...ABOUT THIS REPORT PUC Berhad continues to transform the way we work and live. The 2019 annual...

ANNUALREPORT

FASTER . COOLER . RICHER

IT PAYSBOTH WAYS

2019

PUC BERHAD 0007

MOTTOWE BELIEVE IN MAKING QUANTUM LEAPS TO HELP US ALL ENJOY LIFE AND MAKE THE BEST USE OF OUR TIME. WE CONSISTENTLY KEEP OURSELVES AHEAD OF TIME AND FOCUS ON PIONEERING NEW TECHNOLOGIES SO THAT YOU COULD LIVE LIFE TO THE FULLEST. OUR WORLD-CLASS SOLUTIONS EMPOWER YOU TO

HAVE FASTER, COOLER AND RICHER LIVES.

ABOUT THISREPORTPUC Berhad continues to transform the way we work and live. The 2019 annual report highlights our success stories as we continue on our transformation journey, fresh from our name-change from PUC Founder (MSC) Berhad. With this revamp, our new objectives and success is focused on technology and digital services as our core business direction.

In 2019, we have seen a series of corporate actions including fundraising exercises, partnerships and collaborations across all industries based on common grounds that benefits all. Through these initiatives, we have cemented strategic relationships that build trust and efficiencies, to achieve our business transformation plan. Fueled by these alliances, we also leveraged on our expertise and experience to continue forward. The goal is not only to become the leading face in the digital services arena in Malaysia but in Southeast Asia and beyond.

The PUC Berhad Annual Report 2019 is published and available for download at www.puc.com and Bursa Malaysia Securities Berhad’s website at www.bursamalaysia.com/market_information/announcements. This report is part of our responsibility and accountability to all our shareholders and stakeholders so that they may access information about our financial performance, achievements, milestones and other notable highlights during the financial year. This report also outlines a comprehensive rationale, the thought process as well as catalyst for our business transformation, overall goals to be achieved and future plans that are in the pipeline. It also provides a framework of our targets for the short and medium-term and our vision in bringing the company to the next level based on our long-sighted targets.

This annual report contains statements and details that meets the regulatory requirements of the Malaysian Code on Corporate Governance, the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, and the Companies Act 2016. Our financial statements are independently prepared and audited in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016. As such, the PUC Berhad Annual Report 2019 is the perfect vehicle for up-to-date, comprehensive and transparent information on the company’s performance, operations and strategies

to help existing shareholders and potential investors make informed investment decisions. This report acts as a guide and interactive tool of communication for us to engage with all the stakeholders involved.

We are delighted to deliver sustainable reporting that outlines how we build bridges between the physical and digital worlds as we establish a system of core services that bring a wealth of conveniences to the people around us. This is on top of maintaining our stance as a responsible corporate citizen contributing to a sustainable future while we help the industry tackle numerous disruptions and challenges of today’s technologies and trends.

The entire Annual Report 2019 has been approved by our Board.

iiPUC BERHAD Annual Report 2019

TABLE OFCONTENTS

2019 Key Developments

1 18

76

69

53

50

2 20

784 22

826 26

8410 29

21312 31

15 34 217

16 44 221

CorporateSocial Responsibility

Audit & Risk ManagementCommittee Report

Corporate Information Notice of Annual General Meeting

Group Corporate Structure Form of ProxyKey Senior Management

Key Financial Highlights

Statement on Risk Managementand Internal Control

Corporate GovernanceOverview Statement

Our Principles

Additional ComplianceInformation

Sustainability Statement

News Coverage

Financial StatementsCorporate Events

Analysis of Securities HoldingsOur Business

Group Organisation Structure

Chairman’s Statement

Group Managing Director andGroup Chief Executive Officer’s Statement

Strategy Review

Presto

Board of Directors

Management Discussionand Analysis

22nd AnnualGeneralMeeting

Thursday, 30 July 202010.00 A.M.Ballroom I, Main Wing,Jalan Kelab Tropicana,Tropicana Golf & Country Resort, 47410 Petaling Jaya, Selangor

936 1

112019 KEYDEVELOPMENTS

• PUC signs MOU with Smuzcity Berhad to form a JV entity under Presto O2O initiatives for Jingdong Unmanned Concept Store in Malaysia and ASEAN.

• Entered into a Services Agreement and Collaboration Agreement with APAC Venture Sdn Bhd, the only listed WeChat preferred partner on WeChat.com worldwide and marketing partner of Tencent Holdings Limited, the owner and developer of WeChat.

• Rebranding of 11street Malaysia to PrestoMall, the online market place operated by PUC’s associate company, Presto Mall Sdn Bhd (formerly known as Celcom Planet Sdn Bhd)

• PUC enters into a MOU with BonusLink Sdn. Bhd. to be the sole and exclusive partner for BonusLink loyalty point issuing and redemption on PrestoMall.

• PUC explores micro-financing to consumers and SMEs with NetX Holdings Berhad’s subsidiary, NetX Digital Limited.

SPTEMBER 2019

MARCH 2019

JUNE 2019JANUARY 2020

12• MOU with Jingdong E-commerce (Trade)

Hong Kong Corporated Limited was signed to collaborate and enhance both parties’ B2B2C model by offering increased cross border business opportunities and product offerings between China and Malaysia.

• PUC wishes to further enlarge its business scope by entering a MOU with Shenzhen Jiedian Technology Co Ltd to offer power bank rental through collaboration with Jiedian.

• PUC signs MOU with Luminor Capital Sdn. Bhd. to market its micro-financing to civil servants in the form of PrestoPay Credit to borrowers’ Presto app accounts.

DECEMBER 2019

2• Obtained shareholders’ approval to acquire the remaining 67% of Pictureworks Holdings.

• Obtained shareholders’ approaval for a 30% private placement in respect of the Pictureworks Holdings transaction.

• Obtained shareholders’ approval for a 5:1 share consolidation of PUC Berhad’s shares. The share consolidation has been completed.

FEBRUARY 2020

NOVEMBER 2019

KEYFINANCIALHIGHLIGHTS

2015 2015

2015

2016

2015

2016

2016

2017

2016

2017

20172017

2018*

2018*

2018*

2018*

2019

2019

2019

2019

1,236 912

5,2165,882

25,527 24,290

36,472 34,02037,962

4,515

27,376 25,753

43,032200,019193,133

143,694

51,45547,012

294,309255,548

Revenue (RM’000)

Segmental Revenue Contribution

OMNICHANNEL (RM’000)

Total Assets (RM’000)

FINTECH (RM’000)

(RM4.4) MILLION

RM3.9 MILLION

(RM38.8) MILLION

(RM1.4) MILLION

-8.6%

11.6%

-13.2%

-23.2%

(RM)

REVENUE

OMNICHANNEL

FINTECH

ECOMMERCE

CORPORATE & OTHERS

GROSS PROFIT

NET PROFIT BEFORE TAX

NET PROFIT AFTER TAX

2 PUC BERHAD Annual Report 2019

2015

2015 2015 2015

2016

2016 2016 2016

2017

2017 2017 20172018*

2018*

2018*2018*

2018* 2019

2019 2019 2019

612 5511,344

11,553

4,499

2,870

12.66

15.82

12.10177,549171,308

128,979

2,298(19,316)

6,578 (56,577)

12.75

8.73

244,878207,117

Net Profit After Tax (RM’000) Total Equity (RM’000)

CORPORATE & OTHERS (RM’000)

Net Asset Per Share (Sen)

(RM63.2) MILLION (RM37.8) MILLION

(RM7.1) MILLION

(RM4.03) SEN>100% -15.4%

-61.1%

-31.6%

(RM) FY2015 FY2016 FY2017 FY2018 (RESTATED)* FY2019

REVENUE 27,375,831 100.00% 25,752,623 100.00% 43,031,716 100.00% 51,455,318 100.00% 47,011,959 100.00%

OMNICHANNEL 25,527,186 93.25% 24,289,916 94.32% 36,472,165 84.76% 34,020,320 66.12% 37,962,073 80.75%

FINTECH 1,236,258 4.52% 912,108 3.54% 5,215,725 12.12% 5,881,651 11.43% 4,514,866 9.60%

ECOMMERCE - 0.00% - 0.00% - 0.00% - 0.00% 35,666 0.08%

CORPORATE & OTHERS 612,387 2.24% 550,599 2.14% 1,343,826 3.12% 11,553,347 22.45% 4,499,354 9.57%

GROSS PROFIT 13,647,865 14,516,255 19,999,347 28,115,233 23,223,703

NET PROFIT BEFORE TAX 2,518,579 2,664,577 (18,993,056) 8,655,511 (55,909,341)

NET PROFIT AFTER TAX 2,298,290 2,869,509 (19,315,587) 6,577,741 (56,577,360)

2015 2016 2017 2019

- - - -

36

ECOMMERCE (RM’000)

* The figures in financial year ended 2018 have been restated to reflect the disposal group held for sale and discontinued operation.

3PUC BERHAD Annual Report 2019

OUR PRINCIPLES

WHYHOWWHAT

Being one step ahead, developing new technology and providing world-class solutions will help us provide an easier, happier and richer lives for all. By defining our “Why”, “How” and “What”, it gives our business an edge in our approach and strategies which is set to inspire, whilst setting us apart from other industry players.


OUR PURPOSEThe purpose of our existence and why we communicate the way we do.

OUR VALUEThe strengths and values that help us distinguish ourselves from other industry players.

OUR MISSIONThis is everything we strive to achieve based on our core belief.

We believe in making quantum leaps to help people enjoy life and make the best use of their time.

Constantly improving, always looking to be one step ahead, and pioneering new technology that would benefit all.

Use our industry expertise to provide a comprehensive range of world-class solutions that aim to enrich people’s lives.


2019 NEWS COVERAGE6 PUC BERHAD Annual Report 2019

2019 NEWS COVERAGE8 PUC BERHAD Annual Report 2019

CORPORATE EVENTS

May 2019Pictureworks Group was accepted by LL Malaysia Taman Tema Sdn Bhd to deliver full fledged imaging services and customised photo merchandise for Legoland Sealife Malaysia.

April 2019Presto Universe CEO Mr. Cheong Chia Chou was invited to be one of the panel speakers at The New Currency: Going Cashless Conference held in Connexion Convention Centre.

27 June 201921st AGMPUC received shareholders’ approval for all listed Resolutions during the 21st AGM. Group Managing Director and Chief Executive Officer, Cheong Chia Chou shared key financial highlights and business strategies with the shareholders as well as the challenging yet exciting journey of Presto Universe becoming an e-commerce super-app.

September 2019Pictureworks Group was accepted by Nelke Planning Shanghai Co.Ltd to deliver full fledge imaging services and customized photo merchandise for Naruto World Theme Park (Shanghai), which was intended to commence in December 2019.


20 November 201919th Conference on Overseas Chinese Pioneering and Developing in ChinaGroup Managing Director and Chief Executive Officer, Cheong Chia Chou sharing about a Malaysian homegrown e-commerce story with other Chinese entrepreneurs from around the world.

10 December 2019#FutureProofYourBusiness ForumPUC Berhad Group MD and CEO, Mr Cheong Chia Chou was invited to speak at “Future Proof Your Business” Forum organized by Quill City Mall KL. Sharing unique insights about Increasing Your Revenue through Omnichannel Marketing. #PrestoUniverse

12 December 2019JDX Presto Concept Store Grand OpeningJDX Presto Concept Store, the largest cashless concept store in ASEAN, celebrates its official grand opening at Quill City Mall KL on 12.12.19. JDX Presto Concept Store hosts products from a host of brands covering categories such as Electrical Appliances, Gadgets, Health & Beauty, Home & Living, Fashion and Food & Beverage, with a total of up to 3,000 Stock Keeping Units (SKUs) from J.Zao, as well as other top selling products from China and the ASEAN region.

19 February 2020EGM for Proposed Acquisition by PUC Berhad in Pictureworks Holdings Sdn Bhd (PWHSB)The EGM obtained approval by shareholders to acquire the remaining 67% of PWHSB for a total purchase consideration of RM142.04mil. The EGM also approved consolidation of every 5 ordinary shares in PUC into 1 PUC share, and proposed private placement of up to 30% of total issued shares of PUC.


OUR BUSINESS

Our OmniChannel offers an all-encompassing marketing solution for marketers and companies, in the form of advertising, as well as traditional and new media businesses. These solutions serve as an important tool for many of PUC’s advertising and media clients, aside from their own internal branding campaigns for the purpose of marketing outreach.

As such, our offerings under this segment are as follows:

Media Planning and BuyingWe provide a unified platform which encompasses traditional advertising to digital marketing for advertisers to meet their marketing and branding objectives, at the same time, make an impact in their sales and marketing outreach.

Omnichannel Marketing PlatformMany marketers are always on the lookout for cost-effective marketing platform for their marketing outreach activities thus, this prompted PUC to create an omnichannel marketing platform as a tool for marketers to reach out to their targeted audience.

Imagery Capture and Distribution PlatformPUC completed the acquisition of 33% equity stake in Pictureworks Holdings Sdn Bhd (“Pictureworks”) in June 2018, and subsequently announced in December 2018 of its plans to acquire the remaining 67% stake in Pictureworks. Pictureworks launched its proprietary imaging technology, PictureAirTM which enables users to view, purchase and share images online as well as through mobile devices.

PUC BerhadIncorporated in 1997 in Malaysia and listed on ACE Market in 2002, PUC Berhad had over the years built a solid base in the payment solutions and integrated media services industry. In mid-2017, the group started their foray into the digital business sphere focusing on three core services - OmniChannel, eCommerce and Financial Technology (FinTech). With that in place, PUC is poised to become the country’s leading digital services provider.

OMNICHANNEL


O2OJDXPresto Concept Store was a key development in 2019. O2O Retail provides end-to-end delivery service, covering from packing and shipping, to warehousing and eCommerce fulfilment.

PUC signed an MOU for multiple collaboration opportunity with JD Group of companies for cross-border trade which encompasses an integrated cross-border e-commerce and payment solution experience to Malaysian consumers. JD.com is one of China’s largest e-commerce and logistics companies with an international network of resellers and is ranked 139 in Fortune Global 500. Its key business focus includes: e-commerce and logistics, finance, payment and technology.

Smart RetailPUC signed an MOU with JieDian for a powerbank rental distribution at retail outlets. Malaysia has a high mobile adoption rate, making it ideal for the introduction of this business initiative.

LoyaltyPUC also signed an MOU with Bonuslink, the largest multichannel loyalty point company in Malaysia. This is a useful and strategic partnership as currently, Bonuslink issues more than RM100 million worth of loyalty points. Presto will become its exclusive online redemption channel.

Integrated Online Services and Payment SolutionsThis business segment offers a unique integrated payment solutions and services through PUC’s proprietary brands – Presto Services, PrestoMall, and PrestoBuddy.

PRESTO MALL SDN BDNPresto Mall Sdn Bhd drives the Online Marketplace for PrestoMall, formerly 11street Malaysia, with a listing of 6 million products from global and local brands, reaching some 30 million consumers globally.

PRESTO BUDDY SDN BHDPresto Buddy Sdn Bhd acts as the marketing arm for Presto brands through intellectual property licensing, retail, cross-branding partnerships, amongst others.

eCOMMERCE

The eCommerce space has enabled PUC to embrace a myriad of digital services that form part of the digital ecosystem, which includes the online marketplace, the proprietary online-to-offline platform and other digital lifestyle services. In June 2019, 11street Malaysia was rebranded to PrestoMall.


OUR BUSINESS

Customised IT Solutions & Internet Driven SolutionsThrough our wholly-owned subsidiary, Enovax Pte Ltd, we offer the full suite of customised IT solutions and internet-based services, through seamless web, mobile, kiosk, gantry, applications and platforms to diverse industries, which include food and beverage, eCommerce, leisure and entertainment. In addition, this company together with Enovax Malaysia Sdn Bhd are also the Group’s internal resource for all technological needs.

eWallet and Electronic Payment Processing ServicesFor our eWallet and Electronic Payment Services unit, Presto Pay Sdn Bhd focuses on electronic payment processing services for businesses across multiple platforms, 24 hours a day. Presto Pay is licensed by Bank Negara Malaysia (BNM) to issue electronic money as well as the provision of Merchant Acquisition Services. As such, these financial transactions are facilitated through our in-house digital lifestyle platform and mobile application, Presto. We have also appointed our partners Revenue Monster and Revenue Harvest as Presto’s third-party merchant acquirer who have been key partners in driving merchant acquisitions for our Presto Pay.

Credit Community ServicesPresto Credit Sdn Bhd (formerly known as Wealth Pursuit Sdn Bhd), a wholly-owned subsidiary of PUC, is a licensed money-lending business offering access to credit and financial services. We have been exploring collaboration opportunities with potential partners and the project has kickstarted with our collaboration with Luminor Capital (Malaysia) Sdn Bhd. This marks yet another milestone for PUC as this is our foray into credit community services.

Strategic Investments and VenturesPUC continues to identify opportunities for investments or strategic partnerships that can complement and synergise with the Group’s existing businesses and business directions. The Group has exited its Renewable Energy business for which the disposal of the solar plant is currently pending completion. Another area of focus of PUC is to continuously form strategic alliances with leaders in their respective areas.

FINTECH

In the digital ecosystem, financial and technology are indispensable. Hence, PUC’s FinTech segment encompasses these two key components, whereby both play a crucial role in PUC’s business and offerings.


CORPORATEINFORMATION

COMPANY PRINCIPAL ACTIVITYThe Company is principally involved in investment holding.

GROUP PRINCIPAL ACTIVITIESThe Group is principally engaged in four business segments namely, OmniChannel, eCommerce, FinTech and Others.

AUDIT AND RISK MANAGEMENT COMMITTEEChairmanNathaniel Grant David Sherick

MemberDato’ Othman Bin Jusoh(resigned on 1 June 2020)

Liew Peng Chuen @ Liew Ah ChoyRaja Zafura Binti Raja ZainHon Shil Hong

REMUNERATION COMMITTEEChairmanDatuk Oh Chong Peng


Liew Peng Chuen @ Liew Ah ChoyNathaniel Grant David Sherick

BOARD OF DIRECTORSDato’ Othman Bin JusohIndependent Non-Executive Chairman(resigned on 1 June 2020)

Cheong Chia ChouGroup Managing Director, Group Chief Executive Officer

Liew Peng Chuen @ Liew Ah ChoyIndependent Non-Executive Director

Nathaniel Grant David SherickIndependent Non-Executive Director

Datuk Oh Chong PengIndependent Non-Executive Director(re-designated as Independent Non-Executive Chairman on 1 June 2020)

Raja Zafura Binti Raja ZainIndependent Non-Executive Director

Hon Shil HongIndependent Non-Executive Director

Hafez Mohd Hashim Bin Razman Md HashimIndependent Non-Executive Director(appointed on 1 August 2019)

NOMINATION COMMITTEEChairmanLiew Peng Chuen @ Liew Ah Choy


Nathaniel Grant David SherickRaja Zafura Binti Raja Zain(appointed on 1 June 2020)

COMPANY SECRETARIESLim Seck Wah (MAICSA 0799845)(SSM PC No: 2020 08 00 0054)Tang Chi Hoe (Kevin)(MAICSA 7045754)(SSM PC No: 2020 08 00 2054)

REGISTERED OFFICELevel 15-2Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel: (603) 2692 4271Fax: (603) 2732 5388

MANAGEMENT OFFICELevel 11, 203 Menara Allianz SentralJalan Tun SambanthanKuala Lumpur Sentral50470 Kuala Lumpur, MalaysiaTel : +6(03) 2719 1018Fax : +6(03) 7651 0088

SHARE REGISTRARMega Corporate Services Sdn Bhd (Registration No. 198901010682 (187984-H))Level 15-2Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel: (603) 2692 4271Fax: (603) 2732 5388

PRINCIPAL BANKERSAlliance Bank Malaysia Berhad Malayan Banking Berhad

AUDITORS Messrs. UHY (AF 1411)Suite 11.05, Level 11The Gardens South TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur Tel: (603) 2279 3088Fax: (603) 2279 3099

COMPANY WEBSITE/ COMPANY EMAIL ADDRESShttp://[email protected]

Company Name

PUC Berhad199701036234 (451734-A) PUC 0007

ACE Market of Bursa Malaysia Securities Berhad

Registration No Stock Name Stock Code StockExchange Listing


GROUP CORPORATESTRUCTUREAS AT 30 APRIL 2020

OthersOmniChannelFinTech and eCommerceNote: 100% owned subsidiary, unless indicated in the chart

PRPMY

FPYMY

PUCMY

RHMMY

FQEMY

MG1MY

MG2MY

PRUMY

ENVSG

ENVMY

PPWMYPMMMY PUCSH

PRBMY PRTMY PRSMY

PVNSGPRCMY

40%12%

PUCHQ

RMABV RMGMY

ACNBV

PUCHK PECMY

PWHQ

PWSG

PWMY

FWHK35%

33%

PWSH PWHK


ABBREVIATION FULL NAME OF ENTITY PRINCIPAL ACTIVITIES

HOLDING COMPANY

PUCHQ PUC Berhad Investment holding

SUBSIDIARY COMPANY

ACNBV AllChina.cn.Ltd Advertising and media activities

ENVMY Enovax Malaysia Sdn Bhd Software development and consultancy

ENVSG Enovax Pte Ltd Software development and consultancy

FPYMY Founder Pay Sdn Bhd Money lending business and payment solutions

FQEMY Founder Qube Sdn Bhd E-content, e-commerce and e-merchant business and end-to-end media and advertising solutions

MG1MY MaxGreen Energy Sdn Bhd Renewable energy projects

MG2MY MaxGreen Energy 2 Sdn Bhd Renewable energy projects

PECMY Peer Consultancy Sdn Bhd Provision of business management services

PRBMY Presto Buddy Sdn Bhd E-marketing and promoting of Intellectual Property (“IP”) licensing and merchandising of IP products and services

PRCMY Presto Credit Sdn Bhd (Formerly known as Wealth Pursuit Sdn Bhd) Money lending business

PRPMY Presto Pay Sdn Bhd E-payment solutions, trading and merchandising of goods

PRSMY Presto Services Sdn Bhd Integrated payment solutions, digital and E-business

PRTMY Presto Travel Sdn Bhd (Formerly known as Presto Media Sdn Bhd) Online travel agency and travel related businesses

PRUMY Presto Universe Sdn Bhd (Formerly known as PUC Ventures Sdn Bhd) Investment holding

PUCHK PUC International (Hong Kong) Limited Investment holding, advertising and media activities

PUCMY PUC (Malaysia) Sdn BhdInvestment holding, acquisition and licensing of intellectual property rights, provision of management and technical services

PUCSH Shanghai PUC Network Technology Co., Ltd Technology consultancy services

PVNSG Presto Ventures Pte Ltd(Formerly known as PUC (Singapore) Pte Ltd)

Investment holding, e-business, e-commerce, e-payment, advertising and media activities

RHMMY RedHot Media Sdn BhdAdvertising, media activities, and research and development of electronic advertising services, and other advertising services

RMABV Red Media Asia Ltd Investment holding

RMGMY RH Media Group Sdn Bhd Investment holding

ASSOCIATE

PMMMY Presto Mall Sdn Bhd(Formerly known as Celcom Planet Sdn Bhd) E-commerce platform

PPWMY Presto Power Sdn Bhd Provision of digital imaging and content solutions

PWHQ (Holding) Pictureworks Holdings Sdn Bhd Investment holding

SUBSIDIARY OF PWHQ

PWMY Pictureworks (M) Sdn Bhd Provision of digital imaging and content solutions, and licensing of imagery services

PWSG Pictureworks Pte Ltd Software development and consultancy

PWSH Pictureworks (Shanghai) Limited Provision of photographical service and trading of photographical products

PWHK Pictureworks (Hong Kong) Limited Imaging operation

ASSOCIATE OF PWHQ

FWHK FotoWorks (Hong Kong) Limited Digital imaging operation


GROUP ORGANISATIONSTRUCTURE

BOARD OF DIRECTORS

Group Managing Director/Group Chief Executive Officer

Finance Controller

Finance and Accounting Corporate Development

Legal Creative Development &Content Management

Digital Communication

Corporate Secretarial Customer Care

Campaign and EventsManagement

Compliance and RiskManagement

Marketing, Branding andCommunication

Human Resources andAdministration

Investor Relationsand Investment Public Relations

Business Partnership

Renewable Energy Business Branding Marketing

Operations Management

Group Chief Strategy Officer Group Chief Operating Officer

AS AT 31 May 2020


Group ChiefCommerical Officer

Business Development

IT Management

Product Management

Infra Engineering

Consumer Experience

Product and Technology

eCommerce Business

Product Development

FinTech Business

Data Science

Technology Platform

Group ChiefTechnology Officer


CHAIRMAN’SSTATEMENT

With the positive outlook of the digital economy in Malaysia, PUC is confident that Presto will become an essential asset of the Group. The Group will continue to develop Presto’s digital services with a focus to roll out more features and services in the near term.

Dato’ Othman Bin JusohChairman

Dear Shareholders,On behalf of the Board of Directors, it is my pleasure to present to you the Annual Report and audited financial statements of PUC Berhad (“PUC” or “Company”) for the financial year ended 31 December 2019 (“FY2019”).

The year 2019 proved to be a challenging one due to various macro-economics and geographical developments that continue to affect global economic growth. These included ongoing trade tensions between major economies, slower than expected growth in key economies such as China and India and overall weaker investor sentiment, which impacted overall capital flows and investments.

In Malaysia, gross domestic product growth moderated to below 3%, well below initial expectations of 4.7%-4.8%. Growth was slower due to the continued slowdown in public sector infrastructure spending, a depreciating ringgit against major currencies and weaker export performance and decreased foreign direct investment.

Against this challenging backdrop, PUC has continued to pursue its business strategies towards realising

set targets and objectives and to create value for shareholders. However, despite our best efforts, there were various uncontrollable external factors and developments that had impacted our financial performance. Nevertheless, coupled with exemplifying resilience, commitment, and flexibility, the Company has registered various noteworthy operational highlights.

In FY2019, PUC strengthened its Financial Technology (“FinTech”) and e-Commerce businesses, towards becoming a leading digital services provider in Malaysia. Operational highlights in FY2019 include the continued growth of our omnichannel business as well as various partnerships inked during the financial year.

Strategic partnerships further strengthens our business model and operational and technological capabilities going forward. They provide PUC with access to new markets, products, solutions, intellectual property and other benefits that solidify our competitive edge towards operating more effectively in a crowded marketplace.


The strategic efforts initiated in FY2019 puts the Group in a more robust position towards bolstering income streams and growing its market share. Coupled with operating costs that are managed well, we foresee earnings to improve going forward. However, the Group will not be exempted from the challenges that may arise from the economic impact of coronavirus as it will have short-term and long-term effects on businesses. The Group’s operating cost continues to be well managed, while borrowings, liabilities and our cash position remain at healthy levels.

COMMITMENT TO CORPORATE GOVERNANCE & SUSTAINABILITYAs we progress as a business entity, we remain committed to the twin pillars of good corporate governance practice and corporate sustainability.

Essentially, we continue to enhance our internal processes and policies towards developing an environment of stronger accountability, transparency, responsibility, and disclosure in developing a more conducive and ethical workplace. This is also being extended progressively across our value chain; to our suppliers, vendors and business partners.

PUC has also adopted several of the United Nations’ Sustainable Development Goals (“UN SDGs”) as part of its commitment to supporting and driving sustainability. These adopted UN SDGs serve as the basis for the Group to take action across a wide range of material economic, environmental and social topics. Giving impetus to our sustainability effort, PUC in FY2019 established its Sustainability Working Group (“SWG”), a cross-functional team comprising individuals from across the PUC Group.

The SWG is tasked with driving the Board of Directors’ and Management’s sustainability agenda. The full report on the work performed by the SWG, the results achieved through the adopted UN SDGs are provided in the Sustainability Statement of this annual report.

PROSPECTS FOR THE YEAR 2020The global impact of the Covid-19 pandemic cannot be denied, with nearly all countries, communities and industries feeling the effects of this unprecedented development. The digital industry is also not spared of the effects.

Nevertheless, the inconvenient and challenging scenario has also brought positives. With nationwide lockdowns, there is an increasing shift to digital channels by consumers. This is something that we believe may become the new norm post-Covid-19, which we hope is a short-term and one-off incident.

E-commerce and digital transformation will be the new normal amidst the Covid-19 pandemic. It will be congruent to the fact that society globally will address personal hygiene and health as the epicenter of survival. Therefore cashless transactions will be widely embraced and potentially open doors for more creativity in the digitalisation scope.

The Group expects to see continuing growth towards a satisfactory FY2020 through contributions from its OmniChannel, FinTech, eCommerce businesses. These aside, continued growth from contributions from associate businesses in eCommerce and OmniChannel will also help to drive PUC’s business performance going forward.

With the positive outlook of the digital economy in Malaysia, PUC is confident that Presto will become an essential asset of the Group. The Group will continue to develop Presto’s digital services with a focus to roll out more features and services in the near term.

ACKNOWLEDGEMENTS AND APPRECIATIONI wish to inform all shareholders of my decision to step down as Chairman of the Board, effective 1st June 2020 to pursue personal interests. It is with fond memories that I will recall my tenure with the Group and wish the Board, management, staff and shareholders every success as they continue to make progress together towards a challenging, but certainly bright future with exciting growth opportunities ahead.

On a related note, I wish to welcome Datuk Oh Chong Peng who will be the Group’s new Chairman and express full confidence in his capabilities to provide the necessary leadership and counsel to guide the Group to greater heights.

On behalf of the Board, I would like to extend my heartiest gratitude to our global partners, business partners and shareholders for their continuous support. I also wish to thank the management team and the staff for their dedication, commitment, and contribution rendered to the Group throughout 2019.

I believe that with the continued support from all our stakeholders, PUC will continue to grow and contribute positively to the OmniChannel, eCommerce and FinTech industries in Malaysia. The Group is well-positioned to become a leading digital services provider in Malaysia and eventually across the region and beyond.

Thank You.

DATO’ OTHMAN BIN JUSOHIndependent Non-Executive Chairman


GROUP MANAGING DIRECTOR ANDGROUP CHIEF EXECUTIVE OFFICER’S STATEMENT

It has been an exciting journey since PUC’s founding until now, and we can look forward to an equally exciting future. It has been a true privilege to lead PUC through this transformation and with continued support from all our partners, I believe PUC will continue to contribute positively to the Malaysian economy and that the Company is well-positioned to achieve greater heights in the years to come.

Cheong Chia ChouGroup Managing Directorand Group Chief Executive Officer


DEAR VALUED SHAREHOLDERS,Last year 2019, the third year of our transformation journey, was the year we strengthened our position as the market leader in our core businesses, comprising business segments namely OmniChannel, eCommerce and Financial Technology (“FinTech”).

The OmniChannel segment offers services in online and offline Media & Advertising, Social Marketing and Events while eCommerce segment includes Online Marketplace/eCommerce, IP & Merchandise and Digital Services, and Fintech segment offers AI Technology, Imaging Solution and Technology.

In essence, PUC in 2019 has continued to forge ahead with its journey of transformation in Malaysia and the Asian region. In doing so, we have strengthened our business model and overall product offerings through the development of strategic partnerships with selected partners. We have continued to stamp our mark and have progressively penetrated our chosen market segments with our core proposition of offering ease of services on our Presto App and rewarding customer experiences. More importantly, we continued to establish our credentials and market positioning to be a leading digital products and services player in Malaysia and the region.

One of our missions has always been to better the lives of consumers and small businesses with technology. We believe in the transformative power of technology. We want to solve social and lifestyle problems for retailers, entrepreneurs and consumers by bridging the gap between all stakeholders and creating greater convenience that would change the way retailers trade and people live. However, despite the progress made, FYE2019 was indeed a year of challenge and turbulence, as reflected in our financial performance.

The Group recorded a loss after tax of RM59.24 million for FYE2019 compared to RM6.59 million profit after tax achieved in FYE2018. It is mainly due to impairment of goodwill attributable to the wholly-owned subsidiary, PUC International (Hong Kong) Ltd of RM23.35 million necessitated by the economic and social unrest in Hong Kong as well as the Covid-19 outbreak, and impairment loss of RM21.85 million on content and regional licence assets arising from the Group’s decision to reduce its involvement in traditional media business.

Also contributing to the losses were write-off of goodwill and impairment loss on disposal of Maxgreen Energy Sdn Bhd as the Group is exiting renewable energy business, higher depreciation and amortisation charges arising from the enhancement of Presto application features rollout and its offerings. In addition, the Group’s associates also posted a lower financial result due to a challenging economic condition throughout the year.

2019 HighlightsThrough our wholly-owned subsidiary Presto Universe Sdn Bhd, we worked with Smuzcity Berhad, a local technology firm to market and sell Jingdong Logistics Group X Department (JDX) products on PrestoMall, which also led to the eventual opening of the JDX Presto Concept Store in Quill City Mall on 12 December 2019.

JDX Presto Concept Store, the largest unmanned retail store in Malaysia, offers the online-to-offline (O2O) shopping experience utilising Jingdong’s Unmanned Technology-enabled concept as well as our Presto ecosystem. The shopper only needs to scan the QR code on the items they are interested to purchase, make the payment by using Presto e-wallet and opt to either pick up the purchased items or have it shipped to their address.

August 2019 saw the launch of PrestoTravel, a mini-app that can be accessed through Presto App, in partnership with Agoda. This enables Presto App users to make bookings on Agoda from September 2019 onwards. On top of that, travellers can enjoy additional savings through cashback option with no limit to the amount on Agoda.

The Group embarked on the integration and rebranding of 11street Malaysia to PrestoMall to further strengthen our presence in the e-Commerce space in June 2019.

In conjunction with the Hari Raya Aidilfitri celebration, PrestoPay rolled out its first Cashless Raya Bazaar which was held from 16th to 18th May 2019 at Quill City Mall in Kuala Lumpur. The three-day event offers deals up to 70% discount from more than 30 merchants with some 200 products.

OMNICHANNELPresto covers the OmniChannel and financial services segment of the Group. The OmniChannel provides an integrated marketing sphere on Presto Digital Ecosystem by reaching out to its online and offline audiences for meaningful conversions. With more than two decades in advertising and promotion, OmniChannel has successfully integrated the digital and traditional media, and online-to-offline marketing that support our FinTech services.

The overall expenditure from the traditional media and advertising sector continues to decline due to economic uncertainty as well as digital media. Despite the OmniChannel segment recording a revenue of RM38.0 million in FYE2019 compared to RM34.0 million in FYE2018, the Group’s traditional advertising business is expected to face increasing challenges and a drastic decline in revenue.

We expect it to continue declining due to the continuous challenges and revenue slow down. However, in our traditional media business, we remained cautious on the


risks even though at present, it is sustainable due to the short-term prospects from our existing customers. This was gained through the commitment of locking them through the short-term and medium-term contracts.

The Group will continue to focus on enhancing its overall advertising and media services by combining digital and traditional media as well as online-to-offline marketing.

FINTECHOur Group digital payment services business continues to be enhanced to include service offerings that will allow the Group to gradually develop a platform as a digital bank. The launching of our micro-financing facility through our wholly-owned subsidiary Presto Credit Sdn Bhd in October 2019 enables us to offer quick and hassle-free micro-financing service in the form of PrestoPay Credits to Presto users. To make it more convenient for borrowers which are only available for civil servants at the current stage, the repayments are deducted from their monthly salary.

Moving forward, the Group will continuously enrich the digital contents of Presto emphasising more on credit and payment features as it will provide the users with broader exposure in the ecosystem.

ECOMMERCEAs for the Group’s overall digital business strategy, PrestoMall remains vital in forging successful relationships with our users due to its presence in the market. The first official Jindong Unmanned Technology store was successfully launched by the Group and Smuzcity Berhad. The 50,000 square foot venue at Quill City Mall is known as JDX Presto concept store which displays and sells products from China and ASEAN via the online-to-offline model. This opportunity allows its users and sellers to experience the service enhancement benefitting its purpose.

In exploring cross-border business opportunities and collaboration between China and Malaysia, the Group signed an MOU with Jingdong E-Commerce (Trade) Hong Kong Corporation Limited (“JD”) and integrated JD.com with PrestoMall. This synergy is expected to increase the product volume and enhance the e-commerce site by virtue of offering products from those countries. This is also a golden opportunity to bring JD.com’s vast pool of sellers on-board, providing them with an opportunity to sell in Prestomall.

Another MOU was signed by the Group with Bonuskad Loyalty Sdn Bhd (“BLSB”) to collaborate on loyalty point issuance and redemption activities. BLSB (a joint venture between Shell Malaysia Trading Sdn Bhd, AMBank (M) Bhd, and Parkson Corporation Bhd) owns the BonusLink consumer reward programme which has 9 million registered members. Out of this, 4 million members

are active, and redeem an average of over 55 million worth of BonusLink points every year. As such, Bonuslink members will be able to redeem their Bonuslink points on the PrestoMall system.

With the convergence of Bonuslink members as PrestoMall users, it will allow for a tremendous traffic increase, therefore promising an increase in the transaction volume in PrestoMall for the foreseeable future.

OUTLOOK AND PROSPECTSIn every aspect of our Group’s strategy, we will strive to enhance the development of our business. This is being validated by our MOU with Shenzen Jiedian Technology Co Ltd (“JieDian”) which specializes in providing rental services to mobile device users by offering a convenient, quick and easy shared portable battery. JieDian owned a sizeable market share in the portable battery rental services business in China and the joint venture effort will focus on the development of Malaysian portable battery rental business. This will enable PUC to widen its service offerings to its users in the Presto App as well as increase the awareness of our offerings and our foot-print in the market.

In 2020, FinTech will be the major revenue earner for the Group. The payment services gateway will continue to be enhanced through ongoing research and development encapsulating artificial intelligent technologies. This includes the development of a platform for digital banks, which will be operated by the Group and its strategic partners with Presto Credit as our micro-lending service.

There is a growing embracement of digital lifestyle in businesses, hence, due to this fast-growing demand we foresee growth in this segment that our Group needs to craft a clear and ambitious digital strategy. Thus avoiding the concern of lagging behind in this segment for the sustainability and growth for our businesses in future.

PATH TO THE NEW NORMALThe 2019–20 coronavirus (COVID-19) outbreak is an ongoing global pandemic caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) virus. The outbreak was identified in Wuhan, China, in December 2019, declared to be a Public Health Emergency of International Concern on 30 January 2020, and recognised as a pandemic by the World Health Organization on 11 March 2020.

The coronavirus outbreak is first and foremost a human tragedy, affecting hundreds of thousands of people. It is also having a growing impact on the global economy. It is also having a growing impact on the global economy. The outbreak is moving quickly, and some of the perspectives expressed here may fall rapidly out of date.

GROUP MANAGING DIRECTOR AND GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT


The pandemic continues to expand. More than 175 countries and territories have reported cases of COVID-19, the disease caused by the coronavirus (SARS-CoV-2). To date, cases numbered in the millions and its growing by day.

Governments worldwide have launched unprecedented public-health and economic responses as the virus continues to evolve. To reduce transmission, several measures have been enforced in most countries around the world, such as social distancing and staying at home. The movement control order has been enforced in stages in Malaysia since March 18, 2020.

Mitigating the effect is not easy. First and foremost, the Company needs to support and protect its employees. This is a challenge that is evolving. Since many companies have activated no-travel and work-from-home policies for some workers and physical distancing at work measures, these workers need to be equipped with proper tools to get the job done. Working remotely can be a challenge.

As for the economic impact, large-scale quarantines, travel restrictions, and social-distancing measures resulted in a sharp fall in consumer and business spending likely to last until the end of Quarter 2 of FY2020. Although the outbreak will likely come under control in most parts of the world by later part of Quarter 2, the self-reinforcing dynamics of a recession will kick in and prolong the slump likely until the end of Quarter 3. Consumers will stay home, businesses will lose revenue and lay off workers, and unemployment will rise

sharply. Business investment contracts, and corporate bankruptcies will increase, putting significant pressure on the banking and financial system.

PUC needs to mitigate the effects by being selective in embarking on new projects but at the same time enhancing what is already on our plates. Covid-19 impact on businesses will be huge in the short and the long run. Despite this fear, businesses and communities have shown more altruistic response in the face of the crisis. Digital media integration will be adopted widely due to customers’ expectations in facing the new normal. This will provide a window of opportunity for OmniChannel to capture this new interest. Presto, on the other hand, will be active in supporting the digitalisation platform since cashless society will be the norm in all aspects of life. Creativity and innovations have to be embedded in the Group’s products in order for us to be on a competitive advantage.

In the long term, PUC needs to be prudent in its expenditure and expansion plans in order to survive this challenging time. I am positive that the PUC team will be able to ride this challenging time together and scale new heights in the new world.

Our to-do list heading towards a fully-digitalised Group is still long and ambitious – and I am certain we have the right plans and people to make it happen. We cannot wait for our users to see and experience all the other exciting things that we have created in the pipeline. Fundamentally, we have met our own ambitious goals – and that’s what matters.

It has been an exciting journey since PUC’s formation and look forward to an equally exciting future. It has been a true privilege to lead PUC through this transformation and with continued support from all our partners, I believe PUC will continue to contribute positively to the Malaysian economy and that the Company is well-positioned to achieve greater heights in the years to come.

