Red Ideas Holdings Berhad ( M) (Incorporated in Malaysia) Audited Financial Statements

Transcription

1 Red Ideas Holdings Berhad ( M) (Incorporated in Malaysia) Audited Financial Statements 2018

2 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) CONTENTS PAGE Directors' Report 1-5 Statement by Directors 6 Statutory Declaration 6 Independent Auditors' Report 7-11 Statements of Financial Position 12 Statements of Profit or Loss and Other Comprehensive Income 13 Consolidated Statement of Changes in Equity 14 Statement of Changes in Equity 15 Statements of Cash Flows 16 Notes to the Financial Statements 17-46

3 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) DIRECTORS REPORT The Directors of RED IDEAS HOLDINGS BERHAD, have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial period from 7 June 2017 (date of incorporation) to 31 December INCORPORATION AND COMMENCEMENT OF OPERATIONS The Company was incorporated on 7 June 2017 under the Companies Act 2016 and commenced operations on 25 July The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are disclosed in Note 7 to the financial statements. CONVERSION OF COMPANY STATUS The Company was converted from a private company to a public company on 21 September 2017 by a special resolution dated 18 September 2017 and the name of the Company be altered from Red Ideas Holdings Sdn. Bhd. to Red Ideas Holdings Berhad. RESULTS Group Company Loss for the financial period 1,504, ,975 Attributable to: Owners of the Company 1,504, ,975 In the opinion of the Directors, the results of operations of the Group and of the Company during the financial period have not been substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS No dividend has been paid or declared by the Company since the date of incorporation. The Directors also do not recommend any dividend payment in respect of the current financial period. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial period under review. 1

4 ISSUE OF SHARES AND DEBENTURES During the financial period, the Company issued the following new shares: Class No. of shares Term of issue Purposes Ordinary shares 3 Cash at 1.00 each Subscribers shares Ordinary shares existing share for 80 new shares at each Subdivision of subscribers shares Ordinary shares 80,002,400 Cash at each Acquisition of subsidiaries Redeemable preference shares 2,200,000 Cash at 1.00 each Settlement of director s advances Ordinary shares 20,000,700 Cash at 0.35 each Working capital These new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company. SHARE OPTIONS No options have been granted by the Company to any person during the financial period to take up unissued shares of the Company. No shares have been issued during the financial period by virtue of the exercise of any option to take up unissued shares of the Company. As at the end of the financial period, there were no unissued shares of the Company under option. DIRECTORS The directors in office during the financial period and during the period from the end of the financial period to date of the report are: Ignatius Ho Tzin Sung First director Foo Kah Seong First director Loke Tan Chung First director Dato Wee Hoe Gooi Hoe Soon Appointed on Lim Kee Choon Appointed on The person who is a director of the subsidiaries of the Company during the financial period (not including those directors listed above) is Chan Jen Sze. DIRECTORS BENEFITS Since the date of incorporation, none of the Directors of the Company has received or become entitled to receive any benefit (other than the benefits shown under directors remunerations) by reason of a contract made by the Company or a related corporation with a Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. During and at the end of financial year, no arrangement subsisted to which the Company was a party with the object of enabling 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. 2

