valuation of investments in the Fund s portfolio of companies. Significant judgements are required in determining the extent of the carried interest expense to be recognised which is dependent on the valuation of the Fund s portfolio. Where expectations differ from original estimates, the difference will impact the recognition of carried interest. 24

59 E-Cap (Internal) One Sdn Bhd ( M) 4 FINANCIAL RISK MANAGEMENT 4.1 Financial risk management objectives and policies The Company s overall financial risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Company s financial risk management policies. The Board reviews these risks based on the approved treasury policies and investment guidelines, which cover the management of these risks. The Company is exposed to market price risk, credit risk and liquidity risk. 4.2 Market price risk The fair value of unquoted investments are based on enterprise valuation method and net assets valuation method which have been adjusted to approximate fair value also. The Company is therefore exposed to market price risk as the adjustments to net asset value are made based on valuation methods as recommended by the International Private Equity and Venture Capital Valuations Guidelines to derive a fair value based on multiples of comparable listed companies. The impact of a higher/lower selected comparable companies discounted earnings multiples is disclosed in Note Credit risk The Company s exposure to credit risk is limited as the Company is an investment holding company. The Company s exposure to credit risk is on the carrying amount of amount due from immediate holding company and cash and cash equivalents. 4.4 Liquidity risk The Company s exposure to liquidity risk is limited as the Company is an investment holding company and its cash management and treasury functions are managed by Ekuiti Nasional Berhad ( Ekuinas ), a related company. Furthermore, the Company has the ability to obtain funding through the immediate holding company to ensure settlement of all transaction costs and expenses. The Company s exposure to liquidity risk is on the undiscounted contractual payment of provision and accruals which are short term and repayable within one year, as well as amount due to subsidiaries, and amount due to a related company all of which are repayable upon demand. The Company maintains a level of cash and cash equivalents deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due. 4.5 Capital management The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to provide returns to the shareholder and to maintain an optimal capital structure to reduce the cost of capital. The Company is not subject to any externally imposed capital requirements. Financial Statements Annual Report

60 E-Cap (Internal) One Sdn Bhd ( M) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.6 Fair value estimation of the financial instruments Financial instruments comprise of financial assets and financial liabilities. Fair value is the amount at which a financial asset could be exchanged or a financial liability settled, between knowledgeable and willing parties in an orderly transaction between market participants at the measurement date. The information presented herein represents the estimates of fair values as at the end of the financial year. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. Methodologies and assumptions had been used in deriving the fair values of the investments at fair value through profit or loss at the end of the financial year as disclosed in Note 4.7 to the financial statements. The carrying amounts of current assets and current liabilities approximate their fair value due to the relatively short term nature of these financial instruments. 4.7 Fair value hierarchy The different levels have been defined as follows: (i) (ii) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and (iii) Level 3 inputs are unobservable inputs that have been applied in the models to value the respective asset or liability. The following table presents the Company s financial instruments that are measured at fair value, other than the short term financial instruments which falls under Level 3 in the fair value hierarchy. Financial asset Investments at fair value through profit or loss 705,825, ,666,

61 E-Cap (Internal) One Sdn Bhd ( M) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.7 Fair value hierarchy (continued) Investments classified within Level 3 have significant unobservable inputs, as they are not quoted in active markets. As observable prices are not available for this investment, the fair value of the unquoted investment is based on valuation methods as recommended by the International Private Equity and the Venture Capital Valuation Guidelines, namely net assets valuation method and enterprise valuation method. The main input into the net assets valuation method for these unquoted investments is the net assets value ( NAV ) of the investments which have been adjusted to approximate the fair value. The main input into the enterprise valuation method for this unquoted investment include earnings before interest, taxes, depreciation and amortisation ( EBITDA ), comparable companies earnings multiple and marketability discount. In assessing fair value, management of Ekuiti Nasional Berhad (Fund Management Company) performs quarterly valuation assessments of all portfolio companies and these will be tabled to the Board of Directors on a quarterly basis. The following table presents the movement in Level 3 financial instruments for the financial year ended 31 December 2016: Investments at fair value through profit or loss At 1 January 864,666, ,905,671 Additional capital call for investments 8,833,422 18,863,083 Net unrealised loss on investments at fair value through profit or loss (145,001,890) (104,102,720) Disposal of investment (22,672,052) - At 31 December 705,825, ,666, Financial Statements Annual Report

62 E-Cap (Internal) One Sdn Bhd ( M) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.7 Fair value hierarchy (continued) Significant unobservable inputs The following table discloses the valuation techniques and significant unobservable inputs by the Company for assets recognised at fair value and classified as Level 3 along with the range of values used for those significant unobservable inputs. Valuation technique Significant unobservable inputs Range of unobservable inputs Reasonable possible shift Change in valuation Fair value Asset Investment in subsidiaries 705,825,514 NAV* NAV* - +/-5% +/-35,291, Investment in subsidiaries 841,993,982 NAV* NAV* - +/- 5% +/-42,099,000 Investment in an associate 22,672,052 Enterprise valuation Discounted multiple 6x-11x +/- 5% +/-1,134,000 * The detailed impact of selecting a higher/lower company discounted earning multiple which is used in determining NAV is disclosed in the financial statements of the respective subsidiaries. Valuation process applied by the Company for Level 3 fair value The Company has an established framework in respect to the measurement of fair values of financial instruments. This includes a team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to senior management. The team regularly reviews significant unobservable inputs and valuation adjustments. 28

63 E-Cap (Internal) One Sdn Bhd ( M) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.8 Financial instruments by category Loans and receivable/ other liabilities Designated at fair value through profit or loss Loans and receivable/ other liabilities Designated at fair value through profit or loss Financial assets Investments at fair value through profit or loss - 705,825, ,666,034 Amount due from immediate holding company 56,240,086-12,689,201 - Cash and cash equivalents 106, ,149 - Total 56,346, ,825,514 12,795, ,666,034 Financial liabilities Accrulas 82,735,400-86,926,317 - Amount to subsidiaries 58,410,883-40,903,661 - Amount due to a related company Total 141,146, ,830,040-5 LOSS BEFORE TAXATION Loss before taxation is arrived at after charging: Auditors remuneration - statutory audit fee 26,450 90,100 - non-audit fee (portfolio reporting) 12,550 12,350 39, , Financial Statements Annual Report

64 E-Cap (Internal) One Sdn Bhd ( M) 6 TAXATION Current tax: Malaysian taxation Reconciliation between tax expense and the product of accounting loss multiplied by the Malaysian tax rate is as follows: Loss before taxation (141,210,672) (131,409,670) Tax calculated at rate 24% (2015: 25%) (33,890,561) (32,852,418) Income not subject to tax - (491,667) Expenses not deductible for tax purpose 33,890,561 33,344,085 Taxation - - On 26 November 2010, the Ministry of Finance granted income tax exemption on the statutory business income for a period of five (5) years commencing from year of assessment 2009 until 2015 for the Company. On 5 August 2013, the exemption was extended for an additional period of 5 years commencing from year of assessment 2014 until 2018 for the company. 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Investment in subsidiaries (Note 7.1) 705,825, ,993,982 Investment in an associate (Note 7.2) - 22,672, ,825, ,666,

65 E-Cap (Internal) One Sdn Bhd ( M) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.1 Investment in subsidiaries Unquoted shares, at fair value: At 1 January 841,993, ,605,671 Additional capital call for investments 8,833,422 18,863,083 Net unrealised loss on investments at fair value through profit or loss (145,001,890) (74,474,772) At 31 December 705,825, ,993,982 The details of the investment in subsidiaries are as follows: Name Country of incorporation Principal activity Bendahara 1 Sdn Bhd* Malaysia Investment holding Simbol Minda Sdn Bhd*** Malaysia Investment holding Integrated Food Group Sdn Bhd** Malaysia Investment holding Hallmark Odyssey Sdn Bhd* Malaysia Investment holding Subsidiary of Simbol Minda Sdn Bhd Ilmu Education Group Sdn Bhd*** Malaysia Investment holding Relationship Company s effective interest 2016 % 2015 % Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiaries of Integrated Food Group Sdn Bhd Prinsip Lagenda Sdn Bhd** Malaysia Investment holding Awana Setia Sdn Bhd** Malaysia Investment holding CoolBlog Apps Sdn Bhd** Malaysia Investment holding Subsidiary Subsidiary Subsidiary The significant investment activity during the financial year ended 31 December 2016 were as follows: (a) On 28 March 2016, the Company via Prinsip Lagenda Sdn Bhd had divested its entire equity interest in Lyndarahim Ventures Sdn Bhd, a company incorporated in Malaysia for a total cash consideration of 15,030,000. Financial Statements Annual Report

66 E-Cap (Internal) One Sdn Bhd ( M) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.1 Investment in subsidiaries (continued) The details of the investment in subsidiaries are as follows (continued): Name Country of incorporation Principal activity Subsidiary of Hallmark Odyssey Sdn Bhd Icon Offshore Berhad *@ Malaysia Investment holding Relationship Company s effective interest 2016 % 2015 % Subsidiary * Audited by PricewaterhouseCoopers, Malaysia ** Audited by KPMG, Malaysia *** Audited by Ernst & Young, Listed on the Bursa Malaysia Stock Exchange 7.2 Investment in an associate Unquoted shares, at fair value: At 1 January 22,672,052 52,300,000 Net unrealised loss on investment at fair value through profit or loss - (29,627,948) Disposal of investment (Note A) (22,672,052) - At 31 December - 22,672,

67 E-Cap (Internal) One Sdn Bhd ( M) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.2 Investment in an associate (continued) The details of the investment in an associate are as follows: Name Forma South East Asia Holdings**** Country of incorporation Republic of Mauritius Principal activity Investment holding Relationship Company s effective interest 2016 % 2015 % Associate **** Audited by Crowe Horwath (Mur) Co. Note A On 1 August 2016, the Company had disposed its entire equity interest in Forma South East Asia Holdings for a total cash consideration of 35,000, CASH AND CASH EQUIVALENTS Bank balances 106, , PROVISION AND ACCRUALS Provision for carried interest 82,690,516 86,798,867 Accruals 44, ,450 82,735,400 86,926,317 Provision and accruals are non-interest bearing Financial Statements Annual Report

68 E-Cap (Internal) One Sdn Bhd ( M) 10 SHARE CAPITAL Authorised Issued and fully paid Ordinary shares of 1 each At 1 January 100,000, ,000, Issuance of shares during the financial year At 31 December 100,000, ,000, Redeemable preference shares of 0.01 each At 1 January 90,000 90,000 40,236 38,552 Issuance of shares during the financial year - - 1,261 1,714 At 31 December 90,000 90,000 41,497 40,236 Total 100,090, ,090,000 42,195 40,842 The main features of the redeemable preference shares ( RPS ) are as follows: The holders of the shares shall be entitled to any dividend declared. The RPS shall rank pari passu among themselves and in priority of ordinary shares. The holders of the RPS shall be entitled to receive all notices, accounts and report which holder of the ordinary shares are entitled to. The holders of the RPS shall only be entitled to vote at the meetings convened for the purpose of transacting to the following items of the business: (a) (b) (c) Variation, whether directly or indirectly of the rights attached to the RPS. Winding up of the Company. Such other circumstances as may be expressly provided under law from time to time in respect of preference shares. Subject to the Companies Act, 1965, the Company shall have the right at any time, to redeem all or part of the RPS at a price of 100 per RPS ( Redemption Amount ). The RPS are not convertible into ordinary shares or any other classes of shares in the Company. The RPS are classified as equity as they are redeemable but only at the Company s option, and any dividends are discretionary. 34

69 E-Cap (Internal) One Sdn Bhd ( M) 10 SHARE CAPITAL (CONTINUED) During the financial year, the Company issued 92 ordinary shares at par value of 1 each and 126,047 redeemable preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company during the financial year from ended 31 December 2016 is as follows: Type of share Purpose of issue Number of shares Par value Premium Terms of issue Date of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 32, Cash, at June 2016 Ordinary Working capital Cash, at par 30 June 2016 Preference Working capital 32, Cash, at September 2016 Ordinary Working capital Cash, at par 30 December 2016 Preference Working capital 23, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 38, Cash, at SHARE PREMIUM At 1 January 402,316, ,179,178 Issuance of shares during the financial year 12,603,439 17,137,186 At 31 December 414,919, ,316, Financial Statements Annual Report

70 E-Cap (Internal) One Sdn Bhd ( M) 12 SIGNIFICANT RELATED PARTY DISCLOSURES Parties are considered related if the party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions The related parties of, and their relationship with the Company, are as follows: Related party Yayasan Ekuiti Nasional Ekuinas Capital Sdn Bhd Ekuiti Nasional Berhad Integrated Food Group Sdn Bhd Simbol Minda Sdn Bhd Bendahara 1 Sdn Bhd Hallmark Odyssey Sdn Bhd Forma South East Asia Holdings Relationship Ultimate holding foundation which is formed by the Government of Malaysia Immediate holding company Related company Subsidiary company Subsidiary company Subsidiary company Subsidiary company Associate company 12.2 Key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel of the Company includes all the Directors of the Company who make certain critical decisions in relation to the strategic direction of the Company. The Company has no key management personnel compensation during the financial year Significant related party transaction In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions. Management fee expense Ekuiti Nasional Berhad (12,604,794) (14,138,960) Treasury fee expense Ekuiti Nasional Berhad - (42) Dividend income Forma South East Asia Holdings - 1,966,391 36

71 E-Cap (Internal) One Sdn Bhd ( M) 12 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED) 12.4 Significant related party balances Included in the Company s statement of financial position are the following significant related party balances: Amount due from immediate holding company Ekuinas Capital Sdn Bhd 56,240,086 12,689, Amount due to subsidiaries Simbol Minda Sdn Bhd (2,272,780) - Integrated Food Group Sdn Bhd (45,441,924) (30,410,576) Hallmark Odyssey Sdn Bhd (10,696,179) (10,493,085) (58,410,883) (40,903,661) Amount due to a related company Ekuiti Nasional Berhad (2) (62) The above outstanding balances are unsecured, interest-free, and repayable upon demand. 13 AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS The financial statements have been authorised for issue in accordance with a resolution of the Board of Directors. Financial Statements Annual Report