Cheong Chia ChouGroup Managing Director and Group Chief Executive Officer


MANAGEMENT DISCUSSION& ANALYSIS

This Management Discussion and Analysis provides a review of PUC Berhad’s operations and financial performance and outlines future growth strategies.

During the financial year under review, there were several milestones achieved which include strengthening our operational performance as well as navigating challenges in the constantly evolving operating environment.

FINANCIAL PERFORMANCEThe Group recorded a loss after tax of RM59.24 million for FYE2019 compared to RM6.59 million profit after tax achieved in FYE2018.

There were a few factors that contributed to the negative earnings. It includes impairment of goodwill of RM23.35 million attributable to PUC International (Hong Kong) Ltd due to the economic and social unrest in Hong Kong as well as the Covid-19 outbreak, which led to the Group’s decision that its Hong Kong subsidiary’s business is no longer viable following a thorough and strategic review of the Group’s overall traditional media business and the middle to long-term effects brought about by Hong Kong’s economic uncertainty.

It also includes the impairment loss amounting to RM21.85 million attributable to the content and regional license assets. This is due to the Group’s decision to reduce its involvement in traditional media business especially the media content business. The media content business is becoming increasingly challenging due to competition and market share being dominated by technologies and services by big companies such as NetFlix and Disney+.

In addition, the Group also wrote-off RM2.73 million on its renewable energy business as part of its exit plan from the segment. There was also impairment of goodwill attributable to PUC International (Hong Kong) Ltd amounting to RM23.35 million necessitated by the economic and social unrest in Hong Kong as well as the Covid-19 outbreak. Another impairment loss of RM21.85 million was on content and regional license assets arising from the Group’s decision to reduce its’ involvement in the traditional media business. The Group also wrote-off impairment loss of RM1.67 million on software development costs that are no longer commercially viable.

A lower revenue of RM47.01 million in FYE2019 as compared to the preceding financial year of RM51.46 million due to lower revenue recorded across all business segments. The segmental comparisons are as follows:

(i) OmniChannel remained a major revenue contributor at 79.1% compared to 64.8% in the FYE2018. This segment achieved a revenue of RM37.96 million compared to RM34.02 million previously, largely due to continued higher sales of out-of-home (“OOH”) advertisement spaces.

(ii) The eCommerce segment contributed its maiden revenue of RM0.04 million in the FYE2019. The Group is optimistic that eCommerce will contribute positively to both the top and bottom lines once the integration process is fully completed.

(iii) FinTech contributed RM4.5 million revenue in the FYE2019 compared to RM5.9 million in FYE2018. The FinTech division had been focusing its resources on further research and development enhancements for its own technology capabilities, while also enhancing the Group’s Presto application which contribute to its eCommerce and FinTech businesses.

The Group’s associate, PWHQ contributed profits of RM6.98 million to the Group, representing a 4.7% increase compared to FYE2018.

Meanwhile, Presto Mall Sdn Bhd (formerly known as Celcom Planet Sdn Bhd) contributed losses of RM4.12 million.

The substantially lower profit before tax recorded in FYE2019, other than on the back of a substantially lower overall net income, was mainly due to: (a) Goodwill write-off of RM26.02 million which is attributable to PUC International (Hong Kong) Ltd and renewable energy business; (b) Impairment of intangible assets of RM21.85 million related to traditional media businesses that the Group has decided to close down; (c) Impairment loss on the solar plant amounting to RM2.46 million as the Group had embarked on the disposal of Maxgreen Energy Sdn Bhd which is expected to be completed by end of Q2 2020.

Although the Group has exercised extreme caution and prudence by proceeding with substantial impairments and write-offs, the Group is also expecting OmniChannel contribution to be challenging in 2020, as the business will undergo a major revamp. This is due to the Covid-19 impact as the Group tries to cushion its effect on the media and retail sectors.

As part of business restructure, the Group intended to lump eCommerce and Fintech under one segment called Presto Digital Services business as we foresee wider inter-related services and revenue sources are inter-dependent between these two businesses.


The Group will continue to rationalize its operations to achieve better synergies between the business segments. Under the current economic climate both domestically and globally that has been brought about by the US-China trade war, the Covid-19 virus outbreak, and Malaysia’s political uncertainty, the Group remains cautious in its business outlook in the short to middle term.

Since mid-2017, the Group has undertaken efforts to improve its financial and operational performance by realigning existing operations, acquiring suitable businesses and/or forming partnerships and collaborations to facilitate expansion, and this strategic approach remains a key element for the Group’s growth moving forward.

GROUP OPERATIONAL REVIEWDuring the year in review, several milestones were achieved, notably:

The Group announced on 31 December 2018 that it intended to acquire all the remaining ordinary shares in Pictureworks Holdings Sdn Bhd which was equivalent to 67% equity interest not already owned by the Group, for a total consideration of up to RM167.50 million, to be satisfied by a combination of shares and cash. On 22 November 2019, the Company announced the signing of the supplemental share sales agreement where the purchase consideration was revised to RM142.04 million. The transaction is currently pending completion.

The Group is moving its focus into growing its Fintech businesses by strengthening its technical capabilities internally as well as continue to enhance our existing micro-finance, e-wallet and e-payment offerings. In addition, the Group had expressed interest in exploring the digital banking sector.

Given the sustained initiatives and developments by the Malaysian government and Bank Negara to govern and drive the electronic payments space and e-commerce of Malaysia, the outlook for the Group on the development of its digital platforms remains positive.

While the government’s sustained position to stimulate growth of the Malaysian digital economy is a catalysing factor for Presto’s success, the Group will continue with its ongoing development and growth for its e-commerce businesses/ventures.

RISKSAs with all businesses, PUC is subjected to several risks due to our business exposure in the ASEAN region, to which we will cautiously monitor and at the same time employ strategies to mitigate these risks.

Economic OutlookThe new pandemic which has been circulating the globe will soon exceed the six million mark of infections at the time of this report. Even though this is an unprecedented crisis whose scale is still challenging to determine, a quick look at past events will reveal specific trends. The most obvious is that the world is heading towards a global recession. Businesses around the world are struggling to cut costs in the hope of surviving this outbreak. Stock markets have plunged, thus effecting investments, pension funds and individual savings. Of course, this has a massive effect on investors who are wary of investing their money, as a consequence; hinder economic growth.

Governments around the world are racing to enact new ordinances and legislations aimed at protecting jobs. One of the situations they are trying to avert is the rise in unemployment as it automatically affects the productivity of the country. The travel industry is the most affected by the current events. In an unprecedented move, governments worldwide introduced travel restrictions in a bid to contain the virus. There are also many supporting sectors (food industry, cleaning services and others) that are all directly affected by this.

These restrictions eventually will create a liquidity problem. People don’t have money to spend and prefer to save the little they have for the essential goods. Factories too, are experiencing a slowdown. The sourcing of raw materials is becoming difficult due to the logistical constraints and costs are quickly increasing. We will experience a natural slowdown. Overall, since people are buying less, the demand for certain goods is also falling.

However, not everything is doom and gloom. There is something different this time around, as many people can comfortably live in an online world. Entertainment, education and many other services have easily migrated online. The technology is available and in most cases, free or extremely cheap to use. Retailers and restaurants continued selling through social media platforms, despite not having any official website, providing a part of the economy can still function. However, many of the other industries could not migrate online, and it seems to be the right time to ponder on whether part of their operations can be automated. Today’s Artificial Intelligence can do miracles. We have entire factories operating by robots, deliveries performed by drones or self-driving vehicles, and the list goes on. Furthermore, with the rise of technologies such as Virtual or Augmented Reality headsets, we can have


MANAGEMENT DISCUSSION& ANALYSIS

operators from the comfort of their home running these machines. The possibilities are endless.

PUC’s digital services business on the on-set may seem to be in favour, but impact on OmniChannel, and the potential domino effects still looms.

Volatile foreign exchangeHigh levels of global market volatilities continue to put pressure on the emerging markets’ assets and currencies including Malaysia. The global markets are being dictated by the prolonged trade tensions between the US and China. The long term value of ringgit will hinge upon its speed of recovery from the Covid-19 pandemic. The fluctuations and volatility of the foreign exchange have an impact on our profitability as some of our business transacted are in foreign currencies. As such, we mitigate this by matching revenue and costs in the country’s currency.

Product costsThe Company will also face fluctuating third party cost for our products inventory. To mitigate this potential challenge, we negotiated contractual price arrangements with all our suppliers and maintaining mutual working partnership. However, this largely applies for the OmniChannel business.

On a separate note, the Group has also been revising contractual price arrangements with service vendors in relation to operating costs.

Increased competitionWe acknowledge that increased competition could impact our performance negatively. To address this, the Group will continue to strengthen our products offerings and technological capabilities that will cater effectively to our customers’ needs. Aside from that, the Company will continue to innovate our Presto ecosystem. We will also continue to enhance operational efficiency through various initiatives including enhancement of productivity through the provision of training and identify investments and collaborations opportunity.

MOVING FORWARDThe Malaysian government had introduced various initiatives and incentives for the development of “digital applications, digital companies, and digital Malaysians” in the National Budget 2020. This is on top of the five-year National Fiberisation and Connectivity Plan (NFCP), which will be undertaken via a public-private partnership approach involving a total investment of RM21.6 billion.

Today’s technology is changing rapidly where the convergence of services, devices and business models with digital environments has revolutionised how organisations behave. The internet of things essentially connects the network of physical objects embedded with electronics, sensors and software to collect and share data. Consequently, companies would need to adapt and reinvent themselves into the latest and convenient apps for a digital-ready environment in keeping up with these changes.

We have aligned certain companies within the Group as the innovation arms to ensure our effort in creating affirmative customers experience on these digital platforms are achieved. On top of that, we are also working with strategic partners to accelerate our progress. We also understand that to be a successful technology partner to our customers, it is important to have a digitally-savvy team, hence, we have continuously invested in our people for professional certifications, re-skilling by attending seminars and conferences in keeping abreast with the latest technologies.

The Group expects the digital industry to remain dynamic and competitive in 2020 with the new normal inspired by Covid-19 pandemic. To face these challenges, we will continue to leverage on our existing assets to increase market share by delivering an unparalleled quality digital innovation and experience and by providing efficient and meaningful solutions to our customers.

On a global front, we anticipate new opportunities arising from Covid-19 aftermath. The Group will be planning to expand our data centre market presence regionally and grow our current ecosystem of customers to include interconnected players from various industries.

As one of the country’s leading digital technology companies with two decades of experience, the Group has a resilient business model and capable team to take it to greater heights and position ourselves as “the trusted technology partner” in order to stay in ahead of our competitors.


OverviewAs with all businesses, PUC is subjected to several risks due to our business exposure in the ASEAN region, to which we are cautiously monitoring at the same time employ strategies to mitigate these risks.

Data from GlobalWebIndex showed that more than 26 million Malaysians use the internet today, and about 80% of the users between the age of 16 to 64 shops online. Collectively, they spent more than RM6 billion online in 2019 alone, with the purchase of consumer goods outweighing that on travel.

According to data from Statista, a global and consumer market data provider, combined spend across all sectors for the Malaysian market grew by 24% last year. Not only that the Malaysian market generated some US$3.68 billion in 2019, with the average revenue at US$184.94 per user. It further predicts the market will grow at a compound annual growth rate of 11.8% from 2019 to 2023, resulting in a market volume of US$5.75 billion by 2023.

Although the sector accounts for more than half of the country’s market, the online consumer goods market saw rapid growth. Analysts concur that Malaysia will enjoy strong e-commerce growth in the coming years, and e-marketers predicting that the country will be in the top five fastest-growing markets this year.

Compared to their Southeast-Asian neighbours, Malaysians took the lead in spending on online purchases. With the government making the online growth economy a national priority, it is likely that Malaysia will continue to enjoy strong growth in online shopping in the coming years.

Simply put, ASEAN is about ‘more’—more mobile, more commerce, more video, more stories, and more conversation. Many countries in this region are focusing on mobile Internet, making them a few of the world’s fastest-growing economies. Of course, Malaysia is notwithstanding.

2019 was the year the Group strategized to unlock our e-Commerce potential, an integration with FinTech solutions and other digital services in the Presto ecosystem. The comprehensive OmniChannel segment, which is our core business in advertising and media remained positive, and continued to contribute to our earnings.

CHANGING TRENDSAt the start of 2019, three social trends that were on the rise across the platforms were ephemeral sharing, videos and messaging. As we head into 2020, these

trends have only intensified in our region. Over the last few years, two categories of video experiences have accelerated largely due to mobile: (1) On-the-go and (2) Captivated viewing.

As a result of these changing viewing habits, people are most drawn to brands that are easy to discover and use, whether it is through strong presence in online communities or high-quality mobile content across platforms.

PUC OPERATIONAL ACTIVITIESThe Group had streamlined its businesses into three core segments, namely OmniChannel, eCommerce, and FinTech. OmniChannel consists of the group’s media and advertising businesses as well as the digital imaging business managed under associate, Pictureworks Holdings Sdn Bhd (“PHSB”).

eCommerce operates under the Group’s social marketing platform businesses as well as associate, Presto Mall Sdn Bhd. (formerly known as Celcom Planet Sdn Bhd), the owner and operator of PrestoMall (formerly 11street Malaysia).

Meanwhile, FinTech houses the Group’s electronic money, payment services and technology businesses.

eCommercePrestoMall, our eCommerce component of the Presto ecosystem (a Malaysian home-grown digital services Super App), was ranked fourth among Malaysia’s largest homegrown online marketplaces in 2019. The mobile app rankings indicated that 62% of Malaysian internet users will likely buy via mobile than computer (37%).

Through our partnership with JD.com, JD Logistics and JDX Technology, we launched the JDX Presto Concept Store, the largest unmanned cashless concept store in ASEAN, offering the O2O experience.

Further to that, the Group plans to be the country’s first loyalty point aggregator, a strategy that has not been adopted by any other peers, hence, PrestoMall would welcome any business partner that issues loyalty points to their customers and aggregate their redemption exclusively on PrestoMall, guaranteeing sales on a closed-loop.

Presto signed a memorandum of understanding with BonusLink in January 2020 to be its online and mobile redemption channel. BonusLink, being the largest multi-channel loyalty point company in Malaysia has 9 million existing members with 4 million active members. Annually it has 1billion worth of transactions based on RM100 million worth of points issued to its members.

STRATEGYREVIEW


STRATEGYREVIEW

With these tremendous transactions, it signifies a huge potential for the platform to capture the market besides profiling customers data to suit future product offers.

Smart RetailAn MOU was signed with JieDian for powerbank rental distribution at retail outlets. Malaysia has a high mobile adoption rate, making it ideal for the introduction of this business initiative.

Going forward, the Company will continue to empower “O2O” (online-to-offline) shopping experience as well as enhance our travel and leisure segment with various incentives and rewards programmes.

FINTECHWe will continue to enhance and expand our FinTech solutions which comprises electronic money (e-wallet), payment gateways and technology solutions to meet the expectations of the targeted consumer group.

In December 2019, Presto sealed multiple collaboration opportunity with JD Group of companies to bring an integrated cross-border e-commerce and payment solution experience to Malaysian consumers. JD.com is one of China’s largest e-commerce and logistics companies with an international network of resellers and is ranked 139 in the Fortune Global 500. Its key business focus includes: e-commerce and logistics, finance and payment and technology.

One of the collaboration with JD.com include being the exclusive reseller of their products in Malaysia. In this regard, JD.com will procure all products from China, and re-distribute them to Presto and other companies via the B2B2C (business-to-business-to-consumer) model. As such, Presto does not have to purchase in bulk yet be able to acquire products from China at the lowest cost under consignment mode. This way, as their sole reseller in Malaysia, Presto will have direct control on the pricing strategy for the Malaysian market. This will allow us to offer a wide range of product choices through our Presto digital ecosystem.

TRANSITION INTO A CASHLESS SOCIETYIt is estimated that Malaysia will save approximately 1% in GDP annually by adopting e-payment solutions completely, a bulk of which will be facilitated by usage of e-wallets. Mobile penetration in Malaysia is well above 100%, and although the overall e-wallet adoption is still at its infancy at 8%, we believe, the country is ready for transition into this cashless future. According to a Bank Negara report, a total of 2.3 billion e-money transactions, amounting to some RM22.4 billion was recorded from March 2019 to March 2020.

In view of the adoption of e-wallet amongst the public, merchants and businesses, the government announced a one-off RM30 e-Tunai Rakyat as part of the digital stimulus package to eligible Malaysians aged 18 and above with income of less than RM100,000, during the 2020 Budget address, as a bid to encourage the adaptation of cashless transaction. Over 6 million Malaysians have applied and had spent RM18 million through the participating e-wallets. This is encouraging as it puts the virtual commerce platform on a considerable growth trajectory in the foreseeable future, creating opportunities and challenges for businesses and industries going forward. It is predicted that in 2020, 53% of e-commerce transaction will be paid by cards. Looking at the future projections, the Group sets its sights to be part of this change.

EMBRACING SMART INNOVATIONE-Commerce will not be the only industry to see demand in 2020. Many trends show innovation charging ahead faster than ever, enabled by more access and more demand, as well as by revolutionary new tech platforms and socio-political forces.

People are looking at how and where technologies, including Artificial Intelligence (AI), machine learning, the Internet of Things (IoT) and new network innovations, can best and securely connect them with the things that matter most. The IoT industry is expected to create more than 14,000 new jobs and contribute a significant percentage to the Malaysian economy.

2020 will be shaped by green innovations, combining IoT, big data and AI tech that change the way businesses transact and how we live our lives. There has been significant interest in IoT, hence, allowing the Group the opportunity to expand into AI business and be at forefront of these innovations.


BOARD OFDIRECTORS’ PROFILE

QUALIFICATION• Bachelor of Economics (Honours) in Analytical

Economics, University of Malaya

• Master of Business Administration (Finance), University of Oregon, United States of America

WORKING EXPERIENCE AND OCCUPATIONDato’ Othman began his career with the Malaysian Ministry of Finance holding various senior positions until his retirement in June 2004.

He served as the Group Chief Executive Officer of Malaysia Kuwaiti Investment Co. Sdn Bhd from 1995 to 1998 and acted as an Executive Director for Asian Development Bank from August 2000 to July 2013. He was also the Chief Executive Officer for the National Higher Education Fund from 2005 to 2006 and the Chairman of TH Technologies Sdn Bhd, a wholly-owned subsidiary company of Lembaga Tabung Haji, from 2005 to June 2011. Dato’ Othman was also appointed as the Non-Executive Director of Asia Media Growth Berhad from 2009 until 2011.

He also served as a member of the Group Audit Committee of RHB Bank Berhad from 2004 and the director of several companies within the RHB Banking Group until his retirement in 2016.

DIRECTORSHIP OF OTHER PUBLIC COMPANIES• Listed Corporations: None

• Public Companies: None

MEMBERSHIP OF BOARD COMMITTEES• Member of Audit and Risk Management Committee

• Member of Nomination Committee

• Member of Remuneration Committee

ATTENDANCE AT BOARD MEETING DURING THE FINANCIAL YEAR ENDED 31 DECEMBER 20198/8

DATO’ OTHMAN BIN JUSOH(“DATO’ OTHMAN”)

PositionIndependent Non-Executive Chairman

GenderMale

NationalityMalaysian

Date of Appointment1 January 2014

Date of Resignation1 June 2020

Age72


QUALIFICATION• Bachelor of Computer Science (Hons), National

University of Singapore

• Master of Computer Science, National University of Singapore

WORKING EXPERIENCE AND OCCUPATIONBeing the Group Managing Director and Chief Executive Officer of PUC Berhad (“PUC”), Mr. Cheong oversees the operations and overall business direction of PUC across its core business areas and subsidiaries, as the Group envisions to be the leading digital services company in Malaysia. Mr. Cheong is also the Chief Executive Officer of Presto Mall Sdn Bhd.

An entrepreneur at heart, Mr. Cheong started his first venture with GeoFoto Pte Ltd in 1999. As the Co- Founder and Chief Architect, he developed system architecture and marketed imaging technology in collaboration with his alma mater, National University of Singapore. As an extension of his line of work, he subsequently designed a state-of-the-art online photo printing system which was sold to Fujifilm in 2001.

Following his passion, Mr. Cheong became the Founder and Managing Director of Pictureworks Holdings Sdn. Bhd. and its subsidiary companies (collectively known as “PW Group”), whereby his strategic direction propelled the company to become a regional leader in digital imaging and launched the world’s first photo printing kiosk for smart phones. Headquartered in Singapore, PW Group today has its presence in 13 countries with

offices in Singapore, Malaysia, Shanghai and Hong Kong, serving 100 million customers annually. The foundation in technology, the development of innovative systems, and his proven business acumen, was most recently reiterated as Mr. Cheong won the prestigious EY Entrepreneur Of The Year 2018TM Singapore Award in the category of Media & Lifestyle for Pictureworks.

Prior to this, he was with Systems@Work Pte Ltd (which was acquired by Wirecard), the first company to provide a two-way authentication for online transactions using mobile voice calls. As the Business Solutions Director, he led a team in planning and development of large scale payment systems and innovative payment products including mobile applications to meet the growing demands of Malaysia’s online ePayments ecosystem.



SECURITIES HOLDINGS IN THE COMPANY• His securities holdings is disclosed at page 213 and

215 of the Annual Report.


PositionGroup Managing DirectorGroup Chief Executive Officer

GenderMale

NationalitySingaporean

Date of Appointment14 April 2016

CHEONG CHIA CHOU(“MR. CHEONG”)

Age44



QUALIFICATION• Institute of Chartered Accountants in England & Wales

MEMBERSHIP OF ASSOCIATIONS• Fellow member of the Institute of Chartered

Accountants in England and Wales

• Member of the Association of Certified Fraud Examiners

WORKING EXPERIENCE AND OCCUPATIONMr. Sherick has vast experience in both external and internal audit, and corporate risk management. He worked in public accounting firms in various positions, including positions of Senior Manager and Partner from 1961 to 1982.

Mr. Sherick served as the Director Group Fraud Control & Revenue Assurance in Cable & Wireless Plc (“C&W”). He served as the Regional Chief of Internal Audit and Security for C&W Asia Pacific and Chief of Group Internal Audit & Security in Hong Kong Telecommunications Ltd (a major C&W subsidiary) from 1981 to 1999. He has extensive experience in general audit and specialised in the audit of computerised systems and more particularly in recent years has further specialised in Telecoms Fraud and Revenue Assurance. He served as the Director of Risk Management and Legal Services in Thus Group Plc from 2001 to 2008.

He was a member of the Institute of Internal Auditors and served as the North Pacific Regional Director for four (4) years. He also served on the Advanced Technology Committee and the International Relations Committee

of the Institute of Internal Auditors. He was the founder and Chairman of the Forum for International Irregular Network Access, a worldwide body dealing with Telecommunications Fraud. He was also a fellow of the Hong Kong Society of Accountants and resigned in 1999.

Mr. Sherick has held several posts at various academic institutions in the United Kingdom and in Hong Kong. In the field of law enforcement, he progressed through the ranks to become a Senior Superintendent in the Royal Hong Kong Auxiliary Police Force. He was also an examiner for various professional bodies for the auditing and investigation papers. Mr. Sherick has also published various articles and books on Revenue Assurance and Fraud for the telecommunications industry.



MEMBERSHIP OF BOARD COMMITTEES• Chairman of Audit and Risk Management Committee

• Member of Nomination Committee



NATHANIEL GRANT DAVID SHERICK(“MR. SHERICK”)

PositionIndependent Non-Executive Director

GenderMale

NationalityBritish

Date of Appointment12 June 2014

Age76


QUALIFICATION• Mr. Liew obtained his law degree in 1987 and his

Malaysian Certificate in Legal Practice in 1988

MEMBERSHIP OF ASSOCIATIONS• He was admitted as an Advocate and Solicitor of the

High Court of Malaya in 1989

WORKING EXPERIENCE AND OCCUPATIONMr. Liew has more than forty (40) years of experience in the Malaysian media industry. He began his media career in the New Straits Times in 1969 and joined The Star in 1977, where he became Group Chief Editor in 1983.

He was The Star Editorial Consultant in 1989. He left in 1992 to join the Westmont Group, where he was Executive Director of Westmont Land (Asia) Berhad. In 1995, he returned to the publishing industry by joining Nanyang Press Holdings Bhd (“NPHB”).

The following year, he joined the Sin Chew Media Group, where he became Group Chief Executive Officer. In 2001, he was appointed as Group Managing Director of NPHB until he retired in 2006.

He has been in legal practice with Messrs CH Yeoh & Yiew since 2007.


• Public Companies: Sin Chew Media Corporation Berhad

MEMBERSHIP OF BOARD COMMITTEES• Chairman of Nomination Committee

• Member of Audit and Risk Management Committee


SHAREHOLDINGS IN THE COMPANY• His shareholdings is disclosed at page 213 of the

Annual Report.


LIEW PENG CHUEN @ LIEW AH CHOY(“MR. LIEW”)


GenderMale


Date of Appointment1 January 2014

Age72



QUALIFICATION• Institute of Chartered Accountants in England & Wales

MEMBERSHIP OF ASSOCIATIONS• Fellow member of the Institute of Chartered

Accountants, England and Wales

• Member of the Malaysian Institute of Certified Public Accountants

• Member of the Malaysian Institute of Accountants

WORKING EXPERIENCE AND OCCUPATIONDatuk Oh sits as a Non-Executive Director of the various Board of public listed companies including Malayan Flour Mills Berhad, Dialog Group Berhad and WCE Holdings Berhad. He is currently the Chairman and Member of Labuan Financial Services Authority (“Labuan FSA”) and Council Member of Universiti Tunku Abdul Rahman (“UTAR”) and a trustee of UTAR Education Foundation.

Datuk Oh was the Chairman of the Alliance Financial Group until his retirement from the Board on 26 September 2017. He was a senior partner of Coopers & Lybrand (now known as PricewaterhouseCoopers Malaysia). He was a Committee Member of the Kuala Lumpur Stock Exchange (now known as Bursa Securities Malaysia Berhad) and also a past President, Council Member of the MICPA and was also a member of the Malaysian Accounting Standards Board. He was a council member of the Malaysian Institute of Certified Public Accountants and served as its President from 1994-1996.

DIRECTORSHIP OF OTHER PUBLIC COMPANIES• Listed Corporations:

- WCE Holdings Berhad

- Dialog Group Berhad

- Malayan Flour Mills Berhad

• Public Companies:

- Saujana Resort (M) Berhad

MEMBERSHIP OF BOARD COMMITTEES• Chairman of Remuneration Committee


DATUK OH CHONG PENG(“DATUK OH”)

PositionIndependent Non-Executive Director(re-designated as Independent Non-Executive Chairman on 1 June 2020)

GenderMale


Date of Appointment1 October 2017

Age75


QUALIFICATION• Chartered Institute of Marketing, UK (CIM), Central

London College

WORKING EXPERIENCE AND OCCUPATIONRaja Zafura is a strategic marketing professional with over 20 years of progressive experience in sustainable business and programme management. Currently, she is the Head of Corporate Affairs department of the Employee Provident Fund.

Raja Zafura started her career as an advertising executive of the Pertubuhan Akitek Malaysia, then onto Bates Malaysia, an international advertising agency where she eventually managed key accounts such as Malaysian Tobacco Company Berhad (now known as British American Tobacco (Malaysia) Berhad), HSBC Bank Malaysia Berhad and Petronas Dagangan Berhad. Raja Zafura was also involved in corporate affairs scope of work covering the Confederation of Malaysian Tobacco Manufacturers.

She was a key member of the Iclif Leadership and Governance Centre’s senior leadership team. Prior to Iclif, Raja Zafura worked with Khazanah’s Themed Attraction Resorts and Hotels as Senior Vice President for Marketing, Sales and Communications. She played an instrumental role in the launch of KidZania, as well as contributing to the strategic planning of other theme park projects namely, Puteri Harbour Theme Park (Sanrio Hello Kitty Town and Thomas Town) and Legoland Malaysia Resort.

She served as the Head of Customer Experience of Malayan Banking Berhad’s Consumer Banking division. Raja Zafura’s scope of work included overseeing the brand marketing, advertising, and promotions of not just the consumer banking but also corporate banking, and the Islamic banking division. She was also involved in the Maybank2u user experience initiatives as well as the overall look and feel of the branches throughout the nation.



MEMBERSHIP OF BOARD COMMITTEES• Member of Nomination Committee

• Member of Audit and Risk Management Committee



GenderFemale


Date of Appointment1 March 2018

RAJA ZAFURA BINTI RAJA ZAIN(“RAJA ZAFURA”)

Age56



QUALIFICATION• Master of Accounting and Finance, HELP University

• Master of Business Administration, Charles Sturt University (Australia), HELP University College

MEMBERSHIP OF ASSOCIATIONS• Associate Member of Certified Practising Accountant

(CPA) Australia

WORKING EXPERIENCE AND OCCUPATIONMs. Hon has more than twenty (20) years of working experience spanning across several industries. She is equipped with an accountancy background paired with corporate experience in Finance, Human Resource, Marketing, Administrative and Managerial expertise.

Ms. Hon is the present Managing Director of Academia Management and Consultancy Sdn Bhd (“AMC”). She spearheads the strategic planning of AMC’s related companies and research projects in social science.

She represented companies proposed for Initial Public Offer (pre-propose for IPO) for listings on Bursa Malaysia Securities Berhad. Leveraging on her experiences, she has also provided advisory services to a company in Beijing, China in structuring their operational framework and policies as part of its initial proposed listing exercise.

Pivoting into the educational sector, she was the Head of The Centre for Business Programmes and lecturer at HELP College of Arts and Technology and a part-time lecturer at MAHSA University. She was in

charge of the lectures of accounting and international business subjects as well as supervision of thesis for undergraduate and post-graduate programs.

DIRECTORSHIP OF OTHER PUBLIC COMPANIES• Listed Corporations: Ikhmas Jaya Group Berhad


MEMBERSHIP OF BOARD COMMITTEES• Member of Audit and Risk Management Committee



GenderFemale


Date of Appointment2 August 2018

HON SHIL HONG(“MS. HON”)

Age51


QUALIFICATION• Bachelor of Arts, Victoria University

• Advance Diploma in Multimedia and Mass Communications, Lim Kok Wing University

• GCSC, Standbridge Earls High School

MEMBERSHIP OF ASSOCIATIONSNil

WORKING EXPERIENCE AND OCCUPATIONEncik Hafez journey as an entrepreneur started at a very young age in sales and marketing. Form his learnings in sales and marketing, he then proceeded to set up a food and beverage kiosk in Kuala Lumpur. In 2003, he established HMH Group which started with small landscaping jobs, before gaining traction and promptly moving on to acquiring major facilities management contracts for commercial buildings around Klang Valley, Perak, Melaka & Johor.

Additional Information of the Board of Directors:Family Relationship: None of the Directors has any family relationship with any Director and/or major

shareholder of PUCConflict of Interests: None of the Directors has any conflict of interest with PUCConviction for Offences: None of the Directors has any conviction for offences, other than traffic offences, for the

past five (5) yearsPublic Sanction or Penalty: None of the Directors has any sanction or penalty imposed on them by any regulatory

bodies during the financial year ended 31 December 2019

HMH Group has expanded into a number of other industries including outdoor advertising, information technology as well as American-Japanese Restaurant chain founded by the son of the Benihana Restaurant Empire. Most recently, HMH Group has become a partner in an electric bus venture that will build and provide an affordable, zero emission mass transport solution. Encik Hafez is the founder and Group Chief Executive Officer of HMH Group.

DIRECTORSHIP OF OTHER PUBLIC COMPANIES• Listed Corporations: Tropicana Corporation Berhad


MEMBERSHIP OF BOARD COMMITTEESNil



GenderMale


Date of Appointment1 August 2019

HAFEZ MOHD HASHIM BIN RAZMAN MD HASHIM (“ENCIK HAFEZ”)

Age39


KEY SENIORMANAGEMENT

From left to rightCheong Tze Wai (“Kelvin”) | Tay Yu Xuan (“Jenny”) | Cheong Chia Chou (“Mr. Cheong”) | Foo Yong Jio (“Erwin”) | Hiew Wai Yoon (“Kenneth”)



As the Group Chief Strategy Officer of PUC Berhad (“PUC”), Kelvin is in charge of formulating, developing and aligning the Group’s overall corporate activities and key business initiatives while also managing key relationships with regulators, investors and the entire PUC stakeholder ecosystem.

Kelvin started his career in Research & Development with Via Communications Network where he was involved in product development, providing counsel on information systems and software architecture.

He then joined Nanyang Online Sdn Bhd as a Senior Executive in the Business Development team, where he took on the development of the company’s new business initiatives in electronic media and content before he was transferred to RedHot Media Sdn Bhd (“RHM”) in 2004.

Kelvin served in various capacities in RHM across the company’s Business Development and Corporate Development divisions. His notable achievements include successful intrapreneurial ventures in developing the company’s new media and public relations services. As the Assistant Vice President of Corporate Development, he facilitated in the company’s expansion and listing on the AIM market, London Stock Exchange. In 2008, he was promoted to Vice President, before his posting as the Group Senior Vice President of Resource Holdings Management Limited (“RHML”) and PUC, following a reverse takeover of PUC by RHML in 2014.

Following PUC’s investment into one of the leading online marketplaces in Malaysia, PrestoMall, which

subsequently expanded to offer a series of lifestyle services under the umbrella of Presto Universe Sdn Bhd, Kelvin is overseeing the delivery of the brand’s corporate strategy to become Malaysia’s top super-app that promotes faster, cooler and richer lifestyle to its users.

He graduated with a Bachelor’s Degree in Science majoring in Computing and Information Systems with Honours from Staffordshire University, United Kingdom.

DIRECTORSHIPS• Listed Corporations: None


GenderMale


Date of Appointment1 May 2017

PositionGroup Chief Strategy Officer

CHEONG TZE WAI(“KELVIN”)

Age39


As the Group Chief Operating Officer of PUC Berhad (“PUC”), Jenny oversees the business activities to cost optimization and operational efficiencies. With Jenny’s remarkable relationship-building and interpersonal skills, Jenny is constantly engaging potential business partners to build strategic business collaborations aligning to the Group’s long-term growth plan.

Jenny has more than 13 years of experience in Customer Service, Entertainment, and Event Management industry. Earlier in her career, she developed passion and interest in the imaging industry, a niche she further developed as she joined Pictureworks Holdings Sdn Bhd (“PWHSB”).

Jenny joined PWHSB as a Marketing Executive in year 2005, and assumed the role of General Manager in 2009, she expanded the business portfolio by tying partnership knots with major international theme parks such as LEGOLAND® Malaysia and Kidzania in various parts of the world. Jenny’s deep understanding on themed attractions corporate culture continue to be integral in building relationships with existing and new clients, and positioning PWHSB as global leading imaging service provider for theme parks and attractions.

With her strong leadership and industry expertise, Jenny was appointed the Group Executive Director of PWHSB in 2018. Currently PWHSB offers its services in 13 countries and capturing more than 100 million smiles annually.

Following PUC’s investment into one of the leading online marketplaces in Malaysia, PrestoMall, which subsequently expanded to offer a series of lifestyle services under the umbrella of Presto Universe Sdn Bhd, Jenny assumes the role of Group Chief Operating Officer cum Chief Marketing Officer of Presto Universe Sdn Bhd, striking numerous deals to connect points to shop in Presto digital ecosystem.



GenderFemale

NationalitySingaporean

Date of Appointment1 October 2018

PositionGroup Chief Operating Officer

TAY YU XUAN(“JENNY”)

Age37



As the Group Chief Technology Officer of PUC Berhad (“PUC”), Erwin combines innovation and security to lead a stable of talented IT professionals to elevate the company’s technological direction and digital approach across all core businesses, especially technology, eCommerce and integrated media services, in line with PUC’s long term growth plans to become leading digital service provider. Erwin also oversees Presto’s technology transformation and roadmap in platform and product services.

More than 20 years’ experience in the IT industry, Erwin founded Enovax in 2010, growing the modest IT business into a full-fledged integrated IT business solutions company and a regional player in the field. Known for its full suite of one-stop customized solutions addressing small and medium enterprises (“SMEs”) evolving industry demands, he is integral in building strong capabilities and knowledge base of Enovax in online ticketing, payment gateway solutions such as e-wallet, prepaid cards and e-voucher management system, business process management and resource planning. These have been successfully implemented for various key clients such as Sentosa Development Corporation, Hitachi, Deloitte, Fuji Xerox, Golden Village, SAFRA and Certis Cisco, and are used by millions of users. As a recognition of his involvement in digital business solutions innovation, he was awarded the ‘Best Technology CEO Singapore 2018’ by UK Global Banking & Finance.

Prior to Enovax, Erwin served in multiple roles across the region including Singapore, China, Hong Kong and Taiwan. In 2008, he joined Deloitte Singapore as the Assistant Manager in IT Risk Consulting practice in the

Enterprise Risk Services Division where he specialized in the design and implementation of enterprise security and risk management products for large-scale banks and organizations in Singapore and China, one that is widely used in banks in the region. His career began in 2 of Singapore’s largest system integrator companies, NCS and SCS, after which he worked with Systems@Work Pte Ltd, an online payment solutions company that was eventually acquired by Wirecard.

Erwin graduated with a Bachelor’s Degree in Computer Science and Information Engineering from the National Taiwan University. He is a certified Information Systems Auditor and SUN Certified Java Programmer.



GenderMale


Date of Appointment14 June 2017

PositionGroup Chief Technology Officer

FOO YONG JIO(“ERWIN”)

Age44


As the Group Chief Commercial Officer of PUC Berhad (“PUC”), Kenneth led the Business Development team with the responsibility of engaging business partners and offering the group’s existing products and services to help them realize greater business value. On top of that, Kenneth looked after the development of blockchain platform, digital assets, as well as tokenization.

Kenneth also led the work around streamlining current business activities of the group on top of supporting business fundamentals of various departments to achieve PUC’s long term strategic goals. Prior to this role, he was the Group Chief Executive Officer and Executive Director of PUC.

In addition to his knowledge and proven expertise in the media and payments industry, Kenneth also has more than 2 decades of experience in the Fast Moving Consumer Goods (“FMCG”) sector. This included global powerhouse Nestle and later in Fiamma Berhad where he developed skills and leaderships to become the

Regional Sales Manager. In this role, he was tasked with the management of 7 branches and oversaw a team of 40. These teams marketed home appliances of local and international brands, namely ELBA and MEC. His strategic direction was crucial in bringing in significant gains to the business.

Kenneth graduated with a Bachelor’s Degree in Business Administration with First Class Honours from Unisersiti Putra Malaysia, obtained a Master’s Degree in Business Administration from Universiti Utara Malaysia, and completed a Fintech course from Oxford University in year 2017.



GenderMale


Date of Appointment1 May 2017

PositionGroup Chief Commercial Officer

HIEW WAI YOON(“KENNETH”)

Age45

Other than disclosed, none of the Key Senior Management have:1. any family relationship with any Director and/or major shareholder of PUC;

2. any conflict of interest with PUC;

3. any conviction for offences, for the past five (5) years other than traffic offences; and

4. any public sanction or penalty imposed on them by any regulatory bodies during the financial year ended 31 December 2019.


AUDIT & RISK MANAGEMENTCOMMITTEE REPORT

The Audit Committee was established on 27 February 2002 to serve as a Committee of the Board of Directors of PUC Berhad (“Board”). The Audit Committee was subsequently renamed as Audit and Risk Management Committee (“ARMC”) on 23 May 2018.

The principal objective of the ARMC is to assist the Board in discharging its statutory duties and responsibilities in relation to the Company’s financial, accounting and reporting practices, provide a check and balance view on the risk and internal control system.

COMPOSITIONThe ARMC comprised solely of Independent Non-Executive Directors. The members of the ARMC as at to date of this report are as follow:

Name Designation DirectorshipNathaniel Grant David Sherick Chairman Independent Non-Executive Director

Dato’ Othman Bin Jusoh Member Independent Non-Executive Director

Liew Peng Chuen @ Liew Ah Choy Member Independent Non-Executive Director

Raja Zafura Binti Raja Zain Member Independent Non-Executive Director

Hon Shil Hong Member Independent Non-Executive Director

Name Number of Meetings AttendedNathaniel Grant David Sherick (5/5)

Dato’ Othman Bin Jusoh (5/5)

Liew Peng Chuen @ Liew Ah Choy (5/5)

Raja Zafura Binti Raja Zain (4/4)

Hon Shil Hong (4/4)

The Chairman, Mr. Nathaniel Grant David Sherick, a fellow of the Institute of Chartered Accountants in England and Wales, has vast experience in both internal and external audit. The ARMC members possess a wide range of necessary skills to discharge their duties and are financially literate.

TERMS OF REFERENCEThe ARMC is governed by the Terms of Reference (“ToR”) which establishes the functions, powers, duties and responsibilities granted by the Board which are available on the Company’s website at www.puc.com.

The ToR of ARMC was last reviewed on 28 November 2018.

MEETING ATTENDANCE During the financial year under review, a total of 5 meetings of the ARMC were held. The attendance of the members of the ARMC is as follows:

The Group Managing Director and Group Chief Executive Officer, Senior Management, Finance Controller, the external auditors and as well as the internal auditors were Invited to attend the ARMC meetings, when required.