5 DIRECTORS INTERESTS According to the register of directors' shareholding under section 59 of the Companies Act 2016, the interests of directors in office at the end of the financial period in the ordinary shares of the Company during the financial period are as follows: Number of Shares As at Subdivided /Allotted As at Sold Direct interest ordinary shares: Ignatius Ho Tzin Sung 1 21,600,674-21,600,675 Foo Kah Seong 1 21,600,674-21,600,675 Loke Tan Chung 1 25,200,694-25,200,695 Dato Wee Hoe Gooi Hoe Soon - 8,000,595-8,000,595 Direct interest redeemable preferences shares: Loke Tan Chung - 2,200,000-2,200,000 By virtue of the abovementioned directors interest in the Company, these directors are also deemed to have interests in the subsidiaries of the Company to the extent of the Company s interest in the subsidiaries. None of the other director in office at the end of the financial period has interest in shares of the Company and related corporations, during the financial period ended 31 December DIRECTORS REMUNERATIONS The details of the remunerations of the Directors of the Company comprising remunerations received / receivable from the Group and the Company during the financial period are as follows: Group Company Fees 54,561 39,000 Emoluments 200,000 - EPF contributions 24,000 - Other benefits ,113 39,000 None of the directors of the Company have received any other benefits other than in cash from the Company during the financial period. No payment has been paid to or payable to any third party in respect of the services provided to the Company by the directors during the financial period. INDEMNIFYING DIRECTORS, OFFICERS OR AUDITORS No indemnities have been given or insurance premiums paid, during or since the end of the financial period, for any person who is or has been the director, officer or auditor of the Group and the Company. SUBSIDIARIES The details of the subsidiaries are disclosed in Note 7 to the financial statements. AUDITORS REMUNERATIONS The details of the auditors remuneration are disclosed in Note 17 to the financial statements. 3

6 OTHER STATUTORY INFOATION Before the statements of comprehensive income and the statements of financial position of the Group and of the Company were made out, the directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and are satisfied themselves that all known bad debts have been written off and adequate allowance for doubtful debts has been made; and to ensure that any current assets, which were unlikely to realise in the ordinary course of business including the values of current assets as shown in the accounting records of the Company have been written down to an amount which the current assets 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 amount written off for bad debts or the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or not otherwise dealt with in this report or financial statements which would render any amounts stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Group and of the Company which has arisen since the end of the financial period and secures the liability of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial period. In the opinion of the Directors: (a) (b) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial period which, in the opinion of the directors, will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due; and there has not arisen in the interval between the end of the financial period 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 Group and of the Company for the current financial period in which this report is made. 4

7 AUDITORS The auditors, Messrs. McMillan Woods Mea, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 27 April IGNATIUS HO TZIN SUNG FOO KAH SEONG 5

8 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) STATEMENT BY DIRECTORS Pursuant to Section 251(2) of the Companies Act 2016 We, IGNATIUS HO TZIN SUNG and FOO KAH SEONG, being two of the Directors of RED IDEAS HOLDINGS BERHAD, state that in the opinion of the Directors, the financial statements set out on pages 12 to 46 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of their financial performance and cash flows for the financial period from 7 June 2017 (date of incorporation) to 31 December Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 27 April IGNATIUS HO TZIN SUNG FOO KAH SEONG STATUTORY DECLARATION Pursuant to Section 251(1)(b) of the Companies Act 2016 I, IGNATIUS HO TZIN SUNG, the Director primarily responsible for the financial management of RED IDEAS HOLDINGS BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 12 to 46 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, Subscribed and solemnly declared by the abovenamed} IGNATIUS HO TZIN SUNG at Petaling Jaya in} Selangor on 27 April 2018 } Before me, IGNATIUS HO TZIN SUNG Commissioner for Oaths 6

9 McMillan Woods Mea (AF 1995) CHARTERED ACCOUNTANTS 208 Block C, Phileo Damansara I, 9 Jalan 16/11, Off Jalan Damansara, Petaling Jaya, Selangor. Tel: / 4580 Fax: INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) Report on the Financial Statements Opinion We have audited the financial statements of Red Ideas Holdings Berhad, which comprise the statements of financial position as at 31 December 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial period from 7 June 2017 (date of incorporation) to 31 December 2017 and a summary of significant accounting policies and other explanatory information, as set out on pages 12 to 46. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and cash flows for the financial period from 7 June 2017 (date of incorporation) to 31 December 2017 in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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 Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By- Laws and the IESBA Code. 7