72

73 ExpandingOur Horizons E-Cap (Internal) Two Sdn Bhd Financial Statements Annual Report 2016

74 Reports and Statutory FINANCIAL STATEMENTS

75 4-7 Directors Report 8 Statement By Directors 8 Statutory Declaration 9-11 Independent Auditors Report 12 Statement Of Comprehensive Income 13 Statement Of Financial Position 14 Statement Of Changes In Equity 15 Statement Of Cash Flows 16-37

76 E-Cap (Internal) Two Sdn Bhd ( X) Directors Report The Directors have pleasure in submitting their report and the audited financial statements of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Net profit for the financial year 152,151,915 DIVIDEND No dividend has been paid, declared or proposed since the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December ISSUE OF SHARES During the financial year, the Company issued 266 ordinary shares at par value of 1 each and 1,327,378 preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company during the financial year ended 31 December 2016 is as follows: Type of share Purpose of issue Number of shares Par value Premium Terms of issue Date of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 106, Cash, at June 2016 Ordinary Working capital Cash, at par 30 June 2016 Preference Working capital 426, Cash, at September 2016 Ordinary Working capital Cash, at par 30 September 2016 Preference Working capital 493, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 301, Cash, at 100 The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. The new preference shares issued during the financial year rank pari passu in all respects with the existing preference shares of the Company. There were no other changes in the authorised, issued and fully paid capital of the Company during the financial year. 4

77 E-Cap (Internal) Two Sdn Bhd ( X) Directors Report RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements and notes to the financial statements. DIRECTORS The Directors who have held office since the date of last report are as follows: Syed Yasir Arafat bin Syed Abdul Kadir Mazhairul bin Jamaludin In accordance with Article 66 of the Company s Article of Association, there will be no retirement by rotation in the subsequent Annual General Meeting since there are only two directors being in office at the end of the financial year. DIRECTORS INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors Shareholdings maintained by the Company in accordance with Section 59 of the Companies Act, 2016, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporations during the financial year. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the date of last report, no Director has received or become entitled to receive a benefit 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. Financial Statements Annual Report

78 E-Cap (Internal) Two Sdn Bhd ( X) Directors Report STATUTORY INFOATION ON THE FINANCIAL STATEMENTS Before the financial statements of the Company were made out, the Directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) (d) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Company misleading. 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, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Company which has arisen since the end of the financial year. In the opinion of the Directors: (a) (b) the results of the Company s operations for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the financial year in which this report is made. 6

79 E-Cap (Internal) Two Sdn Bhd ( X) Directors Report IMMEDIATE HOLDING COMPANY AND ULTIMATE HOLDING FOUNDATION The Directors regard Ekuinas Capital Sdn Bhd, a company incorporated in Malaysia as the immediate holding company. The Directors regard Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company s ultimate holding foundation. SUBSIDIARIES Details of subsidiaries are set out in Note 7 to the financial statments. AUDITORS REMUNERATION Details of auditors remuneration are set out in Note 5 to the financial statements. There were no indemnity given or insurance effected for any auditor of the Company. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution. SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Financial Statements Annual Report

80 E-Cap (Internal) Two Sdn Bhd ( X) Statement By Directors Pursuant To Section 251(2) Of The Companies Act, 2016 We, Syed Yasir Arafat bin Syed Abd Kadir and Mazhairul bin Jamaludin, being two of the Directors of E-Cap (Internal) Two Sdn Bhd, state that, in the opinion of the Directors, the financial statements set out on pages 12 to 37 have been properly drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2016 and of the results and cash flows of the Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Signed on behalf of the Board of Directors in accordance with their resolution. SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Statutory Declaration Pursuant To Section 251(1) Of The Companies Act, 2016 I, Mazhairul bin Jamaludin, being the Officer primarily responsible for the financial management of E-Cap (Internal) Two Sdn Bhd, do solemnly and sincerely declare that the financial statements set out on pages 12 to 37 are, in my opinion, 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, MAZHAIRUL BIN JAMALUDIN GROUP CHIEF FINANCIAL OFFICER Subscribed and solemnly declared by the above named Mazhairul bin Jamaludin at Kuala Lumpur before me, on 14 March COMMISSIONER FOR OATHS 8

81 E-Cap (Internal) Two Sdn Bhd ( X) Independent Auditors Report To The Member Of E-Cap (Internal) Two Sdn Bhd (Incorporated In Malaysia) (Company No: X) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of E-Cap (Internal) Two Sdn Bhd ( the Company ) give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. What we have audited We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 12 to 37. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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 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. 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 Directors Report, Statement by Directors and Statutory Declaration but does not include the financial statements of the Company and our auditors report thereon. Our opinion on the financial statements 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 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 this other information, we are required to report that fact. We have nothing to report in this regard. Financial Statements Annual Report

82 E-Cap (Internal) Two Sdn Bhd ( X) Independent Auditors Report To The Member Of E-Cap (Internal) Two Sdn Bhd (Incorporated In Malaysia) (Company No: X) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Responsibilities of the directors for the financial statements The directors of the Company are responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Company, the directors are responsible for assessing the Company s ability to continue as a 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 Company or to cease operations, or have no realistic alternative but to do so. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements 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 International Standards on Auditing 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 in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) Identify and assess the risks of material misstatement of the financial statements 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 Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. (d) 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 Company s ability 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 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 Company to cease to continue as a going concern. (e) Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. 10

83 E-Cap (Internal) Two Sdn Bhd ( X) Independent Auditors Report To The Member Of E-Cap (Internal) Two Sdn Bhd (Incorporated In Malaysia) (Company No: X) REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. OTHER MATTERS This report is made solely to the member of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants DATO MOHAMMAD FAIZ BIN MOHAMMAD AZMI (No. 2025/03/18 (J)) Chartered Accountant Kuala Lumpur 14 March 2017 Financial Statements Annual Report

84 E-Cap (Internal) Two Sdn Bhd ( X) Statement Of Comprehensive Income INCOME Net unrealised gain on investments at fair value through profit or loss 7 202,374,606 13,163,599 Loss on disposal of investment at fair value through profit or loss - (41,043,091) Other income - 8,800, ,374,606 (19,079,118) Note EXPENSES Management fees 11.3 (12,837,833) (15,853,602) Other expenses (37,384,858) (1,438,063) Profit/(loss) before taxation 5 152,151,915 (36,370,783) Taxation TOTAL COMPREHENSIVE INCOME/(LOSS) AND NET PROFIT/(LOSS) FOR THE FINANCIAL YEAR 152,151,915 (36,370,783) The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

85 E-Cap (Internal) Two Sdn Bhd ( X) Statement Of Financial Position As At 31 December 2016 NON-CURRENT ASSET Investments at fair value through profit or loss 7 924,622, ,008,578 Note CURRENT ASSETS Amount due from immediate holding company ,921, ,080,103 Amount due from associates ,045,433 - Amount due from a related company ,980 Other receivables - 9,640, ,967, ,739,458 CURRENT LIABILITIES Provision and accruals 8 49,720,222 12,349,674 Amount due to subsidiaries ,669,253 33,169,255 Amount due to an associate ,243,835 Amount due to a related company ,968, ,504 82,358,127 54,406,268 NET CURRENT ASSETS 204,609, ,333,190 1,129,231, ,341,768 FINANCED BY: Share capital 9 93,440 79,900 Share premium ,629, ,904,603 Capital redemption reserve 9,786 9,786 Retained earnings 201,499,394 49,347,479 1,129,231, ,341,768 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

86 E-Cap (Internal) Two Sdn Bhd ( X) Statement Of Changes In Equity Note Issued and fully paid ordinary shares of 1 each Number of shares Share capital Issued and fully paid redeemable preference shares of 0.01 each Non-distributable Distributable Number of shares Share capital Share premium Capital redemption reserve Retained earnings At 1 January ,949,841 79, ,904,603 9,786 49,347, ,341,768 Issuance of shares during the financial year 9, ,327,378 13, ,724, ,738,067 Total comprehensive profit for the financial year ,151, ,151,915 At 31 December ,277,219 92, ,629,130 9, ,499,394 1,129,231,750 Total At 1 January ,151,063 21, ,084,791 9,786 85,718, ,834,656 Issuance of shares during the financial year 9, ,798,778 57, ,819, ,877,895 Total comprehensive loss for the financial year (36,370,783) (36,370,783) At 31 December ,949,841 79, ,904,603 9,786 49,347, ,341,768 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

87 E-Cap (Internal) Two Sdn Bhd ( X) Statement Of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before taxation 152,151,915 (36,370,783) Note Adjustment for: Net unrealised gain on investments at fair value through profit or loss (202,374,606) (13,163,599) Loss on disposal of investment at fair fair value through profit or loss - 41,043,091 Operating loss before working capital changes (50,222,691) (8,491,291) Changes in working capital: Provision and accruals 37,370,548 (8,799,975) Amount due to immediate holding company (9,841,856) (506,951,502) Amount due (to)/from subsidiaries (6,500,002) 364,193,544 Amount due from associates (104,270,288) (108,659) Amount due to/(from) a related company 5,325,148 (18,982,797) Other receivables 9,640,375 - Net cash flows used in operating activities (118,498,766) (179,140,680) CASH FLOWS FROM INVESTING ACTIVITIES Additional capital call for investments 7 (14,239,301) (435,292,867) Proceeds from disposal of investment - 34,555,652 Net cash flows used in investing activities (14,239,301) (400,737,215) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of ordinary shares Proceeds from the issuance of redeemable preference shares ,737, ,877,800 Net cash flows generated from financing activities 132,738, ,877,895 NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR - - CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR - - CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR - - The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

88 E-Cap (Internal) Two Sdn Bhd ( X) The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. The Company is a private limited company, incorporated and domiciled in Malaysia. The address of the registered office of the Company is: Tingkat 7, Bangunan Setia 1, 15, Lorong Dungun, Bukit Damansara, Kuala Lumpur. The principal place of business of the Company is: Level 13, Surian Tower, No 1, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan. The principal accounting policies applied in preparing the financial statements are set out below. These policies have been applied to all years presented, unless otherwise stated. 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act, 1965 in Malaysia. The financial statements have been prepared under the historical cost convention, as modified by the investments designated at fair value through profit or loss. The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Company s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. 16

89 E-Cap (Internal) Two Sdn Bhd ( X) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.1 Standards, amendments to published standards and interpretations that are applicable and effective The new accounting standards, amendments and improvements to published standards and interpretations that are effective and applicable for the Company s financial year beginning on or after 1 January 2016 are as follows: Annual Improvements to MFRSs Cycle Amendments to MFRS 101 Presentation of financial statement Disclosure Initiative Apart from the new presentation and disclosure requirements as disclosed in the financial statements, the adoption of the above standards and amendments to published standards does not have any other material impact on the Company s financial statements. 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (i) Financial year beginning on/after 1 January 2017 Amendments to MFRS 107 Statement of Cash Flows Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities. Amendments to MFRS 112 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value. In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences. (ii) Financial year beginning on/after 1 January 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. The complete version of MFRS 9 was issued in November MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Financial Statements Annual Report

90 E-Cap (Internal) Two Sdn Bhd ( X) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (continued) (ii) Financial year beginning on/after 1 January 2018 (continued) For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. MFRS 15 Revenue from Contracts with Customers (effective from 1 January 2018) replaces MFRS 118 Revenue and MFRS 111 Construction Contracts and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Unless otherwise disclosed, the above standards, amendments to published standards and interpretations to existing standards are not anticipated to have any significant impact on the Company s financial statements in the year of initial application. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 INVESTMENT ENTITY AND CONSOLIDATION Investment Entity The Company has been deemed to meet the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements as the following conditions exist: (a) (b) (c) The Company obtained funds from its investor for the purpose of providing investment management services; The Company commits to its investor that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and The performance of investments made through its subsidiaries are measured and evaluated on a fair value basis. The Directors have considered the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements and are satisfied that the Company meets the typical characteristics ascribed. The absence of any single characteristic does not disqualify the Company from being classified as an Investment Entity. The Company being an Investment Entity is exempted from preparing consolidated financial statements. 18

91 E-Cap (Internal) Two Sdn Bhd ( X) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 INVESTMENT ENTITY AND CONSOLIDATION (CONTINUED) Subsidiaries The Company does not have any other subsidiaries other than those determined to be controlled subsidiary investments. Controlled subsidiary investments are measured at fair value through profit or loss and not consolidated, in accordance with MFRS 10. The fair value of controlled subsidiary investments is determined on a consistent basis to all other investments measured at fair value through profit or loss, and as described in Note 4.7. Controlled subsidiary investments include the special purpose entities (SPEs) over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding of an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies. The SPEs are incorporated for the purpose of holding underlying investments (the portfolio companies ) on behalf of the Company; as new SPEs are incorporated for each investment, there are no business combinations. The SPEs have no operations other than their respective investment in portfolio companies and providing a vehicle for the onward sale of a portfolio investment. The SPEs are also reflected at fair value, with the key fair value driver being the investment in the underlying portfolio company investments that the SPEs hold on behalf of the Company. None of the SPEs required consolidation as the SPEs are not deemed to be providing investment related services, as defined by MFRS 10. Where the Company is deemed to control an underlying portfolio company, whereby the control be via voting rights or through the ability to direct the relevant activities in return for access to a significant portion of the variable gains and losses derived from those relevant activities, the underlying portfolio company and its results are also not consolidated and are instead reflected at fair value through the profit or loss (through the reflection of the respective SPE that holds the underlying portfolio company value in the Company s financial statements). Movements in the fair value of the Company s portfolio companies may expose the Company to potential gains or losses in the income statement. A subsidiary is derecognised on its disposal. The difference between the net disposal proceeds and the carrying fair value is recognised in the income statement. Financial Statements Annual Report