SUMMARY OF ACTIVITIES OF THE AUDIT AND RISK MANAGEMENT COMMITTEEThe ARMC is collectively responsible in assisting the Board in corporate governance and compliance matters of PUC group. A summary of the work and key matters undertaken by the ARMC during the financial year ended 31 December 2019 (“FYE2019”) included the following:

Financial Statements and Reporting 1. Reviewed and discussed the Group’s unaudited quarterly consolidated financial results and the Group’s annual

audited financial statements before recommending the same for the Board’s consideration and approval prior to the release of the Group’s quarterly and annual results to Bursa Malaysia Securities Berhad, ensuring that the financial reporting and disclosure requirements of relevant authorities have been complied with.

2. Reviewed the financial reporting of the Group with the external auditors and the Management, discussed and made enquiries on, among others:

• any material changes made between the current and preceding or corresponding quarter or year and the reasons for any significant variances in the financial statements.

• any significant changes in accounting policy and adoption of new or updated approved accounting standards and its impact to the financial results of the Group.

• the assumptions and judgments made by the Management which are significant to the financial reporting and their reasonableness based on the available information and current or expected market condition and recommended to the Board of Directors for approval that the financial reports presented a true and fair view of the Group’s financial performance for the FYE2019 and in compliance with the laws and regulatory requirements.

External Audit 1. Reviewed and approved the Audit Planning Memorandum with the external auditors together with their scope of

work for the financial period prior to the commencement of audit.

2. Discussed the Audit Review Memorandum and their findings and recommendations arising from the audit.

3. Reviewed the scope of audit and external auditors’ performance, their independence, suitability, objectivity and their services rendered including non-audit services.

4. Considered and recommended the audit fees payable to the external auditors and their re-appointment of services to the Board for approval.

Internal Audit 1. Reviewed and approved the Annual Internal Audit Plan to ensure principal risk areas were adequately identified

and covered in the plan together with the scope and coverage of the audit over the activities of the respective operating units of the Group and the basis of assessment and risks of the proposed areas of audit.

2. Reviewed the Internal Audit Reports with recommendations from the internal auditors, Management’s responses and follow up actions taken by the Management.

3. Reviewed the status report on the corrective actions taken on the outstanding audit issues, submitted by the internal auditors, to ensure that all key risks and controls have been addressed.

4. Reviewed the internal audit function with particular emphasis on determining the adequacy of the scope, functions, competency, resources levels as well as the process and results of the internal audit functions.


AUDIT & RISK MANAGEMENTCOMMITTEE REPORT

Related Party Transactions and Recurrent Related Party TransactionsThe ARMC reviewed the reports of Related Party Transactions and Recurrent Related Party Transactions as well as conflict of interest situations that may arise within the Company or the Group to ensure they were in the best interest of PUC Group, fair and reasonable on normal commercial terms and not detrimental to the interest of the minority shareholders and found that there were reasonable controls in monitoring the amount transacted during the financial year.

OthersThe ARMC reviewed and endorsed the adequacy and effectiveness of risk management, internal control system and key control process as adopted by PUC Group.

INTERNAL AUDIT FUNCTION (“IAF”)The internal audit function which is outsourced, is independent of the activities and operations of other operating units. Its principal role is to undertake independent, regular and systematic reviews of the systems of risk management and internal controls to provide reasonable assurance that the systems continue to operate efficiently and effectively to ensure an acceptable level of risk exposure.

In line with best practices, the IAF adopts a risk-based methodology that in establishing its strategic and annual Internal Audit Planning Memorandum deploys audit resources to focus on significant risk areas which priorities the audits to areas that have been assessed as having potentially higher risks for effective governance, risk management and internal control. Where applicable, examinations were conducted on policies, manuals and standards governing the activities, processes, systems and on analysis of the data contained in the accounting and management information systems while key Management were interviewed.

In FYE2019, the IAF performed the following audits and reviews:

• Media Concession Management of Founder Qube Sdn Bhd (focus on Laputa Venture Sdn Bhd);

• Capital Sourcing Risk & Financial Reporting Risk of PUC Berhad and its subsidiaries;

• Information Technology Management Review of PUC Berhad and Presto Mall Sdn Bhd; and

• Collection Function Review of Redhot Media Sdn Bhd, Presto Pay Sdn Bhd and Founder Pay Sdn Bhd.

The total costs incurred for the IAF of the Group for FYE2019 was approximately RM68,000.


This Corporate Governance Overview Statement sets out the principal features of PUC Berhad (“PUC” or the “Company”) and its subsidiaries (collectively referred to as “the Group”) corporate governance approach, summary of corporate governance practices during the financial year as well as key focus and future priorities in relation to corporate governance.

This Corporate Governance Overview Statement is prepared in compliance with the ACE Market Listing Requirements (“AMLR”) and is to be read together with the Company’s Corporate Governance Report (“CG Report”) for the financial year ended 31 December 2019 (“FYE2019”) which is available on Bursa Malaysia Securities Berhad (“Bursa Securities”) website at www. bursamalaysia.com and the Company’s website www.puc.com.

This Corporate Governance (“CG”) Overview Statement provides a summary of the corporate governance practices of the Company during the FYE2019 with reference to the three (3) key Principles of good corporate practices as set out in the Malaysian Code on Corporate Governance (“MCCG”) as follows:-

PRINCIPLE A - BOARD LEADERSHIP AND EFFECTIVENESSThe Board of Directors of PUC is striving to achieve high standard in corporate governance through strengthening self and market discipline, promoting good compliance with laws and ethical values, and maintain the standard of corporate governance culture to ensure appropriate management of risks and level of internal controls within the Group.

The Board of Directors is the ultimate decision-making body of the Group and is responsible for the overall direction and vision of the Group’s business and affairs on behalf of the shareholders with the exception to matters which require the approval of shareholders. The Board delegates authority for the conduct of the business to the Group Managing Director /Group Chief Executive Officer (“GMD/CEO”), who together with the Management team is accountable to the Board.

CORPORATE GOVERNANCEOVERVIEW STATEMENT

The Board of Directors of PUC Group (“Board”) is committed to maintain high standards of governance practices, values and ethical business conducts and acknowledges the importance to set the appropriate standards from the Board level to across the entire Group. Corporate governance practices shall be the fundamental aspect in managing the business and affairs of the Group in a responsible and ethical manner.

Principle A Principle BPrinciple C

Board Leadershipand Effectiveness

Effective Audit and Risk

Management; and

Integrity in Corporate

Reporting andMeaningful

Relationship withStakeholders.



Board ResponsibilitiesThe Board is responsible for the performance and affairs of the Company and its subsidiaries (collectively “the Group”). It also provides leadership and guidance for setting the strategic direction and the control systems of the Group. The Board delegates the implementation and monitoring of these set directions and control systems to the management.

The Board is led by the Independent Non-Executive Chairman, Dato’ Othman Bin Jusoh and is supported by the GMD/CEO, Mr. Cheong Chia Chou and other Board members with wide range of expertise and experience. They collectively play an important role in the stewardship in the direction and operations of the Group.

The Board has assigned the day-to-day affairs of the Group’s businesses within various divisions to local management, comprising GMD/CEO and the Key Senior Management and head of department of the main operating companies, who are accountable for the conduct and performance of their businesses within the agreed business strategies.

The roles and responsibilities of the Chairman and the GMD/CEO are segregated and set out in the Board Charter which provides clear, distinct responsibilities for each role to enhance the appropriate existing balance of role, responsibility, power, authority and accountability. The Board Charter is available on the Company’s website on www.puc.com.

The Chairman, Dato’ Othman Bin Jusoh has robust leadership background and vast experience in various senior positions has led to his election from among the Board of Directors and appointed as an Independent Non-Executive Chairman of the Board on 1 January 2014. Dato’ Othman Bin Jusoh has resigned as Independent Non-Executive Chairman on 1 June 2020 and Datuk Oh Chong Peng has been re-designated as Independent Non-Executive Chairman on even date.

The Chairman’s role is to:

• carry out a visionary leadership role in facilitating the effective conduct of the Board;

• create a culture of openness characterised by debate and appropriate challenge amongst Board members;

• promote and ensure the highest integrity standards of corporate governance processes and issues;

• undertake primary responsibility for the Board to receive accurate, timely, clear information and is consulted on all relevant matters.

The Board through the Board Charter recognises the importance of having a clearly separation of power and responsibilities to ensure no repetition of duties and authority, a balance between power and authority.

The Board’s role is to:

• review, challenge and adopt the overall strategic and business plans, goals and directions of the Group;

• oversee and evaluate the conduct and performance of the business and Management in ensuring proper procedures and measures are in place;

• review the adequacy and integrity of the risk management and internal control system of the Group;

• ensure that the Group adheres to high standards of ethics and corporate behaviour to safeguard the interests of shareholders;

• ensure orderly succession planning of the Board, Committees and Management;

• monitor and review the management processes in uplifting integrity of financial and other reporting requirements to ensure the Group’s financial statements are true, fair and conform with the relevant accounting standards including adopting annual budgets and approving the Company’s financial statements.

The GMD/CEO role is to:

• assume overall responsibility in leading the Group’s performance and management;

• oversee the Key Senior Management and head of departments;


• develop, recommend and implement organisational strategy, targets, business plans and policies;

• drive performance within strategic goals and commercial objectives;

• maintain an effective framework of risk management and risk control system;

• foster a corporate culture promoting ethical practices and integrity;

• manage day-to-day conduct of business and affairs;

• be the public face, the official spokesperson of the Group.

There is clear delineation of roles between the Board and Management with the GMD/CEO acting as the conduit between the Board and the Management in driving the success of the Group’s governance and management function.

The Independent Non-Executive Directors’ role is to:

• provide independent judgement to the Board;

• scrutinise the performance of the Management;

• review the adequacy and integrity of the internal control system, management information system, financial and other reporting requirements;

• develop, give unbiased review and constructively challenge and strategy proposals;

• provide a check and balance, deliberate and challenge management on the rationale to the proposals;

• look into whistle blowers and their concerns.

The Non-Executive Directors are not involved in the day-to-day management of the Group but contribute their particular expertise and experience in assisting the development of business strategy of the Group and to make insightful contribution to the Board’s deliberations. The Independent Directors serve as a check and balance with no bias and give fair opinion, and decision in the Board. They also assist and ensure the Board adopts a good corporate governance practice within the group.

Board CommitteesThe Board has established the following Board Committees which consist of Independent Non- Executive Directors to provide independent oversights of management and to ensure that there are appropriate checks and balances in discharging of its oversight function:

• Audit and Risk Management Committee

• Nomination Committee

• Remuneration Committee

These Committees play a significant part in reviewing matters within each Committee’s Terms of Reference (“ToR”) and facilitating the Board’s discharge of its duties and responsibilities. Each of these Committees has specific ToR , scope and specific authorities to review matters and report to the Board with their recommendations.

The Board may also form such other committees from time to time as dictated by business imperatives and/or to promote operational efficiency. Notwithstanding the above, the ultimate responsibility for decision making still lies with the Board. The ToRs are available on the Company’s website on www.puc.com.

Company SecretaryThe Board is supported by the Company Secretaries, who are members of the professional body namely, The Malaysian Institute of Chartered Secretaries and Administrators and they are also qualified under the Companies Act 2016. The



Company Secretaries play an important role in facilitating the overall compliance with the Companies Act 2016, AMLR and other relevant laws and regulations. The Company Secretaries also assist the Board and Board Committees to function effectively and in accordance with their ToR and best practices and ensuring adherence to the existing Board policies and procedures. The roles and responsibilities of the Company Secretaries have been formalised in the Board Charter which provides reference for Company Secretaries in the discharge of their roles and responsibilities.

Board CharterThe Board has adopted a Board Charter to promote the standards of corporate governance and clarifies, amongst others, the roles and responsibilities of the Board, Board Committees and individual Directors and management. The ultimate responsibility for decision making still lies with the Board.The Board Charter is subject to periodic review by the Board to ensure that it remains consistent with the Board’s roles and responsibilities as well as the prevailing legislation and practices. The Board Charter was last reviewed on 28 November 2018 and is available on the Company’s website at www.puc.com.

Code of EthicsThe Board shall formalize and maintain a set of ethical professional standards and behaviour, personal integrity and display of honesty in dealings are expected of all directors, employees and where applicable, counterparts and business partners and ensure its compliance.The Board had adopted a Code of Conduct and Ethics for PUC Group together with management implements its policies and procedures, which include managing conflicts of interest, preventing the abuse of power, corruption, insider trading and money laundering.The Code of Conduct and Ethics is available on the Company’s website on www.puc.com.

Whistleblowing Policy and ProceduresThe Group acknowledges the importance of lawful and ethical behaviour in all its business activities and is committed to adhere to the values of transparency, integrity, impartiality and accountability in the conduct of its business and affairs in its workplace.The Group has in place a Whistleblowing Policy which serves as an internal disclosing channel in relation to whistleblowing at workplace which enable employees to raise genuine concerns, disclose alleged, suspected or actual wrongdoings or known improper conduct at the workplace on a confidential basis and pursuant to the Malaysian Whistle Blowing Protection Act 2010 or other similar laws prevailing in other countries where the subsidiary companies are located, without fear of any form of victimization, harassment, retribution or retaliation.The Whistleblowing Policies and Procedures is available on the Company’s website www.puc.com.All matters reported will be reviewed within a reasonable timeframe, and after due consideration and inquiry, a decision will be taken on whether to proceed with a detailed investigation. Guidance or direction may be sought from the GMD/CEO and other appropriate parties. While all complaints received will be reported to the GMD/CEO, whistleblowing complaints alleging fraud and breaches of corporate governance will be escalated to the Audit and Risk Management Committee and the Chairman of the Board.

Anti-Bribery and Corruption PolicyThe Group is committed to conduct its business and operations premised on the concept of transparency, integrity and accountability, in compliance with the applicable laws and regulations while adopting the highest standards of professionalism, honesty, integrity and ethics.Effective 1 June 2020, the Group has adopted and implemented the anti-bribery and anti-corruption policy in line with the government’s commitment to tackling corruption, improving integrity and implementing good corporate governance pursuant to Section 17A of the Malaysian Anti-Corruption Commission (Amendment) Act 2018.

Business SustainabilityThe Board is mindful of the importance of good governance practices in the application of sustainability practices throughout the Group and commits to promote sustainability strategies in the environment, social and governance aspects as part of its broader responsibility to all its various stakeholders and the communities in which it operates.


The Group strives to achieve a sustainable long term balance between meeting its business goals, preserving the environment to sustain the ecosystem and improving the welfare of its employees and the communities in which it operates. The Group’s efforts in this regard have been set out in the Sustainability Statement in this Annual Report.

Board CompositionThe current Board composition of the Company represents a mix of knowledge, skills, expertise, diversity and gender which assist the Board in effectively discharging its stewardship and responsibilities. The Board of the Company currently has seven (7) members comprising GMD/CEO and six (6) Independent Non-Executive Directors. The profiles of each of the Directors are set out on pages 36 to 43 of this Annual Report.

The present composition of the Board is in compliance with Chapter 15.02 of the AMLR which requires at least one third (1/3) of the Board members of a listed issuer to be Independent Directors. The Independent Directors provide unbiased and independent views in ensuring that the strategies proposed by the Management are fully deliberated and examined for all stakeholders of the Group.

Boardroom DiversityThe Board acknowledges the importance of boardroom diversity in terms of age, gender, culture, nationality, ethnicity and recognises the benefits of this diversity. The Board also recognises that having a range of different skills, backgrounds, experience and diversity is essential to ensure a broad range of viewpoints to facilitate optimal decision making and effective governance.

The Board is of the view that whilst promoting boardroom diversity is essential, the normal selection criteria of a Director, based on an effective blend of competencies, skills, extensive experience and knowledge to strengthen the Board, should remain a priority.

The Board from time to time undertakes a review of its composition to determine areas to strengthen and improve opportunities. Furthermore, the Company takes diversity not only in the Board but also in the workplace as it is an essential measure of good governance, critically attributing to a well-functioning organisation and sustainable development of the Company.

Currently, the Board has two (2) female Directors namely, YM Raja Zafura Binti Raja Zain and Ms. Hon Shil Hong who represent 29% of the total Board members. They are part of the Board’s gender diversity that serves to bring value to the Board discussions from different perspectives and approaches of the female Directors.

Time CommitmentThe Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company.

The Directors’ attendance of Board meetings during the financial year under review as below:

Name Meetings attendedDato’ Othman Bin Jusoh (8/8)

Cheong Chia Chou (8/8)

Datuk Oh Chong Peng (8/8)

Raja Zafura Binti Raja Zain (7/8)

Nathaniel Grant David Sherick (8/8)

Liew Peng Chuen @ Liew Ah Choy (8/8)

Hon Shil Hong (8/8)

Hafez Mohd Hashim Bin Razman Md Hashim (appointed on 1 August 2019) (2/3)



Training and Professional Development of DirectorsThe Board believes that continuous training for Directors is vital for the Board members to enhance their skills and knowledge and to enable them to discharge their duties effectively.

To keep abreast with the current developments, the Board, individual Directors, the Management and staffs receive ongoing training as required and in the case of newly appointed Directors, essential information of the Group were being presented. The Directors will continuously attend the necessary training programmers, conferences, seminars and/or forums so as to keep abreast with the current developments in the various industries as well as the current changes in laws and regulatory requirements.

All the Directors of the Company including the newly appointed Directors, have completed the Mandatory Accreditation Programme as required by Bursa Securities.

The Company Secretary and Auditors regularly update and apprise the Directors on new statutes, policy documents and guidelines issued by the regulatory authorities and the requirements by providing briefing during the year on any significant developments in legal, governance and compliance areas to be observed by the Company and Directors thereupon.

During the financial year, the seminars and conferences attended by the Directors were as follows:

Directors Seminars / Conference / ForumDato’ Othman Bin Jusoh 1. Session on Corporate Governance and Anti-Corruption

Cheong Chia Chou 1. Malaysian Institute of Corporate Governance (“MICG”) - Preparation for Corporate Liability on Corruption

Datuk Oh Chong Peng 1. MICG - Preparation for Corporate Liability on Corruption

Raja Zafura Binti Raja Zain 1. MICG - Preparation for Corporate Liability on Corruption2. Session on Corporate Governance and Anti-Corruption

Nathaniel Grant David Sherick 1. MICG - Preparation for Corporate Liability on Corruption

Liew Peng Chuen @ Liew Ah Choy

1. Bursa Advocacy on Diversity by Robert Ford “Demystifying The Diversity Conundrum : The Road to Business Excellence”

2. Briefing on the New Section 17A, MACC Act 2018 on Corporate Liability and Corruption Free

3. SIDC - Case Study Workshop for Independent Directors4. Session on Corporate Governance and Anti-Corruption

Hon Shil Hong

1. MICG - Briefing on the New Section 17A, MACC Act 2018 on Corporate Liability and Corruption Free

2. MICG - Preparation for corporate liability on corruption : How ready is your company to safeguard your directors, top management and personnel against a corruption prosecution

3. Bursa Malaysia Thought Leadership Series - Sustainability Inspired Innovations : Enablers of the 21st Century

4. SIDC - Case Study Workshop for Independent Directors5. Audit Oversight Board - Conversation with Audit Committees

Hafez Mohd Hashim Bin Razman Md Hashim 1. MICG - Half Day Seminar on Fraud Risk Management


Access and Supply of Information and AdviceIn the discharge of their duties, all Directors have direct access to the Company Secretary and Senior Management. All Board members have unrestricted access to all information relating to the Group’s business affairs within the Group whether as a full Board or in their individual capacity in furtherance of their duties and responsibilities as Directors of the Company.

There is a schedule of matters reserved specifically for the Board’s decision as expressed in the Group’s Limit of Authority providing empowerment to the Senior Management and Management. All Directors have access to the advice and services of the Company Secretary and a procedure that allows Directors to seek independent professional advice where necessary in discharging their duties, making decisions and complying with relevant regulatory requirements at the Company’s expense.

PUC in ensuring that all Directors are able to provide the required time commitment for the meetings practises early planning of meetings schedule so that the Directors are able to plan ahead and to ensure efficient planning by Management and sufficient time spent for the Directors to deliberate and discuss the various matters. As such, the Board of Directors and other Committee meetings schedule were prearranged in the final quarter of 2019 where the tentative dates were tabled to the Board of Directors of PUC via circulation of email.

To keep abreast with the digital era, Board papers including but not limited to the minutes of Board meetings were made accessible via electronic means for instantaneous delivery and within reach by the Board members and are circulated at least five (5) days prior to the date of the Board meetings to enable ample review time for the Board of Directors.

Nomination CommitteeThe Nomination Committee (“NC”) on behalf of the Board of Directors of PUC acts as a key gatekeeper in ensuring the Board and Board Committees have the right balance of skills, experience, independence and knowledge to effectively discharge their duties and responsibilities.

The Board is mindful of the need of boardroom diversity and in this context; the NC in evaluating, assessing and recommending to the Board for approval shall takes into consideration qualifications, credentials, core competencies vis-à-vis the compositions of required mix of skills to demonstrate knowledge, expertise and experience, character, gender, age, ethnicity, professionalism, integrity, competencies, time commitment and other qualities which the Director would bring to the Board to effectively discharge their roles and responsibilities as Director of the Company.

The Company sourced for the most suitable candidates through its Human Resource and Management search networks, the ToR of the NC does not preclude the usage for services of professional recruitment firms to source for the right candidate for directorship or seek independent professional advice whenever necessary. The profile of shortlisted candidates shall be circulated from amongst the NC members for consideration and thereafter recommendation to the Board of Directors for approval.

The NC is governed by the ToR which establishes the functions, powers, duties and responsibilities where a copy of the ToR is available on the Company’s website at www.puc.com.

In line with Rule 15.08A of the AMLR with regard the governance of the NC, the NC membership comprises of all Independent Non-Executive Directors.

Seated on the NC are:

Name Designation and Directorship

Liew Peng Chuen @ Liew Ah Choy Chairman, Independent Non-Executive Director

Dato’ Othman Bin Jusoh(resigned on 1 June 2020) Member, Independent Non-Executive Director

Raja Zafura Binti Raja Zain(appointed on 1 June 2020) Member, Independent Non-Executive Director

Nathaniel Grant David Sherick Member, Independent Non-Executive Director



Attendance of NC MeetingsDuring the FYE2019, a total of two (2) NC meetings were held and met the requisite quorum as stipulated in the ToR of NC, the attendance as recorded below:

The respective Board member contributed individual skills, experience, independence and knowledge being regularly reviewed using a matrix skill to cover the skills needed for the running of a public listed company.

To keep abreast with the digital era, NC papers including but not limited to the minutes of NC meetings were made accessible via electronic means for instantaneous delivery and within reach by the NC members and was circulated five (5) days prior to the date of the NC meeting to give ample time for the members to review and comment.

Annual AssessmentThe NC reviews annually, the effectiveness of the Board and Board Committees as well as the performance of individual directors. The evaluation involves individual Directors and Committee members completing separate evaluation questionnaires regarding the processes of the Board and its Committees, their effectiveness and where improvements could be considered. The criteria for the evaluation is guided by the Corporate Governance Guide issued by Bursa Securities.

The evaluation process also involved a peer and self- review assessment, where Directors will assess their own performance and that of their fellow Directors. These assessments and comments by all Directors were summarised and discussed at the NC meeting which gave recommendation to the Board at the Board Meeting held thereafter. All assessments and evaluations carried out by the NC are properly documented.

During the FYE2019, the NC has carried out the following activities:

• recommended to the Board the appointment of new Director, namely Mr Hafez Mohd Hashim Bin Razman Md Hashim as Independent Non-Executive Directors after evaluating his competency, experience, integrity and independence;

• reviewed and assessed the mix of skills, expertise, composition, size and experience of the Board; • reviewed and assessed the performance of each individual Director, independence of the Independent Directors,

diversity, gender, effectiveness of the Board and Board Committees; • reviewed the performance of the ARMC and its members;• reviewed nomination, criteria and election process of Directors;• recommended to the Board, the Directors who are retiring and being eligible, for re-election; and • recommended to the Board, the retention of Independent Directors.

Re-election of DirectorsThe NC also conducted assessment on Directors who are subject to retirement at the forthcoming Annual General Meeting (“AGM”) in accordance with the provisions of the Constitution of the Company and the relevant provisions of the Companies Act 2016.

Clause 85 of the Constitution of the Company provides that at least one-third of the Directors are subject to retirement by rotation at each AGM and that all Directors shall retire once in every three years and are eligible to offer themselves for re-election. Further, Clause 92 of the Constitution of the Company also provides that a Director who is appointed during the year shall be subject to re-election at the next AGM to be held following his appointment.

Name Designation and Directorship AttendanceLiew Peng Chuen @ Liew Ah Choy Chairman, Independent Non-Executive Director 2/2

Dato’ Othman Bin Jusoh(resigned on 1 June 2020) Member, Independent Non-Executive Director 2/2

Nathaniel Grant David Sherick Member, Independent Non-Executive Director 2/2

Raja Zafura Binti Raja Zain(appointed on 1 June 2020) Member, Independent Non-Executive Director n/a


The NC is also responsible for recommending to the Board those Directors who are retiring and are eligible to stand for re-election at the AGM.

At the forthcoming AGM of the Company, the following Directors are due for retirement and are eligible for re-election pursuant to Clause 85 and Clause 92 of the Company’s Constitution are as follows:

i) Mr Cheong Chia Chou (Clause 85)

ii) Mr Nathaniel Grant David Sherick (Clause 85)

iii) Mr Hafez Mohd Hashim Bin Razman Md Hashim (Clause 92)

Tenure of Independent Non-Executive Directors (inclusive of Chairman)Majority of the Board is made up of Independent Non-Executive Directors whose maximum tenure as expressed in the Board Charter shall be capped to a cumulative period of nine (9) years. Thereafter, the office of Independent Director is subject to members’ approval on yearly basis should they wish to remain as Independent Director.

Should the Board continue to retain the Independent Director after the twelfth year, the Board should provide justification and seek annual members’ approval through a two-tier voting process.

Annual Assessment of IndependenceThe Board recognises the importance of independence and objectivity in its decision-making process. The presence of the Independent Non-Executive Directors is essential in providing unbiased and impartial opinion, advice and judgment to ensure the interests of the Group, shareholders, employees, customers and other stakeholders in which the Group conducts its businesses are well represented and taken into account.

The Board, through the NC, has assessed the Independence of its Independent Non-Executive Directors on an annual basis based on criteria as set out in the AMLR.

Remuneration CommitteeThe Remuneration Committee (“RC”) having established on 28 May 2007 is governed by the ToR which establishes the functions, powers, duties and responsibilities where a copy of the ToR is available on the Company’s website at www.puc.com.

In line with Guidance 6.2 of the MCCG with regard the governance of the RC, the RC membership comprises of all Independent Non-Executive Directors.

The members of the RC as at the date of this Statement are as follows:

To keep abreast with the digital era, RC papers including but not limited to the minutes of RC meetings were made accessible via electronic means for instantaneous delivery and within reach by the RC members and circulated five (5) days prior to the date of the RC meeting to enable ample review time for the members.

Name Designation and DirectorshipDatuk Oh Chong Peng Chairman, Independent Non-Executive Director

Dato’ Othman Bin Jusoh(resigned on 1 June 2020) Member, Independent Non-Executive Director

Liew Peng Chuen @ Liew Ah Choy Member, Independent Non-Executive Director

Nathaniel Grant David Sherick Member, Independent Non-Executive Director



During the FYE2019, a total of one (1) RC meeting were held and met the requisite quorum as stipulated in the ToR of RC, the attendance as recorded below:

In recommending the Directors and Key Senior Management’s remuneration to the Board for approval as a whole with the Director concerned abstaining from the decision-making process and in encouraging long-term decision making removing undue volatility from remuneration outcomes, the RC takes into account of the responsibilities of the Directors including the GMD/CEO, the pay and employment conditions of all our employees, the corporate and individual performance, the current views of stakeholders, the general market conditions including accomplishment of strategic goals as well as regional and global corporate performance and benchmarking against the remuneration arrangements of other companies of a similar positions, size and complexity for guidance.

The remuneration of Directors is determined at levels which enables the Company to attract and retain Directors with the relevant experience and expertise to manage the business of the Group effectively. The remuneration of Key Senior Management is determined at a level which enables the Company to attract, develop and retain high performing and talented individual with the relevant experience, level of expertise and level of responsibilities.

The Board recommended that the level of remuneration should reflect the experience and the level of responsibilities undertaken by each Non-Executive Director. The Board will then recommend the Directors’ fees and other benefits payable to Non-Executive Directors on a yearly basis to the shareholders for approval at the Annual General Meeting in accordance with Section 230(1) of the Companies Act 2016.

Name Meetings attendedDatuk Oh Chong Peng 1/1

Dato’ Othman Bin Jusoh (resigned on 1 June 2020) 1/1

Liew Peng Chuen @ Liew Ah Choy 1/1

Nathaniel Grant David Sherick 1/1

Directors Fees Salaries Bonuses Benefits-in-kind*

Other Emoluments** Total

PUCNon-Executive DirectorsDato’ Othman Bin Jusoh 54,000 - - - 12,000 66,000Nathaniel Grant David Sherick 36,000 - - - 12,000 48,000Liew Peng Chuen @ Liew Ah Choy 36,000 - - - 12,000 48,000Datuk Oh Chong Peng 36,000 - - - 8,000 44,000Raja Zafura Binti Raja Zain 36,000 - - - 8,000 44,000Hon Shil Hong 36,000 - - - 8,000 44,000Hafez Mohd Hashim Bin Razman Md Hashim (appointed on 1 August 2019) 15,000 - - - 3,000 18,000

Wan Jinn Woei (resigned on 18 April 2019) 10,800 - - - 1,000 11,800

Executive DirectorsCheong Chia Chou - 360,000 - - - 360,000

The Board believes in a competitive and transparent remuneration framework that is in line with Rule 9.25 Appendix 9C(12) of the AMLR where the essence on Directors’ Remuneration received and receivable from the Company and its subsidiaries for the FYE2019 are being spelt out in the table below and reported in the Annual Report 2019:

a) Individual Directors on a named basisDirectors’ Remuneration (RM)


Directors Fees Salaries Bonuses Benefits-in-kind*

Other Emoluments** Total

SubsidiariesNon-Executive Directors

Dato’ Othman Bin Jusoh - - - - - -

Nathaniel Grant David Sherick - - - - - -

Liew Peng Chuen @ Liew Ah Choy - - - - - -

Datuk Oh Chong Peng - - - - - -

Raja Zafura Binti Raja Zain - - - - - -

Hon Shil Hong - - - - - -Hafez Mohd Hashim Bin Razman Md Hashim (appointed on 1 August 2019) - - - - - -

Wan Jinn Woei (resigned on 18 April 2019) - - - - - -

Executive Directors

Cheong Chia Chou - - - - - -

Total 259,800 360,000 0 0 64,000 683,800

Notes:* Benefits-in-kind has the meaning as given by the Malaysian Inland Revenue Board for the FYE2019.** Other emoluments comprised of meeting allowances and chairman of committee fee.

b) The remuneration of top five (5) Key Senior Management in bands of RM50,000 on an aggregate basisThe MCCG has recommended that the Company should disclose on a named basis, the detailed remuneration of the top five (5) Senior Management. However, The Board was in the opinion that it is inappropriate to make such disclosure on the remuneration of Senior Management on a named basis due to sensitivity of the remuneration package, privacy, security and issue of staff poaching.

The Group’s Key Senior Management and their total remuneration from the Group are categorised into the various bands as follows:-

Amount Number of Key Senior ManagementRM200,000 - RM250,000 1

RM300,001 - RM350,000 0

RM350,001 - RM400,000 2

RM550,001 - RM600,000 1



PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

Audit and Risk Management Committee The Audit and Risk Management Committee (“ARMC”) is established by the Board and comprised five (5) members, one (1) of the members resigned on 1 June 2020. The current ARMC comprises four (4) members, all of whom are Independent Non-Executive Directors.

The members of the ARMC as at the date of this report are as follow:

The Chairman of ARMC is appointed by the Board and is not the Chairman of the Board. The ARMC is governed by the Terms of Reference (“ToR”) which establishes the functions, powers, duties and responsibilities granted by the Board which are available on the Company’s website at www.puc.com.

The members of the ARMC possess a mix of skills, knowledge and experience to enable them to discharge their duties and responsibilities pursuant to the ToR of the ARMC. In addition, the ARMC members are financially literate and are able to understand, analyse and challenge matters under the purview of the ARMC including the financial reporting process.

The Board is assisted by the ARMC to oversee the Group’s and Company’s financial reporting process and the quality of financial reporting and ensuring that the financial statements comply with the requirements of the Companies Act 2016 (“CA 2016”) and the applicable Malaysian Financial Reporting Standards and International Financial Reporting Standards in Malaysia.

In presenting the annual audited financial statements to the shareholders, the Board takes responsibility to present a balanced and meaningful assessment of the Group’s and Company’s financial performance and prospects and ensure that the financial statements reviewed and recommended by the ARMC for Board’s approval are prepared in accordance with the requirements of the CA 2016, the applicable Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to present a true and fair view of the financial position, financial performance and cash flows of the Group and the Company.

A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing section.

Besides overseeing the Group’s accounting and financial reporting process, ARMC is also responsible to assist the Board to review the nature, scope and results of the external audit, its cost effectiveness and the independence and objectivity of the external auditors, to oversee and monitor the Group internal audit functions, reviews any related party transactions, recurrent related party transactions, risk management activities and other activities such as governance matters.

The performance of the ARMC is reviewed annually by the NC. The evaluation covered aspects such as the members’ financial literacy levels, its quality and composition, skills and competencies and the conduct and administration of the ARMC meetings. Based on the evaluation, the NC concluded that the ARMC has been rated “strong” in its performance and has carried out its duties in accordance with its ToR during the FYE2019.

Read more on ARMC Report detailing its composition and a summary of activities during the financial year on pages 50 to 52 of this Annual Report.

Name Designation and DirectorshipNathaniel Grant David Sherick Chairman, Independent Non-Executive Director

Dato’ Othman Bin Jusoh (resigned on 1 June 2020) Member, Independent Non-Executive Director

Liew Peng Chuen @ Liew Ah Choy Member, Independent Non-Executive Director

Raja Zafura Binti Raja Zain Member, Independent Non-Executive Director

Hon Shil Hong Member, Independent Non-Executive Director


Assessment of External AuditorsThe Board maintains a transparent and professional relationship with the External Auditors through the ARMC. Based on the current practice, the ARMC invites External Auditors to attend its meetings at least twice a year to discuss their audit plan and their audit findings on the Group’s audited financial statements. In addition, the ARMC also have private meetings with the External Auditors without the presence of the Financial Controller and Senior Management to enable exchange of views on issues requiring attention.

The Board has delegated to the ARMC to perform an annual assessment on the quality of the audit which encompassed the performance and calibre of the External Auditors and their independence, objectivity and professionalism. The assessment process involves identifying the areas of assessment and devising tools to obtain the relevant data. Upon completion of the assessment, the ARMC will make recommendation for re-appointment of the External Auditors to the Board. The proposed appointment will be subject to shareholders’ approval at the AGM.

The details of the ARMC’s functions are set out in the ARMC Report on pages 50 to 52 of this annual report.

Risk Management and Internal Control FrameworkThe Board is responsible for the Group’s risk management framework and system of internal control and for reviewing their adequacy and integrity. Accordingly, the Directors are required to ensure that an effective system of internal control, which provides reasonable assessment of effective and efficient operations, internal financial controls and compliance with laws and regulations as well as with internal procedures and guidelines are in place within the Group.

The Board has delegated the responsibility of undertaking this process of periodic review to the ARMC, whose responsibilities and duties are detailed in the ARMC Report section of this Annual Report. The Board assumes the responsibility for effective and adequacy of the Group’s risk management and internal control system and has an established Term of Reference to assist in discharging of this responsibility.

A centralised risk management function integrated with a compliance function was formalised for PUC Group to provide a holistic and wide view of the risk and compliance management within PUC Group.

The Group’s risk management framework encompasses the following key elements:

i. Identification of potential risk inherent in the media and advertising business; media and advertising is a major revenue making arm of PUC Group;

ii. Implementation of proper internal control and procedures to manage identified risks;

iii. Provision of a sound risk management and internal control system as required by the Code;

iv. Instil confidence in the standards of the Group’s management policies and procedures amongst its stakeholders;

v. Empowering and equipping the Group with effective policies and procedures for maintaining a competitive edge in the market; and

vi. Ensure business continuity of the Group in the event of unexpected circumstances.

The risk management framework being responsive to changes in the business environment is clearly communicated to all levels.



The internal audit function is independent of the activities and operations of other operating units. Its principal role is to undertake independent, regular and systematic reviews of the systems of risk management and internal controls to provide reasonable assurance that the systems continue to operate efficiently and effectively to ensure an acceptable level of risk exposure.

In line with best practices, the IAF adopts a risk-based methodology that in establishing its strategic and annual Internal Audit Planning Memorandum deploys audit resources to focus on significant risk areas which priorities the audits to areas that have been assessed as having potentially higher risks for effective governance, risk management and internal control. Where applicable, examinations were conducted on policies, manuals and standards governing the activities, processes, systems and on analysis of the data contained in the accounting and management information systems while key Management were interviewed.

A Statement on Risk Management and Internal Control of the Group which provides an overview of the state of internal controls within the Group is set out on pages 78 to 81 of the Annual Report.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

Communication between Company and Stakeholders PUC continues to engage and maintain the stakeholders’ needs and expectations, taking into consideration their viewpoints and provide new perspective in generating positive impact to the organization. The Company’s key stakeholder group were identified by their significance, impact and potential impact to our business.

The Company engaged with the stakeholders according to their areas of interest and addressed any issues raise appropriately through specific channels of communication as per table below:

Shareholders/ Investors/ Business Partners Employees Government/ Local

Authorities/ Regulators

How we Engage - AGM- Investors and Analyst Briefing- Results Announcements- Investor Relations Events- Website- Annual Report

- Townhall Sessions- Dialogue and Engagement- Intranet Portal- Annual Dinner- Recreation and Sports Club

events

- Emails/Letters- Discussion on Government

Initiatives- Formal Meetings- Inspections

Areas of Interest - Dividends- Sustainable Returns- Long-term Growth and

Stability- Board and Governance

Sustainability

- Company’s Long-term Growth and Performance

- Skills and Capability Development

- Employee Benefits- Staff Safety and Well-being

- Contribution to Economic, and Industry Growth

- Governance Compliance- Compliance to:- Malaysian Labour Laws- Environmental Management

and Compliance- Money Lending Act

Values we Created - Sustainable Returns- Promote Transparent

Practices- Long-term Growth and

Sustainability

- Skills and Career Development

- Safety and Wellness- Competitive Remuneration

- Responsible Corporate Citizen

- Responsible Money Lender


Customers Suppliers Community Media

- Customer Feedback Management

- Surveys, Email Queries- Loyalty Programmes- Events Dialogue and

Engagements- Social Media

- Face to Face Meetings- Evaluation/Performance

Review- Corporate Presentation- Supplier Training

Programme- Signing Ceremonies

- Community Engagement Activities

- Annual Report- Website/ Information- Leaflet/Kiosks

- Press Release/ Media Invites

- Press Conferences- Interviews- Media Engagement

- Customers Satisfaction- Safety and Security- Differentiation of Products

and Services, Tailored to Customer Demand and Trend

- Fair Practices- Transparent Tender

Process- Company’s Compliance

with Laws and Regulations

- Corporate Social Responsibilities

- Financial Performance, Growth Strategy and Future Plans

- Corporate Social Responsibility

- Attractive and Competitive Offerings at Marketplace

- Innovative and Trend Setting Products and Services

- Customer Loyalty

- Fair Procurement Practices- Business Opportunities- Elevate Marketability

- Corporate Social Investment

- Responsible Environment Management

- Company Updates- Quarterly Reports



PUC strives to maintain an open of transparent channel of communication with its stakeholders with the objective of providing updated and accurate information of the Group.

More of PUC Group’s latest information and updates are made available through the Company’s website at www. puc.com and its social media platforms as follows:

Facebook page: www.facebook.com/PUCBerhad

LinkedIn page: www.linkedin.com/company/PUCBerhad

Conduct of General MeetingsThe Company’s AGM remains the principal forum for dialogue with private and institutional shareholders and aims to ensure that the AGM provides an important opportunity for effective communication with and constructive feedback from the shareholders. At the AGM, the Board presents the progress and performance of the Company’s businesses and shareholders are encouraged to participate in the proceedings and question and answer session and thereafter to vote on all resolutions.

The External Auditors are also present to provide professional and independent clarification on issues and concerns raised by the shareholders in connection with the Audited Financial Statements.

The Chairman, the GMD/CEO and the Financial Controller together with Senior Management will respond to shareholders’ questions at the AGM.

The Notice and agenda of AGM together with Form of Proxy are given to shareholders at least twenty-eight (28) days before the AGM. Each item of the special business included in the Notice of AGM is accompanied by an explanatory statement on the proposed resolution to facilitate a better understanding and evaluation of issues involved.

In compliance with the AMLR and MCCG recommendation, all the resolutions passed by the shareholders at the last AGM held on 27 June 2019 were voted by way of poll and with electronic voting to facilitate greater shareholder participation during the last AGM.

Directors’ Responsibilities StatementThe Board is responsible to ensure that the financial statements are properly drawn up in accordance with the requirements of the CA 2016, Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Group as at the end of the financial year and of the financial performance and cash flows of the Group for the financial year then ended.

