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INTEGRATINGTechnology

Annual Report 2018

DIVERSIFIED GATEWAY SOLUTIONS BERHAD(675362-P)

Level 16, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala Lumpur, Malaysia.

+603 4291 9233 +603 4291 7633

www.dgsbgroup.com

CORPORATE REPORT & COMPLIANCE STATEMENTS

51Contact Detailsof Subsidiaries

2Chairman’s Statement

4Management Discussion

& Analysis

14Corporate

Information

15Profile ofDirectors

18Key Management

Personnel

19Business Structure

by Segment

20Corporate Structure

215-Year Financial Highlights

2014-2018

22Corporate Governance

Overview Statement

29Statement on Risk

Management & Internal Control

32Audit & Risk Management

Committee Report

34Statement on Directors’

Responsibility for Preparing the Financial Statements

35Analysis of

Shareholdings

38Other Compliance

Information

42Notice of 13th

Annual General Meeting

46Statement Accompanying

Notice of 13th AnnualGeneral Meeting

47Privacy Notice

[PDPA]

49Form of

Proxy

VOLUME 1

What's inside

Visit www.dgsbgroup.com for more information

1Annual Report 2018DIVERSIFIED GATEWAY SOLUTIONS BERHAD (675362-P)

Annual Report 2018DIVERSIFIED GATEWAY SOLUTIONS BERHAD (675362-P)2

Chairman’s Statement

The regional economic landscape is also somewhat uncertain, caused by global events and possible changes in national policy by other administrations. Where required, the Group will realign its go-to-market strategies and product offerings. Similarly, we will continue to invest in workflow and workplace improvements and embark on technology upgrades to enhance business competitiveness, driven by strong employee engagement and teamwork.

We remain committed to our vision for operational excellence and accountability for results, to deliver quality services and products to our customers while providing good returns to our shareholders. Together with the recent steady increase in industry growth rates, and barring any unforeseen circumstances, we remain cautiously optimistic of a positive outlook for the financial year ahead.

AWARDS & ACHIEVEMENTSIn spite of the challenging market conditions, the companies within the DGSB Group – Diversified Gateway Berhad (DGB) and ISS Consulting (Thailand) Ltd (ISS(T)) - demonstrated continued commitment to delivering the best performance possible.

During the period, DGB signed an agreement with NTT Communications for DGB to become the first partner in Malaysia to provide NTT Com’s Global Management One (GMOne) managed IT services. Both companies will leverage their complementary strengths to provide managed IT services based on automation to medium and large size enterprise customers in Malaysia.

DGB was also appointed as a certified Huawei Partner, enabling the provision of one-stop-shop ICT products and complete solutions for medium to large enterprises in Malaysia.

BackgroundWith the recent change of government in Malaysia in May 2018, the longer term impact of this change on the regulatory environment and the industry climate in general remains to be seen. In light of this, DGSB Group subsidiary Diversified Gateway Berhad (DGB), whose market is predominantly domestic, is adopting a watching brief to ensure it remains relevant and competitive.

Annual Report 2018DIVERSIFIED GATEWAY SOLUTIONS BERHAD (675362-P) 3

Chairman’s statement (Cont’d.)

In Thailand, ISS Consulting was appointed as SAP Cloud Partner with responsibility for sales and delivery of SAP cloud products including Ariba, C4C, Hybris and SAP ByDesign.

PERFORMANCEDetails of the Group’s financial performance are presented in the Management Discussion & Analysis on Pages 10 to 11 of Volume 1 of this Annual Report.

OUTLOOKAs more organisations embrace Cloud, Mobile and Analytics, we are seeing an increasing number of clients requiring the services for hybrid infrastructure of local network and cloud-based solutions, as well as combined internal and managed solutions to deliver a seamless experience across a wide range of technology platforms. At the same time, key industry players continue to upgrade and expand their network and broadband coverage to meet the requirements of businesses and communities that have become ‘mobile’.

As DGB continues to focus on the trend of hybrid integration technology in Malaysia, with emphasis on the telecommunications, digital media and IT managed services sectors, it will seek to further strengthen its foothold in this space via partnerships with major technology and service providers.

In Thailand, the Group, via ISS(T), is expanding its reach, targeting banking and financial institutions, Government and corporate customers, as well as further strengthening its foothold in the SAP cloud and business solutions implementation market.

The Group is also constantly looking out for merger and acquisition opportunities in the ICT and technology industries in general.

CARE IN THE COMMUNITYThe Group remains committed to its corporate social responsibilities including good ethical behaviour, concern for the welfare and development of all our employees and firm adherence to environmental policies for the well-being of society at large. As a result, the DGSB Group aims to participate wherever possible in activities that support the communities where it operates.

DiVErsity in thE WOrkpLacE

The DGSB Group practises a policy of diversity and full inclusion at the workplace. Appointments, promotions and other employee-related decisions are made solely on the basis of suitability of skills, experience and performance. As such, our employee population

comprises a well-balanced team that is results-oriented and focused on achieving the highest standards of excellence for the Group.