92 E-Cap (Internal) Two Sdn Bhd ( X) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 INVESTMENT ENTITY AND CONSOLIDATION (CONTINUED) Associates An associate is an entity, including an unincorporated entity such as partnership, over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Investments that are held as part of the Company s investment portfolio are carried in the balance sheet at fair value even though the Company may have significant influence over those companies. This treatment is permitted by MFRS 128, Investment in Associates, which allows investments that are held by Investment Entities to be recognised and measured as at, fair value through profit or loss and accounted for in accordance with MFRS 139 and MFRS 13, Fair Value Measurement, with changes in fair value recognised in the statement of comprehensive income in the period of the change. An associate is derecognised on its disposal. The difference between the net disposal proceeds and the carrying fair value is recognised in the income statement. 2.2 OTHER INVESTMENTS Other investments are designated at fair value through profit or loss. Changes in the fair value of other investments are recognised in the income statement in the year which the changes arise. On disposal of such investments, the difference between the net disposal proceeds and its carrying amount is included in the income statement. 2.3 FINANCIAL ASSETS Financial assets designated at fair value through profit or loss Classification Financial assets designated at fair value through profit or loss at inception are financial assets that are acquired as part of the principal activities of the Company. They are presented as non-current asset. The Company s financial assets designated at fair value through profit or loss comprise of investments at fair value through profit or loss in the statement of financial position Recognition and initial measurement Financial assets designated at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed as incurred in the income statement Subsequent measurement Subsequent to initial recognition, all financial assets designated at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value are presented in the income statement in the year in which they arise. 20

93 E-Cap (Internal) Two Sdn Bhd ( X) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.3 FINANCIAL ASSETS (CONTINUED) Financial assets designated at fair value through profit or loss (continued) De-recognition A financial asset is de-recognised when the rights to receive cash flows from financial assets designated at fair value through profit or loss have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership Loans and receivables Classification Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve (12) months after the end of the reporting year. These are classified as non-current assets. The Company s loans and receivables comprise of amount due from immediate holding company, amount due from associates and amount due from a related company in the statement of financial position Recognition and initial measurement Loans and receivables are initially recognised at fair value plus transaction costs that are directly attributable to its acquisition Subsequent measurement Loans and receivables are subsequently carried at amortised cost using the effective interest method Subsequent measurement impairment of loans and receivables The Company assesses at the end of the reporting year whether there is objective evidence that the loans and receivables are impaired. Loan and receivables are impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the loans and receivables that can be reliably estimated. If in a subsequent year, the amount of the impairment loss decrease and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement. As at the end of the reporting year, there is no recognition of impairment in the income statement De-recognition Loans and receivables are de-recognised when the rights to receive cash flows from loans and receivables have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial Statements Annual Report

94 E-Cap (Internal) Two Sdn Bhd ( X) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.4 PROVISION Provision are recognised when the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligations, and when a reliable estimate of the amount can be made. 2.5 FINANCIAL LIABILITIES Classification Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Company becomes party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The Company s financial liabilities comprise of provision and accruals, amount due to subsidiaries and amount due to a related company in the statement of financial position Recognition and measurement Financial liabilities are recognised initially at fair value plus directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method De-recognition A financial liability is de-recognised when the obligation under the liability is extinguished when an existing financial liability is replaced by another from the same party on substantially different terms, or the term of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. 2.6 SHARE CAPITAL Ordinary shares are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity. 22

95 E-Cap (Internal) Two Sdn Bhd ( X) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.7 REVENUE RECOGNITION Dividend income Dividend income is recognised when the right to receive payment is established Interest income Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income shall accrue to the Company. 2.8 CARRIED INTEREST Carried interest represents the fees payable to the Fund Management Company and is computed and provided for at each financial year end based on the valuation of the investments in the Fund s portfolio of companies, after accounting for appropriate outflow payments/inflow receipts in accordance with the terms stated in the Global Fund Management Agreement. Any increase or decrease in carried interest is recognised in the income statement. 2.9 INCOME TAXES Current tax expense is determined according to Malaysian tax laws and includes all taxes based upon the taxable profits. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates enacted or substantively enacted by the reporting year are used to determine deferred income tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Financial Statements Annual Report

96 E-Cap (Internal) Two Sdn Bhd ( X) 3 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of the Company s financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting year. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. In the process of applying the Company s accounting policies, the Directors and management have made the following judgements which have the most significant effect on the amounts recognised in the financial statements: (a) Valuation of unquoted investments The Company carries its investments at fair value, with changes in fair values being recognised in the income statement. The Company estimates the fair values of its unquoted investments based on the net assets valuation method and enterprise valuation method as recommended by the International Private Equity and Venture Capital Valuation Guidelines. The Directors believe that net asset valuation method is a fair representation of fair value per MFRS 13 for certain unquoted investments as the net assets of the Company s investments have been adjusted to their approximate fair value. Where expectations differ from original estimates, the difference will impact the fair value of the unquoted investments. Under the enterprise valuation method, the Company applied a marketability and liquidity discount rate on the selected comparable companies earnings multiples in deriving the fair value of the unquoted investments. (b) Carried interest Carried interest represents the amount payable to Ekuiti Nasional Berhad, the Fund Management Company, based on the valuation of investments in the Fund s portfolio of companies. Significant judgements are required in determining the extent of the carried interest expense to be recognised which is dependent on the valuation of the Fund s portfolio. Where expectations differ from original estimates, the difference will impact the recognition of carried interest. 24

97 E-Cap (Internal) Two Sdn Bhd ( X) 4 FINANCIAL RISK MANAGEMENT 4.1 Financial risk management objectives and policies The Company s overall financial risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Company s financial risk management policies. The Board reviews these risks based on the approved treasury policies and investment guidelines, which cover the management of these risks. The Company is exposed to market price risk, credit risk and liquidity risk. 4.2 Market price risk The fair value of unquoted investments are based on net assets valuation method which have been adjusted to approximate fair value. The Company is therefore exposed to market price risk as the adjustments to net asset value are made based on valuation methods as recommended by the International Private Equity and Venture Capital Valuations Guidelines to derive a fair value based on multiples of comparable listed companies. The impact of a higher/lower selected comparable companies discounted earnings multiples is disclosed in Note Credit risk The Company s exposure to credit risk is limited as the Company is an investment holding company. The Company s exposure to credit risk is on the carrying amount of amount due from immediate holding company, amount due from an associate and amount due from a related company. 4.4 Liquidity risk The Company s exposure to liquidity risk is limited as the Company is an investment holding company and its cash management and treasury functions are managed by Ekuiti Nasional Berhad ( Ekuinas ), a related company. Furthermore, the Company has the ability to obtain funding through the immediate holding company to ensure settlement of all transaction costs and expenses. The Company s exposure to liquidity risk is on the undiscounted contractual payment of provision and accruals, which are short term and repayable within one year as well as amount due to subsidiaries, and amount due to a related company all of which are repayable upon demand. 4.5 Capital management The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to provide returns to the shareholder and to maintain an optimal capital structure to reduce the cost of capital. The Company is not subject to any externally imposed capital requirements. Financial Statements Annual Report

98 E-Cap (Internal) Two Sdn Bhd ( X) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.6 Fair value estimation of the financial instruments Financial instruments comprise of financial assets and financial liabilities. Fair value is the amount at which a financial asset could be exchanged or a financial liability settled, between knowledgeable and willing parties in an orderly transaction between market participants at the measurement date. The information presented herein represents the estimates of fair values as at the end of the financial year. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. Methodologies and assumptions had been used in deriving the fair values of the investments at the end of the reporting year as disclosed in Note 4.7 to the financial statements. The carrying amounts of current assets and current liabilities approximate their fair value due to the relatively short term nature of these financial instruments. 4.7 Fair value hierarchy The different levels have been defined as follows: (i) (ii) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and (iii) Level 3 inputs are unobservable inputs that have been applied in the models to value the respective asset or liability. The following table presents the Company s financial instruments that are measured at fair value, other than the short term financial instruments which falls under Level 3 in the fair value hierarchy. Financial asset Investments at fair value through profit or loss 924,622, ,008,

99 E-Cap (Internal) Two Sdn Bhd ( X) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.7 Fair value hierarchy (continued) Investments classified within Level 3 have significant unobservable inputs, as they are not quoted in active markets. As observable prices are not available for this investment, the fair value of the unquoted investment is based on valuation methods as recommended by the International Private Equity and the Venture Capital Valuation Guidelines, namely net assets valuation method and enterprise valuation method. The main input into the net assets valuation method for these unquoted investments is the net assets value ( NAV ) of the investment which have been adjusted to approximate the fair value. The main input into the enterprise valuation method include earnings before interest, taxes, depreciation and amortisation ( EBITDA ), comparable companies earnings multiple and marketability discount. In assessing fair value, management of Ekuiti Nasional Berhad (Fund Management Company) performs quarterly valuation assessments of all portfolio companies and these will be tabled to the Board of Directors on a quarterly basis. The following table presents the movement in Level 3 financial instruments for the financial year ended 31 December 2016: Investments at fair value through profit or loss At 1 January 708,008, ,150,845 Additional capital call for investments 14,239, ,292,869 Net unrealised gain on investments at fair value through profit or loss 202,374,606 13,163,599 Disposal of investment - (67,598,735) At 31 December 924,622, ,008, Financial Statements Annual Report

100 E-Cap (Internal) Two Sdn Bhd ( X) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.7 Fair value hierarchy (continued) Significant unobservable inputs The following table discloses the valuation techniques and significant unobservable inputs by the Company for assets recognised at fair value and classified as Level 3 along with the range of values used for those significant unobservable inputs. Valuation technique Significant unobservable inputs Range of unobservable inputs Reasonable possible shift Change in valuation Fair value Asset Investment in subsidiaries 562,088,603 NAV* NAV* - +/- 5% +/-28,104,000 Investment in an associate 61,537,133 NAV* NAV* - +/- 5% +/-3,077, x-20.5x +/- 5% +/-11,781,000 Investment in an associate 235,613,079 Enterprise valuation Discounted multiple Other investments 65,383,670 NAV* NAV* - +/- 5% +/-3,269, Investment in subsidiaries 408,556,662 NAV* NAV* - +/- 5% +/-20,428,000 Investment in an associate 65,738,594 NAV* NAV* - +/- 5% +/-3,287,000 Other investments 101,155,114 NAV* NAV* - +/- 5% +/-5,058,000 Other investments 132,558,208 Enterprise valuation Discounted multiple 11x-18x +/- 5% +/-6,628,000 * The detailed impact of selecting a higher/lower company discounted earning multiple which is used in determining NAV is disclosed in the financial statements of the respective investments. Valuation process applied by the Company for Level 3 fair value The Company has an established framework in respect to the measurement of fair values of financial instruments. This includes a team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to senior management. The team regularly reviews significant unobservable inputs and valuation adjustments. 28

101 E-Cap (Internal) Two Sdn Bhd ( X) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.8 Financial instruments by category Loans and receivables/ other liabilities Designated at fair value through profit or loss Loans and receivables/ other liabilities Designated at fair value through profit or loss Financial assets Investments at fair value through profit or loss - 924,622, ,008,578 Amount due from immediate holding company 190,921, ,080,103 - Amount due from associates 96,045, Amount due from a related company ,980 - Other receivables - - 9,640,375 - Total 286,967, ,622, ,739, ,008,578 Financial liabilities Provision and accruals 49,720,222-12,349,674 - Amount due to subsidiaries 26,669,253-33,169,255 - Amount due to an associate - - 8,243,835 - Amount due to a related company 5,968, ,504 - Total 82,358,127-54,406,268-5 PROFIT/(LOSS) BEFORE TAXATION Profit/(loss) before taxation is arrived at after charging: Auditors remuneration - statutory audit fee 51,300 4,550 - non-audit fee (portfolio reporting) 12,550 3,250 63,850 7, Financial Statements Annual Report

102 E-Cap (Internal) Two Sdn Bhd ( X) 6 TAXATION Current tax: Malaysian taxation Reconciliation between tax expense and the product of accounting profit/(loss) multiplied by the Malaysian tax rate is as follows: Profit/(loss) before taxation 152,151,915 (36,370,783) Tax calculated at rate 24% (2015: 25%) 36,516,460 (9,092,696) Income not subject to tax (48,569,905) (3,290,900) Expenses not deductible for tax purpose 12,053,445 12,383,596 Taxation - - On 6 June 2016, the Ministry of Finance granted an extension of income tax exemption on the statutory business income for an additional extension period of two (2) years commencing from year assessment 2017 until 2018 for the Company. 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Investment in subsidiaries (Note 7.1) 562,088, ,556,662 Investment in associates (Note 7.2) 297,150,212 65,738,594 Other investments (Note 7.3) 65,383, ,713,322 At 31 December 924,622, ,008,

103 E-Cap (Internal) Two Sdn Bhd ( X) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.1 Investment in subsidiaries Unquoted shares, at fair value: At 1 January 408,556,662 52,858,647 Additional capital call for investments 14,239, ,209,207 Disposal of investment - (2) Net unrealised gain/(loss) on investments at fair value through profit or loss 139,292,640 (511,190) At 31 December 562,088, ,556,662 The details of the investment in subsidiaries are as follows: Name Country of incorporation Principal activity Relationship Company s effective interest Tekun Prima Sdn Bhd* Malaysia Investment Subsidiary holding Tetap Kuasa Sdn Bhd* Malaysia Investment Subsidiary holding Nexus Leap Sdn Bhd* Malaysia Investment Subsidiary holding Subsidiary of Tekun Prima Sdn Bhd PrimaBaguz Sdn Bhd*** Malaysia Manufacturer Subsidiary of premium halal meat Subsidiary of Tetap Kuasa Sdn Bhd Orkim Sdn Bhd** Malaysia Shipping Subsidiary operations, ship brokering and shipping management for Clean Petroleum Product (CPP) Subsidiary of Nexus Leap Sdn Bhd Tranglo Sdn Bhd**** Malaysia Airtime and mobile money transaction services Subsidiary % 2015 % Financial Statements Annual Report

104 E-Cap (Internal) Two Sdn Bhd ( X) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.2 Investment in associates Unquoted shares, at fair value: At 1 January 65,738,594 96,734,115 Transfer of investment (Note A) 132,558,208 - Net unrealised gain/(loss) on investment at fair value through profit or loss 98,853,410 (30,995,521) At 31 December 297,150,212 65,738,594 The details of the investment in associates are as follows: Name Country of incorporation Principal activity Hallmark Odyssey Sdn Bhd* Malaysia Investment holding ILMU Education Group Sdn Bhd** Malaysia Investment holding Relationship Company s effective interest 2016 % 2015 % Associate Associate * Audited by PricewaterhouseCoopers, Malaysia ** Audited by Ernst & Young, Malaysia *** Audited by KPMG, Malaysia **** Audited by Crowe Horwath, Malaysia Note A During the year, the Company has subscribed to the conversion of its entire equity interest in Redeemable Preference Shares ( RPS ) of Ilmu Education Group Sdn Bhd ( ILMU ) into ordinary shares which resulted in the changes of the Company s effective interest to 20.3%. In previous year, the investment was classified as other investment. 32