The Directors are satisfied that in preparing the financial statements of the Group for the FYE2019, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on a going concern basis.

The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the CA 2016.

This Corporate Governance Overview Statement was approved by the Board of Directors of the Company on 20 May 2020.


SUSTAINABILITYSTATEMENT

PUC Group is committed towards integrating sustainability into all areas of its business. As we are embarking on a journey towards transformational technology and digital services, our priority towards maintaining sustainability as an integral part of our way of doing business and a guiding principle in our decision making and development remains and has never wavered. We believe in transparent business processes, corporate social responsibility and sustainability management. In this Sustainability Statement, we will outline our efforts at embedding sustainability throughout the Group in the economic, environmental and social spheres, including exceptional achievements and highlights made throughout 2019.

Our company motto of “Making people’s lives easier, happier and richer” goes beyond financial performance. We strive to strike a balance between empowering economic growth and interest of the people that we work with, we serve and the community we impact as we believe these are the core of long-term sustainability.

With transparency and accountability in mind, we constantly engage our key stakeholders which includes regulators, investors, customers, employees, media and partners to get their feedback and insights which will enable us to re-look at our priorities and address the pressing material matters of our business and stakeholders. We believe this will help PUC navigate whatever lies beyond, as the environment we operate in is an evolving one.

This is the second year since embarking on the integrated reporting format. The Group is still formulating its sustainability policy which will be in place come 2020.

SCOPE OF THIS STATEMENTThe coverage of this statement encompasses all segments of the Group’s operations.

REPORTING PERIODThe reporting period covered is from January to December 2019.

REFERENCES AND GUIDELINESOur sustainability reporting was prepared in accordance with these references and guidelines:

• United Nation Sustainable Development Goals (“SDGs”)

• Bursa Malaysia Sustainable Reporting Guide

ENVIRONMENT

SOCIAL

ECONOMIC



Sustainability CommitteeAt the heart of the Group’s sustainability reporting are our values and commitment of diversity and inclusion. We have handpicked a diverse panel of individuals from various departments and backgrounds tasked with overseeing all matters relating to sustainability domestically and regionally. Our sustainability committee members are as follows:

Our proactive approach to sustainabilityFinancially sound and sustainable development is central to the Group’s mandate. We work hard to ensure that we are not only contributing to effective and sustainable business processes, but our work is also in line with the priorities of the international community, such as the SDGs.

Our approach to sustainability is to select several initiatives which have both local and international impact reflecting the coverage of the Company’s business and wherever possible, directly benefit the communities in which we operate.

In a nutshell, we take into consideration the social and economic impacts in our business strategies and operations planning to ensure they benefit and contribute to the greater good of society, and eventually ensure the sustainability of the Company.

Aligning our business goalsBy 2050, the world population is expected to reach nine billion, giving rise to a host of issues such as climate change, poverty and ongoing urbanization. We believe as a company, we have an increasingly important role to play to eradicate these issues, and so in 2019, we embarked on identifying five (5) SDGs that are aligned to our values and our way of doing business. They are:

Good Health and Well-BeingEnsuring all employees have access to adequate health and medical assistance.

Gender EqualityPUC is dedicated to grow an inclusive organization where individual employees with diverse backgrounds can demonstrate their potential to the fullest.

Decent Work and Economic GrowthPresent equal opportunities to all employees with the desire to advance or develop their skills further.

Industry, Innovation and InfrastructureThe Group is constantly working towards mindful work culture that protects the environment through business activities and the provision of revolutionary products, technologies and services.

Reduced InequalitiesPromote positive work culture where all employees with diverse backgrounds can demonstrate their potential to the fullest.

Sustainability Committee Members Departments (Sub-unit)Kelvin Cheong Corporate Development

Erwin Foo IT

Johnny Tan Corporate Development – Corporate Finance

Lee Wan Fatt Corporate Development – Corporate Finance

Chor Zhenyi Finance

Felicia Ng (alternate: See Sue Yong) Corporate Development – Legal

Lim Iong Sik Corporate Development – Investor Relation

Eileen Eng Human Resource

Goal3

Goal9

Goal10

Goal5

Goal8


Energy Saving InitiativesTo increase energy savings, employees keep blinds closed during sunny days to keep the temperature down inside the workspace. When nobody is using the meeting room, the air-conditioner will be switched off.

A functioning, and fully charged laptop has sufficient power to last for at least eight hours before the next charge. To prevent overcharging laptops due to being plugged into power points all night, our IT Policy has been created with energy saving measures in mind. As such, all employees are encouraged to bring their laptops home after work.

The following chart shows PUC’s energy consumption for 2019. The energy consumption for 2019 was 113,403 kWh and corresponding expenditure was RM64,254.77. PUC has been streamlining its operations and processes to improve energy efficiency.

Conserving ResourcesIn line with the Malaysian government’s continuous effort towards encouraging a cashless and cardless society, our product and services, particularly our homegrown social marketing platform – Presto, offers mobile payment function, as well as other value-enhanced digital offerings such as bill payment, money transfer, and movie ticket purchase. This is to encourage people to have paperless transactions. This is our commitment to help society reduce the demand for paper and ink, thereby saving resources.

At PUC, we acknowledge that electronic waste (“e-waste”) is a threat to sustainability. Internally, part of the Group’s sustainability initiatives is to minimise e-waste to conserve resources and reduce the amount of energy we take from the earth. As such, our Policy stipulates that functioning company laptops in good condition will be passed on to the next employee. Old laptops and equipment will be sold to recover costs and extend the device’s lifespan, thus making full use of available and existing resources.

ENVIRONMENT

JAN ‘19

JUL ‘19

FEB ‘19

AUG ‘19

MAR ‘19

SEP ‘19

APR ‘19

OCT ‘19

MAY ‘19

NOV ‘19

JUN ‘19

DEC ‘19

7813

kWh

113403

RM

64254.77

Month

Total

5182.09

8748 7463.96

8236 4424.07

8614 4159.60

7949 4268.35

12236 6594.65

12572 6777.05

12404 6685.85

10195 5487.15

8645 4646.05

8258 4436.05

7733 4129.90



By integrating digital technologies into the daily lives of consumers, we are ultimately bringing forth a wealth of convenience to them. Digitalisation does not only contribute to productivity and efficiency, but also to broader socio-economic development. It is an accelerator of development that precedes social progress and robust economic development.

Stakeholder EngagementWe value all our stakeholders, as each plays a pivotal role in our success and contributes to our business continuity. We recognise that they are crucial to PUC’s development and long-term success. Although external stakeholders were not engaged to examine EES matters in detail, our regular interactions with them enables us to have a good understanding of their concerns. Our key stakeholders and their areas of interest based on our various engagements with them are set out below:

ECONOMIC

Stakeholders Their Expectations How We Engage How We Respond

• Business partners and their end customers

• Retail customers

• Value for money• Ease of dealing• High-quality products and

services• Timely delivery of products

and services

• Regular meetings and communication

• Regular visits business partners

• System audits• Online customer service

and counter at our concept store

• Marketing communications, website, and digital media

• Investment in research and development

• Well-trained customer service team and talented designers

• Stringent quality assurance process

Employees• Personal and professional

development• Workplace safety

• Performance appraisal• Training• Team meetings• Employee engagement• Company events

• HR policies to promote a conducive work environment, fair employment practices and people development

• Occupational health and safety system

Suppliers

• Regular business• Long-term relationship• Clarity of specifications• Timely payment

• Meetings and electronic communications

• Purchase orders and agreements

• Establish fair selection process

• Pay as per agreement

Government and Regulators

• Regulatory compliance• Taxes

• Inspections and meetings• Circulars and notices• Regulatory filings

• Adhere to the applicable laws and regulations

• Maintain the necessary records


Business ContinuityPUC has a Crisis Management Manual in place, which specifies in detail the crisis responses required in various possible scenarios.

A good crisis plan functions as a guidebook to handle all kinds of complex situations that could significantly affect the profitability, integrity and reputation of PUC. For example, serious crises include workplace crime or acts of violence to less serious situations such malfunctioning computer servers.

Supply Chain and ProcurementPUC maintains a supplier list that is updated regularly. In the procurement SOP, it has been specified that more than one quotation is always needed as part of PUC’s dedication to ensuring processes and procedures are all above board.

Anti-CorruptionPUC has a No Gift Policy in place. All PUC employees were briefed on the No Gift Policy through internal emails sent by the HR department. This policy has also been explained in the Employees Handbook. In addition, Anti-Bribery and Anti-Corruption Policy and guidelines have been adopted and implemented effective 1 June 2020.

No corruption incidents have been reported within the Group thus far.

Stakeholders Their Expectations How We Engage How We Respond

Community• Support for communities• Responsible business

operations

• Community development initiatives

• Commitment to corporate social responsibility

Shareholders

• Return on investment• Sustainable business

growth• Good corporate

governance

• Extraordinary/Annual General Meeting

• Investor Relations briefings

• Ensuring good corporate governance practices are in place

• Prudent business and financial planning

• Risk management



SOCIALOur TeamPUC values its employees as they are key assets and enablers of its success. We acknowledge that having a quality working environment encourages employees’ efficiency and effectiveness.

As a major factor of our business success, our team plays an integral role in the sustainability and success of the Group. We acknowledge that Human Capital is the central determinant of resource productivity and sustainability. As such, we are focused on investing in a highly skilled and talented workforce. This can be achieved with the strength of a diverse and inclusive workforce by taking into account the current diversity in the gender and ethnicity of the existing workforce.

As of December 2019, PUC had 88 employees, of which 75% were ethnic Chinese, followed by 17% ethnic Bumiputra, and 6.8% ethnic Indian. Our employees consist of 59.1% females and 40.9% males. Age-wise, most of our employees are young and vibrant, with 50% from the 21-30 age group, followed by 38.6% from the 31-40 age group, 10% from the 41-50 age group, and only 1 person from the 51-60 age group.

The Group also encourages the continuous development of employees by equipping them with new knowledge and ideas through annual training, seminars, workshops and talks.

The following activities during the financial year demonstrating the Group’s efforts to promote a learning culture at the workplace:

Date Course Name Training Provider No. of Staff Attended

1 Jan 2019 Seminar on Preparation For Corporate Liability on Corruption

Malaysian Institute of Corporate Governance 5

15 Jan 2019 Vistage CEO Tea Talk 2019 Vistage Asia Sdn. Bhd. 1

16 & 29 Jan 2019 Seminar on Preparation for Corporate Liability on Corruption


30 Jan 2019 Rise Hong Kong 2019 Connected Intelligence Limited 1

18 Feb 2019 MBRS Seminar Mega Corporate Services Sdn. Bhd. 3

7 Mar 2019 "Let's Get Real" on Anti-Bribery The ICLIF Leadership and Governance Centre 1

23 May 2019 MIA's Engagement Session with Audit Committee Members on Integrated Reporting Malaysian Institute of Accounts 1

9 Aug 2019 Corporate Liability - Section 17A of The MACCA 2018


8 Oct 2019 Malaysia Tax Budget 2020 Crowe CPE Sdn. Bhd. 1

22 Oct 2019 Reducing Manpower Cost MECA Employers Consulting Agency Sdn. Bhd. 1

12 Nov 2019 Deferred Tax Under MFRS 112/MPEPRS Section 29 Malaysian Institute of Accounts 1


Human ResourcesThe success of PUC Group depends to a large extent on the dedication and skill of our employees. Each and every employee’s personal development is important to us, and we highly encourage success planning of our valued employees with high-quality training programs, which we regularly adapt to the needs of the company.

Labour PoliciesFor permanent staff, EPF contributions are provided in line with the standard market rate (12%-13%). Besides that, PUC also provides medical coverage (hospitalisation and surgery), outpatient, dental and optical benefit, team building funds, newborn gift, long service award, etc.

Employee HandbookPUC has an Employee Handbook which was drafted in accordance with the Employment Act 1955. The handbook is reviewed annually to ensure that it remains relevant.


CORPORATESOCIAL RESPONSIBILITYPUC thrives on the support of the local community and society at large. Therefore, we always aim to give back to the communities where we do business, by enriching and empowering the communities we serve. We hope to enable a sustainable future for both our business and society.

One of the ways we provide support for the local communities is through volunteerism and charitable contributions.

Our CSR initiatives help to empower our employees to leverage the corporate resources at their disposal to do good. These CSR programmes help to boost employee morale through the feel-good factor, because they did something positive that matters. This improved morale can contribute to greater productivity in the company.

We endeavour to continue making meaningful contributions to the betterment of the communities and support initiatives for a sustainable environment. The Group is dedicated in being sustainable in the holistic sense which extends to many functions.

Community engagement activitiesIn 2019, we have chosen to support the Library of HOPE project as our CSR beneficiary, as detailed below:

Library of HOPELibrary of HOPE is a programme by PeopleGiving, aimed at bringing joy and nurturing the education and literacy of underprivileged children in Malaysia, empowering them to break the cycle of poverty. The programme is also intended to create a space for children to learn and play in a conducive environment.

Since September 2013, PeopleGiving had set up 11 libraries for deserving communities in Malaysia. The main target beneficiaries for the Library of HOPE in 2020 remains the Orang Asli communities, because seven out of ten Orang Asli live under the poverty line, and three out of ten are hardcore poor.

As part of giving back to the community, PUC hosted the Happy Library in a Box event at Menara Allianz, from 13 January to 13 February 2020. The total number of books collected was 613 books, while other donated items included soft and hard toys, educational material and stationery. These items will be used to furnish the Library of HOPE number 12 in Kampung Sungai Ulu Ruai in April and May 2020.


STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

The Board acknowledges the responsibilities over the risk management and internal control system in PUC Berhad (“PUC”) and its subsidiaries (“Group”), which includes the establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity to safeguard shareholders’ investments and the Group’s assets.

The Board is pleased to provide the following Statement on Risk Management and Internal Control pursuant to Rule 15.26(b) of the Listing Requirements of Bursa Securities and as guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (“the Guidelines”).

RESPONSIBILITYThe Board assumes the responsibility for effective and adequacy of the Group’s risk management and internal control system and has an established Term of Reference to assist in discharging of this responsibility. As such the Board has delegated the responsibility of undertaking this process of periodic review to the Audit and Risk Management Committee (“ARMC”), whose responsibilities and duties are detailed in the ARMC Report section of this Annual Report. However, the Board as a whole remains ultimately responsible for the effectiveness, adequacy and integrity of the system of risk management and internal controls.

The system of risk management and internal controls covers not only financial aspect of the Group, but also operational and compliance aspect of the Group. However, the Board recognises that these systems are designed to manage, rather than eliminate, the risk of not adhering to the Group’s policies and failure to achieve corporate objectives and goals. The systems provide reasonable, but not absolute, assurance against the occurrence of any material misstatement, losses, fraud or breaches of laws or regulations.

The Board is assisted by the Group Managing Director/Chief Executive Officer, Executive Directors and Senior Management in implementing the Board approved policies and procedures on risk and control by identifying and analysing risk information, designing and operating suitable internal controls to manage and control these risks and monitoring the effectiveness of the risk management and control activities.

The Board’s risk management approach has continued to evolve in line with the Group’s expanding activities. During the financial year, the Group continues efforts

in expansion from the media business to e-commerce and fintech businesses, which is expected to contribute significantly to the Group’s business in the coming years. The Group is also committed to grow its overseas markets and to identify suitable joint venture and collaboration opportunities.

RISK MANAGEMENTThe Board entrusts the Audit and Risk Management Committee (“ARMC”) with the overall responsibility to regularly review and monitor the risk management activities of the Group and to approve appropriate risk management procedures and measurement methodologies.

The Board and the Senior Management practice a proactive approach in identifying significant risks in the business operations, processes and activities of the Group. Strategic, operational and project risks will be highlighted and deliberated by the ARMC and/or the Board during ARMC meetings and/or special meetings, as and when necessary. The ARMC has established the Risk Management Policy and Framework (“Frameworks”) and these Frameworks provides an on-going process for identifying, evaluating and managing the significant risks faced by the Group that may affect the achievement of the Group’s corporate objectives.

The Group’s Frameworks encompasses the following key elements:

i. Identification of potential risk inherent in the media and advertising business; media and advertising is a major revenue making arm of PUC Group;

ii. Implementation of proper internal control and procedures to manage identified risks;

iii. Provision of a sound risk management and internal control system as required by the Malaysian Code on Corporate Governance (“Code”);

iv. Instil confidence in the standards of the Group’s management policies and procedures amongst its stakeholders;

v. Empowering and equipping the Group with effective policies and procedures for maintaining a competitive edge in the market; and

vi. Ensure business continuity of the Group in the event of unexpected circumstances.


The Group’s Risk Management activities are guided by the following Enterprise Risk Management (“ERM”) framework and steps for the organisation’s risk management process, taking reference from the internationally accepted Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) ERM Framework - Integrating with Strategy and Performance.

The Group’s risk management process can be briefly summarised as follows: -

Risk Identification, Assessment and ResponseThe Management of each Business Unit, in establishing its business objectives, are required to identify and document all possible risks that can affect their achievements taking into consideration the effectiveness of controls that are capable of mitigating such risks. The Management identifies new, emerging, and changing risks that disrupt operations and affect the reasonable expectation of achieving strategy and business objectives. Identifying new and emerging risks, or changes in existing risks, allows management to look to the future and gives them time to assess the potential severity of the risks.

Risk Performance and ReviewThe Management shall review the Group’s performance to determine how risk has manifested and impacted strategy and business objectives compared to the risk tolerance of the Group. It also provides an approach for measuring whether risks related to the achievement of strategy and business objectives are acceptable or unacceptable.

Risk Information Communication and ReportingThe management has responsibility for ensuring there are adequate operating procedures and practices in place to identify, assess and manage risk in their direct areas of responsibility and test control systems for effectiveness and relevance. Additionally, the management has responsibility to be generally involved in the management and treatment of risk throughout.

The management shall report to the ARMC of current events, new developments and potential exposures to losses, as identified through the risk management practice at least annually. ARMC upon receiving the relevant report, reviews and recommends to the Board any action plan(s) it deems appropriate to strengthen the risk management process and internal controls.

MISSION, VISION& CORE VALUES

STRATEGYDEVELOPMENT

BUSINESSOBJECTIVEFORMULATION

IMPLEMENTATION& PERFORMANCE

ENHANCE VALUE

Governance & Culture

Strategy &Objective-setting

Review &Revision

Imformation,Communication,& Reporting

Performance

1. Exercises Board Risk Oversight

2. Establishes Operating Structures

3. Defines Desired Culture4. Demonstrates

Commitment to Core Values

5. Attracts, Develops and Retains Capable Individuals

6. Analyses Business Context

7. Defines Risk Appetite8. Evaluates Alternative

Strategies9. Formulates Business

Objectives

10. Identifies Risk11. Assesses Severity of

Risk12. Prioritizes Risks13. Implements Risk

Responses14. Develops Portfolio

View

15. Assesses Substantial Change

16. Reviews Risk and Performance

17. Pursues Improvement in Enterprise Risk

18. Leverages Information and Technology

19. Communicates Risk Information

20. Reports on Risk, Culture and Performance


STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

INTERNAL CONTROLThe Board has assigned the ARMC with the duty of reviewing and monitoring the effectiveness of the Group’s system of internal control. The ARMC reviews internal control matters and update the Board on significant control gaps, if any, for the Board’s attention and action. Issues relating to the business operations are also highlighted to the Board’s attention during Board meetings and any significant fluctuation or exceptional noted will be analysed and acted in a timely manner.

The key elements of the Group’s internal control systems are as follows: -

(a) The Board has delegated to the ARMC the task of undertaking a periodic review of the effectiveness, adequacy and integrity of the Group’s risk management framework and internal control systems;

(b) A formal organisation structure with well-defined scopes of responsibility, clear lines of accountability and appropriate levels of delegated authority;

(c) The Group has developed and maintains documented policies, procedures and process flows for its key business operations with appropriate levels of delegated authority. The documented internal policies, procedures and processes are in place to ensure compliance with the internal control and relevant laws and regulations;

(d) The Board has formalised and adopted the Code of Conduct & Ethics Policy which serve as a primary guidance on the ethical and behavioural conduct of the Group. The Code of Conduct & Ethics Policy sets out the principles on dealing with conflicts of interest, insider dealings, compliance to laws and others;

(e) The Group has put in place a consistent human resource practice throughout the Group to ensure the Group’s ability to operate in an effective and efficient manner by employing and retaining adequate competent employees possessing the necessary knowledge, skill and experience in order to carry out their duties and responsibilities effectively and efficiently;

(f) Information pertaining to internal control policies, procedures and processes which are critical to the achievement of the Group’s corporate objectives are communicated through established reporting lines across the Group via electronic mail system, internal meetings and briefings etc.;

(g) Periodic management meetings are held to discuss and review financial data, operational performance key business units of the Group. Issues and/or matters that require the Board and Senior Management’s attention will be highlighted review, deliberation and decision-making on a timely manner; and

(h) Periodic reviews of adequacy and integrity of selected areas of internal control systems are carried out by our Risk & Compliance department and results of such reviews are reported to the ARMC for review, deliberation, decision making and actions.


INTERNAL AUDITThe Board acknowledges the importance of internal audit function and as such as the Board has authorised the ARMC to review the effectiveness of the internal audit function. The Group has outsourced the internal audit function and the risk management policy and framework review and implementation to an external and independent professional consulting firm and has conducted a review on the corporate governance and risk management systems of the Group. The ARMC is currently assisted by the internal auditors and risk management consultant who report independently and directly to the ARMC and the Board. Any issue affecting the Group from achieving its corporate’s objectives and the implementation of the action plans to address the risks identified will be discussed during the ARMC meetings.

The internal auditors and risk management consultant has unrestricted access to all documents and records of the Group which deemed necessary in the performance of his function. Any highlighted issues will be followed up closely to determine the extent of the recommendation that have been implemented by the management.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORSAs required by paragraph 15.23 of the Listing Requirements, the External Auditors have reviewed this Statement on Risk Management and Internal Control. As set out in their terms of engagement, the said review procedures were performed in accordance with the Audit and Assurance Practice Guide (AAPG)3: Guidance for Auditors On Engagements To Report on The Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants. AAPG3 does not require the External Auditors to consider whether this Statement covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system.

Based on their procedures performed, the External Auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is not prepared in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Guidelines, nor is factually inaccurate.

BOARD ASSESSMENTThe Board remains committed towards operating a sound system of internal control and recognises the need for the system to continuously evolve to support the types of businesses and size of operations of the Group. The Board, in striving for continuous improvement will put in place appropriate action plans, when necessary, to further enhance the Group’s system of internal control.

The Board having reviewed the system and received assurance from the Group Managing Director/Chief Executive Officer and the Finance Manager that the Group’s risk management and internal control system is satisfied that no material losses, deficiencies or errors arising from any inadequacy or failure of the Group’s internal control system during the financial year ended 31 December 2019 and up to the date of this statement that will require disclosure in the Annual Report.

This Statement is made in accordance with a resolution of the Board of Directors dated 20 May 2020.


ADDITIONALCOMPLIANCE INFORMATION

(In accordance with Rule 9 Appendix 9C of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad)

Utilisation of Proceeds Raised from Corporate Proposals During the Financial Year Ended 2019 (“FYE2019”)On 8 August 2019, PUC Berhad (“PUC or the Company”) had announced a proposed placement of up to ten percent (10%) of the issued and paid-up share capital of the Company equivalent to 215,786,400 new shares (“2019 Private Placement”).

The Company had placed out all 215,786,400 new ordinary shares in tranches, and the 2019 Private Placement has been completed following the listing and quotation of the final tranche on 26 November 2019. The Company had raised total RM13,676,899 of proceeds from the 2019 Private Placement which has been fully utilized in accordance with the mandate of this exercise.

The Company had on 27 November 2019 announced to undertake a private placement exercise of up to 166,601,000 new ordinary shares, representing up to 30% of the total number of issued shares of PUC to independent third party investors to be identified later and at an issue price to be determined later. The said proposal was approved by the shareholders of the Company at an Extraordinary General Meeting held on 19 February 2020.

Audit and Non-Audit FeesDetails of statutory audit, audit-related and non-audit fees paid or made payable in the FYE2019 to the External Auditors, Messr UHY are as set out below:

Material Contracts With Related PartyThe particulars of material contracts of the PUC and its subsidiaries involving the interest of the Directors, Chief Executive whom are not a director or major shareholders of the Company, subsisting as at 31 December 2019 or entered into since the end of the previous financial year, are as follows:-

The Company had on 31 December 2018 entered into a conditional share sale agreement (“SSA”) with Cheong Chia Chou and Superb Go Sdn Bhd (collectively, the “Vendors”), for the acquisition of 11,455,947 ordinary shares in Pictureworks Holdings Sdn. Bhd. (“PWHSB”), representing 62.22% of the total number of issued shares in PWHSB from the Vendors for a total purchase consideration of RM155.55 million. The purchase consideration will be satisfied by a combination of issuance and allotment of new ordinary shares in the Company and cash (“PW Acquisition”).

Parties to the SSA has, on 22 November 2019, entered into a supplemental agreement (“Supplemental SSA 1”) to vary and amend certain arrangements, terms and conditions of the SSA, including revision of the purchase consideration for the 62.22% equity interest in PWHSB from RM155.55 million to RM131.90 million.

On 22 November 2019, PUC also entered into a separate conditional sale of shares agreement with Beauty World Holdings Pte Ltd on parallel terms as the SSA supplemented by the Supplemental SSA 1, for the acquisition of 880,341 PWHSB shares, representing 4.78% equity interest in PWHSB.

Cheong Chia Chou, the Group Managing Director/Group Chief Executive Officer and a major shareholder of PUC, he is also a director and major shareholder in PWHSB. Cheong Chia Chou had abstained and will continue to abstain from all deliberations and voting at the relevant meetings and/or resolutions in relation to the PW Acquisition.

Fees paid or made payable to Messrs UHY (RM)Fees Description Company Subsidiaries TotalAudit 75,000 185,348 260,348

Non-Audit 5,000 Nil 5,000

Designation 80,000 185,348 265,348


* PUC had on 5 November 2019 entered into a sale of shares agreement (“Agreement”) with Sri Lahat Property Sdn Bhd (“SLP”) to dispose its entire 100% equity interest in MaxGreen Energy Sdn Bhd (“MG1MY”) to SLP, and both parties to the SSA had subsequently on 13 April 2020 entered into a supplemental sale of shares agreement to vary and amend certain arrangement, terms and conditions of the Agreement (“Proposed Disposal”). The land is owned by MG1MY, and will be transferred together with MG1MY to SLP upon completion of the Proposed Disposal.

Material Properties

AddressUnit C-2-01, Level 2, Capital 3, Oasis Square, No. 2, Jalan PJU1A/7A, Ara Damansara, PJU1A, 47301 Petaling Jaya, Selangor Darul Ehsan

H.S.(D) 52052, PT 30506, Bandar Sungai Petani, Kuala Muda, Kedah Darul Aman*

Type of Property Building Land

Existing Use Operational Office Solar Photovoltaic Structure and Plant

Approximate Area 8,612 square feet 108,900 square feet

Tenure Freehold 99-year lease expiring in 2094

Age of Building Approximately 8 years Approximately 4 years

Date of Acquisition 14 January 2015 22 January 2015

Net Book Value as at 31 December 2019 (RM) 4,977,500 6,786,352


PUC BERHAD

ANNUALREPORT2019

FINANCIAL STATEMENTS86 93 101

92 97 104

92 99 109

Directors’Report

Independent Auditors’Report to the Members

Statements ofChanges in Equity

Statement byDirectors

Statements ofFinancial Position

Statements ofCash Flows

StatutoryDeclaration

Statements of Profit orLoss and Other

Comprehensive Income

Notes to theFinancial Statements

DIRECTORS’REPORT

The Directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2019.

PRINCIPAL ACTIVITIESThe principal activity of the Company is that of investment holding. The principal activities of its subsidiary companies are disclosed in Note 7 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

RESERVES AND PROVISIONSThere were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

DIVIDENDSThere were no dividends proposed, declared or paid by the Company since the end of the previous financial year. The Directors do not recommend any dividend in respect of the current financial year.

ISSUE OF SHARES AND DEBENTURESDuring the financial year, the Company issued:

(i) 229,620,977 new ordinary shares pursuant to the conversion of RM0.05 nominal value of irredeemable convertible unsecured loan stocks (“ICULS”) at RM0.05 per ICULS;

(ii) 215,786,400 new ordinary shares pursuant to the private placement exercises at issue price between RM0.06 and RM0.07 per ordinary share; and

(iii) 7,630,765 new ordinary shares pursuant to the conversion of warrants at exercise price of RM0.10 per ordinary share.

The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.

There was no issuance of debentures during the financial year.

FINANCIAL RESULTSGroup

RMCompany

RMLoss for the financial year, attibutable to the owners of the parent - Continuing operations 56,577,360 10,918,069 - Discontinued operation 2,659,287 -

59,236,647 10,918,069


IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)The salient terms of the ICULS are disclosed in Note 21 to the financial statements.

As at 31 December 2019, the ICULS has been fully converted to ordinary shares.

WARRANTSWarrants 2014/2024 (“Warrants-A”)The Warrants-A were constituted under the Deed Poll dated 6 November 2014.

As at 31 December 2019, the total number of Warrants-A that remained unexercised were 132,763,894.

The salient terms of the Warrants-A are disclosed in Note 22(d)(i) to the financial statements.

Warrants 2016/2019 (“Warrants-B”)The Warrants-B were constituted under the Deed Poll dated 30 December 2015.

The Warrants-B has expired in February 2019.

The salient terms of the Warrants-B are disclosed in Note 22(d)(ii) to the financial statements.

OPTIONS GRANTED OVER UNISSUED SHARESNo options were granted to any person to take up unissued shares of the Company during the financial year.

DIRECTORSThe Directors in office since the beginning of the current financial year until the date of this report are:

Dato’ Othman Bin Jusoh*Cheong Chia Chou*Nathaniel Grant David SherickLiew Peng Chuen @ Liew Ah Choy*Datuk Oh Chong Peng*Raja Zafura Binti Raja ZainHon Shil Hong Hafez Mohd Hashim Bin Razman Md Haslim (appointed on 1.8.2019)Wan Jinn Woei (resigned on 18.4.2019)

* Director of the Company and its subsidiary companies

The Directors who held office in the subsidiary companies (excluding Directors who are also Directors of the Company) since the beginning of the current financial year until the date of this report are:

Cheong Tze Wai Foo Yong JioHiew Wai Yoon (resigned on 30.4.2020)

The information required to be disclosed pursuant to Section 253 of the Companies Act 2016 is deemed incorporated herein by such reference to the financial statements of the respective subsidiary companies and made a part hereof.


DIRECTORS’REPORT

DIRECTORS’ INTERESTS IN SHARESThe interests and deemed interests in the shares, warrants, options over shares and debentures of the Company or its related corporations (other than wholly-owned subsidiary companies) of those who were Directors at financial year end according to the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of USD 0.10 eachAt

1.1.2019 Bought SoldAt

31.12.2019Interests in the Ultimate Holding CompanyDirect interests

Cheong Chia Chou 10,918,479 - - 10,918,479

Liew Peng Chuen @ Liew Ah Choy 30,018 - - 30,018

Nathaniel Grant David Sherick 30,018 - - 30,018

Datuk Oh Chong Peng 42,883 - - 42,883

Number of ordinary shares of USD 0.10 eachAt


31.12.2019Interests in the Ultimate Holding CompanyIndirect interests

Datuk Oh Chong Peng 137,992 - - 137,992

Number of ordinary sharesAt


31.12.2019Interests in the CompanyDirect interests

Liew Peng Chuen @ Liew Ah Choy 2,500,000 - - 2,500,000

Number of ordinary sharesAt

1.1.2019Converted

from ICULS SoldAt

31.12.2019Interests in the CompanyIndirect interests

Cheong Chia Chou ^ 550,368,402 95,200,000 494,237,943 151,330,459

Liew Peng Chuen @ Liew Ah Choy 1,000,000 - - 1,000,000


DIRECTORS’ INTERESTS IN SHARES (CONT’D)The interests and deemed interests in the shares, warrants, options over shares and debentures of the Company or its related corporations (other than wholly-owned subsidiary companies) of those who were Directors at financial year end according to the Register of Directors’ Shareholdings are as follows: (Cont’d)

Number of ICULS 2016/2019 of RM0.05 nominal valueAt

1.1.2019 Converted SoldAt


Cheong Chia Chou ^ 109,910,800 95,200,000 14,710,800 -

Number of Warrants-AAt



Cheong Chia Chou ^ 19,500,000 - - 19,500,000

Note:^ Deemed interested pursuant to Section 8 of the Companies Act 2016 by virtue of his substantial shareholdings in Resource Holding

Management Limited.

None of the other Directors in office at the end of the financial year had any interest in the ordinary shares of the Company or of its related corporations during the financial year.


DIRECTORS’REPORT

DIRECTORS’ BENEFITSSince the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors as shown in Note 35(c) to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than Director who have significant financial interests in companies which traded with certain companies in the Group in the ordinary course of business in which a Director is a member as disclosed in Note 35(b) to the financial statements.

Neither during nor at the end of the financial year, was the Company a party to any arrangement whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

INDEMNITY AND INSURANCE COSTSThere was no indemnity given to or insurance effected for any Directors, officers and auditors of the Company in accordance with Section 289 of the Companies Act 2016 in Malaysia.

OTHER STATUTORY INFORMATION(a) Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps:

(i) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there were no bad debts to be written off and no allowance for doubtful debts was required; and

(ii) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including the value of current assets as shown in the accounting records of the Group and of the Company have been written down to an amount which the current assets might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances:

(i) which would render it necessary to write off any bad debts or to make any allowance for doubtful debts in the financial statements of the Group and of the Company; or

(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(iii) not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading; or

(iv) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(c) At the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.


OTHER STATUTORY INFORMATION (CONT’D)(d) In the opinion of the Directors:

(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations when they fall due;

(ii) the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(iii) 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 Group and of the Company for the financial year in which this report is made.

SIGNIFICANT EVENTSThe significant events are disclosed in Note 41 to the financial statements.

SUBSEQUENT EVENTSThe subsequent events are disclosed in Note 42 to the financial statements.

IMMEDIATE HOLDING COMPANYThe Directors regard Redhot Media International Limited, a company incorporated in Labuan and domiciled in Malaysia, as immediate holding company.

INTERMEDIATE HOLDING COMPANYThe Directors regard RHM Ltd, a company incorporated in Cayman Islands, as intermediate holding company.

ULTIMATE HOLDING COMPANYThe Directors regard Resource Holding Management Limited, a company incorporated in Cayman Islands, as ultimate holding company.

SUBSIDIARY COMPANIESThe details of the subsidiary companies are disclosed in Note 7 to the financial statements.

AUDITORSThe Auditors, Messrs. UHY, have expressed their willingness to continue in office.

The details of auditors’ remuneration are set out in Note 30 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 20 May 2020.

NATHANIEL GRANT DAVID SHERICK

KUALA LUMPUR

CHEONG CHIA CHOU


STATEMENT BY DIRECTORS

STATUTORY DECLARATION

PURSUANT TO SECTION 251(2) OF THE COMPANIES ACT 2016

PURSUANT TO SECTION 251(1)(B) OF THE COMPANIES ACT 2016

We, the undersigned, being two of the Directors of the Company, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 97 to 212 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the 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 2019 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 20 May 2020.

I, Chor Zhenyi (MIA Membership No: 30298), being the officer primarily responsible for the financial management of PUC Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 97 to 212 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 20 May 2020

Before me,

))))) CHOR ZHENYI

NO. W 710MOHAN A.S. MANIAMOMMISSIONER FOR OATHS

NATHANIEL GRANT DAVID SHERICK

KUALA LUMPUR

CHEONG CHIA CHOU


[REGISTRATION NO.: 199701036234 (451734-A)] (INCORPORATED IN MALAYSIA)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PUC BERHAD

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

OpinionWe have audited the financial statements of PUC Berhad, which comprise the statements of financial position as at 31 December 2019 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 97 to 212.

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 2019, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for OpinionWe 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 ResponsibilitiesWe 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 IESBA Code.

Key Audit MattersKey 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 financial 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.

Key Audit Matters How we addressed the key audit matters

Recoverability of carrying amount of intangible assets

The Group is required to annually test the intangible assets for impairment in accordance to MFRS 136 Impairment of Assets. This assessment requires management to make estimates concerning the estimated future cash flows and associated discount rates and growth rates based on management’s view of future business prospects. Due to the inherent uncertainty involved in forecasting and discounting future cash flows, this is the key judgemental area that our audit was concentrated on.

The Group has intangible assets amounting to RM30.38 million as at 31 December 2019.

We have discussed with the management on the assessment of cash-generating units (“CGUs”) with reference to accounting standards and considered the operating and management structure changes with reference to our understanding of the business. We also assessed whether the allocation of goodwill to those CGUs was done on a consistent and reasonable basis.

We also reviewed the cash flows projection with comparison to recent performance, trend analysis by reference to prior years’ forecasts, where relevant, assessing whether the Group has achieved them.

We have tested management’s sensitivity analysis in relation to the key inputs to the goodwill impairment test model, as well as performing our own sensitivity analysis which included changes to volume, margin and the discount rate applied.



INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PUC BERHAD (CONT’D)

Key Audit Matters (Cont’d)Key Audit Matters How we addressed the key audit matters

Impairment of trade receivables

The Group has material credit exposures in its trade receivables. Given the nature of these assets, the assessment of impairment involves significant estimation uncertainty, subjective assumptions and the application of significant judgement.

We have performed impairment assessment on trade receivables that were either in default or overdue as at 31 December 2019.

We obtained and evaluated the Group’s credit risk policy, and tested the associated processes used by management to assess credit exposures.

We reviewed the adequacy of the impairment loss and enquired management regarding the recoverability of the selected receivables that are past due but not impaired, and review the customers’ correspondence, settlement agreement and obtained evidence of subsequent receipts. We also obtained confirmation from the counterparties for selected accounts.

We have reviewed the appropriateness of the disclosures made in the financial statements.

Investment in an associate

Presto Universe Sdn. Bhd. (formerly known as PUC Venture Sdn. Bhd.), a wholly-owned subsidiary company of the Company invested 11.76% equity interest in Presto Mall Sdn. Bhd. (formerly known as Celcom Planet Sdn. Bhd.) (“PMMMY”), a company incorporated in Malaysia for a total consideration of RM40 million.

The share of loss from PMMMY, being an associate of the Group amounting to RM4.12 million contributed adversely to the Group’s loss after tax for the financial year ended 31 December 2019.

Given that the share of current year loss and investment cost are significant in the context of the consolidated financial statements and the associate is audited by another firm of auditor, this is one of the key areas that we focused on in our audit.

We reviewed the valuation methodologies and key assumptions used in the valuation report issued by an independent valuer in the assessment of the indicative fair value of the entire issued share capital of PMMMY as at 31 December 2019. The impairment assessment of investment in PMMMY is in accordance with MFRS 136 Impairment of Assets.

We have issued instructions to PMMMY’s auditors to communicate the overall Group’s audit strategy and instructed the auditors to perform an audit of the financial information suitable for consolidation purposes.

We have obtained the reporting from PMMMY’s auditors and discussed with the auditors on the matters of significance in their audit which could impact the Group’s consolidated financial statements.

We have obtained an understanding of the procedures performed by PMMMY’s auditors on the areas with risk of material misstatement and considered whether the planned procedures were appropriate for the purpose of the audit of the consolidated financial statements.

We have assessed the adequacy of the work performed by PMMMY’s auditors by inspecting their audit documentation.


Information Other than the Financial Statements and Auditors’ Report ThereonThe Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the 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 other information and, in doing so, consider whether the other information 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 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 StatementsThe Directors of the Company are responsible for the preparation of the 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 or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and 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:

• 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.

• 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 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.



INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PUC BERHAD (CONT’D)

Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)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: (Cont’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 or the Company to cease to continue as a going concern.

• 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.

• 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.

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 financial year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory RequirementsIn accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiary companies of which we have not acted as auditors, are disclosed in Note 7 to the financial statements.

Other MattersThis 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.