Our workforce has 316 employees, comprising 48% men and 52% women. In terms of age, it is spread across a range of ages: 28% are 20 to 30 years old while 52% are aged 31 to 40. Some 17% are between41 and 50 years old while 3% are aged between 51 and 60.

The Group also reaches out to the community to provide industry exposure to young undergraduates. During the year under review, the Group has provided working experience to around 23 intern students from various higher education institutes, involving practical training and opportunities to learn and experience the corporate working culture.

APPRECIATION & ACKNOWLEDGEMENTI would like to take this opportunity to thank the employees of the DGSB Group for their continuous effort and positive contribution to the Company. Under the good guidance of the Directors and the Management team, it is their commitment in serving our customers that drives the business performance of the Group.

I would also like to thank our customers, shareholders, business partners and associates, for your faith in us in these challenging times. We very much look forward to your continued support in the coming years as the Group continues on its journey of growth and expansion.

Thank you.Dato’ Mah siew kwokCHAIRMAN


Management Discussion & Analysis

OVERVIEW OF BUSINESS OPERATIONSDiVErsiFiED GatEWay BErhaD (DGB)

DGB is a renowned company operating in four distinct business units that serve major telecommunications companies and enterprises:-

• telco infrastructure – where it provides a comprehensive suite of communications network solutions and related services and has formed long-term strategic partnerships with leading technology providers such as Ciena, Cisco, Huawei, Juniper and Extreme Networks to provide a rich portfolio of solutions to the end customers.

• Digital Media – providing indoor and outdoor iMedia Digital media solutions combining cloud services with digital media broadcasting from providers such as Maipu, Kingvon, Novastar, Konka and NEC.

• it technical & Maintenance – With a footprint in 18 different locations across Malaysia including Sabah and Sarawak, DGB is able to conform to tight Service Level requirements by companies that operate branch networks. A strong team of dedicated on-site engineers are stationed at all locations to provide 24 x 7 technical support and also spare parts management.

• it Managed services – DGB is the first certified partner in Malaysia for NTT Communications to provide Global Management One (GMOne) IT Managed Services. As such, DGB offers a one-stop portfolio of services for the entire IT ecosystem leveraging on the 24 x 7 remote infrastructure management (RIM) and service desk across the globe.

IntroductionThe Diversified Gateway Solutions Berhad (DGSB) Group brings together the solutions and services provided by Diversified Gateway Berhad (DGB) and ISS Consulting (Thailand) Ltd (ISS(T)), which function as its two major independent operating subsidiaries.


manaGement disCUssion & anaLYsis (Cont’d.)

DGB is the first certified partner in Malaysia for NTT Communications to provide Global Management One (GMOne) IT Managed Services.

Key customers include Telekom Malaysia, Persatuan Pengendali Internet Malaysia, Tech-Mahindra ICT Services (Malaysia), Malaysian Industrial Development Finance Berhad, Lonpac Insurance Berhad, Orange Business Services, Hewlett-Packard (M) and related companies within the Omesti Berhad Group, including Formis Network Services Sdn Bhd and Ohana Communications Sdn Bhd.

iss cOnsULtinG (thaiLanD) LtD (iss(t))

ISS(T) provides tailored solutions and services for the entire life-cycle of Enterprise Resource Planning. The company’s combined industry competence and SAP industry solutions make it a strategic partner for medium-sized companies.

At the same time, large enterprises rely on its subject matter competence of SAP’s innovative solutions, where ISS(T) leads in implementing SAP’s latest products, helping customers deploy new solutions as they are launched by SAP.

The principal base of operations is located in Bangkok, Thailand, where the company employs some 220 SAP applications specialists.

New customers in the financial year ended 31 March 2018 (FYE 2018) include:

• SiamChemical IndustryCo., Ltd.• GoldenPrizeCanningCo., Ltd.• LuckyStarCo., Ltd.• MillconSteelPCL• PrimeSteel IndustryCo., Ltd.• Thai FoodGroupPCL• Thantawan IndustryPCL

Primary solutions include:sap s/4hana: A real-time enterprise resource management suite for digital business, built on the advanced in-memory platform, SAP HANA, and offers a personalised, consumer-grade user experience with SAP Fiori. Deployable in the cloud or on premise, SAP S/4HANA can drive instant value across all lines of business – no matter the industry or business size. The next-generation intelligent ERP business suite, it is designed specifically for in-memory computing.

SAP S/4HANA is the digital core – the nerve centre – of the entire business that connects the enterprise with people, business networks, the internet of things (IoT), big data, and more. It consolidates internal and external elements into a single, living structure that goes beyond traditional ERP software. In other words, it connects all of business processes, provides live information and insights, and seamlessly integrates enterprise with the digital world at large.



sap Business planning & consolidation (Bpc): An application that delivers planning, budgeting, forecasting, and financial consolidation capabilities, enabling businesses to easily adjust plans and forecasts, speed up budget and closing cycles, and ensure compliance with financial reporting standards.

sap BusinessObjects (BO) Business intelligence (Bi): A reporting and analytics business intelligence (BI) platform aimed at business users, comprising reporting applications that allow users to discover data, perform analysis to derive insights and create reports that visualise the insights. Applications use drag-and-drop functions and allow users to search and analyse data from a wide variety of sources.