105 E-Cap (Internal) Two Sdn Bhd ( X) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.3 Other investments Unquoted shares, at fair value: At 1 January 233,713, ,558,083 Advances to Rancak Selera Sdn Bhd - 17,640,385 Additional capital call for investment - 79,083,662 Disposal of investment - (85,239,118) Transfer of investment (Note A) (132,558,208) - Net unrealised (loss)/gain on fair value of investments at fair value through profit or loss (35,771,444) 44,670,310 At 31 December 65,383, ,713,322 Other investments comprise of the Company s equity interest in Redeemble Preference Shares ( RPS ) of Prinsip Lagenda Sdn Bhd ( Prinsip ) and Integrated Food Group ( IFG ). On 28 March 2016, the Company via Prinsip had divested its entire equity interest in Lyndarahim Ventures Sdn Bhd, a company incorporated in Malaysia for a total cash consideration of 5,970, PROVISION AND ACCRUALS Provision for carried interest 49,650,433 12,336,869 Other accruals 69,789 12,805 49,720,222 12,349,674 Provision and accruals are non-interest bearing Financial Statements Annual Report

106 E-Cap (Internal) Two Sdn Bhd ( X) 9 SHARE CAPITAL Authorised Issued and fully paid Ordinary shares of 1 each At 1 January 100,000, ,000, Issuance of shares during the financial year At 31 December 100,000, ,000, Redeemable preference shares of 0.01 each At 1 January 90,000 90,000 79,498 21,510 Issuance of shares during the financial year ,274 57,988 At 31 December 90,000 90,000 92,772 79,498 Total 100,090, ,090,000 93,440 79,900 During the financial year, the Company issued 266 ordinary shares at par value of 1 each and 1,327,378 preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company for the financial year ended 31 December 2016 are as follows: Date of issue Type of share Purpose of issue Number of shares Par value Premium Terms of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 106, Cash, at June 2016 Ordinary Working capital Cash, at par 30 June 2016 Preference Working capital 426, Cash, at September 2016 Ordinary Working capital Cash, at par 30 September 2016 Preference Working capital 493, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 301, Cash, at

107 E-Cap (Internal) Two Sdn Bhd ( X) 9 SHARE CAPITAL (CONTINUED) The main features of the redeemable preference shares ( RPS ) are as follows: The holders of the shares shall be entitled to any dividend declared. The RPS shall rank pari passu among themselves and in priority of ordinary shares. The holders of the RPS shall be entitled to receive all notices, accounts and report which holder of the ordinary shares are entitled to. The holders of the RPS shall only be entitled to vote at the meetings convened for the purpose of transacting to the following items of the business: (a) (b) (c) Variation, whether directly or indirectly, of the rights attached to the RPS. Winding-up of the Company. Such other circumstances as may be expressly provided under the law from time to time in respect of preference shares. Subject to the Companies Act, 1965, the Company shall have the right at any time, to redeem all or part of the RPS at a price of 100 per RPS ( Redemption Amount ). The RPS are not convertible into ordinary shares or any other classes of shares in the Company. The RPS are classified as equity as they are redeemable but only at the Company s option, and any dividends are discretionary. 10 SHARE PREMIUM At 1 January 794,904, ,084,791 Issuance of redeemable preference shares during the financial year 132,724, ,819,812 At 31 December 927,629, ,904, Financial Statements Annual Report

108 E-Cap (Internal) Two Sdn Bhd ( X) 11 SIGNIFICANT RELATED PARTY Parties are considered related if the party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions The related parties of, and their relationships with the Company, are as follows: Related party Yayasan Ekuiti Nasional Ekuinas Capital Sdn Bhd Tekun Prima Sdn Bhd Tetap Kuasa Sdn Bhd Nexus Leap Sdn Bhd Hallmark Odyssey Sdn Bhd Ilmu Education Group Sdn Bhd Ekuiti Nasional Berhad Integrated Food Group Sdn Bhd Prinsip Lagenda Sdn Bhd Relationship Ultimate holding foundation which is formed by the Government of Malaysia Immediate holding company Subsidiary company Subsidiary company Subsidiary company Associate company Associate company Related company Related company Related company 11.2 Key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel of the Company includes all the Directors of the Company who make certain critical decisions in relation to the strategic direction of the Company. The Company has no key management personnel compensation during the financial year Significant related party transaction In addition to related party disclosures mentioned elsewhere in the financial statements, set out below is other significant related party transaction. Management fees Ekuiti Nasional Berhad (12,837,833) (15,853,602)

109 E-Cap (Internal) Two Sdn Bhd ( X) 11 SIGNIFICANT RELATED PARTY (CONTINUED) 11.4 Significant related party balances Included in the Company s statement of financial position are the following significant related party balances: Amount due from immediate holding company Ekuinas Capital Sdn Bhd 190,921, ,080, Amount due from associates Hallmark Odyssey Sdn Bhd 96,026,453 - Ilmu Education Group Sdn Bhd 18,980-96,045,433 - Amount due from a related company Ilmu Education Group Sdn Bhd - 18,980 Amount due to subsidiaries Tetap Kuasa Sdn Bhd (25,669,253) (33,169,253) Tekun Prima Sdn Bhd (1,000,000) - Nexus Leap Sdn Bhd - (2) (26,669,253) (33,169,255) Amount due to an associate Hallmark Odyssey Sdn Bhd - (8,243,835) Amount due to a related company Ekuiti Nasional Berhad - (643,504) Prinsip Lagenda Sdn Bhd (5,968,652) - (5,968,652) (643,504) 12 AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS The financial statements have been authorised for issue in accordance with a resolution of the Board of Directors. Financial Statements Annual Report

110

111 ExpandingOur Horizons E-Cap (Internal) Three Sdn Bhd Financial Statements Annual Report 2016

112 Reports and Statutory FINANCIAL STATEMENTS

113 4-7 Directors Report 8 Statement By Directors 8 Statutory Declaration 9-11 Independent Auditors Report 12 Statement Of Comprehensive Income 13 Statement Of Financial Position 14 Statement Of Changes In Equity 15 Statement Of Cash Flows 16-36

114 E-Cap (Internal) Three Sdn Bhd ( D) Directors Report The Directors hereby submit their report and the audited financial statements of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Net loss for the financial year 48,316,203 DIVIDEND No dividend has been paid, declared and proposed since the end of the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December ISSUE OF SHARES During the financial year, the Company issued 235 ordinary shares at par value of 1 each and 2,324,917 redeemable preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company during the financial year ended 31 December 2016 is as follows: Type of share Purpose of issue Number of shares Par value Premium Terms of issue Date of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 668, Cash, at June 2016 Ordinary Working capital Cash, at par 30 June 2016 Preference Working capital 745, Cash, at September 2016 Ordinary Working capital Cash, at par 30 September 2016 Preference Working capital 745, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 165, Cash, at 100 The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. The new preference shares issued during the financial year rank pari passu in all respects with the existing preference shares of the Company. There were no other changes in the authorised, issued and fully paid capital of the Company during the financial year ended 31 December

115 E-Cap (Internal) Three Sdn Bhd ( D) Directors Report RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements and notes to the financial statements. DIRECTORS The Directors who have held office since the date of last report are as follows: Syed Yasir Arafat bin Syed Abd Kadir Mazhairul bin Jamaludin In accordance with Article 63 of the Company s Articles of Association, all Directors shall retire from the Board in the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. DIRECTORS INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors Shareholdings maintained by the Company in accordance with Section 59 of the Companies Act, 2016, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporation during the financial year. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the date of last report, no Director has received or become entitled to receive a benefit 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. Financial Statements Annual Report

116 E-Cap (Internal) Three Sdn Bhd ( D) Directors Report STATUTORY INFOATION ON THE FINANCIAL STATEMENTS Before the financial statements of the Company were made out, the Directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there are no known bad debts that had been written off and that allowance need not be made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) (d) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Company misleading. 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, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Company which has arisen since the end of the financial year. In the opinion of the Directors: (a) (b) the results of the Company s operations for the financial period were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the financial year in which this report is made. 6

117 E-Cap (Internal) Three Sdn Bhd ( D) Directors Report IMMEDIATE HOLDING COMPANY AND ULTIMATE HOLDING FOUNDATION The Directors regard Ekuinas Capital Sdn Bhd, a company incorporated in Malaysia, as the immediate holding company. The Directors regard Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company s ultimate holding foundation. SUBSIDIARIES Details of subsidiaries are set out in Note 7 to the financial statements. AUDITORS REMUNERATION Details of auditors remuneration are set out in Note 5 to the financial statements. Then were no indemnity given or insurance effected for any auditor of the Company. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution. SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Financial Statements Annual Report

118 E-Cap (Internal) Three Sdn Bhd ( D) Statement By Directors Pursuant To Section 251(2) Of The Companies Act, 2016 We, Syed Yasir Arafat bin Syed Abd Kadir and Mazhairul bin Jamaludin, being two of the Directors of E-Cap (Internal) Three Sdn Bhd, state that, in the opinion of the Directors, the financial statements set out on pages 12 to 36 have been properly drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2016 and of the results and cash flows of the Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Signed on behalf of the Board of Directors in accordance with their resolution. SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Statutory Declaration Pursuant To Section 251(1) Of The Companies Act, 2016 I, Mazhairul bin Jamaludin, being the Officer primarily responsible for the financial management of E-Cap (Internal) Three Sdn Bhd, do solemnly and sincerely declare that the financial statements set out on pages 12 to 36 are, in my opinion, 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, MAZHAIRUL BIN JAMALUDIN GROUP CHIEF FINANCIAL OFFICER Subscribed and solemnly declared by the above named Mazhairul bin Jamaludin at Kuala Lumpur before me, on 14 March COMMISSIONER FOR OATHS 8

119 E-Cap (Internal) Three Sdn Bhd ( D) Independent Auditors Report To The Member of E-Cap (Internal) Three Sdn Bhd (Incorporated In Malaysia) (Company No: D) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of E-Cap (Internal) Three Sdn Bhd ( the Company ) give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. What we have audited We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 12 to 36. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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 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. 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 Directors Report, Statement by Directors and Statutory Declaration but does not include the financial statements of the Company and our auditors report thereon. Our opinion on the financial statements 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 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 this other information, we are required to report that fact. We have nothing to report in this regard. Financial Statements Annual Report

120 E-Cap (Internal) Three Sdn Bhd ( D) Independent Auditors Report To The Member of E-Cap (Internal) Three Sdn Bhd (Incorporated In Malaysia) (Company No: D) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Responsibilities of the directors for the financial statements The directors of the Company are responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Company, the directors are responsible for assessing the Company s ability to continue as a 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 Company or to cease operations, or have no realistic alternative but to do so. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements 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 International Standards on Auditing 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 in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) Identify and assess the risks of material misstatement of the financial statements 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 Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. (d) 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 Company s ability 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 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 Company to cease to continue as a going concern. (e) Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. 10

121 E-Cap (Internal) Three Sdn Bhd ( D) Independent Auditors Report To The Member of E-Cap (Internal) Three Sdn Bhd (Incorporated In Malaysia) (Company No: D) REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. OTHER MATTERS This report is made solely to the member of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants DATO MOHAMMAD FAIZ BIN MOHAMMAD AZMI (No. 2025/03/18 (J)) Chartered Accountant Kuala Lumpur 14 March 2017 Financial Statements Annual Report

122 E-Cap (Internal) Three Sdn Bhd ( D) Statement Of Comprehensive Income Note Financial year ended Financial period from (date of incorporation) to LOSS Net unrealised loss on investments at fair value through profit or loss 7 (21,795,735) - EXPENSES Management fee 10.3 (26,250,000) (30,625,000) Consultancy fees (222,401) (69,000) Other expenses (48,067) (13,220) Loss before taxation 5 (48,316,203) (30,707,220) Taxation TOTAL COMPREHENSIVE LOSS AND NET LOSS FOR THE FINANCIAL YEAR/PERIOD (48,316,203) (30,707,220) The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

123 E-Cap (Internal) Three Sdn Bhd ( D) Statement Of Financial Position As At 31 December 2016 Note NON-CURRENT ASSET Investments at fair value through profit or loss 7 275,426,113 78,205,750 CURRENT ASSETS Amount due from immediate holding company ,800,000 - Amount due from a subsidiary ,928 Amount due from a related company ,000,000 19,800,000 13,007,928 CURRENT LIABILITIES Accruals 49,924 13,220 Amount due to a subsidiary ,800,000-19,849,924 13,200 NET CURRENT (LIABILITIES)/ASSETS (49,924) 12,994, ,376,189 91,200,458 FINANCED BY: Share capital 8 35,752 12,269 Share premium 9 354,363, ,895,409 Accumulated losses (79,023,423) (30,707,220) 275,376,189 91,200,458 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

124 E-Cap (Internal) Three Sdn Bhd ( D) Statement Of Changes In Equity Note Issued and fully paid ordinary shares of 1 each Number of shares Share capital Issued and fully paid redeemable preference shares of 0.01 each Number of shares Share capital Nondistributable Share premium Accumulated losses At 1 January ,219,076 12, ,895,409 (30,707,220) 91,200,458 Issuance of shares during the financial year 8, ,324,917 23, ,468, ,491,934 Total comprehensive loss for the financial year (48,316,203) (48,316,203) At 31 December ,543,993 35, ,363,860 (79,023,423) 275,376,189 Total At 30 October 2014 (date of incorporation) Issuance of shares during the financial year 8, ,219,076 12, ,895, ,907,676 Total comprehensive loss for the financial year (30,707,220) (30,707,220) At 31 December ,219,076 12, ,895,409 (30,707,220) 91,200,458 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