UHYFirm Number: AF 1411Chartered Accountants

DATUK TEE GUAN PIANApproved Number: 01886/05/2022 JChartered Accountant

KUALA LUMPUR20 May 2020


AS AT 31 DECEMBER 2019

STATEMENTS OFFINANCIAL POSITION

Note

Group Company2019

RM2018

RM2019

RM2018

RM

ASSETSNon-Current AssetsProperty, plant and equipment 4 7,894,805 19,953,816 457,662 749,413

Right-of-use assets 5 444,001 - - -

Software development expenditure 6 56,361,216 48,995,703 - 392,000

Investment in subsidiary companies 7 - - 128,543,216 129,559,299

Investment in associates 8 96,322,405 93,459,074 48,355,041 48,355,041

Intangible assets 9 30,384,335 79,545,351 - -

Other investments 10 - 10 - 10

Deferred tax assets 11 - 891,277 - 791,837

Other receivables 12 804,694 912,293 - -

Lease receivables 13 1,059,656 - - -

193,271,112 243,757,524 177,355,919 179,847,600

Current AssetsInventories 14 25,587,134 - - -

Other investments 10 2,584 2,495 2,583 2,494

Trade receivables 15 21,109,442 30,819,791 - -

Other receivables 12 4,941,077 14,670,504 124,530 561,567

Lease receivables 13 405,025 - - -

Amount due from subsidiary companies 16 – – 108,985,194 86,632,236

Tax recoverable 50,510 50,564 44 6,036

Deposits, bank and cash balances 17 2,598,587 5,008,541 154,624 1,761,069

54,694,359 50,551,895 109,266,975 88,963,402

Asset held for sale 18 – – 2,556,077 -

Assets included in disposal group held for sale and discontinued operation 19 7,582,614 – - -

62,276,973 50,551,895 111,823,052 88,963,402

Total Assets 255,548,085 294,309,419 289,178,971 268,811,002


STATEMENTS OFFINANCIAL POSITION (CONT’D)AS AT 31 DECEMBER 2019

Note

Group Company2019

RM2018

RM2019

RM2018

RM

EQUITY AND LIABILITIESEQUITYShare capital 20 265,310,042 227,907,964 269,142,797 231,740,719

ICULS equity component 21 - 14,441,767 - 14,441,767

Reserves 22 (58,193,269) 2,527,880 (32,380,804) (19,994,612)

Total Equity 207,116,773 244,877,611 236,761,993 226,187,874

Non-Current LiabilitiesFinance lease liability 23 - 4,732 – -

Lease liabilities 24 80,858 - – -

Bank borrowings 25 3,809,563 4,254,113 – -

3,890,421 4,258,845 – -

Current Liabilities

Trade payables 26 1,232,868 2,132,252 - -

Other payables 27 41,051,710 39,151,063 32,841,143 27,880,913

Amount due to subsidiary companies 16 – – 19,575,835 13,544,277

ICULS liability component 21 - 1,197,938 - 1,197,938

Finance lease liability 23 - 6,306 - -

Lease liabilities 24 378,170 - - -

Bank borrowings 25 436,369 695,542 - -

Tax payable 1,359,160 1,989,862 - -

44,458,277 45,172,963 52,416,978 42,623,128

Liabilities included in disposal group held for sale and discontinued operation 82,614 - - -

44,540,891 45,172,963 52,416,978 42,623,128

Total Liabilities 48,431,312 49,431,808 52,416,978 42,623,128

Total Equity and Liabilities 255,548,085 294,309,419 289,178,971 268,811,002

The accompanying notes form an integral part of the financial statements.


FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Note

Group Company2019

RM2018

RM2019

RM2018

RM

Continuing OperationsRevenue 28 47,011,959 51,455,318 - -

Cost of sales (23,788,256) (23,340,085) - -

Gross profit 23,223,703 28,115,233 - -

Other income 384,993 6,045,643 882,033 797,223

Administrative and selling expenses (82,618,649) (33,231,643) (8,365,260) (7,146,908)

Net gain on impairment of financial instruments 3,340,681 3,043,315 - -

(Loss)/Profit from operations (55,669,272) 3,972,548 (7,483,227) (6,349,685)

Finance costs 29 (3,103,400) (421,070) (2,818,428) (141,291)

Share of results of associates, net of tax 2,863,331 5,104,033 - -

(Loss)/Profit before tax 30 (55,909,341) 8,655,511 (10,301,655) (6,490,976)

Taxation 31 (668,019) (2,077,770) (616,414) -

(Loss)/Profit from continuing operations (56,577,360) 6,577,741 (10,918,069) (6,490,976)

(Loss)/Profit from discontinued operation, net of tax 19 (2,659,287) 11,009 - -

(Loss)/Profit for the financial year (59,236,647) 6,588,750 (10,918,069) (6,490,976)

Other comprehensive income

Items that are or may be reclassified subsequently to profit or loss

Exchange translation differences for foreign operations (13,393) (59,671) - -

Total comprehensive (loss)/income for the financial year (59,250,040) 6,529,079 (10,918,069) (6,490,976)

(Loss)/Profit for the financial year attributable to:

Owners of the parent (59,236,647) 6,572,771 (10,918,069) (6,490,976)

Non-controlling interests - 15,979 - -

(59,236,647) 6,588,750 (10,918,069) (6,490,976)


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONT’D)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Note

Group Company2019

RM2018

RM2019

RM2018

RM

Total comprehensive (loss)/income for the financial year attributable to:

Owners of the parent (59,250,040) 6,513,100 (10,918,069) (6,490,976)

Non-controlling interests - 15,979 - -

(59,250,040) 6,529,079 (10,918,069) (6,490,976)

(Loss)/Earnings per share

Basic (sen) 32(a)

- from continuing operations (2.59) 0.40

- from discontinued operation (0.12) 0.001

Total (2.71) 0.40

Diluted (sen) 32(b)



Total (2.71) 0.32




STATEMENTS OFCHANGES IN EQUITY

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,625

Loss

for t

he fi

nanc

ial ye

ar -

- -

- -

- (5

9,236

,647)

(59,2

36,64

7)Ot

her c

ompr

ehen

sive

loss

for

the

finan

cial y

ear

- -

- (1

3,393

) -

- -

(13,3

93)

Tota

l com

preh

ensiv

e lo

ss fo

r th

e fin

ancia

l yea

r -

- -

(13,3

93)

- -

(59,2

36,64

7) (5

9,250

,040)

Tran

sact

ions

with

ow

ners

:

Iss

ue o

f ord

inar

y sha

res

- Co

nver

sion

of IC

ULS

(N

otes

20

and

21)

22,96

2,103

(1

4,441

,767)

- -

- -

(1,46

8,123

) 7,

052,2

13

- Pr

ivate

plac

emen

t (No

te 2

0) 13

,676,8

99

- -

- -

- -

13,67

6,899

-

Conv

ersio

n of

war

rant

s

[Not

es 2

0 an

d 22

(d)]

763,0

76

- 15

2,615

-

- (1

52,61

5) -

763,0

76

- Ex

pira

tion

of w

arra

nts

[N

ote

22(d

)] -

- 3,

389,2

68

- -

(3

,389,2

68)

- -

Tota

l tra

nsac

tions

with

own

ers

37,40

2,078

(1

4,441

,767)

3,54

1,883

-

- (3

,541,8

83)

(1,46

8,123

) 21

,492,1

88

At 3

1 De

cem

ber 2

019

265,3

10,04

2 -

(14,8

45,69

2) (1

69,17

3)(3

6,809

,064)

16,71

4,974

(2

3,084

,314)

207,1

16,77

3


STATEMENTS OFCHANGES IN EQUITY (CONT’D)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

At

tribu

table

to O

wners

of th

e Pare

nt

No

n-Dist

ribut

able

Distr

ibutab

le

Grou

p20

18

Share

Capit

al RM

ICULS

Eq

uity

Comp

onen

tRM

Othe

rRe

serve

sRM

Forei

gnCu

rrenc

yTra

nslat

ionRe

serve RM

Reve

rseAc

quisi

tion

Debit RM

Warra

nts

Rese

rves

RM

Retai

ned

Earn

ings

RMTo

tal RM

Non-

Cont

rollin

gInt

erests RM

Total

Equit

y RM

At 1

Janu

ary 20

18, a

s pr

eviou

sly re

porte

d 15

4,074

,850

27,10

8,822

(1

9,013

,429)

(96,1

09)

(36,8

09,06

4) 2

0,983

,213

31,41

7,367

17

7,665

,650

(116

,471)

177,5

49,17

9

Effec

t on a

dopt

ion of

MFR

S 9

and

MFRS

15 -

- -

- -

- (3

66,69

6) (3

66,69

6) -

(366

,696)

At 1

Janu

ary 20

18, a

s res

tated

154,0

74,85

0 27

,108,8

22

(19,0

13,42

9) (9

6,109

) (3

6,809

,064)

20,98

3,213

31

,050,6

71

177,2

98,95

4 (1

16,47

1) 17

7,182

,483

Profi

t for

the f

inanc

ial ye

ar -

- -

- -

- 6,

572,7

71

6,57

2,771

15

,979

6,58

8,750

Othe

r com

preh

ensiv

e los

s for

the f

inanc

ial ye

ar -

- -

(59,6

71)

- -

- (5

9,671

) -

(59,6

71)

Total

com

preh

ensiv

e (los

s)/inc

ome f

or th

e fina

ncial

year

- -

- (5

9,671

) -

- 6,

572,7

71

6,51

3,100

15

,979

6,52

9,079

Trans

actio

ns w

ith ow

ners:

Issue

of or

dinary

share

s

- Co

nvers

ion of

ICUL

S

(Not

es 20

and

21)

25,81

8,360

(1

2,667

,055)

- -

- -

- 13

,151,3

05

- 13

,151,3

05

- Pr

ivate

place

men

t

(Not

e 20)

23,59

5,230

-

- -

- -

- 23

,595,2

30

- 23

,595,2

30

- Co

nvers

ion of

warr

ants

[Not

es 20

and

22(d

)] 3,

619,5

24

- 72

6,356

-

- (7

26,35

6) -

3,61

9,524

-

3,61

9,524

- Pu

rchas

e con

sidera

tion f

or ac

quisi

tion o

f an a

ssocia

te (N

ote 2

0) 20

,800,0

00

- -

- -

- -

20,80

0,000

-

20,80

0,000

Acqu

isitio

n of e

quity

inter

est

from

non-

cont

rollin

g int

erests

[Not

e 7(b

)] -

- (1

00,50

2) -

- -

- (1

00,50

2) 10

0,492

(1

0)

Total

tran

sacti

ons w

ith

owne

rs 73

,833,1

14

(12,6

67,05

5) 62

5,854

-

- (7

26,35

6) -

61,06

5,557

10

0,492

61

,166,0

49

At 31

Dec

embe

r 201

8 22

7,907

,964

14,44

1,767

(1

8,387

,575)

(155

,780)

(36,8

09,06

4) 20

,256,8

57

37,62

3,442

24

4,877

,611

- 24

4,877

,611


Non-

Dist

ribut

able

Com

pany

2019

Shar

e Cap

ital

RM

ICUL

S Eq

uity

Com

pone

nt RM

Othe

rRe

serv

es RM

War

rant

s Re

serv

es RM

Accu

mul

ated

Loss

es RM

Tota

lEq

uity RM

At 1

Janu

ary 2

019

231,7

40,71

9 14

,441,7

67

(20,2

56,85

7) 20

,256,8

57

(19,9

94,61

2) 22

6,187

,874

Loss

for t

he fi

nanc

ial ye

ar, r

epre

sent

ing

tota

l co

mpr

ehen

sive

loss

for t

he fi

nanc

ial ye

ar -

- -

- (1

0,918

,069)

(10,9

18,06

9)Tr

ansa

ctio

ns w

ith o

wne

rs:

Issue

of o

rdin

ary s

hare

s

-

Conv

ersio

n of

ICUL

S

(Not

es 2

0 an

d 21

) 22

,962,1

03

(14,4

41,76

7) -

- (1

,468,1

23)

7,05

2,213

-

Priva

te p

lacem

ent (

Note

20)

13,67

6,899

-

- -

- 13

,676,8

99

- Co

nver

sion

of w

arra

nts

[N

otes

20

and

22(d

)] 76

3,076

-

152,6

15

(152

,615)

- 76

3,076

-

Expi

ratio

n of

war

rant

s

[Not

e 22

(d)]

- -

3,38

9,268

(3

,389,2

68)

- -

Tota

l tra

nsac

tions

with

own

ers

37,40

2,078

(1

4,441

,767)

3,54

1,883

(3

,541,8

83)

(1,46

8,123

) 21

,492,1

88

At 3

1 De

cem

ber 2

019

269,1

42,79

7 -

(16,7

14,97

4) 16

,714,9

74

(32,3

80,80

4) 23

6,761

,993

Non-

Dist

ribut

able

Com

pany

2018

Shar

e Cap

ital

RM

ICUL

S Eq

uity

Com

pone

nt RM

Othe

rRe

serv

es RM

War

rant

s Re

serv

es RM

Accu

mul

ated

Loss

es RM

Tota

lEq

uity RM

At 1

Janu

ary 2

018

157,9

07,60

5 27

,108,8

22

(20,9

83,21

3) 20

,983,2

13

(13,5

03,63

6) 17

1,512

,791

Loss

for t

he fi

nanc

ial ye

ar, r

epre

sent

ing

tota

l co

mpr

ehen

sive

loss

for t

he fi

nanc

ial ye

ar -

- -

- (6

,490,9

76)

(6,49

0,976

)Tr

ansa

ctio

ns w

ith o

wne

rs:

Issue

of o

rdin

ary s

hare

s

-

Conv

ersio

n of

ICUL

S

(Not

es 2

0 an

d 21

) 25

,818,3

60

(12,6

67,05

5) -

- -

13,15

1,305

-

Priva

te p

lacem

ent (

Note

20)

23,59

5,230

-

- -

- 23

,595,2

30

- Co

nver

sion

of w

arra

nts [

Note

s 20

and

22(d

)] 3,

619,5

24

- 72

6,356

(7

26,35

6) -

3,61

9,524

-

Purc

hase

con

sider

atio

n fo

r acq

uisit

ion

of

an a

ssoc

iate

(Not

e 20

) 20

,800,0

00

- -

- -

20,80

0,000

To

tal t

rans

actio

ns w

ith o

wner

s 73

,833,1

14

(12,6

67,05

5) 72

6,356

(7

26,35

6) -

61,16

6,059

At

31

Dece

mbe

r 201

8 23

1,740

,719

14,44

1,767

(2

0,256

,857)

20,25

6,857

(1

9,994

,612)

226,1

87,87

4

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of

the

fina

ncia

l sta

tem

ents

.


STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Group Company2019

RM2018

RM2019

RM2018

RMCASH FLOWS FROM OPERATING ACTIVITIES(Loss)/Profit before tax

- Continuing operations (55,909,341) 8,655,511 (10,301,655) (6,490,976)

- Discountinued operation (2,659,287) 11,023 - -

(58,568,628) 8,666,534 (10,301,655) (6,490,976)

Adjustments for:

Amortisation of:

- Software development expenditure 4,466,864 2,809,737 98,000 98,000

- Intangible assets 1,292,519 2,370,735 - -

Bad debts written off on trade receivables - 1,792,173 - -

Deposits forfeited - 33,481 - -

Depreciation of:

- Property, plant and equipment 1,756,646 1,598,124 306,130 288,965

- Right-of-use assets 411,385 - - -

Fair value adjustment on other receivable 81,992 101,063 - -

Impairment losses on:

- Intangible assets 45,202,239 - - -

- Trade receivables - 535,972 - -

- Other receivables - 10,886 - -

- Remeasurement to fair value less costs to sell on disposal group 2,728,248 - - -

Operating (loss)/profit before working capital changes carried down (2,628,735) 17,918,705 (9,897,525) (6,104,011)


Group Company2019

RM2018

RM2019

RM2018

RMCASH FLOWS FROM OPERATING ACTIVITIES (CONT’D)Operating profit/(loss) before working capital changes brought down (2,628,735) 17,918,705 (9,897,525) (6,104,011)

Loss on ICULS liability component upon maturity 481,155 - 481,155 -

Written off:

- Deposit 550,000 - - -

- Goodwill 2,400,273 686,536 - -

- Property, plant and equipment 693 - - -

- Software development expenditure 1,905,467 - 294,000 -

Finance costs 3,103,400 421,070 2,818,428 141,291

Amortisation of government grant (1,504) (180,500) - -

Dividends received from mutual funds (89) (410,452) (89) (410,452)

Gain on disposal of intangible assets (101,063) - - -

Interest income (43,510) (129,886) (800,287) (314,204)

Reversal of impairment losses on:

- Investment in subsidiary companies - - (80,000) -

- Trade receivables (3,340,681) (3,590,173) - -

Share of result of associates, net of tax (2,863,331) (5,104,033) - -

Unrealised gain on foreign exchange (15,943) (30,254) (1,657) (101)

Operating (loss)/profit before working capital changes carried down (553,868) 4,949,230 (7,185,975) (6,687,477)


STATEMENTS OFCASH FLOWS (CONT’D)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

Group Company2019

RM2018

RM2019

RM2018

RMCASH FLOWS FROM OPERATING ACTIVITIES (CONT’D)Operating (loss)/profit before working capital changes brought down (553,868) 4,949,230 (7,185,975) (6,687,477)

Changes in working capital:

Inventories (25,587,134) 7,967,264 - -

Trade receivables 13,065,220 (25,884,283) - -

Other receivables 8,794,674 (9,685,469) 437,037 1,671,778

Lease receivables (391,001) - - -

Trade payables (904,163) (1,768,820) - -

Other payables (770,734) 1,019,045 2,201,887 (3,609,859)

Amount due to holding company - 2,859 - 2,859

Amount due from/(to) subsidiary companies - - (9,467,402) (65,395,496)

(5,793,138) (28,349,404) (6,828,478) (67,330,718)

Cash used in operations (6,347,006) (23,400,174) (14,014,453) (74,018,195)

Interest received 43,510 129,886 800,287 314,204

Interest paid (284,972) (279,779) - -

Tax refund 55,931 20,277 6,676 -

Tax paid (639,870) (193,690) (1,536) 5,775

Currency translation differences (307) (81,060) - -

(825,708) (404,366) 805,427 319,979

Net cash used in operating activities (7,172,714) (23,804,540) (13,209,026) (73,698,216)


Group Company2019

RM2018

RM2019

RM2018

RMCASH FLOWS FROM INVESTING ACTIVITIESAcquisition of interests of non-controlling interests - - - (10)

Addition of investment in subsidiary companies [Note 7(b)] - - - (7,010,000)

Acquisition of investment in an associate [Note 8(a)] - (40,000,000) - -

Addition of software development expenditure [Note 6(d)] (13,737,844) (23,846,510) - -

Dividends received from mutual funds 89 410,452 89 410,452

Incorporation of subsidiary companies - - - (4)

Purchase of property, plant and equipment (71,456) (3,053,237) (14,379) (50,469)

Proceeds from disposal of financial assets at fair value through profit or loss (89) 40,586,020 (89) 40,586,020

Proceeds from disposal of intangible assets - 9,400,000 - -

Net cash (used in)/from investing activities (13,809,300) (16,503,275) (14,379) 33,935,989

CASH FLOWS FROM FINANCING ACTIVITIESDecrease in fixed deposits pledged (21,378) (21,480) - -

Proceeds from conversion of ICULS(Notes 20 and 21) 6,012,855 12,908,119 6,012,855 12,908,119

Proceeds from private placement of shares(Note 20) 13,676,899 23,595,230 13,676,899 23,595,230

Proceeds from conversion of Warrants[Notes 20 and 22(d)] 763,076 3,619,524 763,076 3,619,524

Coupon payment for ICULS (526,384) (1,146,128) (526,384) (1,146,128)

Loan to a subsidiary company - - (8,309,490) -

Payment of lease liabilities (360,398) - - -

Repayment of finance lease liability - (6,274) - -

Repayment of term loan (507,655) (536,747) - -

Net cash from financing activities 19,037,015 38,412,244 11,616,956 38,976,745



Group Company2019

RM2018

RM2019

RM2018

RMNet decrease in cash and cash equivalents (1,944,999) (1,895,571) (1,606,449) (785,482)

Cash and cash equivalents at the beginning of the financial year 4,111,442 5,950,403 1,761,069 2,546,546

Effect of foreign translation differences on cash and cash equivalents (6,173) 56,610 4 5

Cash and cash equivalents at the end of the financial year 2,160,270 4,111,442 154,624 1,761,069

Cash and cash equivalents at the end of the financial year comprises:

Fixed deposits with licensed banks (Note 17) 722,409 732,890 - 31,859

Cash and bank balances (Note 17) 2,160,270 4,275,651 154,624 1,729,210

Bank overdraft (Note 25) - (196,068) - -

2,882,679 4,812,473 154,624 1,761,069

Less: Fixed deposits pledged with licensed banks (Note 17) (722,409) (701,031) - -

2,160,270 4,111,442 154,624 1,761,069

STATEMENTS OFCASH FLOWS (CONT’D)



31 DECEMBER 2019

NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the

ACE Market of Bursa Malaysia Securities Berhad.

The registered office of the Company is located at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur.

The principal place of business of the Company is located at Level 11, 203, Menara Allianz Sentral, Jalan Tun Sambanthan, Kuala Lumpur Sentral, 50470 Kuala Lumpur.

The principal activity of the Company is that of investment holding. The principal activities of its subsidiary companies are disclosed in Note 7. There have been no significant changes in the nature of these activities of the Company and its subsidiary companies during the financial year.

The immediate holding company is Redhot Media International Limited, a company incorporated in Labuan and domiciled in Malaysia.

The intermediate holding company is RHM Ltd, a company incorporated in Cayman Islands.

The ultimate holding company is Resource Holding Management Limited, a company incorporated in Cayman Islands.

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 and the requirements of the Companies Act 2016 in Malaysia.

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise indicated in the significant accounting policies below.

Adoption of new and amended standards During the financial year, the Group and the Company have adopted the following new standards and amendments to standards issued by the Malaysian Accounting Standards Board (“MASB”) that are mandatory for current financial year:

MFRS 16 LeaseIC Interpretation 23 Uncertainty over Income Tax TreatmentsAmendments to MFRS 9 Prepayment Features with Negative CompensationAmendments to MFRS 119 Plan Amendment, Curtailment or SettlementAmendments to MFRS 128 Long-term Interests in Associates and Joint VenturesAnnual Improvements to MFRSs 2015 - 2017 Cycle:• Amendments to MFRS 3• Amendments to MFRS 11• Amendments to MFRS 112• Amendments to MFRS 123


31 DECEMBER 2019

NOTES TO THEFINANCIAL STATEMENTS (CONT’D)

2. BASIS OF PREPARATION (CONT’D) (a) Statement of compliance (Cont’d)

Adoption of new and amended standards (Cont’d)

The adoption of the new standards and amendments to standards did not have any significant impact on the financial statements of the Group and of the Company, except for:

MFRS 16 Lease

MFRS 16, which upon the effective date will supersede MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Leases, IC Interpretation 115 Operating Leases - Incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

As a result of the adoption of MFRS 16, the existing requirements for a lessee to distinguish between finance leases and operating leases under the MFRS 117 Leases are no longer required. MFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically, under MFRS 16, a lessee is required to recognise a right-of-use (“ROU”) asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the ROU asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statements of cash flows.

The ROU asset and the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard, MFRS 117.

In respect of the lessor accounting, MFRS 16 substantially carries forward the lessor accounting requirements in MFRS 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.

As permitted by the transitional provision of MFRS 16, the Group has elected to adopt a simplified transition approach where cumulative effects of initial application are recognised on 1 January 2019 as an adjustment to the opening balance of retained earnings.

For leases that were classified as finance lease under MFRS 117, the carrying amounts of the ROU asset and the lease liability at 1 January 2019 are determined to be the same as the carrying amount of the lease asset and lease liability under MFRS 117 immediately before that date.

The Group has also applied the following practical expedients when applying MFRS 16 to lease previously classified as operating lease under MFRS 117:

• Applied a single discount rate to portfolio of leases with reasonably similar characteristics.

• The Group does not apply the standard to leases which lease terms end within 12 months from 1 January 2019.

• No adjustments are made on transition for leases for which the underlying assets are of low value.

• Excluded initial direct costs from measuring the ROU assets at the date of initial application.

• The Group uses hindsight in determining lease terms for contracts that contain options for extension.




The adoption of the new standards and amendments to standards did not have any significant impact on the financial statements of the Group and of the Company, except for: (Cont’d)

MFRS 16 Lease (Cont’d)

As a result, the leasehold land under property, plant and equipment classification have been reclassified to ROU assets on 1 January 2019 for the Group.

Impact arising from the adoption of MFRS 16 on the financial statements of the Group are as follows:

Statements of Financial Position

As at 31.12.2018

RM

Effect on adoption of

MFRS 16RM

As at 1.1.2019

RMGroup

Non-Current Assets

Property, plant and equipment 19,953,816 (1,473,784) 18,480,032

Right-of-use assets - 2,107,815 2,107,815

Non-Current Liabilities

Finance lease liability 4,732 (4,732) -

Lease liabilities - 294,847 294,847

Current Liabilities

Finance lease liability 6,306 (6,306) -

Lease liabilities - 353,207 353,207

Equity

Retained earnings 37,623,442 (2,986) 37,620,456


31 DECEMBER 2019



The adoption of the new standards and amendments to standards did not have any significant impact on the financial statements of the Group and of the Company, except for:

MFRS 16 Lease (Cont’d)

The following table explains the differences between operating lease commitments disclosed applying MFRS 117 at 31 December 2018, and lease liabilities recognised in the statements of financial position at 1 January 2019.

The weighted average incremental borrowing rate applied to lease liabilities on 1 January 2019 was 10.35%.

Standards issued but not yet effectiveThe Group and the Company have not applied the following new standards and amendments to standards that have been issued by the MASB but are not yet effective for the Group and for the Company:

The Group and the Company intend to adopt the above new standards and amendments to standards, if applicable, when they become effective.

The initial application of the above-mentioned new standards and amendments to standards are not expected to have any significant impacts on the financial statements of the Group and of the Company.

Group RM

Operating lease commitment as at 31 December 2018 302,016

Discounted using the incremental borrowings rate at 1 January 2019 (16,227)

Add: Transfer from finance lease obligations upon initial application of MFRS 16 11,038

Lease liabilities recognised upon initial adoption of lease definition under MFRS 16 351,227

Lease liabilities recognised as at 1 January 2019 648,054

Effective dates for financial periods

beginning onor after

Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020

Amendments to MFRS 3 Definition of a Business 1 January 2020

Amendments to MFRS 9, MFRS 139and MFRS 7 Interest Rate Benchmark Reform 1 January 2020

Amendments to MFRS 101 andMFRS 108 Definition of Material 1 January 2020

MFRS 17 Insurance Contracts 1 January 2021

Amendments to MFRS 101 Classification of Liabilities as Current or Non-current 1 January 2022

Amendments to MFRS 10 andMFRS 128

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Deferred untilfurther notice



2. BASIS OF PREPARATION (CONT’D) (b) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest RM except when otherwise stated.

(c) Significant accounting judgements, estimates and assumptions

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent 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.

Judgements

The following are the judgements made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements:

Determining the lease term of contracts with renewal options - the Group as lessee

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised.

The Group has several lease contracts that include extension options. The Group applies judgement in evaluating whether to exercise the option to renew the lease. It considers all relevant factors that create an economic incentive for it to exercise the renewal option. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew.

The Group includes the renewal period as part of the lease term for such leases. The Group typically exercises its option to renew for those leases with renewal option.

Satisfaction of performance obligations in relation to contracts with customers

The Group is required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time or at a point in time in order to determine the appropriate method for recognising revenue. This assessment was made based on the terms and conditions of the contracts, and the provisions of relevant laws and regulations.

The Group recognises revenue over time in the following circumstances:

(a) the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;

(b) the Group does not create an asset with an alternative use to the Group and has an enforceable right to payment for performance completed to date; and

(c) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.

Where the above criteria are not met, revenue is recognised at a point in time. Where revenue is recognised at a point of time, the Group assesses each contract with customers to determine when the performance obligation of the Group under the contract is satisfied.


31 DECEMBER 2019


2. BASIS OF PREPARATION (CONT’D) (c) Significant accounting judgements, estimates and assumptions (Cont’d)

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period are set out below:

Useful lives of property, plant and equipment and right-of-use (“ROU”) assets

The Group regularly reviews the estimated useful lives of property, plant and equipment and ROU assets based on factors such as business plan and strategies, expected level of usage and future technological developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction in the estimated useful lives of property, plant and equipment and ROU assets would increase the recorded depreciation and decrease the value of property, plant and equipment and ROU assets. The carrying amount at the reporting date for property, plant and equipment and ROU assets are disclosed in Notes 4 and 5 respectively.

Impairment of goodwill on consolidation

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use amount requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The key assumptions used to determine the value in use is disclosed in Note 9(b).

Development costs

The Group capitalises development costs for a project in accordance with the accounting policy. Initial capitalisation of development costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generations of the project, discount rates to be applied and the expected period of benefits. The carrying amount at the reporting date for software development expenditure is disclosed in Note 6.

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses, unutilised capital allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the unused tax losses, unutilised capital allowances and other deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of recognised and unrecognised deferred tax assets are disclosed in Note 11.

Inventories valuation

Inventories are measured at the lower of cost and net realisable value. The Group estimates the net realisable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Group’s products, the Group might be required to reduce the value of its inventories. Details of inventories are disclosed in Note 14.



Key sources of estimation uncertainty (Cont’d)

Determination of transaction prices

The Group is required to determine the transaction price in respect of each of its contracts with customers. In making such judgement, the Group assesses the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component and any non-cash consideration in the contract.

There is no estimation required in determining the transaction price, as revenue from sale of goods or rendering of services are based on invoiced values. Discounts are not considered as they are only given in rare circumstances.

Provision for expected credit loss of financial assets at amortised cost

The Group uses a provision matrix to calculate expected credit loss for trade receivables. The provision rates are based on number of days past due.

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and expected credit loss is a significant estimate. The Group’s historical credit loss experience and forecast of economic conditions may not be representative of customer’s actual default in the future. Information about the expected credit loss is disclosed in Note 15.

Discount rate used in leases

Where the interest rate implicit in the lease cannot be readily determined, the Group uses the incremental borrowing rate to measure the lease liabilities. The incremental borrowing rate is the interest rate that the Group would have to pay to borrow over a similar term, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. Therefore, the incremental borrowing rate requires estimation, particularly when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the incremental borrowing rate using observable inputs when available and is required to make certain entity-specific estimates.

Income taxes

Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business.

The Group recognises liabilities for tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these tax matters is different from the amounts that were initially recognised, such differences will impact the income tax and/or deferred tax provisions in the period in which such determination is made. As at 31 December 2019, the Group has tax recoverable and tax payable of RM50,510 (2018: RM50,564) and RM1,359,160 (2018: RM1,989,862) respectively. As at 31 December 2019, the Company has tax recoverable of RM44 (2018: RM6,036).


31 DECEMBER 2019



Key sources of estimation uncertainty (Cont’d)

Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. Details of the assumptions used are given in the Note 37(c) regarding financial assets and liabilities. In applying the valuation techniques, management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the end of the reporting period.

3. SIGNIFICANT ACCOUNTING POLICIES The Group and the Company apply the significant accounting policies set out below, consistently throughout all

periods presented in the financial statements unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiary companies

Subsidiary companies are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiary companies are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Business Combination - Acquisition Method

Under the acquisition method of accounting, subsidiary companies are fully consolidated from the date on which control is transferred to the Group and de-consolidated from the date that control ceased. The consideration transferred for the acquisition of a subsidiary company is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (a) Basis of consolidation (Cont’d)

(i) Subsidiary companies (Cont’d)

Business Combination - Reverse Acquisition

On 2 January 2014, the Company completed the acquisition of the entire equity interest in Red Media Asia Ltd (“RMABV”) via the issuance of 750,000,000 ordinary shares of RM0.10 each in the Company at an issue price of RM0.12 each.

Upon completion of the acquisition, the Company became the legal parent of RMABV. Due to the relative values of RMABV and the Company, the owners of RMABV became the majority shareholders in the Company, and controlling about 62.48% of the issued and paid up share capital of the Company at the date of acquisition. Furthermore, the former owners dominate the management of the combined entity. In accordance with MFRS 3 Business Combinations, the substance of such business combination between the Company and RMABV constituted a reverse acquisition whereby the acquirer and acquiree of the transaction for accounting purpose should be RMABV (that is the legal subsidiary or accounting parent) and the Company (that is the legal parent or accounting subsidiary) respectively.

The acquisition of RMABV is accounted for using the reverse acquisition method of accounting in accordance with MFRS 3 Business Combinations.

MFRS 3 requires that the consolidated financial statements be issued under the name of the legal parent (herein called “accounting acquiree” or “the Company”), but described in the notes as a continuation of the financial statements of the legal subsidiary (herein called “accounting acquirer” or “RMABV”), with one adjustment, which is to adjust retroactively the accounting acquirer’s legal capital to reflect the legal capital of accounting acquiree. Therefore, the financial statements of the Group represent the continuation of the financial statements of RMABV except for its capital structure.

The following accounting treatments have been applied in the consolidated financial statements in respect of the reverse acquisition:

(i) the assets and liabilities of RMABV have been recognised and measured at their pre-combination carrying amounts prior to the reverse acquisition;

(ii) the identifiable assets and liabilities of the Company were recorded in the statements of financial position at fair value on the date of reverse acquisition;

(iii) the retained earnings and reserves recognised in the statements of financial position are those of RMABV immediately prior to the reverse acquisition; and

(iv) the comparative financial information presented in the consolidated financial statements is that of RMABV.

Acquisition-related costs are expensed in profit or loss as incurred.

If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is re-measured at its acquisition date fair value and the resulting gain or loss is recognised in profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (which cannot exceed one year from the acquisition date), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date, if known, would have affected the amounts recognised at that date.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (a) Basis of consolidation (Cont’d)

(i) Subsidiary companies (Cont’d)

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instruments and within the scope of MFRS 9 Financial Instruments is measured at fair value with the changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated. Unrealised losses are eliminated only if there is no indication of impairment. Where necessary, accounting policies of subsidiary companies have been changed to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investment in subsidiary companies are stated at cost less accumulated impairment losses. On disposal of such investment, the difference between net disposal proceeds and their carrying amounts are recognised in profit or loss. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. Refer accounting policy Note 3(n)(i) on impairment of non-financial assets.

(ii) Change in ownership interests in subsidiary companies without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary company is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(iii) Disposal of subsidiary companies

If the Group loses control of a subsidiary company, the assets and liabilities of the subsidiary company, including any goodwill, and non-controlling interests are derecognised at their carrying value on the date that control is lost. Any remaining investment in the entity is recognised at fair value. The difference between the fair value of consideration received and the amounts derecognised and the remaining fair value of the investment is recognised as a gain or loss on disposal in profit or loss. Any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.

(iv) Goodwill on consolidation

The excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary company acquired (ie. a bargain purchase), the gain is recognised in profit or loss.

Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying amount may be impaired. The policy of recognition and measurement of impairment losses is in accordance with Note 3(n)(i) on impairment of non-financial assets.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (b) Investment in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

On acquisition of an investment in an associate, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of associate’s profit or loss for the period in which the investment is acquired.

An associate is accounted for either at cost or equity method as described in MFRS 128 from the date on which the investee becomes an associate. Under the equity method, on initial recognition the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of profit or loss and other comprehensive income of the associate after the date of acquisition. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

Profits or losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s consolidated financial statements only to the extent of unrelated investors’ interests in the associate. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the assets transferred.

The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The requirements of MFRS 136 Impairment of Assets are applied to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

In the Company’s separate financial statements, investment in associates are stated at cost less accumulated impairment losses. On disposal of such investment, the difference between net disposal proceeds and their carrying amounts are recognised in profit or loss. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 3(n)(i) on impairment of non-financial assets.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (c) Foreign currency translation

(i) Foreign currency transactions and balances

Transactions in foreign currency are recorded in the functional currency of the respective Group entities using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are included in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the reporting period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised in other comprehensive income.

(ii) Foreign operations

The assets and liabilities of foreign operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at the rate of exchange prevailing at the reporting date, except for goodwill and fair value adjustments arising from business combinations before 1 January 2012 (the date of transition to MFRS) which are treated as assets and liabilities of the Company. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly owned subsidiary company, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence is lost, the cumulative amount in the FCTR related that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence, the relevant proportion of the cumulative amount is reclassified to profit or loss.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (d) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 3(n)(i) on impairment of non-financial assets.

(i) Recognition and measurement

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (d) Property, plant and equipment (Cont’d)

(iii) Depreciation

Depreciation of property, plant and equipment is recognised in the profit or loss on straight-line basis to write off the cost of each asset to its residual value over its estimated useful life. Capital work-in-progress is not depreciated until it ready for its intended use.

Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:

Freehold buildings 50 years Computers 3 to 5 years Office equipment 5 to 10 years Furniture and fittings 10 years Plant and machinery 3 to 10 years Renovation 5 years

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 property, plant and equipment.

Leasehold land

The above accounting policies for property, plant and equipment applies to leasehold land until 31 December 2018. The leasehold land was depreciated over the remaining lease period.

Following the adoption of MFRS 16 Leases on 1 January 2019, the Group has reclassified the carrying amount of the leasehold land to ROU assets. The policy of recognition and measurement of the ROU assets is in accordance with Note 3(e).

(e) Leases

Policy applicable from 1 January 2019

(i) As lessee

The Group and the Company recognise ROU asset and a lease liability at the lease commencement date. The ROU asset is initially measured at cost, which comprise the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or site on which it is located, less any lease incentives received.

The ROU asset is subsequently measured at cost less any accumulated depreciation, accumulated impairment loss and, if applicable, adjusted for any remeasurement of lease liabilities. The policy of recognition and measurement of impairment losses is in accordance with Note 3(n)(i) on impairment of non-financial assets.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (e) Leases (Cont’d)

Policy applicable from 1 January 2019 (Cont’d)

(i) As lessee (Cont’d)

The ROU asset under cost model is depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. The estimated useful lives of the ROU assets are determined on the same basis as those of property, plant and equipment as follows:

Leasehold land Over the remaining lease period Office equipment 5 years or over the lease term, if shorter Buildings Over the lease term

The ROU assets are subject to impairment.

The lease liability is initially measured at the present value of future lease payments at the commencement date, discounted using the respective Group entities’ incremental borrowing rates. Lease payments included in the measurement of the lease liability include fixed payments, any variable lease payments, amount expected to be payable under a residual value guarantee, and exercise price under an extension option that the Group are reasonably certain to exercise.

Variable lease payments that do not depend on an index or a rate and are dependent on a future activity are recognised as expenses in profit or loss in the period in which the event or condition that triggers the payment occurs.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in rate, or if the Group changes its assessment of whether it will exercise an extension or termination option.

Lease payments associated with short-term leases and leases of low value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less and do not contain a purchase option. Low value assets are those assets valued at less than RM20,000 each when purchased new.

(ii) As lessor

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases.

If the lease arrangement contains lease and non-lease components, the Group apply MFRS 15 Revenue from Contracts with Customers to allocate the consideration in the contract based on the stand-alone selling price.

The Group recognises assets held under a finance lease in its statements of financial position and presents them as a receivable at an amount equal to the net investment in the lease. The Group uses the interest rate implicit in the lease to measure the net investment in the lease.

The Group recognises lease payments under operating leases as income on a straight-line basis over the lease term unless another systematic basis is more representative of the pattern in which benefit from the use of the underlying asset is diminished. The lease payment recognised is included as part of “Revenue”. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (e) Leases (Cont’d)

Policy applicable before 1 January 2019

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement.

(i) As lessee

(a) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as a property, plant and equipment.

(b) Operating lease

Leases, where the Group or the Company do not assume substantially all the risks and rewards of ownership are classified as operating leases and are not recognised on the statements of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

(ii) As lessor

Leases in which the Group or the Company do not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (f) Intangible assets

(i) Internally-generated intangible assets - research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

• the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;• its intention to complete and its ability and intention to use or sell the asset;• how the asset will generate future economic benefits;• the availability of resources to complete; and• the ability to measure reliably the expenditure during development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful lives and amortisation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

(ii) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful lives and amortisation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Intangible assets are amortised based on the estimated useful lives of assets as follows:

Software development expenditure 5 to 10 years Digital contents 2 to 20 years Regional software license 20 years

(iii) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair values at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

(iv) Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

The policy of recognition and measurement of impairment losses is in accordance with Note 3(n)(i) on impairment of non-financial assets.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (g) Financial assets

Recognition and initial measurement

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

At initial recognition, the Group and the Company measure a financial asset at its fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance of the financial instruments. Transaction costs of financial assets carried at fair value through profit or loss (“FVTPL”) are expensed in profit or loss.

Financial asset categories and subsequent measurement

The Group and the Company determine the classification of financial assets at initial recognition and are not reclassified subsequent to their initial recognition unless the Group and the Company change its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

(i) Financial assets at amortised cost

The Group and the Company measure financial assets at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss.

The Group’s and the Company’s financial assets at amortised cost include trade and other receivables, lease receivables, amount due from subsidiary companies and deposits, bank and cash balances.

(ii) Financial assets at fair value through other comprehensive income (“FVTOCI”)

(a) Debt investments

A debt investment is measured at FVTOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The debt investment is not designated as fair value through profit or loss. Interest income calculated using effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income.

On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (g) Financial assets (Cont’d)

Financial asset categories and subsequent measurement (Cont’d)

(ii) Financial assets at fair value through other comprehensive income (“FVTOCI”) (Cont’d)

(b) Equity instruments

This category comprises investment in equity investment that is not held for trading. The Group and the Company irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis. Dividends are recognised as income in profit or loss unless the dividend clearly represent a recovery of part of the cost of investment. Other net gains and losses are recognised in other comprehensive income.

On derecognition, gains and losses accumulated in other comprehensive income are not reclassified to profit or loss.

(iii) Financial assets at fair value through profit or loss (“FVTPL”)

All financial assets not classified as measured at amortised cost or FVTOCI, as described above are measured at FVTPL. This includes derivative financial assets (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument). On initial recognition, the Group or the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI or at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets categorised as FVTPL are subsequently measured at their fair value. Net gains or losses, including any interest or dividend income are recognised in the profit or loss.