It features a number of reporting and analysis applications that all have their own identity, purpose and function. These include:

• Web Intelligence (Webi), awebbrowser tool thatallows users to perform analysis, and produce and distribute formatted reports.

• CrystalReports, adataanalyticsand reporting toolaimed at individual users or small and medium-size businesses (SMBs).

• SAPBusinessObjectsDashboards, adatavisualisationtool that allows users to create custom dashboards from reports.

• QueryasaWebService (QaaWS),enablingcreationand publication of web services that can be consumed in Crystal Reports and SAP BusinessObjects Dashboards.

• SAPBusinessObjectsExplorer, aself-servicedataexploration tool that enables users to search through large volumes of data from various sources and then create data visualisations that can be shared.

• SAPLumira, aself-servicedatadiscoveryandvisualisation tool that allows users to find and analyse relevant business data and create custom interactive dashboards and analytics applications.

sap Business One: Built for small to medium sized businesses that have outgrown their accounting-only or legacy systems and are looking for a single, integrated solution to manage their entire business. SAP Business One provides executives and managers with instant access to critical business information so they can confidently make informed business decisions. A comprehensive solution, it covers virtually all aspects of customer business including finance, logistics/operations and customer relationship management.

sap Business ByDesign: Cloud-based ERP for mid-market companies and subsidiaries providing a platform to turn growth potential into real results. It connects every function across the company – from finance to CRM – to time-tested best practices and in-depth analytics. It provides the foundation to scale and compete without the complexity and cost, so businesses can grow in their own way.

sap successFactors: Cloud-based human resources software which seamlessly integrates to create a complete HCM system. It can help streamline global HR processes, assist with recruitment and retention, train and re-skill the workforce, and take advantage of technologies such as artificial intelligence (AI). SAP SuccessFactors improves executive insight and decision-making while ensuring the company has the right people with the right skills doing the right work.

consulting services & training

· IT Strategy & Process Consulting

· International SAP roll-out expertise with many leading MNC’s and regional customers

· Comprehensive solutions across all areas of SAP

· Training Partner for individualised Project Teams and End-User Support

Outsourcing & all-round supportFirst and second level support to customers across Asia via a certified Helpdesk Support Centre.

Cloud-based ERP for mid-market companies and subsidiaries providing a platform to turn growth potential into real results.



OBjECTIVES & STRATEGIESDGB

In FYE 2018, DGB continued its efforts to obtain infrastructure services and upsell /expand coverage in the current customer base with more focus on building closer rapport with customers and principals. With careful customer management planning, DGB will extend coverage within the current customer base and also grow across different industries.

For the financial year ended 31 March 2019 (FYE 2019) and beyond, DGB will focus on building new partnerships with network and IT infrastructure solution vendors based on the Internet of Things (IoT), new optical and wireless solutions, and network security systems to offer to medium and large enterprise customers. DGB will also work on improving technical skills in order to enhance its services and grow its customer base.

Working hand in hand with NTT Communications and Emerio Malaysia, DGB identifies the right industry and enterprise that will benefit from GMOne’s managed services. GMOne serves as a value add on top of the existing products and solutions provided.

DGB will focus on Smart City solutions that leverage on the evolving technology of IoT. DGB will further explore the growing trends of video analytics solutions, safe city solutions, smart building solutions and smart street lamp solutions.

In terms of the IT Technical and Maintenance business unit, maintaining the existing customer network infrastructure while securing new maintenance contracts from new customers will be the main objective. DGB’s technical team aims to grow in numbers of expert certifications by partnering with leading technology providers such as Cisco and Huawei.

For FYE 2019 and beyond, DGB has the intention to increase the headcount at its existing 18 nationwide support centres and to increase the number of nationwide support centres to more than 30 through new DGB support centres or through partnerships with third party companies to provide better turnaround time to customers. In addition, the team is expanding into IT Managed Services and it is expected this will be an area of growth for FYE 2019 and beyond.

For the digital media business, in FYE 2018, DGB continued its current contract roll-out of equipment progressively with its major customer Niagasoft Solutions Sdn Bhd. In the longer term, the focus will continue to be on expanding the digital media business into other areas such as state governments, the private sector, education sector, developers, etc. Beyond mere digital displays, DGB is working on launching Augmented Reality (AR) and 3D holographic displays as well as adding IoT functionalities to enhance its digital media offerings.

For DGB, the long-term mission is to be a significant player in the technology integration business, with focus in the telecommunications and digital media markets. This will be achieved via partnerships with solution vendors backed up by DGB’s traditional strengths in technical, maintenance and now IT managed services.