125 E-Cap (Internal) Three Sdn Bhd ( D) Statement Of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Loss before taxation Note Financial year ended Financial period from (date of incorporation) to (48,316,203) (30,707,220) Adjustment for: Net unrealised loss on investment at fair value through profit or loss 21,795,735 - Changes in working capital: Accruals 36,704 13,220 Amount due from immediate holding company (19,800,000) - Amount due from a subsidiary 19,807,928 (7,928) Amount due from a related company 13,000,000 (13,000,000) Net cash flows used in operating activities (13,475,836) (43,701,928) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investments 7 (218,603,221) (78,205,750) Additional capital call in investment in subsidiaries 7.1 (412,877) - Net cash flows used in investing activities (219,016,098) (78,205,750) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of ordinary shares Proceeds from the issuance of redeemable preference shares 8,9 232,491, ,907,600 Net cash flows generated from financing activities 232,491, ,907,678 NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR/PERIOD - - CASH AND CASH EQUIVALENTS AS AT THE BEGINNING OF THE FINANCIAL YEAR/DATE OF INCORPORATION - - CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR/PERIOD - - The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

126 E-Cap (Internal) Three Sdn Bhd ( D) The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. The Company is a private limited company, incorporated and domiciled in Malaysia. The address of the registered office of the Company is: Tingkat 7, Bangunan Setia 1, 15, Lorong Dungun, Bukit Damansara, Kuala Lumpur. The principal place of business of the Company is: Level 13, Surian Tower, No 1, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan. The principal accounting policies applied in preparing the financial statements are set out below. These policies have been applied to all years presented, unless otherwise stated. 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act, 1965 in Malaysia. The financial statements have been prepared under the historical cost convention, as modified by the investments designated at fair value through profit or loss. The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Company s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. 16

127 E-Cap (Internal) Three Sdn Bhd ( D) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.1 Standards, amendments to published standards and interpretations that are applicable and effective The new accounting standards, amendments and improvements to published standards and interpretations that are effective and applicable for the Company s financial year beginning on or after 1 January 2016 are as follows: Annual Improvements to MFRSs Cycle Amendments to MFRS 101 Presentation of financial statement Disclosure Initiative Apart from the new presentation and disclosure requirements as disclosed in the financial statements, the adoption of the above standards and amendments to published standards does not have any other material impact on the Company s financial statements. 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (i) Financial year beginning on/after 1 January 2017 Amendments to MFRS 107 Statement of Cash Flows Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities. Amendments to MFRS 112 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value. In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences. (ii) Financial year beginning on/after 1 January 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. The complete version of MFRS 9 was issued in November MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Financial Statements Annual Report

128 E-Cap (Internal) Three Sdn Bhd ( D) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (continued) (ii) Financial year beginning on/after 1 January 2018 (continued) For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. MFRS 15 Revenue from Contracts with Customers (effective from 1 January 2018) replaces MFRS 118 Revenue and MFRS 111 Construction Contracts and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Unless otherwise disclosed, the above standards, amendments to published standards and interpretations to existing standards are not anticipated to have any significant impact on the Company s financial statements in the year of initial application. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 INVESTMENT ENTITY AND CONSOLIDATION Investment Entity The Company has been deemed to meet the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements as the following conditions exist: (a) (b) (c) The Company obtained funds from its investor for the purpose of providing investment management services; The Company commits to its investor that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and The performance of investments made through its subsidiaries are measured and evaluated on a fair value basis. 18

129 E-Cap (Internal) Three Sdn Bhd ( D) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 INVESTMENT ENTITY AND CONSOLIDATION (CONTINUED) Investment Entity (continued) The Directors have considered the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements and satisfied that the Company meets most of the typical characteristics ascribed. The absence of any of the characteristic does not disqualify the Company from being classified as an Investment Entity. The Company being an Investment Entity is exempted from preparing consolidated financial statements Subsidiaries The Company does not have any other subsidiaries other than those determined to be controlled subsidiary investments. Controlled subsidiary investments are measured at fair value through profit or loss and not consolidated, in accordance with MFRS 10. The fair value of controlled subsidiary investments is determined on a consistent basis to all other investments measured at fair value through profit or loss, and as described in Note 4.7. Controlled subsidiary investments include the special purpose entities (SPEs) over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding of an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies. Subsidiaries (SPEs) are incorporated for the purpose of holding underlying investments (the portfolio companies ) on behalf of the Company; as new SPEs are incorporated for each investment, there are no business combinations. The SPEs have no operations other than their respective investment in portfolio companies and providing a vehicle for the onward sale of a portfolio investment. The SPEs are also reflected at fair value, with the key fair value driver being the investment in the underlying portfolio company investments that the SPEs hold on behalf of the Company. None of the SPEs required consolidation as the SPEs are not deemed to be providing investment related services, as defined by MFRS 10. Where the Company is deemed to control an underlying portfolio company, whereby the control be via voting rights or through the ability to direct the relevant activities in return for access to a significant portion of the variable gains and losses derived from those relevant activities, the underlying portfolio company and its results are also not consolidated and are instead reflected at fair value through the profit or loss (through the reflection of the respective SPE that holds the underlying portfolio company value in the Company s financial statements). Movements in the fair value of the Company s portfolio companies may expose the Company to potential gains or losses in the income statement. A subsidiary is derecognised on its disposal. The difference between the net disposal proceeds and the carrying fair value is recognised in the income statement. Financial Statements Annual Report

130 E-Cap (Internal) Three Sdn Bhd ( D) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 INVESTMENT ENTITY AND CONSOLIDATION (CONTINUED) Associates An associate is an entity, including an unincorporated entity such as partnership, over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Investments that are held as part of the Company s investment portfolio are carried in the statement of financial position at fair value through profit or loss even though the Company may have significant influence over those companies. This treatment is permitted by MFRS 128, Investment in Associate, which allows investments that are held by Investment Entities to be recognised and measured as at fair value through profit or loss in accordance with MFRS 139 and MFRS 13, Fair Value Measurement, with changes in fair value recognised in the income statement in the period of the change. An associate is derecognised on its disposal. The difference between the net disposal proceeds and the carrying fair value is recognised in the income statement. 2.2 FINANCIAL ASSETS Financial assets designated at fair value through profit or loss Classifications Financial assets designated at fair value through profit or loss at inception are financial assets that are acquired as part of the principal activities of the Company. They are presented as non-current asset. The Company s financial assets designated at fair value through profit or loss comprise of investments at fair value through profit or loss in the statement of financial position Recognition and initial measurement Financial assets at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in income statement Subsequent measurement Subsequent to initial recognition, all financial assets designated at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value are presented in the income statement in the year in which they arise De-recognition A financial asset is de-recognised when the rights to receive cash flows from financial assets designated at fair value through profit or loss have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. 20

131 E-Cap (Internal) Three Sdn Bhd ( D) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.2 FINANCIAL ASSETS (CONTINUED) Loans and receivables Classification Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve (12) months after the end of the reporting year, which are classified as non-current assets. The Company s loans and receivables comprise amount due from immediate holding company in the statement of financial position Recognition and initial measurement Loans and receivables are initially recognised at fair value plus transaction costs that are directly attributable to its acquisition Subsequent measurement Loans and receivables are subsequently carried at amortised cost using the effective interest method Subsequent measurement impairment of loans and receivables The Company assesses at the end of the reporting period whether there is objective evidence that loans and receivables impaired. Loans and receivables are impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of loans and receivables that can be reliably estimated. If in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement. As at the end of the reporting year, there is no recognition of impairment in the income statement De-recognition Loans and receivables are de-recognised when the rights to receive cash flows from loans and receivables have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial Statements Annual Report

132 E-Cap (Internal) Three Sdn Bhd ( D) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.3 PROVISIONS Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligations, and when a reliable estimate of the amount can be made. 2.4 FINANCIAL LIABILITIES Classification Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139 Financial Instruments: Recognition and Measurement, are recognised in the statement of financial position when, and only when, the Company becomes party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. As at the end of reporting year, the Company s financial liability comprise of accruals and amount due to a subsidiary in the statement of financial position Recognition and measurement Financial liabilities are recognised initially at fair value plus directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method De-recognition A financial liability is de-recognised when the obligation under the liability is extinguished when an existing financial liability is replaced by another from the same party on substantially different terms, or the term of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. 2.5 SHARE CAPITAL Ordinary shares are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity. 22

133 E-Cap (Internal) Three Sdn Bhd ( D) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.6 CARRIED INTEREST Carried interest represents the fees payable to the Fund Management Company and is computed and provided for at each financial year end based on the valuation of the investments in the Fund s portfolio of companies, after accounting for appropriate outflow payments/inflow receipts in accordance with the terms stated in the Global Fund Management Agreement. Any increase or decrease in carried interest is recognised in the income statement. 2.7 INCOME TAXES Current tax expense is determined according to the Malaysian tax laws and includes all taxes based upon the taxable profits. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates enacted or substantively enacted by the reporting period are used to determine deferred income tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Financial Statements Annual Report

134 E-Cap (Internal) Three Sdn Bhd ( D) 3 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of the Company s financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. In the process of applying the Company s accounting policies, the Directors and management have made the following judgements which have the most significant effect on the amounts recognised in the financial statements: (a) Valuation of unquoted investments The Company carries its investments at fair value, with changes in fair values being recognised in the income statement. The Company estimates the fair values of its unquoted investments based on the net assets valuation method and enterprise valuation method as recommended by the International Private Equity and Venture Capital Valuation Guidelines. The Directors believe that net asset valuation method is a fair representation of fair value per MFRS 13 for a certain unquoted investments as the net assets of the Company s investments have been adjusted to approximate fair value. Where expectations differ from original estimates, the difference will impact the fair value of the unquoted investments. Under the enterprise valuation method, the Company applied a marketability and liquidity discount rate on the selected comparable companies earning multiples in deriving the fair value of the unquoted investments. (b) Carried interest Carried interest represents the amount payable to Ekuiti Nasional Berhad, the Fund Management Company, based on the valuation of investments in the Fund s portfolio of companies. Significant judgements are required in determining the extent of the carried interest expense to be recognised which is dependent on the valuation of the Fund s portfolio. Where expectations differ from original estimates, the difference will impact the recognition of carried interest. 24

135 E-Cap (Internal) Three Sdn Bhd ( D) 4 FINANCIAL RISK MANAGEMENT 4.1 Financial risk management objectives and policies The Company s overall financial risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Company s financial risk management policies. The Board of Directors reviews these risks based on the approved treasury policies and investment guidelines, which cover the management of these risks. The Company is exposed to market price risk, credit risk and liquidity risk. 4.2 Market price risk The fair value of unquoted investments are based on enterprise valuation method and net assets valuation method which have been adjusted to approximate fair value also. The Company is therefore exposed to market price risk as the adjustments to net asset value are made based on valuation methods as recommended by the International Private Equity and Venture Capital Valuations Guidelines to derive a fair value based on multiples of comparable listed companies. The impact of a higher/lower selected comparable companies discounted earnings multiples is disclosed in Note Credit risk The Company s exposure to credit risk is limited as the Company is an investment holding company. The Company s exposure to credit risk is on the carrying amount of amount due from immediate holding company. 4.4 Liquidity risk The Company s exposure to liquidity risk is limited as the Company is an investment holding company and its cash management and treasury functions are managed by Ekuiti Nasional Berhad ( Ekuinas ), a related company. Furthermore, the Company has the ability to obtain funding through the immediate holding company to ensure settlement of all transaction costs and expenses. The Company s exposure to liquidity risk is on the undiscounted contractual payments of accruals, which are short term and repayable within one year as well as amount due to a subsidiary which is and repayable upon demand. 4.5 Capital management The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to provide returns to the shareholder and to maintain an optimal capital structure to reduce the cost of capital. The Company is not subject to any externally imposed capital requirements. Financial Statements Annual Report

136 E-Cap (Internal) Three Sdn Bhd ( D) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.6 Fair value estimation of the financial instruments Financial instruments comprise financial assets and financial liabilities. Fair value is the amount at which a financial asset could be exchanged or a financial liability settled, between knowledgeable and willing parties in an orderly transaction between market participants at the measurement date. The information presented herein represents the estimates of fair values as at the end of the financial year. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. Methodologies and assumptions had been used in deriving the fair values of the investments at the end of the financial year as disclosed in Note 4.7 to the financial statements. The carrying amounts of current assets and liabilities approximate their fair value due to the relatively short term nature of these financial instruments. 4.7 Fair value hierarchy The different levels have been defined as follows: (i) (ii) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and (iii) Level 3 inputs are unobservable inputs that have been applied in the models to value the respective asset or liability. The following table presents the Company s financial instruments that are measured at fair value, other than the short term financial instruments, which falls under Level 3 in the fair value hierachy. Financial assets Investments at fair value through profit or loss 275,426,113 78,205,

137 E-Cap (Internal) Three Sdn Bhd ( D) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.7 Fair value hierarchy (continued) Investments classified within Level 3 have significant unobservable inputs, as they are traded infrequently. As observable prices are not available for this investment, the fair value of the unquoted investment is based on valuation methods as recommended by the International Private Equity and the Venture Capital Valuation Guidelines, namely net assets valuation method and enterprise valuation method. The main input into the net assets valuation method for these unquoted investments is the net assets value ( NAV ) of the investments which have been adjusted to approximate the fair value. The main input into the enterprise valuation method for this unquoted investment include earnings before interest, taxes, depreciation and amortisation ( EBITDA ), comparable companies earnings multiple and marketability discount. In assessing fair value, management of Ekuiti Nasional Berhad (Fund Management Company) performs quarterly valuation assessments of all portfolio companies and these will be tabled to the Board of Directors on a quarterly basis. The following table presents the movement in Level 3 financial instruments for the financial year ended 31 December 2016: Investments at fair value through profit or loss At 1 January/date of incorporations 78,205,750 - Acquisition of investments 218,603,221 78,205,750 Additional capital call for investments 412,877 - Net unrealised loss on investment at fair value through profit or loss (21,795,735) - At 31 December 275,426,113 78,205, Financial Statements Annual Report