10 INDEPENDENT AUDITORS REPORT (Contd.) TO THE MEMBERS OF RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Intangible Assets Impairment and Review Under MFRS 136, the carrying amount of the intangible assets amounting to 2,628,070 as at 31 December 2017 is required to be tested for impairment at least annually. The Group s accounting policies for intangible assets are disclosed in Note 3.2 to the financial statements. This assessment requires the exercise of significant judgement about future market conditions including growths rates and discount rates. The key assumptions to the impairment test and the sensitivity of changes in these assumptions to the risk of impairment are disclosed in Note 5 to the financial statements. Our audit procedure and response Our audit procedures focused on evaluating and challenging the key assumptions used by management in conducting the impairment review. These procedures included challenging cash flow forecasts used, checking the computations thereof and comparison to recent performance. We have also assessed and validated the adequacy and appropriateness of the disclosure in the financial statements. 8

11 INDEPENDENT AUDITORS REPORT (Contd.) TO THE MEMBERS OF RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) Information Other than the Financial Statements and Auditors Report Thereon The Directors of the Company are responsible for the other information. The other information comprises the Directors Report but does not include the financial statements of the Group and of the Company and our auditors report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the Directors Report and, in doing so, consider whether the Directors Report is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Directors Report, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements of the Group and 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 2016 in Malaysia. The directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group s and 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 Group and the Company or to cease operations, or have no realistic alternative but to do so. 9

12 INDEPENDENT AUDITORS REPORT (Contd.) TO THE MEMBERS OF RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and 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) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (b) 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 Group s and the Company s internal control. (c) 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 Group s or 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 Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern. (e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation. (f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. 10

13 INDEPENDENT AUDITORS REPORT (Contd.) TO THE MEMBERS OF RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. McMillan Woods Mea AF 1995 Chartered Accountants Mea Fatt Leong 1346/8/19 (J) Chartered Accountant Petaling Jaya 27 April

14 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2017 Group Company Note ASSETS NON-CURRENT ASSETS Intangible assets 5 2,628,070 - Plant and equipment 6 154,275 - Investment in subsidiaries 7-1,000,030 Amounts due from subsidiaries 8-3,417,230 2,782,345 4,417,260 CURRENT ASSETS Inventories 9 152,615 - Trade receivables ,356 - Other receivables, deposits and prepayments 11 35,591 1,625 Cash and bank balances 5,809,364 4,926,603 6,261,926 4,928,228 TOTAL ASSETS 9,044,271 9,345,488 EQUITY AND LIABILITIES Equity attributable to owners of the Company Share capital 12 9,914,453 9,914,453 Translation reserve 13 72,714 - Accumulated loss (1,504,137) (653,975) Net Equity 8,483,030 9,260,478 CURRENT LIABILITIES Sundry payables and accruals ,241 85,010 TOTAL LIABILITIES 561,241 85,010 TOTAL EQUITY AND LIABILITIES 9,044,271 9,345,488 See accompanying Notes to the financial statements 12

15 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD FROM 7 JUNE 2017 (DATE OF INCORPORATION) TO 31 DECEMBER 2017 Group Company Note Revenue ,259 - Cost of sales (287,230) - Gross profit 51,029 - Other income 6,224 - Administrative expenses (1,561,390) (653,975) Loss from operations (1,504,137) (653,975) Finance cost - - Loss before tax 17 (1,504,137) (653,975) Income tax Loss for the financial period (1,504,137) (653,975) Other comprehensive income Items that will not be reclassified subsequently to profit or loss: Currency translation difference for a foreign subsidiary 72,714 - Total comprehensive loss for the financial period (1,431,423) (653,975) Loss for the financial period attributable to: Owners of the Company (1,504,137) (653,975) Total comprehensive loss for the financial period attributable to: Owners of the Company (1,431,423) (653,975) Loss per ordinary share Basic loss per ordinary share (sen) 19(a) (2.83) Diluted loss per ordinary share (sen) 19(b) (2.83) See accompanying Notes to the financial statements 13