The company plans to develop a Rapid Deployment and Implementation package for each SAP product under its portfolio.



iss(t)

In FYE 2018, the company continued its primary focus on SAP S/4HANA and SAP Business One implementation in the small and medium-sized enterprise market in Thailand. As such, ISS(T) was successful in growing and maintaining 30% of its current revenue from existing accounts with the remaining 70% derived from new accounts.

In the longer term, the company will continue its focus on increasing the number of transactions alongside SAP’s new focus on cloud products (ByDesign, SAP Business One on Cloud, SuccessFactors, etc). For its Help Desk Support Centre business, ISS(T) will continue to maintain and grow the current customer base, as well as increasing the number of help desk support staff to balance the increment in business.

REVIEW OF OPERATING ACTIVITIESDGB

During the year under review, DGB has been appointed as a certified Huawei Partner. This strategic partnership together with Huawei provides one-stop-shop ICT products and complete solutions for medium to large enterprises in Malaysia.

Towards the end of FYE 2018, DGB also added IT Managed Services to its portfolio and signed a partnership agreement with NTT Communications to provide IT Managed Services for medium to large enterprises in Malaysia. DGB and NTT Communications will leverage on their complementary strengths to provide comprehensive managed services featuring advanced automation to optimize use of resources and ensure quality of service to customers in Malaysia.

DGB is also in discussions to sign up as an ATOP distributor for the Malaysia market in FYE 2019. ATOP Corporation is a leading manufacturer of optical transceivers.

iss(t)

During the year under review, ISS(T) was appointed as an SAP Cloud Partner with responsibility for sales and delivery of SAP cloud products including Ariba, C4C, Hybris and SAP By Design. ISS(T) has also continued to focus on SAP ERP projects utilising SAP S/4HANA and SAP Business One.

Significant success has been achieved by ISS(T) in its role as SAP Business One Partner in the General Business segment and as a leading SAP partner in Thailand. As such, ISS(T) was recognised by SAP for achieving the highest number of licences in South East Asia.

NEW DEVELOPMENT AREASDGB

internet of things (iot): DGB is actively leveraging the growth in IoT business, driving new solutions in existing and new customer environments. With this growth, last mile and backbone requirements will proportionally grow, requiring significant coverage and upgrades in the network, either as part of the end customer’s network or the service provider’s network. The first IoT implementations will be in the area of digital media business.

cloud: The conventional method of building infrastructure is gradually moving towards a shared and ‘pay as you grow’ cloud-based model. As such, DGB is exploring opportunities for applications and services for cloud-based environments through partnerships with principals or partners. DGB is currently exploring cloud solutions to go alongside its IoT offerings in the digital media business.

smart city solutions: Smart cities integrate information and communication technology (ICT), and various physical devices connected to the network (IoT) to optimise the efficiency of city operations and services and connect to citizens.



software Defined Wide area network (sD Wan): This improves network usage, simplifies network O&M, automates deployment of network resources, creates simpler and wider terminal interconnections in the IoT sector, implements free mobility of campus network services, and offers on-demand enterprise interconnections. By leveraging SD WAN, DGB can help enterprises to define their own networks and modify networks to support digital upgrades.

Digital Media: DGB is working on additional IoT functionalities for LED display solutions for indoor and outdoor media that have the ability to provide dynamic useful content to users by combining better content management tools, displays and technologies. These include interactive display, 3D Holographic display, Augmented Reality technologies and accompanying data analytics.

iss(t)

With the launch of multiple SAP products into the market, ISS(T) plans to offer these products as a bundled package and so deliver a comprehensive scope of work at a reasonable price. The company plans to develop a Rapid Deployment and Implementation package for each SAP product under its portfolio, including S/4HANA migration, SAP Business One for SME, SAP Data Warehouse Package and SAP Cloud Product Package. The objective of this initiative will be to help customers understand the benefits of each respective SAP solution and ensure that the solution that best meets their needs is implemented.

Currently ISS(T) has launched ISS Smart One Package. This SAP-qualified partner-packaged solution for SAP S/4HANA offers system conversion services from SAP Business Suite to SAP S/4HANA.

• Smart One Manufacturing, an SAP-qualified partner-packaged solution for SAP S/4HANA, includes finance, procure to pay, order to cash and plan to product. Smart One Manufacturing helps the enterprise to discover new ways of transforming its business model and processes for the digital economy. It also helps streamline business operations and gain better insight into the business so achieving improved planning accuracy and reduced inventory cost. Deployment timeframe starts from 20 weeks.



• Smart One Trading, an SAP-qualified partner-packaged solution for SAP S/4HANA, includes the full scope of SAP S/4HANA which takes advantage of new capabilities such as transfer pricing, parallel valuation, financial soft close, and prediction. Smart One Trading complies with financial reporting requirements in a simplified manner. With SAP Fiori, it extends the personalised paradigm of the SAP Fiori user experience, enabling easier onboarding and greater productivity. Deployment timeframe starts from 16 weeks.