All financial assets, except for those measured at FVTPL and equity investments measured at FVTOCI, are subject to impairment assessment as disclosed in Note 3(n)(ii) on impairment of financial assets.

Regular way purchase or sale of financial assets

Regular way purchase or sale are purchase or sale of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchase or sale of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to receive cash flows from the financial asset expire or transferred, or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount of the financial assets and the sum of consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (h) Financial liabilities

Recognition and initial measurement

Financial liabilities are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

At initial recognition, the Group and the Company measure a financial liability at its fair value less, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance of the financial instruments.

Financial liability categories and subsequent measurement

The Group and the Company classify its financial liabilities as follows:

(i) Financial liabilities at fair value through profit or loss

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination and financial liabilities that are specifically designated into this category upon initial recognition.

Financial liabilities categorised as FVTPL are subsequently measured at their fair value with gains or losses recognised in the profit or loss.

The Group and the Company have not designated any financial liabilities as FVTPL.

(ii) Financial liabilities at amortised cost

Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method.

Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.

The Group’s and the Company’s financial liabilities designated as amortised cost comprise trade and other payables, amount due to subsidiary companies, finance lease liability, lease liabilities and bank borrowings.

Derecognition

A financial liability or part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(i) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs when the guaranteed debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as financial liabilities at fair value, net of transaction costs. Subsequently, the liability is measured at the higher of:

• the amount of the loss allowances; and• the amount initially recognised less, when appropriate, the cumulative amount of income recognised in

accordance with the principles of MFRS 15 Revenue from Contracts with Customers.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (j) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost of inventories comprise cost of purchase and other costs incurred in bringing it to their present location and condition are determined on the first-in-first-out basis.

Net realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the costs necessary to make the sale.

(l) Contract assets and contract liabilities

Contract asset is the right to consideration for goods or services transferred to the customers. The Group’s contract assets is the excess of revenue recognised over the billings to-date and deposits or advances received from customers.

Where there is objective evidence of impairment, the amount of impairment losses is determined by comparing the contract asset’s carrying amount and the present value of estimated future cash flows to be generated by the contract asset.

Contract asset is reclassified to trade receivables at the point at which invoices have been billed to customers.

Contract liability is the obligation to transfer goods or services to customers for which the Group has received the consideration or has billed the customers. The Group’s contract liabilities is the excess of the billings to-date over the revenue recognised. Contract liabilities are recognised as revenue when the Group performs its obligation under the contracts.

(m) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (n) Impairment of assets

(i) Non-financial assets

The carrying amounts of non-financial assets (except for inventories, deferred tax assets and non-current assets (or disposal group) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives, or that are not yet available for use, the recoverable amount is estimated each period at the same time.

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 cash-generating units. Subject to operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows 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 or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment loss is recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (group of cash-generating units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss.

(ii) Financial assets

The Group and the Company recognise an allowance for expected credit losses (“ECL”) for all debt instruments not held at FVTPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group and the Company expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

For trade receivables, other receivables, contract assets and inter-company balances, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and the Company have established a provision matrix that is based on its historical credit loss experience and the economic environment.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (o) Share capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity.

Dividend distribution to the Company’s shareholders is recognised as a liability in the period they are approved by the Board of Directors except for the final dividend which is subject to approval by the Company’s shareholders.

(p) Compound financial instruments

A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component. Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

(q) Provisions

Provisions are recognised when there is a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. The expense relating to any provision is presented in the statements of profit or loss and other comprehensive income net of any reimbursement.

(r) Employee benefits

(i) Short-term employee benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the reporting period in which the associated services are rendered by employees of the Group. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur.

The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (r) Employee benefits (Cont’d)

(ii) Defined contribution plans

As required by law, companies in Malaysia contribute to the state pension scheme, the Employee Provident Fund (“EPF”). Some of the Group’s foreign subsidiary companies also make contributions to their respective countries’ statutory pension schemes. Such contributions are recognised as an expense in the profit or loss as incurred. Once the contributions have been paid, the Group has no further payment obligations.

(s) Revenue recognition

(i) Revenue from contracts with customers

Revenue is recognised when the Group satisfied a performance obligation (“PO”) by transferring a promised good or service to the customer, which is when the customer obtains control of the good or service. A PO may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied PO.

The Group recognises revenue from the following major sources:

(a) Sales of goods

Revenue from sale of goods is recognised when the transfer of significant risk and rewards of ownership of the goods to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(b) Rendering of services

Revenue from services and management fees are recognised in the reporting period in which the services are rendered, which simultaneously received and consumes the benefits provided by the Group, and the Group has a present right to payment for the services.

(c) Sales of advertising space, public relation, database management, internet related and other electronic commerce services

Revenue from sales of advertising space, public relation, database management, internet related and other electronic commerce services rendered are recognised upon rendering of services.

(d) Subscription income

Subscription income is derived from the fees which entitle the member to services during the membership period. It is recognised on a basis that reflects the timing, nature and value of the benefits provided.

(ii) Rental income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

(iii) Interest income

Interest income is recognised on accruals basis using the effective interest method.

(iv) Dividend income

Dividend income is recognised when the Group and the Company’s right to receive payment is established.


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (t) Government grant

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

When the grant relates to an expense item, it is recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Where the grant relates to an asset, it is recognised as deferred income and transferred to profit or loss on a systematic basis over the useful lives of the related asset.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Where the Group receives non-monetary government grants, the asset and the grant are recorded at nominal amount and transferred to profit or loss on a systematic basis over the life of the depreciable asset by way of a reduced depreciation charge.

(u) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(v) Income taxes

Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the financial year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statements of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, at the end of the reporting period. Deferred tax assets and liabilities are not discounted.


31 DECEMBER 2019


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (v) Income taxes (Cont’d)

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(w) Segments reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group’s operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

(x) Contingencies

Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the asset or the obligation is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.

(y) Assets and disposal group held for sale and discontinued operation

Assets and disposal group are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Such assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset and disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and disposal group. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

• represents a separate major line of business or geographical area of operations,• is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of

operations or• is a subsidiary company acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale.

When an operation is classified as a discontinued operation, the comparative statements of profit or loss and other comprehensive income is re-represented as if the operation had been discontinued from the start of the comparative period.


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- 84

8 57

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PRO

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4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Company2019

Computers RM

Office equipment

RM

Furniture and fittings

RMRenovation

RMTotal

RM

CostAt 1 January 2019 359,792 149,402 307,197 881,712 1,698,103 Additions 7,829 - - 6,550 14,379

At 31 December 2019 367,621 149,402 307,197 888,262 1,712,482

Accumulated depreciation At 1 January 2019 160,880 56,882 119,512 611,416 948,690

Charge for the financial year 66,540 24,505 38,791 176,294 306,130

At 31 December 2019 227,420 81,387 158,303 787,710 1,254,820

Carrying amount

At 31 December 2019 140,201 68,015 148,894 100,552 457,662

Company2018

Computers RM

Office equipment

RM

Furniture and fittings

RMRenovation

RMTotal

RM

CostAt 1 January 2018 323,753 149,402 307,197 867,282 1,647,634

Additions 36,039 - - 14,430 50,469

At 31 December 2018 359,792 149,402 307,197 881,712 1,698,103

Accumulated depreciation

At 1 January 2018 91,983 41,935 90,150 435,657 659,725

Charge for the financial year 68,897 14,947 29,362 175,759 288,965

At 31 December 2018 160,880 56,882 119,512 611,416 948,690

Carrying amount

At 31 December 2018 198,912 92,520 187,685 270,296 749,413


31 DECEMBER 2019


4. PROPERTY, PLANT AND EQUIPMENT (CONT’D) (a) Assets pledged as securities to a licensed bank

The carrying amount of property, plant and equipment of the Group pledged as securities for bank borrowings as disclosed in Note 25(a) are as follows:

(b) Assets held under finance lease

As at 31 December 2018, the net carrying amount of leased office equipment of the Group was RM10,285. Leased asset is pledged as security for the related finance lease liability.

Following the adoption of MFRS 16 on 1 January 2019, the Group has reclassified the carrying amount of leased assets to ROU assets as disclosed in Note 5.

(c) As at 31 December 2018, the remaining lease period of the leasehold land was 36 years.

Group2019

RM2018

RM

Freehold buildings 4,977,500 5,087,500


Included in the above, the office equipment of the Group with carrying amount of RM4,388 is pledged as security for the related lease liability.

The remaining lease period of the leasehold land is 35 years.

5. RIGHT-OF-USE ASSETS

2019

Leasehold land

RM

Office equipment

RMBuildings

RMTotal

RM

CostAt 1 January 2019, as previously reported - - - - Effect on adoption of MFRS 16 [Note 2(a)] 1,557,270 28,492 731,091 2,316,853

At 1 January 2019, as restated 1,557,270 28,492 731,091 2,316,853

Additions - - 170,229 170,229 Expiration of lease contracts - - (179,188) (179,188)Exchange difference - 54 1,053 1,107 Transfer to disposal group held for sale and discontinued operation (Note 19) (1,557,270) - - (1,557,270)

At 31 December 2019 - 28,546 723,185 751,731

Accumulated depreciation At 1 January 2019, as previously reported - - - - Effect on adoption of MFRS 16 [Note 2(a)] 93,771 18,207 97,060 209,038

At 1 January 2019, as restated 93,771 18,207 97,060 209,038

Charge for the financial year 40,188 5,907 365,290 411,385 Expiration of lease contracts - - (179,188) (179,188)Exchange difference - 44 410 454 Transfer to disposal group held for sale and discontinued operation (Note 19) (133,959) - - (133,959)

At 31 December 2019 - 24,158 283,572 307,730

Carrying amount At 31 December 2019 - 4,388 439,613 444,001


31 DECEMBER 2019


6. SOFTWARE DEVELOPMENT EXPENDITURE

Group2019

OmniChannel(Note a)

RM

FinTech(Note b)

RM

Corporate and Others

(Note c)RM

TotalRM

CostAt 1 January 2019 5,028,513 986,410 50,557,514 56,572,437 Additions - - 13,737,844 13,737,844 Written off - - (2,208,500) (2,208,500)

At 31 December 2019 5,028,513 986,410 62,086,858 68,101,781

Accumulated amortisation At 1 January 2019 5,013,757 111,493 2,451,484 7,576,734 Amortisation during the financial year 5,367 187,482 4,274,015 4,466,864 Written off - - (303,033) (303,033)

At 31 December 2019 5,019,124 298,975 6,422,466 11,740,565

Carrying amount At 31 December 2019 9,389 687,435 55,664,392 56,361,216


6. SOFTWARE DEVELOPMENT EXPENDITURE (CONT’D)

Group2018

OmniChannel#(Note a)

RM

FinTech#(Note b)

RM

Corporate and Others#

(Note c)RM

TotalRM

CostAt 1 January 2018 5,028,513 986,410 16,861,004 22,875,927

Additions - - 30,046,510 30,046,510

Transfer from property, plant and equipment - - 3,650,000 3,650,000

At 31 December 2018 5,028,513 986,410 50,557,514 56,572,437

Accumulated amortisation

At 1 January 2018 4,717,998 48,999 - 4,766,997

Amortisation during the financial year 295,759 62,494 2,451,484 2,809,737

At 31 December 2019 5,013,757 111,493 2,451,484 7,576,734

Carrying amount

At 31 December 2018 14,756 874,917 48,106,030 48,995,703

# the comparative figures have been restated following the change in the composition of its reporting segments as disclosed in Note 36.


31 DECEMBER 2019


6. SOFTWARE DEVELOPMENT EXPENDITURE (CONT’D)

Company

Corporate and Others (Note c)

2019RM

2018RM

CostAt 1 January 490,000 3,449,245

Disposal - (2,959,245)

Written off (490,000) -

At 31 December - 490,000

Accumulated amortisation At 1 January 98,000 -

Amortisation during the financial year 98,000 98,000

Written off (196,000) -


Carrying amount At 31 December - 392,000

(a) The development costs of OmniChannel consist of media and advertising businesses as well as the digital imaging business managed under Pictureworks Holdings Sdn. Bhd., an associate of the Company.

(b) The development costs of FinTech consist of electronic money, payment services and technology businesses.

(c) The development costs of corporate and others consist of software and solutions for the overall Presto digital ecosystem.

(d) The aggregate costs for software development expenditure of the Group during the financial year acquired through offset against trade receivables and cash payments are as follows:

Group2019

RM2018

RMAggregate costs 13,737,844 30,046,510

Less: Offset against trade receivables - (6,200,000)

Cash payments 13,737,844 23,846,510


7. INVESTMENT IN SUBSIDIARY COMPANIES

Company2019

RM2018

RMIn Malaysia At costUnquoted shares 32,393,016 33,489,096

Less: Accumulated impairment losses (50,000) (130,000)

32,343,016 33,359,096

Outside Malaysia At costUnquoted shares 96,200,200 96,200,203

128,543,216 129,559,299

Company2019

RM2018

RMAt 1 January 130,000 130,000

Reversal of impairment losses (80,000) -

At 31 December 50,000 130,000

Movements in the allowance for impairment losses of investment in subsidiary companies are as follows:

The reversal of impairment losses of RM80,000 was recognised in other income in the statements of profit or loss and other comprehensive income, in relation to the disposal of Enovax Malaysia Sdn. Bhd. as disclosed in Note 7(d)(i).


31 DECEMBER 2019


7. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)

Details of the subsidiary companies are as follows:

Name of company

Place of business/

Country of incorporation

Effective interest

Principal activities2019

%2018

%Direct Holding:

Enovax Pte. Ltd.* Republic ofSingapore

100 100 Software development and consultancy

Founder Pay Sdn. Bhd. Malaysia 100 100 Money lending business and payment solutions

Founder Qube Sdn. Bhd. Malaysia 100 100 E-Content, e-commerce and e-merchant business, and end-to-end media and advertising solutions

MaxGreen Energy Sdn. Bhd.# Malaysia 100 100 Renewable energy projects

MaxGreen Energy 2 Sdn. Bhd. Malaysia 100 100 Renewable energy projects

Presto Pay Sdn. Bhd. Malaysia 100 100 E-payment solutions, trading and merchandising of goods

Presto Universe Sdn. Bhd. (formerly known as PUC Ventures Sdn. Bhd.)

Malaysia 100 100 Investment holding

PUC (Malaysia) Sdn. Bhd. Malaysia 100 100 Investment holding, acquisition and licensing of intellectual property rights, provision of management and technical services

Red Media Asia Ltd British Virgin Islands

100 100 Investment holding

RedHot Media Sdn. Bhd. Malaysia 100 100 Advertising and media activities, research and development of electronic advertising services, and other advertising services

Enovax Malaysia Sdn. Bhd. Malaysia - 100 Software development and consultancy

Presto Buddy Sdn. Bhd. Malaysia - 100 E-marketing and promoting of intellectual property licensing and merchandising of IP products and services

Presto Credit Sdn. Bhd.(formerly known as Wealth Pursuit Sdn. Bhd.)

Malaysia - 100 Money lending business



Details of the subsidiary companies are as follows: (Cont’d)

Name of company

Place of business/


Effective interest


%2018

%Direct Holding:

Presto Services Sdn. Bhd.(formerly known as Presto Universe Sdn. Bhd.)

Malaysia - 100 Integrated payment solutions, digital and E-business

Presto Travel Sdn. Bhd.(formerly known as Presto Media Sdn. Bhd.)

Malaysia - 100 Online travel agency and travel related business

Presto Ventures Pte. Ltd.*[formerly known as PUC (Singapore) Pte. Ltd.]

Republic of Singapore

- 100 Investment holding, e-business, e-commerce, e-payment, advertising and media services

Indirect Holding: Held through PrestoUniverse Sdn. Bhd.(formerly known as PUCVentures Sdn. Bhd.)Enovax Malaysia Sdn. Bhd. Malaysia 100 - Software development and

consultancy

Presto Buddy Sdn. Bhd. Malaysia 100 - E-marketing and promoting of intellectual property licensing and merchandising of IP products and services

Presto Credit Sdn. Bhd.(formerly known as Wealth Pursuit Sdn. Bhd.)

Malaysia 100 - Money lending business

Presto Services Sdn. Bhd.(formerly known as Presto Universe Sdn. Bhd.)

Malaysia 100 - Integrated payment solutions, digital and E-business

Presto Travel Sdn. Bhd.(formerly known as Presto Media Sdn. Bhd.)

Malaysia 100 - Online travel agency and travel related business

Presto Ventures Pte. Ltd.*[formerly known as PUC (Singapore) Pte. Ltd.]

Republic of Singapore

100 - Investment holding, e-business, e-commerce, e-payment, advertising and media services


31 DECEMBER 2019



Details of the subsidiary companies are as follows: (Cont’d)

Name of company

Place of business/


Effective interest


%2018

%Held through Red Media Asia LtdRH Media Group Sdn. Bhd. Malaysia 100 100 Investment holding

Held through RH Media Group Sdn. Bhd.AllChina.cn Ltd British Virgin

Islands100 100 Advertising and media

activities

PUC International (Hong Kong) Limited*

Hong Kong 100 100 Investment holding, advertising and media activities

Held through PUC International (Hong Kong) Limited

Peer Consultancy Sdn. Bhd. Malaysia 100 100 Provision of business management services

Held through Presto Ventures Pte. Ltd.[Formerly known as PUC (Singapore) Pte. Ltd.]

Shanghai PUC Network Technology Co., Ltd.^

People’s Republic of

China

100 100 Technology consultancy services

* Audited by member firm of UHY International Limited ^ Not audited by UHY # The investment in MaxGreen Energy Sdn. Bhd. has been presented as asset held for sale as disclosed in Note 18



(a) Incorporation of new subsidiary companies

31 December 2018

(i) On 12 April 2018, the Company incorporated a wholly-owned subsidiary company in Malaysia under the name of PUC Ventures Sdn. Bhd. with an initial paid-up capital of RM1.00 comprising of 1 ordinary share.

(ii) On 18 July 2018, the Company incorporated a wholly-owned subsidiary company in Malaysia under the name of Presto Media Sdn. Bhd. with an initial paid-up capital of RM1.00 comprising of 1 ordinary share.

(iii) On 5 October 2018, the Company incorporated a wholly-owned subsidiary company in Malaysia under the name of Presto Universe Sdn. Bhd. with an initial paid-up capital of RM1.00 comprising of 1 ordinary share, which subsequently changed its name to Presto Services Sdn. Bhd. on 25 October 2018.

(iv) On 8 October 2018, the Company incorporated a wholly-owned subsidiary company in Malaysia under the name of Presto Buddy Sdn. Bhd. with an initial paid-up capital of RM1.00 comprising of 1 ordinary share.

(b) Acquisition of non-controlling interests

31 December 2018

On 18 October 2018, the Company acquired additional 20,000 ordinary shares, representing 20% equity interest in Enovax Malaysia Sdn. Bhd. (“ENVMY”) for a total consideration of RM10 only. Consequently, the Company’s equity interest in ENVMY increased from 80% to 100% and ENVMY became a wholly-owned subsidiary company of the Company.

The effect of changes in the equity interest in ENVMY that is attributable to owners of the Company:

2018RM

Carrying amount of non-controlling interests acquired (100,492)

Consideration paid to non-controlling interests (10)

Increase in parent's equity (100,502)


31 DECEMBER 2019



(c) Addition of investment in subsidiary companies

31 December 2019

On 31 December 2019, Presto Pay Sdn. Bhd. (“PRPMY”), a wholly-owned subsidiary company of the Company had increased its issued and paid-up share capital from 16,860,000 to 18,400,000 ordinary shares for a total consideration of RM1,540,000. The Company has subscribed for an additional 1,540,000 ordinary shares in PRPSB by way of capitalisation of amount due from PRPSB of RM1,540,000. PRPSB remained as a wholly-owned subsidiary company of the Company.

31 December 2018

(i) On 27 February 2018, PRPMY, a wholly-owned subsidiary company of the Company had increased its issued and paid-up share capital from 300,000 to 16,860,000 ordinary shares for a total consideration of RM16,560,000. The Company has subscribed for an additional 16,560,000 ordinary shares in PRPSB by way of cash consideration of RM7,010,000 and capitalisation of amount due from PRPSB of RM9,550,000. PRPSB remained as a wholly-owned subsidiary company of the Company.

(ii) On 10 July 2018, PUC Venture Sdn. Bhd. (“PVNMY”), a wholly-owned subsidiary company of the Company had increased its paid-up share capital from 1 to 5,000,000 ordinary shares for a total consideration of RM4,999,999. The Company has subscribed for an additional 4,999,999 ordinary shares in PVNMY by way of capitalisation of amount due from PVNMY of RM4,999,999. PVNMY remained as a wholly-owned subsidiary company of the Company.

(d) Internal reorganisation

31 December 2019

(i) On 9 December 2019, the Company completed its internal reorganisation exercise by disposed the entire issued and paid-up share capital of the following subsidiary companies to Presto Universe Sdn. Bhd. (“PRUMY”) (formerly known as PUC Venture Sdn. Bhd.), a wholly-owned subsidiary company of the Company:

(a) 100,000 ordinary shares in Enovax Malaysia Sdn. Bhd. for a total consideration of RM80,010;

(b) 1 ordinary share in Presto Buddy Sdn. Bhd. for a total consideration of RM1;

(c) 1 ordinary share in Presto Services Sdn. Bhd. (formerly known as Presto Universe Sdn. Bhd.) for a total consideration of RM1;

(d) 1 ordinary share in Presto Travel Sdn. Bhd. (formerly known as Presto Media Sdn. Bhd.) for a total consideration of RM1; and

(e) 1 ordinary share in Presto Ventures Pte. Ltd. (formerly known as PUC Singapore Pte. Ltd.) for a total consideration of RM3.

(ii) On 9 December 2019, MaxGreen Energy Sdn. Bhd. completed its internal reorganisation exercise by disposed 2,000,002 ordinary shares for a total consideration of RM2,000,002, represents the entire issued and paid-up share capital of Presto Credit Sdn. Bhd. (formerly known as Wealth Pursuit Sdn. Bhd.) to PRUMY, a wholly-owned subsidiary company of the Company.

There are no significant restrictions on the ability of the subsidiary companies to transfer funds to the Group in the form of cash dividends or repayment of loans and advances.


(a) Acquisition of Pictureworks Holding Sdn. Bhd. (“PWHQ”)

The Company had on 27 December 2017 entered into a conditional agreement to acquire 33% equity interest, representing 6,076,081 ordinary shares in PWHQ for a total consideration of RM48,355,041. The acquisition was completed on 6 June 2018 and consequently PWHQ became an associate of the Group.

The purchase consideration for the acquisition consists of:

(i) 64,597,273 new ordinary shares of the Company at fair value of RM0.322 each, whereby the fair value of the share is the published price of the share as at acquisition date. The attributable cost of the issuance of the shares as consideration of RM20,800,000 has been recognised directly in equity as a deduction from share capital; and

8. INVESTMENT IN ASSOCIATES

Group Company2019

RM2018

RM2019

RM2018

RMIn MalaysiaUnquoted shares, at cost 88,355,041 88,355,041 48,355,041 48,355,041

Share of post-acquisition reserves 7,967,364 5,104,033 - -

96,322,405 93,459,074 48,355,041 48,355,041

Details of the associates are as follows:

Name of company

Place of business/


Effective interest


%2018

%

Direct Holding:Pictureworks Holdings Sdn. Bhd. Malaysia 33 33 Investment holding

Indirect Holding:Held through Presto Universe Sdn. Bhd.(formerly known as PUC Ventures Sdn. Bhd.)Presto Mall Sdn. Bhd.^(formerly known as Celcom Planet Sdn. Bhd.)

Malaysia 11.76 12.35 Provision solutions and services related to web-technologies internet and e-commerce

^ Not audited by UHY


31 DECEMBER 2019


8. INVESTMENT IN ASSOCIATES (CONT’D)

(a) Acquisition of Pictureworks Holding Sdn. Bhd. (“PWHQ”) (Cont’d)

The purchase consideration for the acquisition consists of: (Cont’d)

(ii) Additional consideration may be payable in cash by the Company to the vendors in the event that certain pre-determined sales are achieved by the associate, as disclosed below:

(a) RM13,416,00 (“2018 Retained Consideration”) if PWHQ generates RM14,800,000 profit after tax for the financial year ended 31 December 2018 (“2018 Guaranteed Profit”); and

(b) RM18,584,000 (“2019 Retained Consideration”) if PWHQ generates RM20,500,000 profit after tax for the financial year ended 31 December 2019.

During the financial year, an extension letter was signed between the Company and the vendors to extend up to March 2020 for the payment of 2018 Retained Consideration which was due in May 2019. Subsequent to the financial year, the Company and the vendors have mutually agreed to extend the payment of 2018 Retained Consideration for a further 6 months to 30 September 2020. The payment of 2019 Retained Consideration which will be due on May 2020 will also be extended to 30 September 2020.

(b) Acquisition of Presto Mall Sdn. Bhd. (formerly known as Celcom Planet Sdn. Bhd. (“PMMMY”)

Presto Universe Sdn. Bhd. (“PRUMY”) (formerly known as PUC Venture Sdn. Bhd.), a wholly owned subsidiary company of the Company, had on 19 April 2018 entered into an agreement to acquire 53,402,707 ordinary shares, representing 12.35% equity interest in PMMMY for a total consideration of RM40,000,000 only. The acquisition was completed on 14 September 2018 and consequently PMMMY became an associate of the Group.

During the financial year, PMMMY has issued 21,456,000 new ordinary shares of RM1.00 each for a total cash consideration of RM21,456,000 for working capital purposes. The Company do not subscribe additional ordinary shares in PMMMY. Consequently, the Company’s shareholdings in PMMMY decreased from 12.35% to 11.76%.

The summarised financial information of the Group’s and of the Company’s material associates are set out below:

(a) Summarised statement of financial position

PWHQ PMMMY2019

RM2018

RM2019

RM2018

RMNon-current assets 17,909,452 19,247,721 7,875,788 15,804,888

Current assets 42,838,710 23,278,823 2,300,918 6,612,608

Non-current liabilities (34,041) (82,985) (1,106,219) -

Current liabilities (12,532,358) (15,434,899) (39,158,309) (66,024,163)

Net assets/(liabilities) 48,181,763 27,008,660 (30,087,822) (43,606,667)


8. INVESTMENT IN ASSOCIATES (CONT’D)

The summarised financial information of the Group’s and of the Company’s material associates are set out below: (Cont’d)

(b) Summarised statement profit or loss and other comprehensive income

(c) Summarised statement of cash flows

PWHQ PMMMY2019

RM2018

RM2019

RM2018

RM

Revenue 63,634,711 63,165,268 2,680,682 20,562,917

Profit/(Loss) for the financial year 21,161,788 17,746,429 (34,394,801) (71,997,660)

Other comprehensive income for the financial year 11,315 367,832 - -

Total comprehensive income/(loss) for the financial year 21,173,103 18,114,261 (34,394,801) (71,997,660)

PWHQ PMMMY2019

RM2018

RM2019

RM2018

RM

Net cash from/ (used in) operating activities 2,270,242 9,780,639 (55,620,888) (57,106,318)

Net cash used in investing activities (1,617,367) (1,001,477) (509,756) (2,850,051)

Net cash (used in)/from financing activities (2,955,938) (10,560,229) 53,069,455 52,621,175

Net decrease in cash and cash equivalents (2,303,063) (1,781,067) (3,061,189) (7,335,194)


31 DECEMBER 2019


9. INTANGIBLE ASSETS

Group2019

Goodwill on Acquisition of

Business Assets (Note a)

RM

Goodwill on Consolidation

(Note b) RM

Digital Contents

(Note c) RM

Regional Software

License (Note d)

RMTotal

RM

CostAt 1 January 2019 32,583,291 23,818,324 17,109,600 8,558,000 82,069,215 Written off - (2,666,258)# - - (2,666,258)

At 31 December 2019 32,583,291 21,152,066 17,109,600 8,558,000 79,402,957

Accumulated amortisation At 1 January 2019 - - 998,060 1,525,804 2,523,864

Amortisation during the financial year - - 855,480 437,039 1,292,519

At 31 December 2019 - - 1,853,540 1,962,843 3,816,383

Accumulated impairment losses At 1 January 2019 - - - - -

Addition 23,351,022 - 15,256,060 6,595,157 45,202,239

At 31 December 2019 23,351,022 - 15,256,060 6,595,157 45,202,239

Carrying amount

At 31 December 2019 9,232,269 21,152,066 - - 30,384,335


9. INTANGIBLE ASSETS (CONT’D)

Group2018

Goodwill on Acquisition of

Business Assets (Note a)

RM

Goodwill on Consolidation

(Note b) RM

Digital Contents

(Note c) RM

Regional Software

License (Note d)

RMTotal

RM

CostAt 1 January 2018 32,583,291 24,504,860 26,146,574 8,558,000 91,792,725

Disposal - - (9,036,974) - (9,036,974)

Written off - (686,536) - - (686,536)

At 31 December 2018 32,583,291 23,818,324 17,109,600 8,558,000 82,069,215

Accumulated amortisation

At 1 January 2018 - - 3,333,121 1,088,765 4,421,886

Amortisation during the financial year - - 1,933,696 437,039 2,370,735

Disposal - - (4,268,757) - (4,268,757)

At 31 December 2018 - - 998,060 1,525,804 2,523,864

Carrying amount

At 31 December 2018 32,583,291 23,818,324 16,111,540 7,032,196 79,545,351

# Included in the goodwill on consolidation written off is an amount of RM265,985 attributable to discontinued operation as disclosed in Note 19.


31 DECEMBER 2019



(a) Goodwill on acquisition of business assets

This represents goodwill arose from the acquisition of business assets of China Media Mart Information Technology Co. Ltd (“CMIT”), China MediaMart Advertising Co. Ltd. (“CMAD”) and In Motion Media & Ad Co. Limited (“IMM”).

Goodwill acquired in business combinations is allocated, at acquisition, to the cash-generating units (“CGUs”) that are expected to benefit from the business combinations. The carrying amount of goodwill is allocated as follows:

The Group tests goodwill for impairment annually or more frequent where there is objective evidence that the carrying amount might be impaired.

The recoverable amounts of the CGU’s are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast period. Management estimates pre-tax discount rates of 10% that reflect current market assessments of the time value of money and the risks specific to the CGU’s. Future cash flows are derived from the most recent financial budget approved by management for the next five years, beyond that period cash flows are extrapolated using growth rates ranging from 5% to 10%. The growth rates are based on industry growth forecasts.

Based on the impairment assessment, the management determined that the recoverable amounts of goodwill on acquisition of business assets for IMM Business are lesser than the carrying amounts has resulted from the unstable financial market in which it operated. This led to the recognition of impairment loss of RM23,351,022, which was recognised in administrative and selling expenses in the statements of profit or loss and other comprehensive income.

There are no reasonably possible changes in any of the key assumptions used that would cause the carrying amount of this CGU to exceed its recoverable amount.

Group2019

RM2018

RMCMIT and CMAD business 9,232,269 9,232,269

IMM Business - 23,351,022

9,232,269 32,583,291



(b) Goodwill on consolidation

For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest CGU level within the Group at which the goodwill is monitored for internal management purposes.

The aggregate carrying amounts of goodwill allocated to each unit are as follows:

2019 2018Growth rate 5% - 10% 5% - 20%

Pre-tax discount rate 10% 10%

Note

Group2019

RM2018

RMCorporate and others (i) - 2,666,258 #

OmniChannel (ii) 3,032,521 3,032,521

FinTech (iii) 18,119,545 18,119,545 #

21,152,066 23,818,324


(i) Goodwill - Corporate and others

(I) Goodwill written off amounting to RM265,985 was recognised in discontinued operation in the statements of profit or loss and other comprehensive income following the disposal of investment in MaxGreen Energy Sdn. Bhd. as disclosed on Note 19.

(II) Goodwill written off amounting to RM2,400,273 was recognised in continuing operations in administrative and selling expenses in the statements of profit or loss and other comprehensive income due to the change of business of MaxGreen Energy 2 Sdn. Bhd. to corporate and others segment.

(ii) Goodwill - OmniChannel

The recoverable amount of CGU is determined based on value in use calculations using cash flow projections based on financial budgets approved by the Directors covering a five-year period. The key assumptions used for value in use calculations are based on future projection of the Group as follows:

(I) Growth rate - The growth rate is based on industry growth forecasts.

(II) Pre-tax discount rate - The rate that reflect specific risks relating to the relevant CGU.

The values assigned to the key assumptions represent the management’s assessment of future trends in the industry and are based on both external sources and internal sources.

Based on the impairment assessment, no impairment is required for goodwill on OmniChannel.



31 DECEMBER 2019



(b) Goodwill on consolidation (Cont’d)

(iii) Goodwill - FinTech

The recoverable amount of CGU is determined based on value in use calculations using cash flow projections based on financial budgets approved by the Directors covering a five-year period. The key assumptions used for value in use calculations are based on future projection of the Group as follows:

(I) Growth rate - The growth rate is based on industry growth forecasts and expected market share forecasts.

(II) Pre-tax discount rate - The rate that reflect specific risks relating to the relevant CGU.

The values assigned to the key assumptions represent the management’s assessment of future trends in the industry of the current businesses and are based on both external sources and internal sources. The cash flow projection also took into account the Group’s plan to expand its business in electronic commerce and payment.

Based on the impairment assessment, no impairment is required for goodwill on FinTech.


(c) Digital contents

The Group acquired audio visual content with limited rights to distribute, resell or reassign display or broadcast rights. These audio visual contents were acquired to enhance the Group’s range of services for advertising and media business. These contents are amortised on straight-line basis over their estimated useful lives range from 2 to 10 years.

In the previous financial year, the Group had disposed audio visual contents with carrying amount of RM4,768,217, which had resulted in a gain of RM4,631,783.

During the financial year, the management has recognised impairment loss amounting to RM15,256,060 on digital contents arising from the Group’s decision to reduce its’ involvement in traditional media business especially the media content business that has become increasingly challenging due to competition and market share being increasingly dominated by technologies and services. The impairment loss was recognised in administrative and selling expenses in the statements of profit or loss and other comprehensive income.

2019 2018Growth rate 1% - 17% 2% - 20%

Pre-tax discount rate 10% 10%



(d) Regional software license

The Group acquired an exclusive license to use proprietary mobile application software in designated territories. The mobile application is a GPS-based geographical navigation application program for smartphones and tablets with GPS support. It provides information about the malls and its merchants which allows the malls and merchants to place advertisements and promotional displays, as well as enables the end users to interact with the software and access information. The regional software license is amortised on straight-line basis over its estimated useful life of 20 years.

The Group acquired the license to enhance its range of services for its media and advertising businesses and to propel its mobile application business.

During the financial year, the management determined that the recoverable amounts of regional software license are lesser than the carrying amounts, has resulted from the unstable financial market in which it operated, as well as the increasing challenges due to competition and market share being increasingly dominated by other technologies and services. This led to the recognition of impairment loss of RM6,595,157, which was recognised in administrative and selling expenses in the statements of profit or loss and other comprehensive income.

The fair value of the quoted shares was determined by reference to the quoted prices in an active market.

10. OTHER INVESTMENTS

Group Company2019

RM2018

RM2019

RM2018

RMNon-currentFinancial assets at fair value through other comprehensive incomeAt costUnquoted shares 1,334,481 1,334,491 - 10

Less: Accumulated impairment losses (1,334,481) (1,334,481) - -

- 10 - 10

CurrentFinancial assets at fair value through profit or loss

Investment in mutual fund 2,584 2,495 2,583 2,494


31 DECEMBER 2019


11. DEFERRED TAX ASSETS

Group Company2019

RM2018

RM2019

RM2018

RMAt 1 January 891,277 1,018,105 791,837 868,633

Recognised in profit or loss (Note 31) (715,002) (50,032) (615,562) -

Conversion of ICULS (176,275) (76,796) (176,275) (76,796)

At 31 December - 891,277 - 791,837

Group Company2019

RM2018

RM2019

RM2018

RM

Deferred tax assets

Irredeemable convertible unsecured loan stocks (“ICULS”)

At 1 January 791,837 868,633 791,837 868,633

Recognised in profit or loss (615,562) - (615,562) -

Conversion of ICULS (176,275) (76,796) (176,275) (76,796)

At 31 December - 791,837 - 791,837

Deferred revenue

At 1 January 194,618 152,464 - -

Recognised in profit or loss (189,155) 47,338 - -

Over provision in prior years - (5,184) - -

At 31 December 5,463 194,618 - -

Group Company2019

RM2018

RM2019

RM2018

RMDeferred tax assets 1,218,479 2,231,364 44,275 847,533

Deferred tax liability (1,218,479) (1,340,087) (44,275) (55,696)

- 891,277 - 791,837

The net deferred tax assets and liability shown on the statements of financial position after appropriate offsetting are as follows:

The components and movements of deferred tax assets and liability of the Group and of the Company are as follows:


11. DEFERRED TAX ASSETS (CONT’D)

The components and movements of deferred tax assets and liability of the Group and of the Company are as follows: (Cont’d)

Group Company2019

RM2018

RM2019

RM2018

RM

Deferred tax assets (Cont’d)Unutilised capital allowances

At 1 January 1,161,129 910,279 55,696 64,954

Recognised in profit or loss 1,029,080 184,471 (10,965) (5,099)

(Over)/Under provision in prior years (139,085) 66,379 (456) (4,159)

Transfer to disposal group held for saleand discontinued operation (838,353) - - -

At 31 December 1,212,771 1,161,129 44,275 55,696

Unused tax losses

At 1 January 83,780 54,966 - -

Recognised in profit or loss (165) 58,085 - -

Over provision in prior years (83,370) (29,271) - -

At 31 December 245 83,780 - -

1,218,479 2,231,364 44,275 847,533

Deferred tax liabilityAccelerated capital allowances

At 1 January (1,340,087) (968,237) (55,696) (64,954)

Recognised in profit or loss (908,947) (325,182) 10,965 5,099

(Over)/Under provision in prior years 192,202 (46,668) 456 4,159

Transfer to disposal group held for saleand discontinued operation 838,353 - - -

At 31 December (1,218,479) (1,340,087) (44,275) (55,696)


31 DECEMBER 2019


11. DEFERRED TAX ASSETS (CONT’D)

The deferred tax assets have not been recognised in respect of the following items:

Group Company2019

RM2018

RM2019

RM2018

RMAccerelated capital allowances 17,633 33,396 - -

Unutilised capital allowances 2,958,389 1,688,820 511,446 381,608

Unused tax losses 32,155,939 18,802,950 9,045,174 4,156,898

35,131,961 20,525,166 9,556,620 4,538,506

12. OTHER RECEIVABLES

Note

Group Company2019

RM2018

RM2019

RM2018

RM

Non-Current

Other receivables 804,694 912,293 - -

Current

Other receivables 2,996,175 11,032,675 52,447 53,921

Amount due from associates (a) 443,293 3,100 - -

Deposits 181,166 649,332 4,285 5,635

Prepayments (b) 502,078 1,334,288 28,545 462,758

Contract assets (c) - 86,254 - -

Deferred cost 617,791 831,316 - -

GST receivable 308,706 841,671 87,110 87,110

5,049,209 14,778,636 172,387 609,424

Less: Accumulated impairment losses (108,132) (108,132) (47,857) (47,857)

4,941,077 14,670,504 124,530 561,567

Deferred tax assets have not been recognised in respect of these items as they may not have sufficient taxable profits to be used to offset or they have arisen in subsidiary companies that have a recent history of losses.

With effect from year of assessment 2019, the unused tax losses are allowed to be carried forward up to a maximum of seven consecutive years of assessment under the current tax legislation. The other temporary differences do not expire under current tax legislation.


Group Company2019

RM2018

RM2019

RM2018

RMAt 1 January 108,132 97,246 47,857 47,857

Impairment losses recognised - 10,886 - -

At 31 December 108,132 108,132 47,857 47,857

12. OTHER RECEIVABLES (CONT’D)

(a) The amount due from associates represents unsecured, non-interest bearing advances and repayable on demand.

(b) As at 31 December 2019, included in the Group’s prepayments is the consultancy fee of RM225,000 (2018: RMNil) paid for the application of money lending license.

(c) Contract assets relate to Group’s rights to consideration of work completed but not yet billed at the reporting date.

Movements in the allowance for impairment losses of other receivables are as follows:

13. LEASE RECEIVABLES

Other receivables that are individually assessed to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments.

Group2019

RM2018

RM

Minimum lease receivables:

Within one year 587,160 -

Later than one year and not later than two years 587,160 -

Later than two years and not later than five years 643,410 -

1,817,730 -

Less: Interest income in suspense (353,049) -

Present value of minimum lease receivables 1,464,681 -

Present value of minimum lease receivables:

Within one year 405,025 -

Later than one year and not later than two years 466,680 -

Later than two years and not later than five years 592,976 -

1,464,681 -


31 DECEMBER 2019


13. LEASE RECEIVABLES (CONT’D)

14. INVENTORIES

15. TRADE RECEIVABLES

Group2019

RM2018

RM

Analysed as:

Repayable within twelve months 405,025 -

Repayable after twelve months 1,059,656 -

1,464,681 -

Group2019

RM2018

RM

At cost

Finished goods 25,587,134 -

Recognised in profit or loss

Inventories recognised in profit or loss 14,615,836 7,967,264

Group2019

RM2018

RM

Trade receivables

- Third parties 34,765,592 47,570,873

- Related party 1,605,219 3,717,163

36,370,811 51,288,036

Less: Accumulated impairment losses (15,261,369) (20,468,245)

21,109,442 30,819,791

Interest rate of lease receivables at the reporting date range from 1.02% to 1.30% (2018: Nil) per annum.