16 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD FROM 7 JUNE 2017 (DATE OF INCORPORATION) TO 31 DECEMBER 2017 Attributable to Owners of the Company Non-distributable Distributable Share Translation Accumulated Net Capital Reserve Loss Equity Group Note As at (Date of incorporation) Loss for the financial period - - (1,504,137) (1,504,137) Other comprehensive income Currency translation difference for a foreign subsidiary - 72,714-72,714 Total comprehensive loss for the financial period - 72,714 (1,504,137) (1,431,423) Issue of shares 12 10,200, ,200,275 Transaction costs of shares issue 12 (285,825) - - (285,825) Total transactions with owners 9,914, ,914,450 As at ,914,453 72,714 (1,504,137) 8,483,030 See accompanying Notes to the financial statements 14

17 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD FROM 7 JUNE 2017 (DATE OF INCORPORATION) TO 31 DECEMBER 2017 Attributable to Owners of the Company Nondistributable Distributable Share Accumulated Net Capital Loss Equity Company Note As at (Date of incorporation) 3-3 Loss / Total comprehensive loss for the financial period - (653,975) (653,975) Issue of shares 12 10,200,275-10,200,275 Transaction costs of shares issue 12 (285,825) - (285,825) Total transactions with owners 9,914,450-9,914,450 As at 31 December ,914,453 (653,975) 9,260,478 See accompanying Notes to the financial statements 15

18 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL PERIOD FROM 7 JUNE 2017 (DATE OF INCORPORATION) TO 31 DECEMBER 2017 Group Company Note CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax (1,504,137) (653,975) Adjustments for: Amortization of intangible assets 5 143,204 - Depreciation 6 54,335 - Waiver of debt by a director (6,224) - Operating loss before changes in working capital (1,312,822) (653,975) Increase in inventories (78,578) - Decrease / (increase) in receivables 11,634 (1,625) (Decrease) / increase in payables (1,932,265) 85,010 Net cash used in operating activities (3,312,031) (570,590) CASH FLOWS FROM INVESTING ACTIVITIES Additions to intangible assets 5 (368,648) - Additions to plant and equipment 6 (52,352) - Acquisition of subsidiaries, net of cash acquired 7(b) 625,110 - Increase in amount due from subsidiaries - (3,417,230) Net cash from / (used in) investing activities 204,110 (3,417,230) CASH FLOWS FROM FINANCING ACTIVITY Net proceeds from issuance of shares 8,914,420 8,914,420 Net cash generated from financing activity 8,914,420 8,914,420 NET INCREASE IN CASH AND CASH EQUIVALENTS 5,806,499 4,926,600 Effects of exchange rate changes 2,862 - Balance at date of incorporation 3 3 Balance at end of the financial period 5,809,364 4,926,603 CASH AND CASH EQUIVALENTS CONSIST OF: Cash and bank balances 5,809,364 4,926,603 5,809,364 4,926,603 See accompanying Notes to the financial statements 16

19 RED IDEAS HOLDINGS BERHAD ( M) (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 7 JUNE 2017 (DATE OF INCORPORATION) TO 31 DECEMBER GENERAL INFOATION The Company was incorporated on 7 June 2017 under the Companies Act 2016 as a private limited company and domiciled in Malaysia. The Company was converted from a private company to a public company on 21 September 2017 by a special resolution dated 18 September 2017 and the name of the Company be altered from Red Ideas Holdings Sdn. Bhd. to Red Ideas Holdings Berhad. The Company is listed on the LEAP Market of Bursa Malaysia Securities Berhad. The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are disclosed in Note 7 to the financial statements. The registered office of the Company is located at 54B, Damai Complex, Jalan Lumut, Kuala Lumpur. The principal place of business of the Company is located at Unit 606, Block G, Pusat Dagangan Phileo Damansara 1, No. 9, Jalan 16/11, Seksyen 16, Petaling Jaya, Selangor. 2. BASIS OF PREPARATION (a) Statement of Compliance The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act 2016 in Malaysia (b) Basis of Measurement The financial statements have been prepared on the historical cost basis unless otherwise stated in Note 3 to the financial statements. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. (c) Functional and Presentation Currency The financial statements are presented in Ringgit Malaysia ( ), which is the Group s and the Company s functional currency. (d) Use of Estimate and Judgement The preparation of financial statements in conformity with MFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reported period. It also requires the Directors best knowledge of current events and actions, and therefore 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 4 to the financial statements. 17