ISS(T) is also planning to qualify other packages in SAP ByDesign, SAP Analytics on Cloud and SuccessFactors during FYE 2019.

siGniFicant chanGEs

During FYE 2018, majority shareholder Omesti Berhad reduced its shareholding from 52.69% to 15.43%. As a result, Omesti Berhad ceased to be the Company’s holding company. Also during FYE 2018, Insas Berhad, through its 100% owned subsidiary Insas Technology Berhad, acquired a 19.91% stake in the Company via direct business transaction from Omesti Berhad for a total cash consideration of RM12.83 million which represents a purchase price of RM0.0475 per share.

On 26 March 2018, Bursa Malaysia Securities Berhad has approved the Company’s proposed private placement of up to 135.59 million new ordinary shares of the Company representing up to 10% of the existing issued shares of the Company to third party investor(s).

REVIEW OF FINANCIAL PERFORMANCEThe DGSB Group records its financial performance across three segments:

• BusinessPerformanceServices• Digital& InfrastructureServices• Trading&DistributionServices

A snapshot of the Five-Year Financial Highlights for the DGSB Group is presented on Page 21 of Volume 1 of this Annual Report.

rEVEnUE

For the financial year ended 31 March 2018, the Group registered total revenues of RM83.94 million, an increase of 13.2% amounting to RM9.78 million as compared to the previous financial year.

The Business performance services segment revenue for the financial year increased by 35.4%, from RM51.43 million to RM69.62 million. The increase was mainly due to new project engagements by the subsidiary in Thailand.

Revenue for the Digital & infrastructure services segment decreased by 44.9%, from RM25.97 million in 2017 to RM14.31 million in 2018, due to lower orders and fulfillment of certain projects being deferred.

The trading & Distribution services segment reported no revenue in 2018, as compared to RM0.06 million in 2017.

cOsts anD EXpEnsEs

The cost of sales for the Group for the financial year was RM30.41 million, as compared to RM31.78 million in the previous financial year.

The lower cost of sales has increased the Group’s gross profit margin by 7.0% to 64% in the current financial year, as compared to 57% in the previous financial year, mainly due to the Digital & Infrastructure Services segment being able to secure projects with high profit margins.

The Group registered total revenues of RM83.94 million, an increase of 13.2 on the previous year.



Operating costs for the Group were RM57.28 million, compared to RM40.82 million in the previous financial year. The increase of RM16.46 million was mainly due to the following:-

(i) Employee benefits increased from RM32.74 million to RM44.09 million, an increase of RM11.35 million. This was mainly attributable to higher staff costs and gratuity costs from the subsidiary in Thailand of RM8.32 million and RM2.42 million respectively, compared to the previous financial year.

(ii) The Digital & Infrastructure Services segment reported higher inventory write-off, inventory write-down, fair value loss on long-term receivables and impairment on receivables of RM0.37, RM0.40 million, RM1.24 million and RM2 million respectively, compared to the previous financial year.

(iii) The Business Performance Service segment reported higher sales commission of RM0.64 million as compared to the previous financial year.

The increase from the above was partially offset by lower finance costs of RM0.18 million in 2018, as compared to the previous financial year.

prOFit/(LOss) BEFOrE taX

The Group reported a loss before tax of RM1.19 million in 2018, as compared to a profit before tax of RM3.47 million in 2017. This was mainly due to the higher fair value loss and impairment on long-term receivables in the Digital & Infrastructure Services segment.

taXatiOn

The Group reported a tax expense despite the loss before tax position mainly due to the deferred tax impact of the inventory write-off, fair value loss and impairment on long-term receivables not being recognised in 2018.

LiQUiDity anD capitaL rEsOUrcEs

The Group’s capital expenditure and working capital requirements have been financed by cash generated from operations and short-term and long-term loans provided by financial institutions.

Cash and cash equivalents increased to RM5.85 million in 2018, as compared to RM3.47 million in 2017. This was mainly due to lower repayments to related companies and utilisation of internal funds to finance working capital requirements.

Total borrowings of the Group decreased from RM3.2 million in 2017 to RM0.93 million in 2018, resulting in a lower gearing ratio of 2.19% in the current year against 7.19% in the previous year.

This improvement was mainly due to the decrease in bank overdraft borrowings from RM2.67 million in 2017 to RM0.73 million in 2018.



RISKSDGB

One of the principal risks to the business remains foreign currency exchange rates, in particular Ringgit Malaysia against US Dollar. Most of the equipment items used by DGB are imported from either the USA or China, all with US Dollar as the transacting currency. Any weakening of the Ringgit Malaysia, therefore, will affect the gross margin.

Foreign exchange fluctuations, in particular any weakening of Ringgit Malaysia, affects the decision-making process of the customer if budgets for equipment have been set at lower prices. In such cases, the customer either defers the decision or, where implementation is mission critical, is forced to award the contract to a lower-priced vendor with lower specification.

A further risk to the DGB business is the increasing incidence of principals participating directly in tender exercises instead of going through partners. This often results in lower prices being offered to the end customers, given that margins do not need to be allocated to distributors/service providers.