Related party represents associate of the Group.

Trade receivables of the Group are unsecured, non-interest bearing and are generally on 30 to 180 days (2018: 30 to 180 days) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.


The loss allowance account in respect of trade receivables is used to record loss allowance. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

15. TRADE RECEIVABLES (CONT’D)

Movements in the allowance for impairment losses are as follows:

Lifetime allowance

RM

Credit impaired

RM

Loss allowance

RM

Group

At 1 January 2019 233,221 20,235,024 20,468,245 Reversal of impairment losses (9,476) (3,331,205) (3,340,681)Written off - (1,868,355) (1,868,355)Exchange difference - 2,160 2,160

At 31 December 2019 223,745 15,037,624 15,261,369

At 1 January 2018 - 23,397,039 23,397,039

Effect on adoption of MFRS 9 123,134 - 123,134

Impairment losses recognised 110,087 425,885 535,972

Reversal of impairment losses - (3,590,173) (3,590,173)

Exchange difference - 2,273 2,273

At 31 December 2018 233,221 20,235,024 20,468,245


31 DECEMBER 2019



The ageing analysis of trade receivables as at the end of the reporting period are as follows:

Grossamount

RM

Loss allowance

RM

Net amount

RM

Group 2019

Not past due 807,967 (18,467) 789,500 Past due

Less than 30 days 367,748 (13,244) 354,504 31 to 60 days 10,196,809 (2,747) 10,194,062

More than 90 days 9,960,663 (189,287) 9,771,376 20,525,220 (205,278) 20,319,942

Credit impaired Individually impaired 15,037,624 (15,037,624) -

36,370,811 (15,261,369) 21,109,442

Group 2018

Not past due 12,373,445 (16,180) 12,357,265

Past due

Less than 30 days 244,360 (1,325) 243,035

31 to 60 days 768,683 (15,421) 753,262

61 to 90 days 5,967,899 (2,318) 5,965,581

More than 90 days 11,698,625 (197,977) 11,500,648

18,679,567 (217,041) 18,462,526

Credit impaired

Individually impaired 20,235,024 (20,235,024) -

51,288,036 (20,468,245) 30,819,791



Trade receivables that are neither past due nor individually impaired are creditworthy receivables with good payment records with the Group.

As at 31 December 2019, trade receivables of the Group of RM20,319,942 (2018: RM18,462,526) were past due but not individually impaired. Based on past experience and no adverse information to date, the Directors of the Company are of the opinion that no allowance for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.

The trade receivables of the Group that are individually assessed to be impaired amounting to RM15,037,624 (2018: RM20,235,024), related to customers that are in financial difficulties or have defaulted on payments. These balances are expected to be recovered through the debts recovery process.

16. AMOUNT DUE FROM/(TO) SUBSIDIARY COMPANIES

(a) Amount due from subsidiary companies

Note

Company2019

RM2018

RM

Non-trade

Interest bearing (i) 23,276,957 15,059,132

Non-interest bearing (ii) 88,048,090 73,912,957

111,325,047 88,972,089

Less: Accumulated impairment losses (2,339,853) (2,339,853)

108,985,194 86,632,236

(i) This represents unsecured, interest bearing loan at rates range from 2.77% to 4.69% (2018: 2.13% to 4.70%) per annum and repayable within twelve months.

(ii) This represents unsecured, non-interest bearing advances and repayable on demand.

(b) Amount due to subsidiary companies

This represents unsecured, non-interest bearing advances and repayable on demand.


31 DECEMBER 2019


17. DEPOSITS, BANK AND CASH BALANCES

Note

Group Company2019

RM2018

RM2019

RM2018

RMCash and bank balances (a) 1,876,178 4,275,651 154,624 1,729,210

Fixed deposits with licensed banks (b) 722,409 732,890 - 31,859

Total deposits, bank and cash balances 2,598,587 5,008,541 154,624 1,761,069

Company2019

RM

Investment in a subsidiary company 2,556,077

(a) Included in cash and bank balances of the Group are monies held-in-trust amounting to RM75,077 (2018: RM35,746). The deposits and/or funds in the trust accounts are used to make refunds to e-money users of any unremitted monies, remittances, payment of service fees, and any charges related to the administration of the trust account etc.

The trust accounts are subject to regulatory restrictions and therefore not available for general use by the Group.

(b) Fixed deposits with licensed banks of the Group amounting to RM722,409 (2018: RM701,031) are pledged to licensed banks for bank guarantee facility granted to subsidiary companies as disclosed in Note 25.

(c) The interest rates and maturities of deposits of the Group at the reporting date are 3.05% (2018: range from 3.05% to 3.30%) per annum and 365 days (2018: 180 to 365 days) respectively.

The interest rates and maturities of deposits of the Company at the reporting date are Nil (2018: range from 3.05% to 3.30%) per annum and 180 days (2018: 180 days) respectively.

18. ASSET HELD FOR SALE

The non-current asset classified as held for sale on the Company’s statement of financial position as at 31 December 2019 is as follows:

19. DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATION

On 5 November 2019, the Company has entered into a sale of shares agreement (“SSA”) with Sri Lahat Property Sdn. Bhd. (“SLP”) for the disposal of its entire equity interest in MaxGreen Energy Sdn. Bhd. (“MG1MY”) for total disposal consideration of RM7,500,000. MG1MY is included under renewable energy segment in the previous financial year prior to the Group streamline this business into corporate and others segment as disclosed in Note 36.

The disposal of MG1MY is pending completion as at 31 December 2019, and thus the assets and liability of MG1MY have been presented separately in the statements of financial position as a disposal group held for sale and results of MG1MY is presented separately in the statements of profit or loss and other comprehensive income as discontinued operation.


Group2019

RM

Assets

Property, plant and equipment 5,363,514 Right-of-use asset 1,423,311 Other receivables 511,423 Cash and bank balances 284,092 Tax recoverable 274

Assets included in disposal group held for sale and discontinued operation 7,582,614

Liability Other payables, represent the net liability included in disposal group held for sale and discontinued operation (82,614)

Net assets directly associated with disposal group held for sale and discontinued operation 7,500,000

19. DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATION (CONT’D)

Statements of Financial Position

The major classes of assets and liability of MG1MY included in disposal group held for sale and discontinued operation as at 31 December 2019 are as follows:

Statements of Profit or Loss and Other Comprehensive Income

The results of MG1MY and the result recognised on the remeasurement of disposal group are as follows:

The (loss)/profit from discontinued operation is attributable entirely to the owners of the Company.

Company2019

RM2018

RMRevenue 978,747 1,014,761

Other income 58,351 60

Administrative expenses (968,137) (1,003,798)

Impairment loss recognised on the remeasurement to fair value less costs to sell (2,728,248) -

(Loss)/Profit before tax from discontinued operation (2,659,287) 11,023

Taxation - (14)

(Loss)/Profit for the financial year from discontinued operation (2,659,287) 11,009


31 DECEMBER 2019


19. DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATION (CONT’D)

Impairment loss recognised on remeasurement to fair value less costs to sell

During the financial year, impairment loss of RM2,728,248 was recognised on the remeasurement of the net assets of MG1MY that was classified as held for sale. The loss, which consist of goodwill written off of RM265,985 and impairment on property, plant and equipment of RM2,462,263 were recognised to reduce the carrying amount of the assets in the disposal group to fair value less costs to sell. The impairment loss was recognised in discontinued operation in the statements of profit or loss and other comprehensive income.

Statement of Cash Flows

Cash flows attributable to MG1MY are as follows:

Subsequent to the financial year, the Company had on 13 April 2020 entered into a supplemental SSA with SLP to vary and amend certain arrangement, terms and conditions of the SSA, taken into consideration the global economic outlook which has been negatively impacted by Covid-19. The Board viewed that accumulation of cash during this period is in the best interest of the Company. As such, pursuant to the supplemental SSA, both the Company and SLP have mutually agreed to revise the balance purchase price from RM6,000,000 to RM5,000,000, resulting in a revised total disposal consideration from RM7,5000,000 to RM6,500,000. The reduced balance purchase price has been received by the Company on 13 April 2020, which is accelerated from the original disposal process which may take at least 5 more months to complete. Currently the disposal process is pending completion due to the movement control order imposed by the Government of Malaysia, resulting in postponement in lodgement of documents with Companies Commission of Malaysia and other authorities. The management assessed the revision in disposal consideration to be a non-adjusting event as the negotiation for variation of supplemental SSA occurred after the reporting date and it does not provide indication that the disposal group needs to be further impaired as at 31 December 2019.

Group2019

RM2018

RMNet cash from/(used in) operating activities 192,473 (168,723)

Net cash used in investing activity - (789)

Effect on cash flows 192,473 (169,512)


20. SHARE CAPITAL

Group Number of shares Amount

2019Units

2018Units

2019RM

2018RM

Issued and fully paid ordinary shares

At 1 January 1,920,612,911 1,402,462,933 227,907,964 154,074,850

Issuance of new shares pursuant to:

- Conversion of ICULS 229,620,977 258,183,596 22,962,103 25,818,360

- Private placement 215,786,400 159,174,867 13,676,899 23,595,230

- Acquisition of an associate - 64,596,273 - 20,800,000

- Conversion of warrants 7,630,765 36,195,242 763,076 3,619,524

At 31 December 2,373,651,053 1,920,612,911 265,310,042 227,907,964

Company Number of shares Amount

2019Units

2018Units

2019RM

2018RM

Issued and fully paid ordinary shares

At 1 January 1,920,612,911 1,402,462,933 231,740,719 157,907,605

Issuance of new shares pursuant to:

- Conversion of ICULS 229,620,977 258,183,596 22,962,103 25,818,360

- Private placement 215,786,400 159,174,867 13,676,899 23,595,230

- Acquisition of an associate - 64,596,273 - 20,800,000

- Conversion of warrants 7,630,765 36,195,242 763,076 3,619,524

At 31 December 2,373,651,053 1,920,612,911 269,142,797 231,740,719

(a) During the financial year, the Company increased its issued and fully paid share capital from 1,920,612,911 ordinary shares to 2,373,651,053 ordinary shares, through the issuance of:

(i) 229,620,977 new ordinary shares pursuant to the conversion of RM0.05 nominal value of irredeemable convertible unsecured loan stocks (“ICULS”) at RM0.05 per ICULS;

(ii) 215,786,400 new ordinary shares pursuant to the private placement exercises at issue price between RM0.06 and RM0.07 per ordinary share; and

(iii) 7,630,765 new ordinary shares pursuant to the conversion of warrants at exercise price of RM0.10 per ordinary share.


31 DECEMBER 2019


20. SHARE CAPITAL (CONT’D)

(a) The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regards to the Company’s residual assets.

(b) Included in share capital of the Group and of the Company is share premium amounting to RM9,450,761 and RM13,283,516 respectively that was not utilised on or before its expiry date of 30 January 2019.

21. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

ICULS Equity Component

ICULS Liabilities Component

Group and Company2019

RM2018

RMAt 1 January 14,441,767 27,108,822

Conversion during the financial year (14,441,767) (12,667,055)

At 31 December - 14,441,767

Group and Company2019

RM2018

RMAt 1 January 1,197,938 2,522,757

Interest expense capitalised 62,924 141,291

Coupon payment during the financial year (526,384) (1,146,128)

Conversion during the financial year (734,478) (319,982)

At 31 December - 1,197,938

On 18 February 2016, the Company issued RM42,653,286 nominal value of three (3)-year, 4%, irredeemable convertible unsecured loan stocks (“ICULS”) at 100% of the nominal value of RM0.05 each (“Rights ICULS”) on the basis of twenty eight (28) RM0.05 nominal value of the Rights ICULS for every twenty (20) existing ordinary shares of RM0.10 each together with up to 213,266,257 free new detachable warrants (“Warrants-B”) on the basis of seven (7) Warrants-B for every twenty eight (28) Rights ICULS subscribed.

The fixed coupon rate of 4% per annum calculated on the nominal value of the ICULS is payable on annual basis in arrears from the date of issuance of the ICULS.

The ICULS has 3-year tenure commencing from issuance date and matures on the date immediately preceeding the 3rd anniversary of the issue date.


21. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”) (CONT’D)

ICULS Liabilities Component (Cont’d)

The ICULS holders are entitled to convert the ICULS into new ordinary shares of the Company during the 3-year tenure in the following manner:

(a) surrender such number of RM0.05 nominal value of ICULS equivalent to the conversion price for one new ordinary share; or

(b) surrender such number of RM0.05 nominal value of ICULS together with cash payment of RM0.05 such that in aggregate it amount to the conversion price for one new ordinary share.

Any outstanding ICULS not converted into ordinary share at the maturity of the ICULS, will be compulsorily converted into new ordinary shares.

As at 31 December 2019, the ICULS has been fully converted into ordinary shares.

(a) Other reserves

Other reserves arising from the issue of cumulative preference shares and warrants.

(b) Foreign currency translation reserve

Foreign currency translation reserve represents the exchange differences arising from the translation of the financial statements of foreign operations whose functional currency is different from that of the Group’s presentation currency.

(c) Reverse acquisition debit

The difference between the issued equity of the Company and issued equity and share premium of RMABV, the accounting acquirer, was recorded as reverse acquisition debit of RM36,809,064.

22. RESERVES

Note

Group Company2019

RM2018

RM2019

RM2018

RM

Non-distributableOther reserves (a) (14,845,692) (18,387,575) (16,714,974) (20,256,857)Foreign currency translation reserve (b) (169,173) (155,780) - - Reverse acquisition debit (c) (36,809,064) (36,809,064) - - Warrant reserves (d) 16,714,974 20,256,857 16,714,974 20,256,857

(35,108,955) (35,095,562) - - (Accumulated losses)/Retained earnings (23,084,314) 37,623,442 (32,380,804) (19,994,612)

(58,193,269) 2,527,880 (32,380,804) (19,994,612)


31 DECEMBER 2019


22. RESERVES (CONT’D)

(d) Warrant reserves

Group and Company Number of warrants Amount

2019Units

2018Units

2019RM

2018RM

Warrants-A

At 1 January 132,763,894 132,787,036 16,714,974 16,717,888

Exercise of warrants - (23,142) - (2,914)

At 31 December 132,763,894 132,763,894 16,714,974 16,714,974

Warrants-B

At 1 January 177,094,157 213,266,257 3,541,883 4,265,325

Exercise of warrants (7,630,765) (36,172,100) (152,615) (723,442)

Expiration of warrants (169,463,392) - (3,389,268) -

At 31 December - 177,094,157 - 3,541,883

132,763,894 309,858,051 16,714,974 20,256,857

Warrant reserves represent reserves allocated to free detachable warrants issued with bonus issue of ordinary shares and rights issue of ICULS.

(i) Warrants-A

The Warrants-A were constituted under the Deed Poll dated 6 November 2014.

On 26 December 2014, the Company issued 132,791,321 free detachable warrants in the Company (“Warrants-A”) on the basis of one (1) Warrant for every seven (7) existing ordinary shares of RM0.10 each in the Company held at the same entitlement date of the Bonus Issue of Shares.

The salient terms of the Warrants-A are set out as follows:

(I) The exercise price of the Warrants-A has been fixed by the Board at RM0.10 each. Each Warrant entitles the Warrants-A holder to subscribe for one (1) new ordinary share at any time during the exercise period at the exercise price (subject to adjustments in accordance with the provisions of the Deed Poll).

(II) The exercise period commences from the first date of issue of the Warrants-A and ending at the close of business at 5.00 pm in Malaysia on the date which is ten (10) years from the date of issue of the Warrants-A. Warrants-A not exercised during the exercise period will thereafter lapse and cease to be valid.

(III) The Warrants-A holders are not entitled to any voting rights in any general meeting of the Company or to participate in any form of distribution and/or offer of securities in the Company until and unless such Warrant holders exercise their Warrants into new ordinary shares.

As at 31 December 2019, the total number of Warrants-A that remained unexercised were 132,763,894 (2018:132,763,894).


22. RESERVES (CONT’D)

(d) Warrant reserves (Cont’d)

(ii) Warrants-B

The Warrants-B were constituted under the Deed Poll dated 30 December 2015.

On 18 February 2016, the Company issued 213,266,257 free warrants in the Company (“Warrants-B”) on the basis of seven (7) Warrants-B for every twenty eight (28) Rights ICULS subscribed.

The salient terms of the Warrants-B are set out as follows:

(I) The exercise price of the Warrants-B has been fixed by the Board at RM0.10 each. Each Warrant entitles the Warrant holder to subscribe for one (1) new ordinary share at any time during the exercise period at the exercise price (subject to adjustments in accordance with the provisions of the Deed Poll).

(II) The exercise period commences from the first date of issue of the Warrants-B and ending at the close of business at 5.00 pm in Malaysia on the date which is three (3) years from the date of issue of the Warrants-B. Warrants-B not exercised during the exercise period will thereafter lapse and cease to be valid.

(III) The Warrants-B holders are not entitled to any voting rights in any general meeting of the Company or to participate in any form of distribution and/or offer of securities in the Company until and unless such Warrant holders exercise their Warrants into new ordinary shares.

The new ordinary shares allotted and issued upon exercise of the warrants shall rank pari passu in all respects with the existing ordinary shares of the Company, save and except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new ordinary shares arising from the exercise of the warrants.

The Warrants-B has expired in February 2019. Any warrant not exercised during the exercise period will lapse and thereafter ceased to be valid for any purpose. In the previous financial year, the total number of Warrants-B that remained unexercised were 177,094,157.


31 DECEMBER 2019


23. FINANCE LEASE LIABILITY

Group2018

RM

Minimum lease payments:

Within one year 7,254

Later than one year and not later than two years 5,439

12,693

Less: Future finance charges (1,655)

Present value of minimum lease payments 11,038

Present value of minimum lease payments:


Later than one year and not later than two years 4,732

11,038

Analysed as:

Repayable within twelve months 6,306

Repayable after twelve months 4,732

11,038

In the previous financial year, the Group leases office equipment under finance lease as disclosed in Note 4(b). There are no restrictive covenants imposed by the lease agreement and no agreements have been entered into for contingent rental payments.

In the previous financial year, the interest rate of finance lease liability is 3.00% per annum.


24. LEASE LIABILITIES

Group2019

RMAt 1 January 2019, as previously reported - Effect on adoption of MFRS 16 [Note 2(a)] 648,054

At 1 January 2019, as restated 648,054 Addition 170,229 Accretion of interest 49,604 Payment (410,002)Exchange difference 1,143

At 31 December 2019 459,028

Presented as: Non-current 80,858 Current 378,170

459,028

Group2019

RMWithin one year 403,859 Later than one year but not later than two years 83,600

487,459 Less: Future finance charges (28,431)

Present value of lease liabilities 459,028

The maturity analysis of lease liabilities of the Group at the end of the reporting period:

The Group leases office equipment and buildings. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

The weighted average incremental borrowing rate applied to lease liabilities at the reporting date was 10.35%.


31 DECEMBER 2019


25. BANK BORROWINGS

Company2019

RM2018

RM

SecuredBank overdraft - 196,068

Term loans 4,245,932 4,753,587

4,245,932 4,949,655

CurrentSecured Bank overdraft - 196,068

Term loan I 187,504 169,902

Term loan II 248,865 329,572

436,369 695,542

Non-CurrentSecured Term loan I 3,739,403 3,933,293

Term loan II 70,160 320,820

3,809,563 4,254,113

4,245,932 4,949,655

Group2019

%2018

%Bank overdraft - 12.88

Term loans 4.67 - 10.88 4.42 - 10.88

The bank overdraft and term loan II obtained from a licensed bank is secured by the personal guarantees by a Director of a subsidiary company.

The term loan I obtained from a licensed bank is secured by the followings:

(a) legal charge over freehold buildings as disclosed in Note 4(a); and

(b) corporate guarantee by the Company.

The weighted average interest rates per annum are as follows:


25. BANK BORROWINGS (CONT’D)

Maturities of bank borrowings are as follows:

Group2019

RM2018

RMWithin one year 436,369 695,542

Between one and two years 266,609 498,251

Between two and three years 205,311 186,415

Between three and four years 214,572 195,309

Between four and five years 223,864 204,628

After five years 2,899,207 3,169,510

4,245,932 4,949,655

The Group has bank guarantee facility of RM950,000 (2018: RM950,000). This facility is secured by fixed deposit placement as disclosed in Note 17(b).

26. TRADE PAYABLES

The normal trade credit terms of the Group range from 30 to 90 days (2018: 30 to 90 days) depending on the terms of the contracts.

27. OTHER PAYABLES

Note

Group Company2019

RM2018

RM2019

RM2018

RMOther payables (a) 18,389,637 3,808,357 14,149,348 80,298

Accruals 2,490,025 2,186,645 297,250 245,574

Deposits (b) 1,721,599 221,599 1,500,000 -

Contingent consideration (c) 16,894,545 27,555,041 16,894,545 27,555,041

Government grant (d) - 1,504 - -

Contract liabilities (e) 1,486,801 5,340,450 - -

E-money liabilities (f) 68,091 15,224 - -

GST payable 1,012 22,243 - -

41,051,710 39,151,063 32,841,143 27,880,913


31 DECEMBER 2019


27. OTHER PAYABLES (CONT’D)

(a) Other payables

Included in the other payables of the Group and of the Company is an amount of RM13,416,000 and RM13,416,000 (2018: RMNil and RMNil) respectively, being 2018 Retained Consideration due to the vendors of PWHQ as disclosed in Note 8(a)(ii).

(b) Deposits

Included in the deposits of the Group and of the Company are deposits received amounting to RM1,500,000 and RM1,500,000 (2018: RMNil and RMNil) respectively, in relation to the proposed disposal of investment in a subsidiary company as disclosed in Note 19.

(c) Contingent consideration

Contingent consideration relates to contingent consideration payable arising from acquisition of an associate, PWHQ in the previous financial year as disclosed in Note 8(a). There have been no changes in the fair value of the contingent consideration since the acquisition date.

(d) Government grant

Group2019

RM2018

RMAt 1 January 1,504 182,004

Amortised during the financial year (1,504) (180,500)


The subsidiary company namely RedHot Media Sdn. Bhd., has received a Techno Fund grant amounted to RM902,500 in financial year 2014 from the Ministry of Science, Technology and Innovations.

The grant is being amortised over the useful life of the intellectual property. As at 31 December 2019, the grant has been fully amortised.

(e) Contract liabilities

Contract liabilities represents sales of advertising space received from the customers and subscription fees received from the members. Sales of advertising space and subscription income are recognised in the profit or loss on a time progressive basis over the subscription period.

(f) E-money liabilities

E-money liabilities relate to the unutilised amount of e-money which has been issued and the utilised amount of e-money which are pending payment to merchants.


28. REVENUE

Disaggregation of the Group’s revenue from contracts with customers:

Continuing operations Discontinued

operation

OmniChannel RM

eCommerce RM

FinTech RM


RM


RMTotal

RM2019Revenue from contracts with customersSale of advertising and media services 37,955,609 - - 1,873,046 - 39,828,655 Sale of software/hardware - - 796,977 - - 796,977 Sale of electricity - - - - 978,747 978,747 Sale of goods 6,464 35,666 - - - 42,130Rendering of services - - 2,851,661 2,626,308 - 5,477,969 Subscription fees - - 60,372 - - 60,372 Transaction fees - - 592,695 - - 592,695

Total revenue from contracts with customers 37,962,073 35,666

4,301,705 4,499,354 978,747 47,777,545

Revenue from other sources Lease income - - 213,161 - - 213,161

37,962,073 35,666 4,514,866 4,499,354 978,747 47,990,706

Geographical market Malaysia 6,370,755 35,666 2,161,707 2,626,309 978,747 12,173,184 Singapore - - 2,139,998 1,873,045 - 4,013,043 People's Republic of China and Hong Kong 27,972,718 - - - - 27,972,718 Others 3,618,600 - - - - 3,618,600

Total revenue from contracts with customers 37,962,073 35,666 4,301,705 4,499,354 978,747 47,777,545

Timing of revenue recognition At a point in time 31,597,781 35,666 2,898,312 4,499,354 978,747 40,009,860 Over time 6,364,292 - 1,403,393 - - 7,767,685

Total revenue from contracts with customers 37,962,073 35,666

4,301,705 4,499,354 978,747 47,777,545


31 DECEMBER 2019


28. REVENUE (CONT’D)

Disaggregation of the Group’s revenue from contracts with customers: (Cont’d)

Continuing operations Discontinued

operation

OmniChannel# RM

FinTech# RM


RM


RMTotal

RM

2018Revenue from contracts with customersSale of advertising and media services 29,184,320 - 553,894 - 29,738,214

Sale of software/hardware - 1,450,009 10,000,000 - 11,450,009

Sale of video/content licenses 4,836,000 - - - 4,836,000

Sale of electricity - - - 1,014,761 1,014,761

Sale of goods - 7,849 - - 7,849

Rendering of services - 3,692,005 999,453 - 4,691,458

Subscription fees - 75,683 - - 75,683

Transaction fees - 656,105 - - 656,105

Total revenue from contracts with customers 34,020,320

5,881,651 11,553,347 1,014,761 52,470,079

Geographical market

Malaysia 13,095,637 2,539,637 10,999,453 1,014,761 27,649,488

Singapore - 3,342,014 553,894 - 3,895,908

People's Republic of China and Hong Kong 15,478,683 - - - 15,478,683

Others 5,446,000 - - - 5,446,000

Total revenue from contracts with customers 34,020,320 5,881,651 11,553,347 1,014,761 52,470,079

Timing of revenue recognition

At a point in time 20,912,443 3,913,963 11,553,347 1,014,761 37,394,514

Over time 13,107,877 1,967,688 - - 15,075,565

Total revenue from contracts with customers 34,020,320 5,881,651 11,553,347 1,014,761 52,470,079



29. FINANCE COSTS

Group Company2019

RM2018

RM2019

RM2018

RM

Continuing operations

Interest expenses on:

Bank overdraft 10,978 85,282 - -

Finance lease liability - 932 - -

Lease liabilities 49,604 - - -

ICULS 62,924 141,291 62,924 141,291

Term loans 224,390 193,565 - -

Unwinding of discount on deferred consideration 2,755,504 - 2,755,504 -

3,103,400 421,070 2,818,428 141,291

30. (LOSS)/PROFIT BEFORE TAX

(Loss)/Profit before tax is arrived at after charging/(crediting):

Group Company2019

RM2018

RM2019

RM2018

RM Restated

Continuing operations and discontinued operation Auditors’ remuneration:

- Statutory audit

- Current year 260,348 236,750 75,000 75,000

- Continuing operations 248,348 224,750 75,000 75,000

- Discontinued operation 12,000 12,000 - -

- Under provision in prior year - - - 5,000

- Non-audit services 5,000 5,000 5,000 5,000

Amortisation of:

- Software development expenditure 4,466,864 2,809,737 98,000 98,000

- Continuing operations 4,427,431 2,742,137 98,000 98,000


- Intangible assets 1,292,519 2,370,735 - -

Bad debts written off on trade receivables - 1,792,173 - -

Deposit forfeited - 33,481 - -


31 DECEMBER 2019


30. (LOSS)/PROFIT BEFORE TAX (CONT’D)

(Loss)/Profit before tax is arrived at after charging/(crediting): (Cont’d)

Group Company2019

RM2018

RM2019

RM2018

RM Restated

Continuing operations and discontinued operation (Cont’d) Depreciation of:

- Property, plant and equipment 1,756,646 1,598,124 306,130 288,965

- Continuing operations 1,313,202 1,114,246 306,130 288,965


- Right-of-use assets 411,385 - - -

- Continuing operations 371,197 - - -

- Discontinued operation 40,188 - - -


- Intangible assets 45,202,239 - - -

- Remeasurement to fair value less costs to sell on disposal group 2,728,248 - - -

- Discontinued operation 2,728,248 - - -

- Trade receivables - 535,972 - -

- Other receivables - 10,886 - -

Lease expenses relating to short-term leases 454,535 - 1,097 -

Loss/(Gain) on foreign exchange:

- Realised 627,607 (80,971) 6,196 (72,466)

- Unrealised (15,943) (30,254) (1,657) (101)

Loss on ICULS liability component upon maturity 481,155 - 481,155 -

Non-executive Directors’ remuneration

- Fees 222,133 227,903 222,133 227,903

- Allowances 52,000 44,000 52,000 44,000

Rental of equipment - 12,766 - 1,425

Rental of hostel - 71,274 - 10,733

Rental of premises - 405,289 - -


30. (LOSS)/PROFIT BEFORE TAX (CONT’D)

(Loss)/Profit before tax is arrived at after charging/(crediting): (Cont’d)

Group Company2019

RM2018

RM2019

RM2018

RM Restated

Continuing operations and discontinued operation (Cont’d) Rental of server - 330,406 - -

Written off: - 339,406 - -

- Deposit 550,000 - - -

- Goodwill 2,400,273 686,536 - -

- Property, plant and equipment 693 - - -

- Continuing operations 3 - - -

- Discontinued operation 690 - - -

- Software development expenditure 1,905,467 - 294,000 -

- Continuing operations 1,674,500 - 294,000 -

- Discontinued operation 230,967 - - -

Amortisation of government grant (1,504) (180,500) - -

Bad debt recovered - (180,000) - -

Dividends received from mutual funds (89) (410,452) (89) (410,452)

Fair value adjustment on other receivable 81,992 101,063 - -

- Continuing operations 81,992 - - -

- Discontinued operation - 101,063 - -

Gain on disposal of intangible asset - (4,631,783) - -

Finance income on other receivable (101,063) - - -

- Discontinued operation (101,063) - - -

Interest income:

- Deposits with licensed banks (43,510) (129,886) (20,011) (39,097)

- Loan interest income received/receivable from subsidiary companies - - (780,276) (275,107)

Rental income (101,658) (86,400) - -

Reversal of impairment losses on:

- Investment in subsidiary companies - - (80,000) -

- Trade receivables (3,340,681) (3,590,173) - -


31 DECEMBER 2019


31. TAXATION

Group Company2019

RM2018

RM2019

RM2018

RM Restated

Tax expense recognised in profit or loss Malaysian income tax:

Current tax provision 146,442 2,071,353 - -

(Over)/Under provision in prior years (193,425) (43,601) 852 -

(46,983) 2,027,752 852 -

Deferred tax: (Note 11)

Relating to origination and reversal of temporary differences 684,749 35,288 615,562 -

Under provision in prior years 30,253 14,744 - -

715,002 50,032 615,562 -

668,019 2,077,784 616,414 -

Presented as:

Income tax attributable to:

- Continuing operations 668,019 2,077,770 616,414 -

- Discontinued operation - 14 - -

668,019 2,077,784 616,414 -

Malaysian income tax is calculated at the statutory tax rate of 24% (2018: 24%) of the estimated assessable profits for the financial year. Taxation for other jurisdiction is calculated at the rates prevailing in the respective jurisdictions.


31. TAXATION (CONT’D)

A reconciliation of income tax expense applicable to (loss)/profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

Group Company2019

RM2018

RM2019

RM2018

RM Restated

(Loss)/Profit before tax - Continuing operations (55,909,341) 8,655,511 (10,301,655) (6,490,976)

- Discontinued operation (2,659,287) 11,023 - -

(58,568,628) 8,666,534 (10,301,655) (6,490,976)

At Malaysian statutory tax rate of 24% (2018: 24%) (14,056,471) 2,079,968 (2,472,397) (1,557,834)

Income not subject to tax (35,778) (1,246,772) (31,549) (17,416)

Expenses not deductible for tax purposes 10,867,433 1,821,105 1,915,161 714,074

Tax exemption on foreign income (2,203,920) (2,513,470) - -

Different tax rates in foreign jurisdictions 2,754,296 (318,630) - -

Deferred tax assets not recognised 3,505,631 2,284,440 1,204,347 861,176

(Over)/Under provision of income tax in prior years (193,425) (43,601) 852 -

Under provision of deferred tax in prior years 30,253 14,744 - -

Tax expense for the financial year 668,019 2,077,784 616,414 -

Group2019

RM2018

RMRestated

Tax savings during the financial year arising from:

Utilisation of capital allowances brought forward from previous financial year

- Continuing operations - 16,767

- Discontinued operation 74,104 -

74,104 16,767

Utilisation of tax losses brought forward from previous financial year

- Continuing operations 65,905 61,205

- Discontinued operation 38,259 50,773

104,164 111,978

178,268 128,745


31 DECEMBER 2019


31. TAXATION (CONT’D)

The subsidiary company, namely Presto Pay Sdn. Bhd. (“PPSB”) was awarded with the Multimedia Super Corridor (“MSC”) status by the Government on 25 June 2008. The financial incentive awarded to the subsidiary company under the MSC status is “Pioneer Status” under Section 4A of the Promotion of Investment Act, 1986. PPSB has been granted pioneer status by the Ministry of International Trade and Industry for services under the Promotion of Investment Act 1986 in which the statutory income are exempted from tax for a period of 5 years since 25 June 2008. The extensions of Pioneer Status of PPSB have been approved for another 5 years from the date of expiry of first five year period, which subsequently expired on 27 June 2018.

The Group and the Company have the following estimated unutilised capital allowances and unused tax losses available for carry forward to offset against future taxable profits. The said amounts are subject to approval by the tax authorities.

Group Company2019

RM2018

RM2019

RM2018

RM Restated

Unutilised capital allowances - Continuing operations 7,103,322 2,297,136 695,925 611,775

- Discontinued operation 4,401,418 3,650,201 - -

11,504,740 5,947,337 695,925 611,775

Unused tax losses - Continuing operations 31,509,364 17,997,648 9,045,174 4,156,898


32,156,960 18,804,658 9,045,174 4,156,898

43,661,700 24,751,995 9,741,099 4,768,673


32. (LOSS)/EARNINGS PER SHARE

(a) Basic (loss)/earnings per share

The basic (loss)/earnings per share are calculated based on the consolidated (loss)/profit for the financial year attributable to owners of the parent and the weighted average number of ordinary shares in issue during the financial year as follows:

Group2019

RM2018

RMRestated

(Loss)/Profit attributable to owners of the parent

- from continuing operations (56,577,360) 6,561,762

- from discontinued operation (2,659,287) 11,009

(59,236,647) 6,572,771

Units UnitsRestated

Weighted average number of ordinary shares in issue

Issued ordinary shares at 1 January

1,920,612,911 1,402,462,933

Effect of ordinary shares issued during the financial year 262,741,330 233,624,259

Weighted average number of ordinary shares in issue at 31 December 2,183,354,241 1,636,087,192

Basic (loss)/earnings per share (sen)



(2.71) 0.40


31 DECEMBER 2019


32. (LOSS)/EARNINGS PER SHARE (CONT’D)

(b) Diluted (loss)/earnings per share

Diluted (loss)/earnings per share are calculated based on the adjusted consolidated (loss)/profit for the financial year attributable to the owners of the parent and the weighted average number of ordinary shares in issue during the financial year have been adjusted for the dilutive effects of all potential ordinary shares as follows:

Group2019

RM2018

RMRestated

(Loss)/Profit attributable to owners of the parent (59,236,647) 6,572,771

Adjusted for:

Interest savings on ICULS - 107,381

(59,236,647) 6,680,152

Units UnitsRestated

Weighted average number of ordinary shares used in the calculation of basic earnings per share

2,183,354,241 1,636,087,192

Assume conversion of ICULS - 169,503,107

Effect of conversion of free warrants - 309,858,051

Weighted average number of ordinary shares at 31 December (diluted) 2,183,354,241 2,115,448,350

Diluted (loss)/earnings per share (sen)



(2.71) 0.32


33. STAFF COSTS

Group Company2019

RM2018

RM2019

RM2018

RM Restated

Salaries and other emoluments - Continuing operations 11,245,958 10,055,700 360,000 190,858


11,299,958 10,109,700 360,000 190,858

Defined contribution plans 1,360,605 1,117,620 - -

Social security costs 73,513 52,259 414 -

Other benefits 496,503 187,630 5,853 -

13,230,579 11,467,209 366,267 190,858

Group Company2019

RM2018

RM2019

RM2018

RM

Salaries and other emoluments 360,000 318,000 360,000 318,000

Social security costs 414 - 414 -

360,414 318,000 360,414 318,000

Included in the staff costs is aggregate amount of remuneration received by the Executive Directors of the Company and of the subsidiary companies during the financial year as below:


31 DECEMBER 2019


34. R

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34. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES (CONT’D)

The table below show the details changes in the liabilities of the Group and of the Company arising from financing activities, including both cash and non-cash changes: (Cont’d)

(i) The financing cash flows represents the net amount of proceeds from or repayments of ICULS liability component, finance lease liability, lease liabilities and term loans in the statements of cash flows.

(ii) Other changes represent ICULS interest capitalised, conversion of ICULS and exchange difference on lease liabilities.

35. RELATED PARTY DISCLOSURES

(a) Identifying related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel comprise the Directors and management personnel of the Group, having authority and responsibility for planning, directing and controlling the activities of the Group entities directly or indirectly.

Company Note

At1 January

RM

Financingcash flows (i)

RM

Other changes (ii)

RM

At31 December

RM2019

ICULS liability component 21 1,197,938 (526,384) (671,554) -

2018

ICULS liability component 21 2,522,757 (1,146,128) (178,691) 1,197,938


31 DECEMBER 2019


35. RELATED PARTY DISCLOSURES (CONT’D)

(b) Significant related party transactions

Related party transactions have been entered into in the normal course of business under negotiated terms. In addition to the related party balances disclosed elsewhere in the financial statements, the significant related party transactions of the Group and of the Company are as follows:

(c) Compensation of key management personnel

Remuneration of Directors and key management personnel are as follows:

2019RM

2018RM

Group Transactions with associates

Sales of goods 17,167 -

Rendering of services received/receivable 4,196,551 2,799,453

Rendering of services paid/payable 18,480 -

Rental of premises received/receivable 37,200 27,600

Transaction fees received/receivable 16,029 -

Transaction fees paid/payable 53,337 -

Company Transactions with subsidiary companies

Loan interest income received/receivable 780,276 275,107

Management fee paid/payable 3,038,729 3,244,336

Disposal of subsidiary companies 80,016 -

Group Company2019

RM2018

RM2019

RM2018

RM

Directors’ fee 222,133 227,903 222,133 227,903

Salaries and other emoluments 1,456,000 1,359,574 412,000 362,000

Defined contribution plans 129,216 106,230 - 106,230

Social security costs 2,901 1,933 414 1,933

1,810,250 1,695,640 634,547 698,066


36. SEGMENT INFORMATION

In the previous financial year, the Group business segments comprises of renewable energy, advertising and media, financial services, technology, corporate and others.

During the financial year, the Group has streamlined its businesses into the following segments and accordingly the comparative figures have been restated following the change in the composition of its reporting segments.

OmniChannel Media and advertising businesses as well as the digital imaging business

eCommerce Digital service provider of integrated marketplace solutions for offline to online businesses

FinTech Electronic money, payment services and technology businesses

Corporate and others Investment holding or dormant

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements.

Transactions between segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation. The measurement basis and classification are consistent with those adopted in the previous financial year.

Information about segment assets and liabilities are neither included in the internal management reports nor provided regularly to the management. Hence, no disclosures are made on segment assets and liabilities.