20 2. BASIS OF PREPARATION (Contd.) (e) Adoption of New and Amendments to MFRS The Group and the Company had adopted the following new MFRS and amendments to MFRS for the current financial period: Effective for Financial Periods Beginning MFRSs and Amendments to MFRSs On or After Amendments to Disclosure Initiative 1 January 2017 MFRS 107 Amendments to Recognition of Deferred Tax Assets for 1 January 2017 MFRS 112 Unrealised Losses Amendments to MFRS 12 Disclosure of Interests in Other Entities (Annual Improvements to MFRS Standards Cycle) 1 January 2017 The adoption of the above accounting standards and amendments do not have any material impact on the financial statements of the Group and of the Company. (f) New and Amendments to MFRS / IC Interpretations Issued But Not Yet Effective The new MFRSs, amendments to MFRSs and IC interpretations relevant to the Group and the Company that are issued but not yet effective up to the date of issuance of the Group s and of the Company s financial statements are disclosed below: MFRSs, Amendments to MFRSs and IC Interpretations Amendments to First-time Adoption of Malaysian Financial MFRS 1 Reporting Standards (Annual Improvements Amendments to MFRS 128 to MFRS Standards Cycle) Measuring an Associate or Joint Venture at Fair Value (Annual Improvements to MFRS Standards Cycle) Effective for Financial Periods Beginning On or After 1 January January 2018 Amendments to Classification and Measurement of Share- 1 January 2018 MFRS 2 based Payment Transactions MFRS 15 Revenue from Contracts with Customers 1 January 2018 MFRS 9 Financial Instruments 1 January 2018 IC Interpretation Foreign Currency Transactions and Advance 1 January Consideration MFRS 16 Leases 1 January 2019 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 The adoption of above standards and interpretations when become effective will have no material impact on the financial statements of the Group and of the Company. 18

21 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of Consolidation (i) Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Group. Control exists when the Group is exposed or entitled to variable return from involvement with the entities and has the ability to affect those returns through its power over the entities. The Group re-assess whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of controls as mentioned above. In assessing control, potential voting rights that are presently exercisable are taken into account. Furthermore, with potential voting rights in place, the Group is able to govern the financial and operating activities of the entities with the influence obtained from the potential voting rights inherently. Hence, this allows the Group to maintain its control and ability to govern the entities in place. Investments in subsidiaries are measured in the Company s financial statement of position at cost less impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs. The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Group. (ii) Accounting for business combination Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group. The Group measure goodwill at the acquisition date as: - The fair value of the consideration transferred; plus - The recognised amount of any non-controlling interests in the acquiree; plus - If the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less - The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of preexisting relationships. Such amounts are generally recognised in profit or loss. Transaction costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. 19

22 3. SIGNIFICANT ACCOUNTING POLICIES (Contd.) 3.1 Basis of Consolidation (Contd.) (iii) Accounting for changes in proportion held by non-controlling interest The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves. (iv) Loss of control Upon the loss of control of a subsidiary, the Group derecognised the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained. (v) Associates Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies. Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group s share of profit or loss and other comprehensive income of the equity accounted associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. 20