DGB’s business is dependent on retaining, attracting, engaging and inspiring talented staff, who are crucial for the long-term sustainability of the company. Any loss of key staff will be a risk to DGB’s business.

MitiGatiOn

In mitigation of these risks, quotations to DGB customers are now limited to short validity in order to protect as far as possible gross margins from currency fluctuations. Additionally, the company may explore the option of hedging currency exposures once the order is confirmed to principals.

Efforts have also been made to secure better discounts from principals to cover the differences if a negative impact arises from foreign exchange fluctuations.

To mitigate the impact of established principals going direct to end-users, efforts are ongoing to diversify more into a higher services content of DGB’s business. To this end, the company has started reorganising its technical and maintenance division into an IT Managed Services division.

iss(t)

The main risks for software companies and consulting service businesses are how to differentiate between consultant and product, and long sales cycles for acquisition of new customers. ISS(T) has managed to maintain its current customer base by providing additional solutions to grow together with its customers. It is focused on acquiring new customers by providing a variety of SAP products in Small and Midzise Business (SMB) markets. The company appoints dedicated resources to ensure on-time project delivery and customer satisfaction. We are expanding capabilities for SAP consulting service and implementation to other lines of business (LoB) of SAP especially, cloud projects including SAP ByDesign, SAP Analytics on Cloud (SAC), SuccessFactors, ARIBA, Hybris and SAP Business One on Cloud to cover SAP general business (SMB).

Besides offering training and competitive compensation packages, the DGSB Group will be working towards offering an Employee Share Option (ESOS) Scheme to retain, recruit and motivate staff.

The global tech market in terms of spending through to 2019 is valued at US$3.2 trillion (Forrester).



OUTLOOKThe top three emerging trends driving the global IT systems integration services market for 2017-2021 according to Technavio information and communications technology (ICT) research analysts are:

• Increasedadoptionof IoTandcloud-based integrationsolutions

• Rapid implementationofbigdataandanalyticsintegration services

• Adventofhybrid integration technologycombininglocal on-premise and cloud based solutions

Both DGB and ISS(T) are focused on different areas and markets in the ICT systems integration services market, but more in the area of hybrid integration technology. DGB is more hardware-based whereas ISS(T) builds its business around the SAP ecosystem.

As more organisations embrace Cloud, Mobile and Analytics, we are seeing more customers requiring the services for hybrid infrastructure of local network and cloud-based solutions, and combined internal and managed solutions to deliver a seamless experience across a plethora of technology platforms. At the same time, key industry players continue to upgrade and expand their network and broadband coverage to meet the requirements of businesses and communities that have become ‘mobile’.

DGB continues to focus on the trend of hybrid integration technology in Malaysia, with emphasis on the telecommunications, digital media and IT managed services sectors. This will be achieved via partnerships with major technology and service providers, at the same time developing internal resources for technology integration and IT managed services.

In Thailand, the Group, via ISS(T), is expanding its reach, targeting banking and financial institutions, Government and corporate customers, as well as further strengthening its foothold in the SAP cloud and business solutions implementation market.

In addition to the above efforts, the Group will continue to proactively identify new synergistic businesses and mergers and acquisitions opportunities when they arise with the objective of staying relevant in the area of IT systems and technology integration.

Barring unforeseen circumstances, both DGB and ISS(T) are expected to perform the same or better in the new FYE 2019.

Dividend policy

No dividend policy has been established by the Board of Directors for FYE 2018. The Board will review the dividend policy in FYE 2019. Any future dividends and the size thereof will be determined on the basis of the Company’s long-term growth, earnings trend and capital requirements, taking into account the current objectives and strategies adopted.


Corporate Information

HEAD OFFICELevel 16, Menara MaxisegarJalan Pandan Indah 4/2Pandan Indah55100 Kuala LumpurT +603 4291 9233F +603 4291 7633E [email protected]

AUDITORBDOLevel 8BDO @ Menara CenTARa360 Jalan Tuanku Abdul Rahman50100 Kuala LumpurT +603 2616 2888F +603 2616 3190/3191

PRINCIPAL BANKERSPublic Bank BerhadAmBank (M) BerhadCIMB Bank BerhadHong Leong Islamic Bank BerhadMalayan Banking BerhadHong Leong Bank Berhad

SHARE REGISTRARBina Management (M) Sdn BhdLot 10, The Highway CentreJalan 51/20546050 Petaling JayaSelangor Darul EhsanT +603 7784 3922F +603 7784 1988

STOCK EXCHANGE LISTINGACE MarketBursa Malaysia Securities BerhadStock Code: 0131Stock Name: DGSBSector: Technology