138 E-Cap (Internal) Three Sdn Bhd ( D) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.7 Fair value hierarchy (continued) Significant unobservable inputs The following table discloses the valuation techniques and significant unobservable inputs by the Company for assets recognised at fair value and classified as Level 3 along with the range of values used for those significant unobservable inputs. Valuation technique Significant unobservable inputs Range of unobservable inputs Reasonable possible shift Change in valuation Fair value Asset Investment in subsidiaries 194,918,820 NAV* NAV* - +/- 5% +/- 9,746, x-20.5x +/- 5% +/-4,025,000 Investment in an associate 80,507,293 Enterprise valuation Discounted multiple Investment in subsidiaries 78,205,750 NAV* NAV* - +/- 5% +/-3,910,200 * The detailed impact of selecting a higher/lower company discounted earnings multiple which is used in determining NAV is disclosed in the financial statements of the respective subsidiaries. Valuation process applied by the Company for Level 3 fair value The Company has an established framework in respect to the measurement of fair values of financial instruments. This includes a team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to senior management. The team regularly reviews significant unobservable inputs and valuation adjustments. 28

139 E-Cap (Internal) Three Sdn Bhd ( D) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.8 Financial instruments by category Loans and receivables/ other liabilities Designated at fair value through profit or loss Loans and receivables/ other liabilities Designated at fair value through profit or loss Financial assets Investments at fair value through profit or loss - 275,426,113-78,205,750 Amount due from immediate holding company 19,800, Amount due from subsidiaries - - 7,928 - Amount due from a related company ,000,000 - Total 19,800, ,426,113 13,007,928 78,205,750 Financial liabilities Accruals 49,924-13,220 - Amount due to a subsidiary 19,800, Total 19,849,924-13,220-5 LOSS BEFORE TAXATION Loss before taxation is arrived at after charging: Financial year ended Financial period from (date of incorporation) to Auditors remuneration - statutory audit fee 37,450 4,220 - non-audit fee (portfolio reporting) 4,650-42,100 4,220 Financial Statements Annual Report

140 E-Cap (Internal) Three Sdn Bhd ( D) 6 TAXATION Current tax: Malaysian taxation Financial year ended Financial period from (date of incorporation) to Reconciliation between tax expense and the product of accounting loss multiplied by the Malaysian tax rate is as follows: Financial year ended Financial period from (date of incorporation) to Loss before taxation (48,316,203) (30,707,220) Tax calculated at rate 24% (2015: 25%) (11,595,889) (7,676,805) Expenses not deductible for tax purpose 11,595,889 7,676,805 Taxation - - On 6 June 2016, the Ministry of Finance granted an extension of income tax exemption on the statutory business income for a period of 2 years commencing from year of assessment 2017 until 2018 for the Company. 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Investment in subsidiaries (Note 7.1) 194,918,820 78,205,750 Investment in an associate (Note 7.2) 80,507, ,426,113 78,205,

141 E-Cap (Internal) Three Sdn Bhd ( D) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.1 Investment in subsidiaries At 1 January/30 October 2014 (date of incorporation) 78,205,750 - Acquisition of investments 68,603,221 78,205,750 Additional capital call for investments 412,877 - Net unrealised gain on investments at fair value through profit or loss 47,696,972 - At 31 December 194,918,820 78,205,750 The details of the investments are as follows: Name Country of incorporation Principal activity Premier Share Sdn Bhd* Malaysia Investment holding Premier Agenda Sdn Bhd* Malaysia Investment holding Relationship Company s effective interest 2016 % 2015 % Subsidiary Subsidiary Associate of Premier Share Sdn Bhd Al-Ikhsan Sports Sdn Bhd Group* Malaysia Sports retail Associate Subsidiaries of Premier Agenda Sdn Bhd Health Connect Holding Sdn Bhd Group** Malaysia Third party medical claims administrator PMCare Sdn Bhd** Malaysia Third party medical claims administrator Subsidiary Subsidiary Financial Statements Annual Report

142 E-Cap (Internal) Three Sdn Bhd ( D) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) 7.2 INVESTMENT IN AN ASSOCIATE At 1 January/30 October 2014 (date of incorporation) - - Acquisition of investments 150,000,000 - Net unrealised loss on investment at fair value through profit or loss (69,492,707) - At 31 December 80,507,293 - The details of the investments are as follows: Name Country of incorporation Principal activity ILMU Education Group Sdn Bhd*** Malaysia Investment holding Relationship Company s effective interest 2016 % 2015 % Associate * Audited by PricewaterhouseCoopers, Malaysia ** Audited by Deloitte KassimChan, Malaysia *** Audited by Ernst & Young, Malaysia 32

143 E-Cap (Internal) Three Sdn Bhd ( D) 8 SHARE CAPITAL 2016 Authorised 2015 Issued and fully paid Ordinary shares of 1 each At 1 January/date of incorporation 100,000, ,000, Issuance of shares during the financial year At 31 December 100,000, ,000, Redeemable preference shares of 0.01 each At 1 January/date of incorporation 140, ,000 12,191 - Issuance of shares during the financial year ,248 12,191 At 31 December 140, ,000 35,439 12,191 Total 100,140, ,140,000 35,752 12,269 During the financial year, the Company issued 235 ordinary shares at par value of 1 each and 2,324,917 redeemable preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company during the financial year from 1 January 2016 to 31 December 2016 is as follows: Type of share Purpose of issue Number of shares Par value Premium Terms of issue Date of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 668, Cash, at June 2016 Ordinary Working capital Cash, at par 30 June 2016 Preference Working capital 745, Cash, at September 2016 Ordinary Working capital Cash, at par 30 September 2016 Preference Working capital 745, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 165, Cash, at 100 Financial Statements Annual Report

144 E-Cap (Internal) Three Sdn Bhd ( D) 8 SHARE CAPITAL (CONTINUED) The main features of the redeemable preference shares ( RPS ) are as follows: The holders of the shares shall be entitled to any dividend declared. The RPS shall rank pari passu among themselves and in priority of ordinary shares. The holders of the RPS shall be entitled to receive all notices, accounts, and report which holder of the ordinary shares are entitled to. The holders of the RPS shall only be entitled to vote at the meetings convened for the purpose of transacting to the following items of the business: (a) (b) (c) Variation, whether directly or indirectly, of the rights attached to the RPS. Winding-up of the Company. Such other circumstances as may be expressly provided under the law from time to time in respect of preference shares. Subject to the Companies Act, 1965, the Company shall have the right at any time, to redeem all or part of the RPS at a price of 100 per RPS ( Redemption Amount ). The RPS are not convertible into ordinary shares or any other classes of shares in the Company. The RPS are classified as equity as they are redeemable but only at the Company s option, and any dividends are discretionary. 9 SHARE PREMIUM At 1 January/30 October 2014 (date of incorporation) 121,895,409 - Issuance of redeemable preference shares during the financial year/period 232,468, ,895,409 At 31 December 354,363, ,895,

145 E-Cap (Internal) Three Sdn Bhd ( D) 10 SIGNIFICANT RELATED PARTY DISCLOSURES Parties are considered related if the party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions The related parties of, and their relationships with the Company, are as follows: Related party Yayasan Ekuiti Nasional Ekuinas Capital Sdn Bhd Premier Share Sdn Bhd Premier Agenda Sdn Bhd Ilmu Education Group Sdn Bhd Ekuiti Nasional Berhad Relationship Ultimate holding foundation which is formed by the Government of Malaysia Immediate holding company Subsidiary company Subsidiary company Associate company Related company 10.2 Key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel of the Company includes all the Directors of the Company who make certain critical decisions in relation to the strategic direction of the Company. The Company has no key management personnel compensation during the financial year Significant related party transactions In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions. Financial year ended Financial period from (date of incorporation) to Management fee expense Ekuiti Nasional Berhad 26,250,000 30,625,000 Financial Statements Annual Report

146 E-Cap (Internal) Three Sdn Bhd ( D) 10 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED) 10.4 Significant related party balances Included in the Company s statement of financial position are the following significant related party balances: Financial year ended Financial period from (date of incorporation) to Amount due from immediate holding company Ekuinas Capital Sdn Bhd 19,800,000 - Amount due (to)/from subsidiaries Premier Share Sdn Bhd - 7,928 Premier Agenda Sdn Bhd (19,800,000) - (19,800,000) 7,928 Amount due from a related company Ilmu Education Group Sdn Bhd - 13,000,000 All the above outstanding balances are unsecured, interest-free and repayable upon demand. 11 COMPARATIVE FIGURES The comparative figures of the Company in the statement of comprehensive income, statement of cash flows and the related notes to the financial statements are not comparable as they are for the 14 months financial period ended 31 December AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS The financial statements have been authorised for issue in accordance with a resolution of the Board of Directors. 36

147

148

149 ExpandingOur Horizons E-Cap (External) One Sdn Bhd Financial Statements Annual Report 2016

150 Reports and Statutory FINANCIAL STATEMENTS

151 4-7 Directors Report 8 Statement By Directors 8 Statutory Declaration 9-11 Independent Auditors Report 12 Statement Of Comprehensive Income 13 Statement Of Financial Position 14 Statement Of Changes In Equity 15 Statement Of Cash Flows 16-32

152 E-Cap (External) One Sdn Bhd ( T) Directors Report The Directors have pleasure in submitting their report and the audited financial statements of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Net profit for the financial year 61,031,222 DIVIDEND No dividend has been paid, declared or proposed since the end of the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December ISSUE OF SHARES During the financial year, the Company issued 195 ordinary shares at par value of 1 each and 33,327 redeemable preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company during the financial year ended 31 December 2016 is as follows: Type of share Purpose of issue Number of shares Par value Premium Term of issue Date of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 4, Cash, at July 2016 Ordinary Working capital Cash, at par 1 July 2016 Preference Working capital 19, Cash, at September 2016 Ordinary Working capital Cash, at par 30 September 2016 Preference Working capital 3, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 5, Cash, at 100 The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. The new preference shares issued during the financial year rank pari passu in all respects with the existing preference shares of the Company. There were no other changes in the authorised, issued and fully paid capital of the Company during the financial year ended 31 December

153 E-Cap (External) One Sdn Bhd ( T) Directors Report RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements and notes to the financial statements. DIRECTORS The Directors who have held office since the date of the last report are as follows: Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda Datuk Noriyah binti Ahmad Mazhairul bin Jamaludin In accordance with Article 66 of the Company s Articles of Association, Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda shall retire from the Board in the forthcoming Annual General Meeting and being eligible, offers himself for re-election. DIRECTORS INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors Shareholdings maintained by the Company in accordance with Section 59 of the Companies Act, 2016, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporations during the financial year. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the date of last report, no Director has received or become entitled to receive a benefit 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. Financial Statements Annual Report

154 E-Cap (External) One Sdn Bhd ( T) Directors Report STATUTORY INFOATION ON THE FINANCIAL STATEMENTS Before the financial statements of the Company were made out, the Directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there are no known bad debts that had been written off and that allowance need not be made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) (d) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Company misleading. 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, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Company which has arisen since the end of the financial year. In the opinion of the Directors: (a) (b) the results of the Company s operations for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the financial year in which this report is made. 6

155 E-Cap (External) One Sdn Bhd ( T) Directors Report IMMEDIATE HOLDING COMPANY AND ULTIMATE HOLDING FOUNDATION The Directors regard Ekuinas Capital Sdn Bhd, a company incorporated in Malaysia, as the immediate holding company. The Directors regard Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company s ultimate holding foundation. SUBSIDIARIES Details of subsidiaries are set out in Note 7 to the financial statements. AUDITORS REMUNERATION Details of auditors remuneration are set out in Note 5 to the financial statements. There were no indemnity given or insurance effected for any auditor of the Company. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution. RAJA TAN SRI DATO SERI ARSHAD BIN RAJA TUN UDA DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Financial Statements Annual Report

156 E-Cap (External) One Sdn Bhd ( T) Statement By Directors Pursuant To Section 251(2) Of The Companies Act, 2016 We, Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda and Mazhairul bin Jamaludin, being two of the Directors of E-Cap (External) One Sdn Bhd, state that, in the opinion of the Directors, the financial statements set out on pages 12 to 32 have been properly drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2016 and of the results and cash flows of the Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Signed on behalf of the Board of Directors in accordance with their resolution. RAJA TAN SRI DATO SERI ARSHAD BIN RAJA TUN UDA DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Statutory Declaration Pursuant To Section 251(1) Of The Companies Act, 2016 I, Mazhairul bin Jamaludin, the Officer primarily responsible for the financial management of E-Cap (External) One Sdn Bhd, do solemnly and sincerely declare that the financial statements set out on pages 12 to 32 are, in my opinion, 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, MAZHAIRUL BIN JAMALUDIN GROUP CHIEF FINANCIAL OFFICER Subscribed and solemnly declared by the above named Mazhairul bin Jamaludin at Kuala Lumpur before me, on 14 March COMMISSIONER FOR OATHS 8

157 E-Cap (External) One Sdn Bhd ( T) Independent Auditors Report To The Member Of E-Cap (External) One Sdn Bhd (Incorporated In Malaysia) (Company No: T) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of E-Cap (External) One Sdn Bhd ( the Company ) give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. What we have audited We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 12 to 32. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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 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. 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 Directors Report, Statement by Directors and Statutory Declaration but does not include the financial statements of the Company and our auditors report thereon. Our opinion on the financial statements 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 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 this other information, we are required to report that fact. We have nothing to report in this regard. Financial Statements Annual Report

158 E-Cap (External) One Sdn Bhd ( T) Independent Auditors Report To The Member Of E-Cap (External) One Sdn Bhd (Incorporated In Malaysia) (Company No: T) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Responsibilities of the directors for the financial statements The directors of the Company are responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Company, the directors are responsible for assessing the Company s ability to continue as a 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 Company or to cease operations, or have no realistic alternative but to do so. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements 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 International Standards on Auditing 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 in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) Identify and assess the risks of material misstatement of the financial statements 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 Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. (d) 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 Company s ability 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 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 Company to cease to continue as a going concern. (e) Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. 10

159 E-Cap (External) One Sdn Bhd ( T) Independent Auditors Report To The Member Of E-Cap (External) One Sdn Bhd (Incorporated In Malaysia) (Company No: T) REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. OTHER MATTERS This report is made solely to the member of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants DATO MOHAMMAD FAIZ BIN MOHAMMAD AZMI (No. 2025/03/18 (J)) Chartered Accountant Kuala Lumpur 14 March 2017 Financial Statements Annual Report