31 DECEMBER 2019


36. S

EGM

ENT

INFO

RMAT

ION

(CO

NT’

D)

Con

tinui

ng o

pera

tions

Disc

ontin

ued

oper

atio

n

Om

niCh

anne

l eC

omm

erce RM

Fin

Tech

RM

Cor

pora

te

and

Oth

ers

RM

Cor

pora

te

and

Oth

ers

RM

El

imin

atio

ns

RM

Per

con

solid

ated

fi

nanc

ial

stat

emen

ts

RM

2019

Re

venu

e

Exte

rnal

cus

tom

ers

37,

962,

073

35,

666

4,5

14,8

66

4,49

9,35

4 9

78,7

47

- 4

7,99

0,70

6 In

ter s

egm

ent

- -

5,94

4,94

1 7

,804

,702

-

(13,

749,

643)

-

Tota

l rev

enue

37,

962,

073

35,

666

10,4

59,8

07 1

2,30

4,05

6 9

78,7

47

(13,

749,

643)

47,

990,

706

Segm

ent r

esul

ts

Inte

rest

inco

me

21,

692

- 3

11

21,

507

- -

43,

510

Fina

nce

cost

s -

- (2

84,9

71)

(2,8

18,4

29)

- -

(3,1

03,4

00)

Dep

reci

atio

n an

d am

ortis

atio

n (1

,307

,954

) -

(1,2

85,2

03)

(4,8

11,1

92)

(523

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) -

(7,9

27,4

14)

Oth

er n

on-c

ash

item

s (4

2,39

6,62

6) -

(1,4

55)

(4,1

52,7

98)

(3

,339

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) -

(49,

890,

876)

Shar

e of

resu

lt of

as

soci

ates

, net

of t

ax -

- -

2,8

63,3

31

- -

2,8

63,3

31

Segm

ent l

oss

befo

re ta

x (2

9,81

9,47

6) (6

,529

) (5

,063

,859

)(2

1,01

9,47

7)

(2,6

59,2

87)

- (5

8,56

8,62

8)

Asse

ts

Capi

tal e

xpen

ditu

re -

- 1

3,10

7 1

4,82

0,85

9 -

(1,0

24,6

66)

13,

809,

300


36. S

EGM

ENT

INFO

RMAT

ION

(CO

NT’

D)

Con

tinui

ng o

pera

tions

Disc

ontin

ued

oper

atio

n

Om

niCh

anne

l#

eCom

mer

ce#

RM F

inTe

ch # RM

Cor

pora

te

and

Ot

hers

# RM

Cor

pora

te

and

Oth

ers#

RM

El

imin

atio

ns

RM

Per

con

solid

ated

fi

nanc

ial

stat

emen

ts

RM

2018

Re

venu

e

Exte

rnal

cus

tom

ers

34,

020,

320

- 5

,881

,651

1

1,55

3,34

7 1

,014

,761

-

52,

470,

079

Inte

r seg

men

t 1

2,24

0 -

4,2

63,1

90

8,6

99,0

42

- (1

2,97

4,47

2) -

Tota

l rev

enue

34,

032,

560

- 1

0,14

4,84

1 2

0,25

2,38

9 1

,014

,761

(1

2,97

4,47

2) 5

2,47

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9

Segm

ent r

esul

ts

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rest

inco

me

21,

832

- 6

6,82

7 4

1,22

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- 1

29,8

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nce

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s (1

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) -

(279

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) (1

39,3

10)

- -

(421

,070

)

Dep

reci

atio

n an

d am

ortis

atio

n (2

,677

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) (7

38,2

09)

(2,8

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(551

,478

) -

(6,7

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96)

Oth

er n

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s 5

,927

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-

(587

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) 3

3,79

5 (1

01,0

63)

- 5

,272

,599

Shar

e of

resu

lt of

as

soci

ates

, net

of t

ax -

- -

5,1

04,0

33

- -

5,1

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33

Segm

ent p

rofit

/(los

s) be

fore

tax

15,

588,

374

(7,2

15)

5,1

26,7

08

(12,

052,

356)

11,

023

- 8

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-

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#

the

com

para

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figur

es h

ave

been

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ated

follo

win

g th

e ch

ange

in t

he c

ompo

sitio

n of

its

repo

rtin

g se

gmen

ts.


31 DECEMBER 2019


36. SEGMENT INFORMATION (CONT’D)

(a) Adjustments and eliminations

Current taxes, deferred taxes and certain financial assets and liabilities are not allocated to those segments as they are also managed on a group basis.

Capital expenditure consists of additions of property, plant and equipment, software development expenditure and intangible assets, i.e.: digital contents and regional software license.

Inter-segment revenues are eliminated on consolidation.

(b) Other non-cash items consist of the following as presented in the respective notes to financial statements.


RM

Discontinued operation

RM Total

RM2019

Loss on ICULS liability component upon maturity (481,155) - (481,155)Impairment losses on: - Intangible assets (45,202,239) - (45,202,239)

- Remeasurement to fair value less costs to sell on disposal group - (2,728,248) (2,728,248)Gain on foreign exchange: - Unrealised 15,943 - 15,943 Written off:

- Deposit (550,000) - (550,000)

- Goodwill (2,400,273) - (2,400,273)- Prepayments - - -

- Property, plant and equipment (3) (690) (693)- Software development expenditure (1,674,500) (230,967) (1,905,467)

Amortisation of government grant 1,504 - 1,504 Fair value adjustment on other receivable (81,992) - (81,992)

Finance income on other receivable - 101,063 101,063 Reversal of impairment losses on trade receivables 3,340,681 - 3,340,681

(47,032,034) (2,858,842) (49,890,876)



(b) Other non-cash items consist of the following as presented in the respective notes to financial statements. (Cont’d)

(c) Geographic information

Revenue information based on the geographical location of customers respectively are as follows:


RM


RM Total

RM2018

Bad debts written off on trade receivables (1,792,173) - (1,792,173)

Deposit forfeited (33,481) - (33,481)


- Trade receivables (535,972) - (535,972)

- Other receivables (10,886) - (10,886)

Gain on foreign exchange:

- Unrealised 30,254 - 30,254

Written off:

- Goodwill (686,536) - (686,536)

Amortisation of government grant 180,500 - 180,500

Fair value adjustment on other receivable - (101,063) (101,063)

Gain on disposal of intangible asset 4,631,783 - 4,631,783

Reversal of impairment losses on trade receivables 3,590,173 - 3,590,173

5,373,662 (101,063) 5,272,599

2019RM

2018RM


Malaysia 11,407,598 26,634,727

Republic of Singapore 4,013,043 3,895,908

People's Republic of China and Hong Kong 27,972,718 15,478,683

Others 3,618,600 5,446,000

47,011,959 51,455,318


Malaysia 978,747 1,014,761

47,990,706 52,470,079




(d) Major customers

Revenue from 2 (2018: 1) major customers amounted to RM24,822,718 (2018: RM15,478,683), arising from the OmniChannel segment.

Revenue from major customer with revenue equal or more than 10% of the Group’s revenue are as follows:

37. FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expense, including fair value gains and losses, are recognised.

The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

2019RM

2018RM

Customer A 14,764,718 -

Customer B 10,058,000 -

Customer C - 15,478,683

24,822,718 15,478,683

Group

Financia assets at amortised

cost RM

Financia assets at fair value through

profit or lossRM

Financial liabilities at

amortised costRM

TotalRM

2019Financial AssetsOther investments - 2,584 - 2,584 Trade receivables 21,109,442 - - 21,109,442 Other receivables 4,317,196 - - 4,317,196 Lease receivables 1,464,681 - - 1,464,681 Deposits, bank and cash balances 2,598,587 - - 2,598,587

29,489,906 2,584 - 29,492,490

Financial Liabilities Trade payables - - 1,232,868 1,232,868 Other payables - - 39,495,806 39,495,806 Lease liabilities - - 459,028 459,028 Bank borrowings - - 4,245,932 4,245,932

- - 45,433,634 45,433,634

31 DECEMBER 2019


37. FINANCIAL INSTRUMENTS (CONT’D)

(a) Classification of financial instruments (Cont’d)

The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis: (Cont’d)

Group

Financial assets at

amortised cost RM

Financial assets at fair value through

profit or lossRM

Financial assets at fair

value through through other

comprehensiveincome

RM


amortised costRM

TotalRM

2018Financial AssetsOther investments - 2,495 10 - 2,505

Trade receivables 30,819,791 - - - 30,819,791

Other receivables 12,489,268 - - - 12,489,268

Deposits, bank and cash balances 5,008,541 - - - 5,008,541

48,317,600 2,495 10 - 48,320,105

Financial Liabilities

Trade payables - - - 2,132,252 2,132,252

Other payables - - - 33,771,642 33,771,642

Finance lease liability - - - 11,038 11,038

Bank borrowings - - - 4,949,655 4,949,655

- - - 40,864,587 40,864,587






Company

Financial assets at amortised

cost RM


profit or lossRM


amortised costRM

TotalRM

2019Financial AssetsOther investments - 2,583 - 2,583 Other receivables 8,875 - - 8,875 Amount due from subsidiary companies 108,985,194 - - 108,985,194 Deposits, bank and cash balances 154,624 - - 154,624

109,148,693 2,583 - 109,151,276

Financial Liabilities Other payables - - 32,841,143 32,841,143 Amount due from subsidiary companies - - 19,575,835 19,575,835

- - 52,416,978 52,416,978

31 DECEMBER 2019





(b) Financial risk management objectives and policies

The Group’s financial risk management policy is to ensure that adequate financial resources are available for the development of the Group’s operations whilst managing its credit, liquidity, foreign currency, interest rate and market price risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

The following sections provide details regarding the Group and the Company’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.

(i) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and deposits with banks. The Company’s exposure to credit risk arises principally from deposits with banks, amount due from subsidiary companies and guarantee given to a licensed bank for credit facility granted to a subsidiary company. There are no significant changes as compared to prior years.

Company

Financial assets at

amortised cost RM


profit or lossRM

Financial assets at fair

value through through other

comprehensiveincome

RM


amortised costRM

TotalRM

2018Financial AssetsOther investments - 2,494 10 - 2,504

Other receivables 11,699 - - - 11,699

Amount due from subsidiary companies 86,632,236 - - - 86,632,236

Deposits, bank and cash balances 1,761,069 - - - 1,761,069

88,405,004 2,494 10 - 88,407,508

Financial Liabilities

Other payables - - - 27,880,913 27,880,913

Amount due from subsidiary companies - - - 13,544,277 13,544,277

- - - 41,425,190 41,425,190




(b) Financial risk management objectives and policies (Cont’d)

(i) Credit risk (Cont’d)

The Group has adopted a policy of only dealing with creditworthy counterparties. Management has a credit policy in place to control credit risk by dealing with creditworthy counterparties and deposits with banks with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts.

At each reporting date, the Group assesses whether any of the receivables are credit impaired.

The gross carrying amounts of credit impaired trade receivables are written off (either partial or full) when there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities.

The carrying amounts of the financial assets recorded on the statements of financial position at the end of the reporting period represents the Group’s and the Company’s maximum exposure to credit risk except for financial guarantee provided to a licensed bank for credit facility granted to a subsidiary company.

There are no significant changes as compared to previous financial year.

As at the end of the reporting period, the Group has 2 debtors (2018: 4 debtors) that accounted for approximately 77% (2018: 88%) of all the trade receivables outstanding. The Company has no significant concentration of credit risks except for advances to subsidiary companies where risks of default have been assessed to be low.

Financial guarantee

The Company provides unsecured advances to its subsidiary companies. It also provides unsecured financial guarantees to a bank for credit facility granted to a subsidiary company. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies.

The Company’s maximum exposure to credit risk amounting to RM3,926,907 (2018: RM4,103,072), representing the outstanding credit facility of the subsidiary company at the end of the reporting period. There was no indication that the subsidiary company would default on repayment at the end of the reporting period.

(ii) Liquidity risk

Liquidity risk refers to the risk that the Group or the Company will encounter difficulty in meeting its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.

The Group’s and the Company’s funding requirements and liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group finances its liquidity through internally generated cash flows and minimises liquidity risk by keeping committed credit lines available.

31 DECEMBER 2019




(ii) Liquidity risk (Cont’d)

The following table analyses the remaining contractual maturity for financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay.

Group

On demandor within

1 year RM

1 to 2years

RM

2 to 5years

RM

After 5years

RM

Totalcontractualcash flows

RM

Totalcarryingamount

RM

2019Non-derivative financial liabilities

Trade payables 1,232,868 - - - 1,232,868 1,232,868 Other payables 39,495,806 - - - 39,495,806 39,495,806 Lease liabilities 403,859 83,600 - - 487,459 459,028 Bank borrowings 729,295 694,303 1,069,308 3,582,900 6,075,806 4,245,932

41,861,828 777,903 1,069,308 3,582,900 47,291,939 45,433,634

2018Non-derivative financial liabilities

Trade payables 2,132,252 - - - 2,132,252 2,132,252

Other payables 33,771,642 - - - 33,771,642 33,771,642

Finance lease liability 7,254 5,439 - - 12,693 11,038

Bank borrowings 728,584 693,659 1,069,308 4,081,916 6,573,467 4,949,655

36,639,732 699,098 1,069,308 4,081,916 42,490,054 40,864,587





(ii) Liquidity risk (Cont’d)

* Based on the maximum amount that can be called for under the financial guarantee contract.

The Company provides unsecured financial guarantee to a licensed bank in respect of credit facility granted to a subsidiary company and monitors on an ongoing basis the performance of the subsidiary company. At the end of the reporting period, there was no indication that the subsidiary company would default on repayment.

Financial guarantee has not been recognised since the fair value on initial recognition was deemed not material and the probability of the subsidiary company defaulting on its credit facilities is remote.

(iii) Market risks

(a) Foreign currency risk

The Group is exposed to foreign currency risk on transactions that are denominated in currencies other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily United States Dollar (USD), Hong Kong Dollar (HKD), Great British Pound (GBP), Burmese Kyatt, China Yuan Reminbi (RMB) and Singapore Dollar (SGD).

The Group has not entered into any derivative instruments for hedging or trading purposes. Where possible, the Group will apply natural hedging by selling and purchasing in the same currency. However, the exposure to foreign currency risk is monitored from time to time by management.

Company

On demandor repayable

within 1 year RM

Totalcontractualcash flows

RM

Totalcarryingamount

RM

2019

Other payables 32,841,143 32,841,143 32,841,143 Amount due to subsidiary companies 19,575,835 19,575,835 19,575,835 Financial guarantee* 3,926,907 3,926,907 -

56,343,885 56,343,885 52,416,978

2018

Other payables 27,880,913 27,880,913 27,880,913

Amount due to subsidiary companies 13,544,277 13,544,277 13,544,277

Financial guarantee* 4,103,072 4,103,072 -

45,528,262 45,528,262 41,425,190

31 DECEMBER 2019




(iii) Market risks (Cont’d)

(a) Foreign currency risk (Cont’d)

The carrying amounts of the Group’s and of the Company’s foreign currency denominated financial assets and financial liabilities at the end of the reporting period are as follows:

Foreign currency sensitivity analysis

Foreign currency risk arises from Group entities which have a RM functional currency. The exposure to currency risk of Group entities which do not have a RM functional currency is not material and hence, sensitivity analysis is not presented.

(b) Interest rate risk

The Group’s and the Company’s fixed rate deposits placed with licensed banks and borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The Group manages the interest rate risk of its deposits with licensed banks by placing them at the most competitive interest rates obtainable, which yield better returns than cash at bank and maintaining a prudent mix of short and long term deposits.

The Group manages its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes.

Group Company2019

RM2018

RM2019

RM2018

RM

Cash and bank balances

Denominated in:

USD 38,079 148,915 509 -

HKD 4,003 4,816 - -

GBP 59,100 57,595 - -

Burmese Kyatt 167 161 - -

RMB 503,162 528,185 - -

SGD 66,817 97,730 - -

671,328 837,402 509 -





(iii) Market risks (Cont’d)

(b) Interest rate risk (Cont’d)

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amount at the end of the reporting period was:

Group Company2019

RM2018

RM2019

RM2018

RM

Fixed rate instruments

Financial asset 722,409 732,890 - 31,859

Financial liability (459,028) (11,038) - -

263,381 721,852 - 31,859

Floating rate instruments

Financial liabilities (4,245,932) (4,949,655) - -

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for floating rate instruments

A change in 1% interest rate at the end of the reporting period would have increased/(decreased) the Group’s loss before tax by RM42,459 (2018: (decreased)/increased the Group’s profit before tax by RM49,497 ), arising mainly as a result of higher/lower interest expense on floating rate loans and borrowings. This analysis assumes that all other variables remain constant. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(c) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investment in quoted instruments. These investments are listed on Bursa Malaysia Securities Berhad and are classified as fair value through profit or loss financial assets.

31 DECEMBER 2019



(c) Fair value of financial instruments

The carrying amounts of short-term receivables and payables, cash and cash equivalents and short-term loans and borrowings approximate their fair value due to the relatively short-term nature of these financial instruments and insignificant impact of discounting.

The carrying amount of long-term floating rate loans approximates their fair value as the loans will be re-priced to market interest rate on or near reporting date.

It was not practical to estimate fair value of investment in unquoted equity due to the lack of comparable quoted prices in active market and the fair value cannot be reliably estimated.

The table below analyses financial instruments carried at fair value, together with their carrying amounts shown in the statements of financial position.

Fair value of financial instruments carried at fair value Carryingamount

RM Level 1

RM Level 2

RM Level 3

RM Total

RM

Group2019Financial assets at fair value through profit or loss Investment in mutual fund 2,584 - - 2,584 2,584

2018Financial assets at fair value through profit or loss Investment in mutual fund 2,495 - - 2,495 2,495

Company2019Financial assets at fair value through profit or loss Investment in mutual fund 2,583 - - 2,583 2,583

2018Financial assets at fair value through profit or loss Investment in mutual fund 2,494 - - 2,494 2,494




(c) Fair value of financial instruments (Cont’d)

(i) Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

There were no transfers between levels during current financial year and previous financial years.

(ii) Level 1 fair value

Level 1 fair value is derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

(iii) Level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

(iv) Level 3 fair value

Level 3 fair value for the financial assets and liabilities are estimated using unobservable inputs.

38. OPERATING LEASE COMMITMENTS - AS LESSEE

The future minimum lease payments under non-cancellable operating lease are:

39. FINANCIAL GUARANTEE

The Group leases office premises under non-cancellable operating lease agreements. The lease terms are negotiated for average term of one year, and the majority of lease agreements are renewable at the end of the lease period at market rate. None of the leases includes contingent rentals.

Group2018

RM

Operating lease commitments


Group2019

RM2018

RMCorporate guarantee given to a licensed bank for credit facility granted to a subsidiary company

- Limit of guarantee 4,675,000 4,675,000

- Amount utilised 3,926,907 4,103,072

31 DECEMBER 2019


Group2019

RM2018

RM

Finance lease liability - 11,038

Lease liabilities 459,028 -

Bank borrowings 4,245,932 4,949,655

4,704,960 4,960,693

Less: Deposits, bank and cash balances (1,876,178) (4,307,510)

Net debt 2,828,782 653,183

Shareholders’ equity 207,116,773 244,877,611

Debt-to-equity ratio (times) 0.01 0.01

40. CAPITAL MANAGEMENT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group monitors capital using a gearing ratio. The Group’s policy is to maintain a prudent level of gearing ratio that complies with debt covenants and regulatory requirements. The gearing ratios at the end of the reporting period are as follows:

There were no changes in the Group’s approach to capital management during the financial year.



41. SIGNIFICANT EVENTS

The following significant events took place for the Company and its subsidiary companies during the financial year:

(a) PUC Berhad (“the Company” or “PUC”)

(i) On 31 December 2018, the Company announced its intention to acquire all the remaining 12,336,288 ordinary shares in Pictureworks Holdings Sdn. Bhd. (“PWHQ”), representing 67% equity interest in PWHQ. The proposed acquisition involves the acquisition by the Company of up to 12,336,258 PWHQ shares from Cheong Chia Chou, Superb Go Sdn. Bhd. and Beauty World Holdings Pte. Ltd. for a total consideration of up to RM167.5 million to be satisfied by a combination of issuance and allotment of new ordinary shares in the Company and cash.

On 22 November 2019, the Company has entered into a supplemental share sale agreement to revise the purchase consideration to RM142.04 million.

On 21 January 2020, the application pertaining to the proposed acquisition has been approved by Bursa Securities.

The shareholders of the Company have approved the proposed acquisition at an Extraordinary General Meeting held on 19 February 2020.

The acquisition is pending completion as at the date of this report.

(ii) On 19 November 2019, the Company had announced its intention to undertake a share consolidation exercise of every 5 existing ordinary shares in PUC (“PUC Shares”) into 1 PUC share (“Consolidated Share”) (“Share Consolidation”). The shareholders of the Company have approved the proposal at an Extraordinary General Meeting held on 19 February 2020. The Share Consolidation has been completed following the listing of and quotation for 474,729,551 Consolidated Shares and 26,552,111 Consolidated Warrants-A on the ACE Market of Bursa Securities on 9 March 2020.

(iii) On 23 December 2019, the Company entered into a memorandum of understanding (“MOU”) with Luminor Capital Sdn. Bhd. (“LCSB”) to collaborate and work, where LCSB shall market its micro-financing to its borrowers and the disbursement of such approved micro-financing shall partially be in the form of crediting of PrestoPay Credits to the Borrower’s Presto App account. The Company shall remunerate LCSB with a fee computed based on the amount of PrestoPay Credits purchased by LCSB and disbursed into the said Borrower’s Presto App Account. As at the date of this report, the Company and LCSB are in the midst of finalising the definitive agreement.

(iv) The Company had on 27 November 2019 announced that it proposes to undertake private placement exercise of up to 166,601,000 new ordinary shares, representing up to 30% of the total number of issued shares of PUC to independent third party investors to be identified later and at an issue price to be determined later. Bursa Securities had, vide its letter dated 21 January 2020, approved the listing and quotation of up to 166,601,000 Placement Shares to be issued pursuant to the Proposed 30% Private Placement. The proposal was approved by shareholders of the Company at an Extraordinary General Meeting held on 19 February 2020.

No shares have been placed out as at the date of this report.

(b) Presto Credit Sdn. Bhd. (“PRCMY”) (formerly known as Wealth Pursuit Sdn. Bhd.)

On 26 June 2019, PRCMY changed its name from Wealth Pursuit Sdn. Bhd. to Presto Credit Sdn. Bhd..

(c) Presto Travel Sdn. Bhd. (“PRTMY”) (formerly known as Presto Media Sdn. Bhd.)

On 17 October 2019, PRTMY changed its name from Presto Media Sdn. Bhd. to Presto Travel Sdn. Bhd..

31 DECEMBER 2019


41. SIGNIFICANT EVENTS (CONT’D)

The following significant events took place for the Company and its subsidiary companies during the financial year: (Cont’d)

(d) Presto Ventures Pte. Ltd. (“PVNSG”) (formerly known as PUC (Singapore) Pte. Ltd.)

On 11 November 2019, PVNSG changed its name from PUC (Singapore) Pte. Ltd. to Presto Ventures Pte. Ltd..

(e) Presto Universe Sdn. Bhd. (“PRUMY”) (formerly known as PUC Ventures Sdn. Bhd.)

(i) On 19 September 2019, PUC Ventures Sdn. Bhd. entered into a MOU with with Smuzcity Berhad (“SCB”), where the Parties shall explore negotiate and finalise the formation of a new joint-venture entity under PUC’s Presto online-to-offline (“O2O”) initiatives for a Jingdong Unmanned Supermarket Project (“JV Entity”) for the region of South East Asia. Through the JV Entity, the Parties agree to set-up the first official Jingdong Unmanned Technology enabled store in Quill City Mall, Kuala Lumpur, Malaysia that will display and enable products from China and ASEAN to be displayed and sold via the O2O model. As at the date of this report, PRUMY and SCB are still in negotiation to finalise the definitive agreement.

(ii) On 14 November 2019, PRUMY changed its name from PUC Ventures Sdn. Bhd. to Presto Universe Sdn. Bhd..

(iii) On 12 December 2019, PRUMY entered into a MOU with Jingdong E-Commerce (Trade) Hong Kong Corporation Limited (“JD”) to collaborate to integrate JD.com with PrestoMall in order to allow JD.com to offer their products to PrestoMall’s sellers and consumers. JD and PRUMY shall explore onboarding JD’s large pool of sellers onto PrestoMall. As at the date of this report, PRUMY and JD are in the midst of finalising the definitive agreement.

(iv) On 19 December 2019, PRUMY entered into a MOU with Shenzhen Jiedian Technology Co Ltd (“JieDian”), where the Parties shall explore to set up a joint venture in Malaysia and develop the city portable battery rental business in Malaysia. JieDian is responsible for the production and provision of the Portable Batteries Equipment and shall be responsible for the backend maintenance and repair of the Portable Battery Equipment, while PRUMY is responsible for the daily operation of the joint venture. As at the date of this report, PRUMY and JD are still in negotiation to finalise the definitive agreement.

42. SUBSEQUENT EVENTS

The following subsequent events took place for subsidiary companies after the financial year:

(a) Presto Credit Sdn. Bhd. (“PRCMY”) (formerly known as Wealth Pursuit Sdn. Bhd.)

On 4 January 2019, PRCMY, a wholly-owned subsidiary company of the Company, entered into a MOU in relation to a collaboration where PRCMY and Yayasan Pekerja Malaysia (“YAPEM”) will collaborate and work together in providing micro financing to YAPEM members, and YAPEM shall facilitate all operations to implement the deduction of salary program to manage respective YAPEM members’ repayment of the said micro financing to PRCMY.

There is no conclusion on the negotiation between the Parties on 3 January 2020, being the expiry date of the MOU, and therefore the MOU was lapsed with no further force and effect.



42. SUBSEQUENT EVENTS (CONT’D)

The following subsequent events took place for subsidiary companies after the financial year: (Cont’d)

(b) Presto Universe Sdn. Bhd. (“PRUMY”) (formerly known as PUC Ventures Sdn. Bhd.)

(i) On 8 January 2020, PRUMY, a wholly-owned subsidiary company of the Company, entered into a memorandum of understanding (“MOU”) with BonusKad Loyalty Sdn. Bhd. (“BLSB”) to collaborate on loyalty point issuance and redemption, where BLSB shall engage PrestoMall as its sole and exclusive channel for BonusLink point redemption by BonusLink members on PrestoMall site.

As at the date of this report, the Company and BLSB are in the midst of finalising the definitive agreement

(ii) On 8 April 2020, PRUMY, Cheng Lin Holdings Sdn. Bhd. and Instpower Co., Limited have jointly incorporated a company in Malaysia under the name of Presto Power Sdn. Bhd. (“PPWMY”) with an initial paid-up capital of RM100.00 comprising of 100 ordinary shares. PRUMY owned 40% equity interest, representing 40 ordinary shares in PPWMY for total initial paid-up capital of RM40.00 and consequently PPWMY became an associate of PRUMY. The incorporation of PPWMY is for the purpose of undertaking power bank leasing and related services project.

(c) Outbreak effect of Coronavirus (“COVID-19”) Pandemic and Movement Control Order

The Directors of the Company have closely monitored the development of the outbreak of COVID-19 pandemic in Malaysia that may affect the business performance, financial performance and financial position of the Group and of the Company mainly due to travel and movement restriction and other precautionary measures imposed by relevant local authorities that affected the Group and the Company business operations. As at the date of this report, the financial impact of the outbreak to the Group and to the Company cannot be reasonably estimated due to the inherent unpredictable nature and rapid development relating to COVID-19 pandemic, the extent of the impact depends on the on-going precautionary measures introduced by each country to address the pandemic and the durations of the pandemic. As such, the Directors of the Company will continue to closely monitor the situation and respond proactively to mitigate the impact on the Group’s and the Company’s financial performance and financial position.

43. COMPARATIVE FIGURES

Certain comparatives were restated to conform with current financial year’s presentation. There was no significant impact to the financial performance in relation to the financial year ended 31 December 2018.

44. DATE OF AUTHORISATION FOR ISSUE

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 20 May 2020.

31 DECEMBER 2019


ANALYSIS OF SECURITIES HOLDINGS

ANALYSIS OF SHAREHOLDINGS AS AT 30 APRIL 2020

Total number of issued shares 474,729,551

Class of shares Ordinary shares

Voting rights One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGSNo. of shareholders No. of shares held %

Less than 100 shares 822 14,931 0.00(1)

100 to 1,000 shares 980 502,026 0.11

1,001 to 10,000 shares 3,672 19,181,041 4.04

10,001 to 100,000 shares 3,116 106,818,946 22.50

100,001 to less than 5% of issued shares 573 299,828,876 63.16

5% and above of issued shares 2 48,383,731 10.19

Total 9,165 474,729,551 100.00

SUBSTANTIAL SHAREHOLDERS

No. of shares held

Name Direct % Indirect %RedHot Media International Limited (“RHIL”) 25,470,091 5.37 - -

RHM Ltd - - 25,470,091(1) 5.37

Resource Holding Management Limited (“RHML”) - - 25,470,091(2) 5.37

Cheong Chia Chou - - 25,470,091(3) 5.37

DIRECTORS’ SHAREHOLDINGS

No. of shares held

Name Direct % Indirect %Cheong Chia Chou - - 25,470,091(1) 5.37

Liew Peng Chuen @ Liew Ah Choy 500,000 0.11 200,000 (2) 0.04

Note: (1) Negligible by virtue of being less than 0.01%

Note:(1) Deemed interest pursuant to Section 8 of the Companies Act 2016 (“Act”), by virtue of it being the holding company of RHIL.(2) Deemed interest pursuant to Section 8 of the Act, by virtue of it being the holding company of RHM Ltd which in turn is the holding

company of RHIL.(3) Deemed interest pursuant to Section 8 of the Act, by virtue of his shareholding in RHML which is the holding company of RHM Ltd and

which in turn is the holding company of RHIL.

Note:(1) Deemed interest pursuant to Section 8 of the Act, by virtue of his shareholding in RHML which is the holding company of RHM Ltd and

which in turn is the holding company of RHIL.(2) Deemed interest pursuant to Section 59(11)(c) of the Act, by virtue of his spouse’s shareholding in PUC.



LIST OF TOP THIRTY (30) LARGEST SHAREHOLDERSNO. NAME SHARES %

1 HSBC Nominees (Asing) Sdn Bhd – Exempt an for Credit Suisse 24,328,240 5.12

2 RHB Nominees (Tempatan) Sdn Bhd - OSK Capital Sdn Bhd for RedHot Media International Limited 24,055,491 5.07

3 CGS-CIMB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Terence Wong @ Huang Thar-Rearn 12,000,000 2.53

4 SG Fortunes Sdn Bhd 11,031,816 2.32

5 Ng Thiam Lai 10,522,300 2.22

6 RHB Nominees (Tempatan) Sdn Bhd - Tan Ah Loy @ Tan May Ling 10,000,000 2.11

7 Superb Go Sdn Bhd 8,074,534 1.70

8 Public Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Ung Siew Tour 7,155,000 1.51

9 PUC Founder (M) Sdn Bhd 6,160,000 1.30

10 Chua Teck Kim 6,000,000 1.26

11 UOB Kay Hian Nominees (Asing) Sdn Bhd - Exempt an for UOB Kay Hian Pte Ltd 5,555,860 1.17

12 CGS-CIMB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Tan Kim Heung 5,080,000 1.07

13 Ng Chin Tong 4,888,500 1.03

14 RHB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Sim Quan Seng 4,800,000 1.01

15 Public Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Eng Kim Poh 4,800,000 1.01

16 Lim Soon Tut 4,767,360 1.00

17 Public Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Home Art Development Sdn Bhd 3,555,100 0.75

18 RHB Nominees (Tempatan) Sdn Bhd - Chan Shook Fun 3,500,000 0.74

19 Alliance Group Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Ng Kuak Ping 3,333,800 0.70

20 Kenanga Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Ng Chai Go 3,200,000 0.67

21 Tan Hwee Kiang Roland 2,666,660 0.56

22 Kenanga Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for H'ng Bok Chuan 2,352,000 0.50

23 Chua Teck Kwang Danny 2,350,183 0.50

24 Cartaban Nominees (Tempatan) Sdn Bhd - RHB Trustees Berhad for SP Tactical Investment Fund 2,200,000 0.46

25 Kong Siew Mee 2,036,000 0.43

26 Ng Chian Tin 2,034,600 0.43

27 Piong Yon Wee 1,840,000 0.39

28 Chia Boon Haw 1,720,000 0.36

29 CIMB Group Nominees (Tempatan) Sdn Bhd - Pembangunan Sumber Manusia Berhad 1,660,000 0.35

30 Kenanga Nominees (Asing) Sdn Bhd - Exempt an for Phillip Securities Pte Ltd 1,635,700 0.34



ANALYSIS OF WARRANT-A HOLDINGS AS AT 30 APRIL 2020

No. of Warrants-A issued as at 26 December 2014 132,791,321

No. of Warrants-A exercised 27,427

No. of Warrants-A unexercised after consolidation of 5 Warrants-A into 1 Warrants-A 26,552,111

Expiry date of the Warrants-A 25 December 2024

Adjusted Exercise price of each Warrants-A RM0.50 per ordinary share

DISTRIBUTION OF WARRANT-A HOLDINGSWarrant-A Holdings No. of warrant holders No. of warrants held %

Less than 100 warrants 1,069 23,481 0.09

100 to 1,000 warrants 458 186,351 0.70

1,001 to 10,000 warrants 360 1,550,016 5.84

10,001 to 100,000 warrants 287 10,252,375 38.61

100,001 to less than 5% of issued warrants 44 10,639,888 40.07

5% and above of issued warrants 1 3,900,000 14.69

Total 2,219 26,552,111 100.00

SUBSTANTIAL WARRANT-A HOLDERS

No. of warrants held

Name Direct % Indirect %RHIL 3,900,000 14.69 - -

RHM Ltd - - 3,900,000 (1) 14.69

RHML - - 3,900,000 (2) 14.69

Cheong Chia Chou - - 3,900,000 (3) 14.69

Note:(1) Deemed interest pursuant to Section 8 of the Act, by virtue of it being the holding company of RHIL.(2) Deemed interest pursuant to Section 8 of the Act, by virtue of it being the holding company of RHM Ltd which in turn is the holding

company of RHIL.(3) Deemed interest pursuant to Section 8 of the Act, by virtue of his shareholding in RHML which is the holding company of RHM Ltd and


DIRECTORS’ WARRANT-A HOLDINGS

No. of warrants held

Name Direct % Indirect %Cheong Chia Chou - - 3,900,000(1) 14.69

Note:(1) Deemed interest pursuant to Section 8 of the Act, by virtue of his shareholding in RHML which is the holding company of RHM Ltd and




LIST OF TOP THIRTY (30) LARGEST WARRANT-A HOLDERSNO. NAME SHARES %

1 JF Apex Nominees (Tempatan) Sdn Bhd – AEH Capital Sdn Bhd For RedHot Media International Limited 3,900,000 14.69

2 HLIB Nominees (Tempatan) Sdn Bhd – Pledged Securities Account for Lai Way Lik 878,000 3.31

3 PUC Founder (M) Sdn Bhd 770,000 2.90

4 Ooi Siew Bee 684,300 2.58

5 Tan Kheak Chun 567,540 2.14

6 China Asean Venture International Ltd 559,840 2.11

7 Ong Keng Teong 412,580 1.55

8 Public Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Lim Kien Meng 340,000 1.28

9 Ho Soo See 325,300 1.23

10 Tan Chin Ann 300,000 1.13

11 Choong Yoke Ching 300,000 1.13

12 Ong Kian Shin 280,000 1.05

13 Public Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Teo Kiang Yong 279,100 1.05

14 Ong Choon Loon 252,000 0.95

15 Mohd Dzulkarnine Bin Ismail 223,000 0.84

16 De Will Lee 220,000 0.83

17 Tan Jee Jun 218,400 0.82

18 Alliance Group Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Goh Lai Chai 202,640 0.76

19 CGS-CIMB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Liew Meng Fatt 200,440 0.75

20 Tee Yeow 200,000 0.75

21 Cheng Kok Siong 200,000 0.75

22 Wong Kok Wai 180,000 0.68

23 Gan Chu Gee 176,620 0.67

24 Chan Kim Moon 171,540 0.65

25 Maybank Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Ho Teng Bing 158,820 0.60

26 Lau Yau Yee 153,000 0.58

27 Ng Yit Kok 150,000 0.56

28 Maybank Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Tam Kian Kwang 141,200 0.53

29 Lee Swee Lian 140,000 0.53

30 Ng Ting Heng 140,000 0.53


NOTICE OFANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Twenty-Second Annual General Meeting (“AGM”) of the Company will be held at Ballroom I, Main Wing, Jalan Kelab Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya, Selangor on Thursday, 30 July 2020 at 10.00 am for the following purposes :

As Ordinary Business1. To receive the Audited Financial Statements of the Company for the financial year ended

31 December 2019 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees and benefits up to RM400,000 from this AGM until the next AGM of the Company.

3. To re-elect the following Directors retiring pursuant to the Company’s Constitution and being eligible, offer themselves for re-election.

3.1) Cheong Chia Chou (Clause 85)

3.2) Nathaniel Grant David Sherick (Clause 85)

3.3) Hafez Mohd Hashim Bin Razman Md Hashim (Clause 92)

4. To re-appoint Messrs UHY as the auditors of the Company to hold office until the conclusion of the next AGM and to authorise the Directors to fix their remuneration.

As Special BusinessTo consider, and, if thought fit, to pass the following Resolutions:

AS ORDINARY RESOLUTIONS

5. Authority to Issue Shares

“THAT pursuant to Section 75 and 76 of the Companies Act, 2016 as it may be amended, modified or re-enacted from time to time, and subject to the approvals from the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed ten per centum (10%) of the total number of issued shares of the Company at the time of submission to the authority AND THAT the Directors be and are also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.”

By Order of the Board

LIM SECK WAH (MAICSA NO. 0799845) (SSM PC No: 2020 08 00 0054)TANG CHI HOE (KEVIN) (MAICSA NO. 7045754) (SSM PC No: 2020 08 00 2054)Secretaries

Dated : 10 June 2020Kuala Lumpur

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

AGENDA

PUC Berhad(199701036234 (451734-A))

(Incorporated in Malaysia)


NOTICE OFANNUAL GENERAL MEETING

Notes:-

General Meeting Record of DepositorsFor the purpose of determining a member who shall be entitled to attend, speak and vote at the Twenty-Second AGM, the Company shall be requesting the Record of Depositors as at 24 July 2020. Only a depositor whose name appears on the Record of Depositors as at 24 July 2020 shall be entitled to attend, speak and vote at the AGM or appoint proxy(ies) to attend, speak and vote in his/her stead.

Appointment of Proxy(ies)1. A member of the Company may appoint up to two (2) proxies who need not be a member of the Company

to attend, speak and vote at the same meeting. Where the member of the Company appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his/her shareholdings to be represented by each proxy.

2. Where a member is an authorised nominee, as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to credit of the said Securities Account which is credited with ordinary shares of the Company.

3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. The completed Form of Proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or if the appointer is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised.

5. The instrument appointing a proxy(ies) shall be in writing, deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof will not preclude the member from attending, speaking and voting in person at the AGM should the member subsequently wishes to do so.

EXPLANATORY NOTES TO SPECIAL BUSINESS

1. Resolution 6 – Authority to issue shares

The proposed Resolution 6, if passed, will empower the Directors of the Company to issue shares up to ten per centum (10%) of the total number of issued shares of the Company at any one time during the validity of the authority granted for such purposes as they may consider being in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

The general mandate sought to grant authority to Directors to issue shares is a renewal of the mandate that was approved by the shareholders at the Twenty-First AGM held on 27 June 2019. The renewal of the general mandate is to provide flexibility to the Company to issue new shares without the need to convene a separate general meeting to obtain shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercises including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital and/or acquisitions.


Up to the date of this Notice, 215,786,400 ordinary shares were issued by way of private placement (“Private Placement”). Total proceeds of RM13,676,899.00 raised from the Private Placement has been fully utilized in accordance with the mandate of this exercise. The details of Private Placement as follows:-

Number of ordinary

shares

Issue price per share

(RM)Amount

(RM)

28,571,500 0.07 2,000,005.00

14,400,000 0.07 1,008,000.00

30,000,000 0.07 2,100,000.00

22,639,900 0.06 1,358,394.00

85,000,000 0.06 5,100,000.00

18,400,000 0.06 1,104,000.00

16,775,000 0.06 1,006,500.00

215,786,400 13,676,899.00


This page is intentionally left blank

FORM OF PROXY(Before completing this form, please refer to the notes below)

Notes :-General Meeting Record of DepositorsFor the purpose of determining a member who shall be entitled to attend, speak and vote at the Twenty-Second AGM, the Company shall be requesting the Record of Depositors as at 24 July 2020. Only a depositor whose name appears on the Record of Depositors as at 24 July 2020 shall be entitled to attend, speak and vote at the AGM or appoint proxy(ies) to attend, speak and vote in his/her stead.

Appointment of Proxy(ies)1. A member of the Company may appoint up to two (2) proxies who need not be a

member of the Company to attend, speak and vote at the same meeting. Where the member of the Company appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his/her shareholdings to be represented by each proxy.

2. Where a member is an authorised nominee, as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to credit of the said Securities Account which is credited with ordinary shares of the Company.

3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. The completed Form of Proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or if the appointer is a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised.

5. The instrument appointing a proxy(ies) shall be in writing, deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof will not preclude the member from attending, speaking and voting in person at the AGM should the member subsequently wishes to do so.

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Twenty-Second Annual General Meeting (“AGM”) of the Company to be held at Ballroom I, Main Wing, Jalan Kelab Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya, Selangor on Thursday, 30 July 2020 at 10.00 am. My/our proxy(ies) is/are to vote as indicated below:-

(Please indicate with a “√” or “X” in the space provided how you wish your vote to be cast. If no instructions as to voting is given, the proxy(ies) will vote or abstain from voting at his/her discretion. All votings will be conducted by way of poll.

No. of ordinary shares held

Ordinary ResolutionFIRST PROXY SECOND PROXY

FOR AGAINST FOR AGAINST

1) Directors’ Fees and benefits

2) To re-elect Cheong Chia Chou as Director

3) To re-elect Nathaniel Grant David Sherick as Director

4) To re-elect Hafez Mohd Hashim Bin Razman Md Hashim as Director

5) To re-appoint Messrs UHY as Auditors

Special Business

6) Authority to Issue Shares

I/We _________________________________________________________________________________________________________________(Full name in block letters)

Dated this _______________ day of _____________________ 2020 _____________________________Signature/Common Seal

NRIC No./ Passport No./ Co. No./ CDS No. : ________________________________________________________________________________

of ___________________________________________________________________________________________________________________(Full address)

______________________________________________________________________________________________________________________being a member(s) of PUC BERHAD hereby appoint the following person(s):-

PUC Berhad(199701036234 (451734-A))

(Incorporated in Malaysia)

Name of Proxy(ies) NRIC No./Passport No. Phone Number Email Address

No. of shares or

%

Proxy 1

Proxy 2

(199701036234 (451734-A))

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