WEBSITEwww.dgsbgroup.com

Board of Directorsnon-independent non-Executive chairmanDato’ Mah Siew Kwok

Executive DirectorDato’ Dr Tan Seng Chuan

independent non-Executive DirectorsDr Tang Pen San (Appointed on 16 April 2018)Chow Seck Kai (Appointed on 16 April 2018)Wan Mai Gan (Appointed on 16 April 2018)Hoe Kah Soon (Resigned on 16 April 2018)Hj. Ahmad Bin Khalid (Resigned on 16 April 2018)Mah Yong Sun (Resigned on 16 April 2018)

non-independent non-Executive DirectorMonteiro Gerard Clair

BOARD COMMITTEESExecutive committeeDato’ Dr Tan Seng Chuan (Chairman)Dato’ Wong Gian KuiMonteiro Gerard Clair

audit & risk Management committeeChow Seck Kai (Chairman)Dr Tang Pen San Wan Mai Gan

nominating committeeWan Mai Gan (Chairman)Dr Tang Pen SanChow Seck Kai

remuneration committeeDato’ Dr Tan Seng Chuan (Chairman)Chow Seck KaiWan Mai Gan

COMPANY SECRETARYPhang Ai Tee[MAICSA No. 7013346]

REGISTERED OFFICE10th Floor, Menara SMI6 Lorong P. Ramlee50250 Kuala LumpurT +603 2078 4488F +603 2070 6893


Profile of Directors

DATO’ MAH SIEW KWOKnOn-inDEpEnDEnt nOn-EXEcUtiVE chairMan

• Age70,Male,Malaysian• Appointed to theBoardon1August2013

Dato’ Mah qualified in law and was called to the English Bar in 1972. He was the founder and senior partner of Messrs Mah & Partners in 1975, specialising in Corporate Law, Banking Law and Land Law. He remained in practice for ten (10) years before venturing into the commercial sector.

He served as Managing Director of South Malaysia Industries Berhad from 1983 to 1994. Since 1994, he has been involved in the Information Technology sector where his last executive role was as Executive Vice Chairman & Chief Executive Officer of Omesti Berhad.

Dato’ Mah currently serves as Non-Executive Vice Chairman of Omesti Berhad, Deputy Chairman of Ho Hup Construction Company Berhad, Chairman of Kian Joo Can Factory Berhad and Independent Non-Executive Director of Vertice Berhad (formerly known as Voir Holdings Berhad). He also serves on the board of several private companies.

He is Deputy Chairman of Chong Hwa Independent High School and a trustee and member of Chong Hwa KL Foundation. He is also a member of the Board of Trustees of Kwan Inn Teng Foundation. He has been elected as Executive Committee Member of the Inns of Court Malaysia.

DATO’ DR TAN SENG CHUANEXEcUtiVE DirEctOr

• Age63,Male,Malaysian• AppointedasExecutiveDirectoron10November

2017• ChairmanofExecutiveCommitteeandRemuneration

Committee

Dato’ Dr Tan graduated with First Class Honours in Mechanical Engineering from Imperial College, England in 1978. He also obtained a Masters and PhD in Engineering Science in 1981 and 1983 respectively from Harvard University, USA. He has vast experience in the IT industry. As an IT consultant, Dato’ Dr Tan has worked on leading edge software and hardware development projects with many companies in the global IT industry prior to joining Insas Berhad in 1997, where he currently heads the Technology Division. Dato’ Dr Tan is also the Executive Vice Chairman of Inari Amertron Berhad and Executive Director of Insas Berhad..


ProfiLe of direCtors (Cont’d.)

MONTEIRO GERARD CLAIRnOn-inDEpEnDEnt nOn-EXEcUtiVE DirEctOr

• Age47,Male,Malaysian• Appointed to theBoardon10November2017• MemberofExecutiveCommittee

A serial entrepreneur, Mr Monteiro began his career in 1992 as a sales agent for Riken Auto Sdn Bhd (Riken Auto) and was subsequently appointed as a Director. In 1998, he left Riken Auto and set up Optima Auto Sdn Bhd where he served as Managing Director until 2005.

Since then, he has ventured into the property industry and various other investments via several privately held companies including H20 Holdings Sdn Bhd (formerly known as Red Zone Development Sdn Bhd) (H20), an investment holding company. He serves as a Director of H20 and of various other private companies, including property development company Montprimo Sdn Bhd where he is Executive Vice Chairman. He is currently an Executive Director of Omesti Berhad and Microlink Solutions Berhad. He also sits on the Board of subsidiary companies of Omesti Berhad, Microlink Solutions Berhad and Omesti Holdings Berhad.

In his younger years, Gerard was an accomplished sportsman, representing Malaysia in squash at both junior and senior levels. Crowned National Junior Champion in 1988, he also captained the victorious National Junior Team in the East Asian Junior Squash Championships in 1999.

DR TANG PEN SANinDEpEnDEnt nOn-EXEcUtiVE DirEctOr

• Age58,Male,Malaysian• Appointed to theBoardon16April2018• MemberofAudit&RiskManagementCommitteeand

Nominating Committee

Dr Tang holds a Bachelor of Science (First Class Honours) in Computer Engineering and Master of Science in Computer Science, both from the University of Manchester, United Kingdom. He also holds a PhD in Information Engineering from City University of London.