160 E-Cap (External) One Sdn Bhd ( T) Statement Of Comprehensive Income INCOME Net unrealised gain/(loss) on investment at fair value through profit or loss 7 68,481,473 (2,800,996) Note EXPENSES Management fees 10.3 (1,763,090) (1,761,095) Other expenses (5,687,161) (14,577) Profit/(loss) before taxation 5 61,031,222 (4,576,668) Taxation TOTAL COMPREHENSIVE PROFIT/(LOSS) AND NET INCOME/(LOSS) FOR THE FINANCIAL YEAR 61,031,222 (4,576,668) The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 12

161 E-Cap (External) One Sdn Bhd ( T) Statement Of Financial Position As At 31 December 2016 NON-CURRENT ASSET Investments at fair value through profit or loss 7 362,814, ,568,887 Note CURRENT ASSET Amount due from immediate holding company ,786,182 - CURRENT LIABILITY Accruals 5,682,818 14,949 NET CURRENT ASSET/(LIABILITY) 46,103,364 (14,949) 408,918, ,553,938 FINANCED BY: Share capital 8 3,031,265 3,030,736 Share premium 9 302,666, ,334,464 Retained earnings 103,219,960 42,188, ,918, ,553,938 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

162 E-Cap (External) One Sdn Bhd ( T) Statement Of Changes In Equity Note Issued and fully paid ordinary shares of 1 each Number of shares Share capital Issued and fully paid redeemable preference shares of 0.01 each Number of shares Share capital Nondistributable Distributable Share premium Retained earnings Total At 1 January ,000,800 3,000,800 2,993,644 29, ,334,464 42,188, ,553,938 Issuance of shares during the financial year 8, , ,332,366-3,332,895 Total comprehensive profit for the financial year ,031,222 61,031,222 At 31 December ,000,995 3,000,995 3,026,971 30, ,666, ,219, ,918,055 At 1 January ,000,640 3,000,640 2,812,405 28, ,212,376 46,765, ,006,546 Issuance of shares during the financial year 8, ,239 1,812 18,122,088-18,124,060 Total comprehensive loss for the financial year (4,576,668) (4,576,668) At 31 December ,000,800 3,000,800 2,993,644 29, ,334,464 42,188, ,553,938 The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. 14

163 E-Cap (External) One Sdn Bhd ( T) Statement Of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before taxation 61,031,222 (4,576,668) Note Adjustment for: Net unrealised (gain)/loss on investments at fair value through profit or loss 7 (68,481,473) 2,800,996 Operating loss before working capital changes (7,450,251) (1,775,672) Changes in working capital: Accruals 5,667,869 (3,901) Amount due from immediate holding company (51,786,182) - Net cash flows used in operating activities (53,568,564) (1,779,573) CASH FLOWS FROM INVESTING ACTIVITIES Additional capital call for investments 7 (10,192,992) (16,344,487) Capital distributions from investments 60,428,661 - Net cash flows generated from/(used in) investing activities 50,235,669 (16,344,487) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of ordinary shares Proceeds from the issuance of redeemable preference shares 8, 9 3,332,700 18,123,900 Net cash flows generated from financing activities 3,332,895 18,124,060 NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR - - CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR - - CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR - - The accompanying summary of significant accounting policies and notes to the financial statements form an integral part of these financial statements. Financial Statements Annual Report

164 E-Cap (External) One Sdn Bhd ( T) The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. The Company is a private limited company, incorporated and domiciled in Malaysia. The address of the registered office of the Company is: Tingkat 7, Bangunan Setia 1, 15, Lorong Dungun, Bukit Damansara, Kuala Lumpur. The principal place of business of the Company is: Level 13, Surian Tower, No 1, Jalan PJU 7/3, Mutiara Damansara, Petaling Jaya, Selangor Darul Ehsan. The principal accounting policies applied in preparing the financial statements are set out below. These policies have been applied to all years presented, unless otherwise stated. 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act, 1965 in Malaysia. The financial statements have been prepared under the historical cost convention, as modified by the investments designated at fair value through profit or loss. The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Company s accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. 16

165 E-Cap (External) One Sdn Bhd ( T) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.1 Standards, amendments to published standards and interpretations that are applicable and effective The new accounting standards, amendments and improvements to published standards and interpretations that are effective and applicable for the Company s financial year beginning on or after 1 January 2016 are as follows: Annual Improvements to MFRSs Cycle Amendments to MFRS 101 Presentation of financial statement Disclosure Initiative Apart from the new presentation and disclosure requirements as disclosed in the financial statements, the adoption of the above standards and amendments to published standards does not have any other material impact on the Company s financial statements. 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (i) Financial year beginning on/after 1 January 2017 Amendments to MFRS 107 Statement of Cash Flows Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities. Amendments to MFRS 112 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value. In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences. (ii) Financial year beginning on/after 1 January 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. The complete version of MFRS 9 was issued in November MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Financial Statements Annual Report

166 E-Cap (External) One Sdn Bhd ( T) 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 1.2 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company but not yet effective (continued) (ii) Financial year beginning on/after 1 January 2018 (continued) For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. MFRS 9 introduces an expected credit loss model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. MFRS 15 Revenue from Contracts with Customers (effective from 1 January 2018) replaces MFRS 118 Revenue and MFRS 111 Construction Contracts and related interpretations. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Unless otherwise disclosed, the above standards, amendments to published standards and interpretations to existing standards are not anticipated to have any significant impact on the Company s financial statements in the year of initial application. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 INVESTMENT ENTITY AND CONSOLIDATION Investment entity The Company has been deemed to meet the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements as the following conditions exist: (a) (b) (c) The Company obtained funds from its investor for the purpose of providing investment management services; The Company commits to its investor that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and The performance of investments made through its subsidiaries are measured and evaluated on a fair value basis. 18

167 E-Cap (External) One Sdn Bhd ( T) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 INVESTMENT ENTITY AND CONSOLIDATION (CONTINUED) Investment entity (continued) The Directors have considered the definition of an Investment Entity per MFRS 10 Consolidated Financial Statements and satisfied that the Company meets all of the typical characteristics ascribed. The absence of any of the characteristic does not disqualify the Company from being classified as an Investment Entity. The Company being an Investment Entity is exempted from preparing consolidated financial statements Subsidiaries The Company does not have any other subsidiaries other than those determined to be controlled subsidiary investments. Controlled subsidiary investments are measured at fair value through profit or loss and not consolidated, in accordance with MFRS 10. The fair value of controlled subsidiary investments is determined on a consistent basis to all other investments measured at fair value through profit or loss as described in Note 3 and Note 4.6. Where the Company is deemed to control an underlying portfolio company, whereby the control be via voting rights or through the ability to direct the relevant activities in return for access to a significant portion of the variable gains and losses derived from those relevant activities, the underlying portfolio company and its results are also not consolidated and are instead reflected at fair value through the profit or loss. Movements in the fair value of the Company s portfolio companies may expose the Company to potential gains or losses in the income statement. A subsidiary is derecognised on its disposal. The difference between the net disposal proceeds and the carrying fair value is recognised in the income statement. 2.2 FINANCIAL ASSETS Financial assets designated at fair value through profit or loss Classification Financial assets designated at fair value through profit or loss at inception are financial assets that are acquired as part of the principal activities of the Company. They are presented as non-current asset. The Company s financial assets designated at fair value through profit or loss comprise of investment at fair value through profit or loss in the statement of financial position Recognition and initial measurement Financial assets at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in income statement Subsequent measurement Subsequent to initial recognition, all financial assets designated at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value are presented in the income statement in the period in which they arise. Financial Statements Annual Report

168 E-Cap (External) One Sdn Bhd ( T) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.2 FINANCIAL ASSETS (CONTINUED) Financial assets designated at fair value through profit or loss (continued) De-recognition A financial asset is de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership Loans and receivables Classification Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve (12) months after the end of the reporting year which are classified as non-current assets. The Company s loans and receivables comprise of amount due from immediate holding company in the statement of financial position Recognition and initial measurement Loans are receivables are initially recognised at fair value plus transaction costs that are directly attributable to its acquisition Subsequent measurement Loans and receivables are subsequently carried at amortised cost using the effective interest method Subsequent measurement impairment of loans and receivables The Company assesses at the end of the reporting year whether there is objective evidence that loans and receivables impaired. Loans and receivables impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement. As at the end of the reporting year, there is no recognition of impairment in the income statement De-recognition Loans and receivables are de-recognised when the rights to receive cash flows from loans and receivables have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. 20

169 E-Cap (External) One Sdn Bhd ( T) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.3 PROVISIONS Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligations, and when a reliable estimate of the amount can be made. 2.4 FINANCIAL LIABILITIES Classification Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139 Financial Instruments: Recognition and Measurement, are recognised in the statement of financial position when, and only when, the Company becomes party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The Company s financial liability comprises of accruals in the statement of financial position Recognition and measurement Financial liabilities are recognised initially at fair value plus directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method De-recognition A financial liability is de-recognised when the obligation under the liability is extinguished when an existing financial liability is replaced by another from the same party on substantially different terms, or the term of an existing liability are substantially modified. Such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. 2.5 SHARE CAPITAL Ordinary shares are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity. 2.6 CARRIED INTEREST Carried interest represents the fees payable to the Fund Management Company and is computed and accrued at each financial year end based on the valuation of the investments in the Fund s portfolio of companies, after accounting for appropriate outflow payments/inflow receipts in accordance with the terms stated in the Global Fund Management Agreement. Any increase or decrease in carried interest is recognised in the income statement. Financial Statements Annual Report

170 E-Cap (External) One Sdn Bhd ( T) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.7 INCOME TAXES Current tax expense is determined according to Malaysian tax laws and includes all taxes based upon the taxable profits. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates enacted or substantively enacted by the reporting year are used to determine deferred income tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. 3 SUMMARY OF SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of the Company s financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting year. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. In the process of applying the Company s accounting policies, the Directors and management have made the following judgements which have the most significant effect on the amounts recognised in the financial statements: (a) Valuation of unquoted investments The Company carries its investments at fair value, with changes in fair values being recognised in the income statement. The Company estimates the fair values of its unquoted investments based on net assets valuation methods as at 31 December 2016, as recommended by the International Private Equity and Venture Capital Valuation Guidelines. The Directors believe that net assets valuation method is a fair representation of fair value as per MFRS 13 as the net assets of the Company s investments have been adjusted to approximate fair value. Where expectations differ from original estimates, the difference will impact the fair value of the unquoted investment. (b) Carried interest Carried interest represents the amount payable to Ekuiti Nasional Berhad, the Fund Management Company, based on the valuation of investments in the Fund s portfolio of companies. Significant judgements are required in determining the extent of the carried interest expense to be recognised which is dependent on the valuation of the Fund s portfolio. Where expectations differ from original estimates, the difference will impact the recognition of carried interest. 22

171 E-Cap (External) One Sdn Bhd ( T) 4 FINANCIAL RISK MANAGEMENT 4.1 Financial risk management objectives and policies The Company s overall financial risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Company s financial risk management policies. The Board of Directors reviews these risks based on the approved treasury policies and investment guidelines, which cover the management of these risks. The Company is exposed to market price risk, credit risk and liquidity risk. 4.2 Market price risk The fair value of unquoted investments are based on the net assets valuation method which have been adjusted to approximate fair value. The company is therefore exposed to market price risk as the adjustments to net asset value ( NAV ) are made based on valuation methods as recommended by the International Private Equity and Venture Capital Valuation Guidelines to derive a fair value based on multiples of comparable listed companies. The impact of a higher/lower selected comparable companies discounted earnings multiples is disclosed in Note Credit risk The Company s exposure to credit risk is limited as the Company is an investment holding company. The Company s exposure to credit risk is on the carrying amount of amount due from immediate holding company which is repayable upon demand. 4.4 Liquidity risk The Company s exposure to liquidity risk is limited as the Company is an investment holding company company and its cash management and treasury functions are managed by Ekuiti Nasional Berhad ( Ekuinas ), a related company. Furthermore, the Company has the ability to obtain funding through the immediate holding company to ensure settlement of all transaction costs and expenses. The Company s exposure to liquidity risk is on the undiscounted contractual payments of accruals which is shortterm and repayable within one year. 4.5 Capital management The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to provide returns to the shareholder and to maintain an optimal capital structure to reduce the cost of capital. The Company is not subject to any externally imposed capital requirements. Financial Statements Annual Report

172 E-Cap (External) One Sdn Bhd ( T) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.6 Fair value estimation of the financial instruments Financial instruments comprise of financial assets and financial liabilities. Fair value is the amount at which a financial asset could be exchanged or a financial liability settled, between knowledgeable and willing parties in orderly transaction between market participants at the measurement date. The information presented herein represents the estimates of fair values as at the end of the reporting year. Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. Methodologies and assumptions had been used in deriving the fair values of the investments at the end of the reporting year as disclosed in Note 4.7 to the financial statements. The carrying amounts of current asset and liability approximate their fair value due to the relatively short term nature of these financial instruments. 4.7 Fair value hierarchy The different levels have been defined as follows: (i) (ii) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and (iii) Level 3 inputs are unobservable inputs that have been applied in the models to value the respective asset or liability. The following table presents the Company s financial instruments that are measured at fair value, other than the short term financial instruments, which falls under Level 3 in the fair value hierachy: Financial asset Investments at fair value through profit or loss 362,814, ,568,887 Investments classified within Level 3 have significant unobservable inputs, as they are traded infrequently. These comprise of the Company s investment in other private equity funds ( investee funds ). In determining the fair value, the Company relies on the net asset value ( NAV ) of the Investee Funds as reported in the latest available financial statements and capital account statements provided by the general partner, unless the Company is aware of reasons that such a valuation may not be the approximation of fair value. In such cases, the Company will make adjustments to the NAV obtained in order to determine a carrying value that more appropriately reflects the fair value at the reporting date