23 3. SIGNIFICANT ACCOUNTING POLICIES (Contd.) 3.1 Basis of Consolidation (Contd.) (vi) Non-controlling interests Non-controlling interests at the end of the financial year, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Noncontrolling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company. The losses applicable to the non-controlling interests in a subsidiary are allocated to the noncontrolling interests even if doing so causes the non-controlling interests to have a deficit balance. (vii) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. 3.2 Intangible Assets (i) Goodwill Goodwill arises on business combination is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent period. Under the acquisition method, any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interests recognised and the fair value of the Group s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree s identifiable assets and liabilities at the date of acquisition is recorded as goodwill. Where the latter amount exceeds the former, after reassessment, the excess represents a bargain purchase gain and is recognised as a gain in profit or loss. Goodwill acquired in a business combination is from the acquisition date, allocated to each of the cash-generating units ( CGU ) or groups of CGU of the Group that are expected to benefit from the synergies of the combination giving rise to the goodwill irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units. 21

24 3. SIGNIFICANT ACCOUNTING POLICIES (Contd.) 3.2 Intangible Assets (Contd.) (ii) Research and Development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised in profit or loss as incurred. Expenditure incurred on development projects (relating to the design and testing of new and improved know-how on mobile applications) are recognised as intangible asset when the following criteria are fulfilled: - it is technically feasible to complete the intangible asset so that it will be available for use or sale; - management intends to complete the intangible asset and use it or sell it; - there is an ability to use or sell the intangible asset; - it can be demonstrated how the intangible asset will generate probable future economic benefits; - adequate technical, financial and other resources to complete the development and to use or sell the intangible asset is available; and - the expenditure attributable to the intangible asset during its development can be reliably measured. The expenditure capitalised includes the cost of materials, direct labour and overheads cost that are directly attributable to preparing the asset for its intended use. Other development expenditures that do not meet these criteria are recognised as an expense when incurred. Development costs previously recognised as an expense are not recognised as an asset in subsequent periods. Capitalised development costs recognised as intangible asset are amortised from the point at which the asset is ready for use on a straight-line basis over its useful life, not exceeding 5 years. (iii) Trademark Trademark consists of the Company s brand name and the directors are of the opinion that there is a definite useful life based on the Company s current product market feasibility. The trademark is stated at costs less any accumulated amortisation and accumulated impairment losses. The trade mark is amortised using straight line basis at 20% per annum. (iv) Computer Software Costs that are directly associated with identifiable and unique software products which do not form an integral part of the related hardware, controlled by the Company and that the expected future economic benefits attributable to the asset would flow to the Company are recognised as intangible assets. Computer software acquired separately is measured initially at cost. Following initial acquisition, computer software is measured at cost less any accumulated amortisation and accumulated impairment losses. The computer software is amortised using straight-line basis at 40% per annum. 22

25 3. SIGNIFICANT ACCOUNTING POLICIES (Contd.) 3.3 Plant and Equipment All items of plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset. After initial recognition, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the combining entities and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of plant and equipment are recognised in the profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the combining entities are obligated to incur when the asset is acquired, if applicable. Depreciation is calculated under the straight-line method to write off the cost of the assets to their residual values over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. Depreciation of an asset begins when it is ready for its intended use. The principal annual depreciation periods are as follows: Office equipment 40% Renovation 20% Furniture and fittings 10% Guard device 20% At the end of each reporting period, the carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that carrying value may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount. The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of plant and equipment. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate. An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is recognised in profit or loss. 23

26 3. SIGNIFICANT ACCOUNTING POLICIES (Contd.) 3.4 Impairment of Non-Financial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units ( CGU )). In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss. Impairment loss on goodwill is not reversed in a subsequent period. 3.5 Inventories Inventories are measured at the lower of cost and net realisable value after adequate allowances has been made for damaged, obsolete and slow moving items. Cost is principally determined on the weighted average basis. Net realisable value represents the estimated selling price in the ordinary course of business less estimated costs estimated costs necessary to make the sale. 3.6 Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand and at bank, demand deposits, bank overdrafts and short term highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. 24

27 3. SIGNIFICANT ACCOUNTING POLICIES (Contd.) 3.7 Financial Assets Financial assets are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instruments. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss and loans and receivables. (i) Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or noncurrent. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date. (ii) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. A financial asset is derecognised where the contractual right to cash flow from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. 25