173 E-Cap (External) One Sdn Bhd ( T) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.7 Fair value hierarchy (continued) The following table presents the movement in Level 3 financial instruments: Investments at fair value through profit or loss At 1 January 344,568, ,025,396 Additional capital call for investments 10,192,992 16,344,487 Capital distributions from investments (60,428,661) - Net unrealised gain/(loss) on investment at fair value through profit or loss 68,481,473 (2,800,996) At 31 December 362,814, ,568,887 Significant unobservable inputs The following table discloses the valuation techniques by the Company for financial assets recognised at fair value and classified as Level 3. Fair value at Valuation technique 2016 Reasonable possible shift 2015 Change in valuation Asset Investments at fair value through profit or loss 362,814,691 NAV* +/- 5% +/-18,140, Investments at fair value through profit or loss 344,568,887 NAV* +/- 5% +/-17,228,000 If the NAV had been 5% higher/lower, with all other variables held constant, the Company s profit after tax would have been 18,140,000 higher/lower (2015: 17,228,000) higher/lower. * NAV is based on the latest available report and capital statements provided by the General Partner. The detailed impact of selecting higher/lower comparable company s discounted earnings multiple is not disclosed as it is not practicable. Valuation process applied by the Company for Level 3 fair value The Company has an established control framework in respect to the measurement of fair values of financial instruments. This includes a team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to senior management. The team regularly reviews significant unobservable inputs and valuation adjustments. Financial Statements Annual Report

174 E-Cap (External) One Sdn Bhd ( T) 4 FINANCIAL RISK MANAGEMENT (CONTINUED) 4.8 Financial instruments by category Loans and receivable/ other liability Designated at fair value through profit or loss Loans and receivable/ other liability Designated at fair value through profit or loss Financial assets Investments at fair value through profit or loss - 362,814, ,568,887 Amount due from immediate holding company 51,786, Total 51,786, ,814, ,568,887 Financial liability Accruals 5,682,818-14,949-5 PROFIT/(LOSS) BEFORE TAXATION Profit/(loss) before taxation is arrived at after charging: Auditors remuneration - Statutory audit fee 9,700 9,500 - Non-audit fee 4,650 3,050 14,350 12,

175 E-Cap (External) One Sdn Bhd ( T) 6 TAXATION Current tax: Malaysian taxation Reconciliation between tax expense and the product of accounting profit/(loss) multiplied by the Malaysian tax rate is as follows: Profit/(loss) before taxation 61,031,222 (4,576,668) Tax calculated at rate 24% (2015: 25%) 14,647,493 (1,144,167) Income not subject to tax (16,435,553) - Expenses not deductible for tax purpose 1,788,060 1,144,167 Taxation - - On 26 November 2010, the Ministry of Finance granted income tax exemption on the statutory business income for a period of five (5) years commencing from year of assessment 2009 until 2013 for the Company. On 5 August 2013, the exemption was extended for an additional period of 5 years commencing from year of assessment 2014 until 2018 for the company. 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Unquoted shares, at fair value: At 1 January 344,568, ,025,396 Additional capital call for investments 10,192,992 16,344,487 Capital distributions from investments (60,428,661) - Net unrealised gain/(loss) on investment at fair value through profit or loss 68,481,473 (2,800,996) At 31 December 362,814, ,568, Financial Statements Annual Report

176 E-Cap (External) One Sdn Bhd ( T) 7 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED) The details of the investments are as follows: Name Navis Malaysia Growth Opportunities Fund I, L.P. * Place of incorporation Cayman Islands Principal activity Investment holding CIMB National Equity Fund Ltd. P. * Labuan Investment holding TAP Harimau Fund L.P.* Labuan Investment holding Relationship Company s effective interest 2016 % 2015 % Subsidiary Subsidiary Subsidiary * Audited by PricewaterhouseCoopers, Malaysia The significant investment activities during the financial year ended 31 December 2016 were as follows: (a) (b) (c) (d) (e) During the financial year, the Company made additional drawdowns into Navis Malaysia Growth Opportunities Fund I, L.P., amounting to 7,292,342. During the financial year, the Company received 8,270,485 from Navis Malaysia Growth Opportunities Fund I, L.P., being the first cash distribution from portfolio investments. During the financial year, the Company made additional drawdowns into CIMB National Equity Fund Ltd. P., amounting to 1,959,012. During the financial year, the Company received 52,158,176 from CIMB National Equity Fund Ltd. P., being the second cash distribution from portfolio investments. During the financial year, the Company made additional drawdowns into TAP Harimau Fund L.P., amounting to 941,

177 E-Cap (External) One Sdn Bhd ( T) 8 SHARE CAPITAL Authorised Issued and fully paid Ordinary shares of 1 each At 1 January ,000,000 3,000,800 Issuance of shares during the financial year At 31 December ,000,000 3,000,995 Redeemable preference shares of 0.01 each At 1 January ,000 29,936 Issuance of shares during the financial year At 31 December ,000 30,270 Total 100,090,000 3,031,265 Authorised Issued and fully paid Ordinary shares of 1 each At 1 January ,000,000 3,000,640 Issuance of shares during the financial year At 31 December ,000,000 3,000,800 Redeemable preference shares of 0.01 each At 1 January ,000 28,124 Issuance of shares during the financial year - 1,812 At 31 December ,000 29,936 Total 100,090,000 3,030,736 During the financial year, the Company issued 195 ordinary shares at par value of 1 each and 33,327 redeemable preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. Financial Statements Annual Report

178 E-Cap (External) One Sdn Bhd ( T) 8 SHARE CAPITAL (CONTINUED) A summary of the shares issued by the Company for the financial year ended 31 December 2016 is as follows: Date of issue Type of share Purpose of issue Number of shares Par value Premium Term of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 4, Cash, at July 2016 Ordinary Working capital Cash, at par 1 July 2016 Preference Working capital 19, Cash, at September 2016 Ordinary Working capital Cash, at par 30 September 2016 Preference Working capital 3, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 5, Cash, at 100 The main features of the redeemable preference shares ( RPS ) are as follows: The holders of the shares shall be entitled to any dividend declared. The RPS shall rank pari passu among themselves and in priority of ordinary shares. The holders of the RPS shall be entitled to receive all notices, accounts, and report which holder of the ordinary shares are entitled to. The holders of the RPS shall only be entitled to vote at the meetings convened for the purpose of transacting to the following items of the business: (a) (b) (c) Variation, whether directly or indirectly, of the rights attached to the RPS. Winding-up of the Company. Such other circumstances as may be expressly provided under the law from time to time in respect of preference shares. Subject to the Companies Act, 1965, the Company shall have the right at any time, to redeem all or part of the RPS at a price of 100 per RPS ( Redemption Amount ). The RPS are not convertible into ordinary shares or any other classes of shares in the Company. The RPS are classified as equity as they are redeemable but only at the Company s option, and any dividends are discretionary. 30

179 E-Cap (External) One Sdn Bhd ( T) 9 SHARE PREMIUM At 1 January 299,334, ,212,376 Issuance of redeemable preference shares during the financial year 3,332,366 18,122,088 At 31 December 302,666, ,334, SIGNIFICANT RELATED PARTY DISCLOSURES Parties are considered related if the party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions The related parties of, and their relationship with the Company, are as follows: Related party Yayasan Ekuiti Nasional Ekuinas Capital Sdn Bhd Ekuiti Nasional Berhad Relationship Ultimate holding foundation which is formed by the Government of Malaysia Immediate holding company Related company 10.2 Key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel of the Company includes all the Directors of the Company who make certain critical decisions in relation to the strategic direction of the Company. The Company has no key management personnel compensation during the financial year Significant related party transaction In addition to related party disclosures mentioned elsewhere in the financial statements, set out below is the significant related party transaction, during the financial year. Management fee expense Ekuiti Nasional Berhad 1,763,090 1,761, Financial Statements Annual Report

180 E-Cap (External) One Sdn Bhd ( T) 10 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED) 10.4 Significant related party balance Included in the Company s statement of financial position is the following significant related party balance: Amount due from immediate holding company Ekuinas Capital Sdn Bhd 51,786, CAPITAL COMMITMENTS Capital committed and contracted for 99,198, ,391,318 Capital called 300,801, ,608, ,000, ,000,000 These are capital committed under the Ekuinas Outsourced Programme AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS The financial statements have been authorised for issue in accordance with a resolution of the Board of Directors. 32

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183 ExpandingOur Horizons E-Cap (External) Two Sdn Bhd Financial Statements Annual Report 2016

184 Reports and Statutory FINANCIAL STATEMENTS

185 4-7 Directors Report 8 Statement By Directors 8 Statutory Declaration 9-11 Independent Auditors Report 12 Statement Of Comprehensive Income 13 Statement Of Financial Position 14 Statement Of Changes In Equity 15 Statement Of Cash Flows 16-31

186 E-Cap (External) Two Sdn Bhd ( M) Directors Report The Directors have pleasure in submitting their report and the audited financial statements of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company are to carry on the business of an investment holding company, to invest in private equity investments and to acquire the shares of or invest in any company. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Net profit for the financial year 1,795,591 DIVIDEND No dividend has been paid, declared or proposed since the end of the previous financial year. The Directors do not recommend the payment of any final dividend for the financial year ended 31 December ISSUE OF SHARES During the financial year, the Company issued 274 ordinary shares at par value of 1 each and 314,184 redeemable preference shares of 0.01 each at an issue price of 100. The shares have been fully paid in cash. A summary of the shares issued by the Company during the financial year 31 December 2016 is as follows: Type of share Purpose of issue Number of shares Par value Premium Terms of issue Date of issue 31 March 2016 Ordinary Working capital Cash, at par 31 March 2016 Preference Working capital 8, Cash, at July 2016 Ordinary Working capital Cash, at par 1 July 2016 Preference Working capital 57, Cash, at September 2016 Ordinary Working capital Cash, at par 30 September 2016 Preference Working capital 84, Cash, at December 2016 Ordinary Working capital Cash, at par 31 December 2016 Preference Working capital 163, Cash, at 100 The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. The new preference shares issued during the financial year rank pari passu in all respects with the existing preference shares of the Company. There were no other changes in the authorised, issued and fully paid capital of the Company during the financial year ended 31 December

187 E-Cap (External) Two Sdn Bhd ( M) Directors Report RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements and notes to the financial statements. DIRECTORS The Directors who have held office since the date of incorporation are as follows: Syed Yasir Arafat bin Syed Abd Kadir Mazhairul bin Jamaludin In accordance with Article 66 of the Company s Articles of Association, there will be no retirement by rotation in the subsequent Annual General Meeting since there are only two Directors in office at the end of the financial year. DIRECTORS INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors Shareholdings maintained by the Company in accordance with Section 59 of the Companies Act, 2016, none of the Directors in office at the end of the financial year held any interest in shares, warrants, share options and debentures in the Company or its related corporations during the financial year. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the date of last report, no Director has received or become entitled to receive a benefit 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. Financial Statements Annual Report

188 E-Cap (External) Two Sdn Bhd ( M) Directors Report STATUTORY INFOATION ON THE FINANCIAL STATEMENTS Before the financial statements of the Company were made out, the Directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there are no known bad debts that had been written off and that allowance need not be made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) (d) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Company misleading. 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, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Company which has arisen since the end of the financial year. In the opinion of the Directors: (a) (b) the results of the Company s operations for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the financial year in which this report is made. 6

189 E-Cap (External) Two Sdn Bhd ( M) Directors Report IMMEDIATE HOLDING COMPANY AND ULTIMATE HOLDING FOUNDATION The Directors regard Ekuinas Capital Sdn Bhd, a company incorporated in Malaysia, as the immediate holding company. The Directors regard Yayasan Ekuiti Nasional, a foundation incorporated in Malaysia, as the Company s ultimate holding foundation. SUBSIDIARIES Details of subsidiaries are set out in Note 7 to the financial statements. AUDITORS REMUNERATION Details of auditors remuneration are set out in Note 5 to the financial statements. Then were no indemnity given or insurance effected for any auditor of the Company. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution. SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Financial Statements Annual Report

190 E-Cap (External) Two Sdn Bhd ( M) Statement By Directors Pursuant To Section 251(2) Of The Companies Act, 2016 We, Syed Yasir Arafat bin Syed Abd Kadir and Mazhairul bin Jamaludin, being two of the Directors of E-Cap (External) Two Sdn Bhd, state that, in the opinion of the Directors, the financial statements set out on pages 12 to 31 have been properly drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2016 and of the results and cash flows of the Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Signed on behalf of the Board of Directors in accordance with their resolution. SYED YASIR ARAFAT BIN SYED ABD KADIR DIRECTOR MAZHAIRUL BIN JAMALUDIN DIRECTOR Kuala Lumpur 14 March 2017 Statutory Declaration Pursuant To Section 251(1) Of The Companies Act, 2016 I, Mazhairul bin Jamaludin, being the Officer primarily responsible for the financial management of E-Cap (External) Two Sdn Bhd, do solemnly and sincerely declare that the financial statements set out on pages 12 to 31 are, in my opinion, 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, MAZHAIRUL BIN JAMALUDIN GROUP CHIEF FINANCIAL OFFICER Subscribed and solemnly declared by the abovenamed Mazhairul bin Jamaludin at Kuala Lumpur before me, on 14 March COMMISSIONER FOR OATHS 8

191 E-Cap (External) Two Sdn Bhd ( M) Independent Auditors Report To The Member Of E-Cap (External) Two Sdn Bhd (Incorporated In Malaysia) (Company No: M) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the financial statements of E-Cap (External) Two Sdn Bhd ( the Company ) give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. What we have audited We have audited the financial statements of the Company, which comprise the statement of financial position as at 31 December 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 12 to 31. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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 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. 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 Directors Report, but does not include the financial statements of the Company and our auditors report thereon. Our opinion on the financial statements 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 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 this other information, we are required to report that fact. We have nothing to report in this regard. Financial Statements Annual Report

192 E-Cap (External) Two Sdn Bhd ( M) Independent Auditors Report To The Member Of E-Cap (External) Two Sdn Bhd (Incorporated In Malaysia) (Company No: M) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Responsibilities of the directors for the financial statements The directors of the Company are responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Company, the directors are responsible for assessing the Company s ability to continue as a 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 Company or to cease operations, or have no realistic alternative but to do so. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements 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 International Standards on Auditing 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 in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) Identify and assess the risks of material misstatement of the financial statements 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 Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. (d) 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 Company s ability 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 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 Company to cease to continue as a going concern. (e) Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. 10

193 E-Cap (External) Two Sdn Bhd ( M) Independent Auditors Report To The Member Of E-Cap (External) Two Sdn Bhd (Incorporated In Malaysia) (Company No: M) REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. OTHER MATTERS This report is made solely to the member of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants DATO MOHAMMAD FAIZ BIN MOHAMMAD AZMI (No. 2025/03/18 (J)) Chartered Accountant Kuala Lumpur 14 March 2017 Financial Statements Annual Report