Dr Tang has more than 30 years of experience in the global technology business with substantial experience in technology and operational management, business strategy, corporate governance, corporate development, Mergers & Acquisitions and investor relations. He was CEO of a public listed electronics group in Singapore and involved in six IPOs on the Singapore and Malaysian Stock Exchanges. He was a founding Director of P1 Group, a 4G Time Division Duplex (TDD) Wireless Network Operator group in Malaysia. He is also an advisor to several other TDD spectrum and licence holders, helping them to plan and deploy commercial 4G Wireless Data Networks and Private LTE to serve vertical industries.

Dr Tang is a member of the Steering Committee of the Global TD-LTE Initiative (GTI) and was a Chairman of Business Model and Funding of TDD Operators, and Leader of the Private LTE Task Force. He is currently the Managing Director of Arete M Pte Ltd, an InfoComm Service Provider with a Facilities Based Operators Licence in Singapore, aspiring to build Private LTE Networks for Mission Critical Industrial Networks as part of the Smart Nation implementations in Singapore.


ProfiLe of direCtors (Cont’d.)

CHOW SECK KAIinDEpEnDEnt nOn-EXEcUtiVE DirEctOr

• Age63,Male,Malaysian• Appointed to theBoardon16April2018• ChairmanofAudit&RiskManagementCommitteeand

Member of Nominating Committee and Remuneration Committee

Mr Chow is an Associate of the Institute of Chartered Secretaries and Administrators, United Kingdom and a Fellow of the Institute of Public Accountants, Australia.

Mr Chow started his career with a public accounting firm specialising in company secretarial and tax matters. He has been in practice as Company Secretary and Corporate Advisor for SME companies for over 25 years.

He is currently an Independent Non-Executive Director of Ho Hup Construction Company Berhad.

WAN MAI GANinDEpEnDEnt nOn-EXEcUtiVE DirEctOr

• Age54,Female,Malaysian• Appointed to theBoardon16April2018• ChairmanofNominatingCommitteeandMemberof

Audit & Risk Management Committee and Remuneration Committee

Ms Wan Mai Gan is a 29-year veteran in the electronic payments industry with solid local and international exposure in product development, project delivery, post-live support and pre-sales support of mission critical software products.

She began her career with SunGard System Access Malaysia Sdn Bhd and held various key positions from 1988 to 2010, rising to become Vice President and Director. In July 2010, she joined NCR Payments and Services Malaysia Sdn Bhd (NCR) as General Manager, Operations. She was subsequently appointed as Head of Professional Services for the Payments division, Financial Services, with responsibility for Asia, Africa & Middle East regions. Ms Wan retired from NCR in July 2017.

She is currently an Independent Non-Executive Director of Omesti Berhad.

saVE WhErE DiscLOsED aBOVE, nOnE OF thE DirEctOrs has:

• any family relationshipwithanyDirectorand/ormajorshareholderof theCompany;• anyconflictof interestwith theCompany;• anyconviction foroffenceswithin thepast5yearsother than trafficoffences; and• anypublicsanctionorpenalty imposedby the relevant regulatorybodiesduring the financial year.


Key Management Personnel

Robin Lim jin Heechief Operating Officer - Diversified Gateway solutions Berhad

• Age56,Male,Malaysian• Appointedon04April2011

Qualifications Working Experience

BSc 34 years

profile

Robin Lim obtained a Bachelor of Science degree specialising in Computer Science and majoring in Mathematics from the University of Toronto, Canada. He joined Diversified Gateway Berhad in 1997 as a General Manager and was appointed as an Executive Director in 2003.

He has over 30 years of experience spanning various disciplines, covering software customisation, sales & marketing, and operations. Prior to joining the DGSB Group, he held various roles with several companies including AIM Computer Sdn Bhd, Computer Protocol Sdn Bhd and Digital Transmission Systems Sdn Bhd.

any directorship in public companies and listed issuers

any family relationship with any director and/or major shareholder of the listed issuer

Diversified Gateway Berhad

None

any conflict of interests that the person has with the listed issuer

Other than traffic offences, the list of convictions for offences within the past 5 years and particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year, if any.

None None

Wisit WirayagornManaging Director – iss consulting thailand

• Age50,Male, Thai• Appointedon01April2005

Qualifications Working Experience

Masters in Business Administration (MBA)

28 years

profile

Wisit Wirayagorn has served as Managing Director of ISS consulting (Thailand) for over 12 years, with responsibility for managing more than 200 consultants. He holds over 20 years of experience in SAP systems, initially as a consultant, subsequently as project manager, consulting manager, country sales manager, country manager and as Managing Director. He has long-standing experience in standard business applications and ERP implementation. Having been responsible for ERP packages, as well as SAP ERP and other SAP product implementation, he has a sound understanding of business issues. His SAP experience covers the logistics chain, mainly on Materials Management and Production.

Wisit is certified in both SAP MM and PP modules. He is also well-versed in various programming languages, such as COBOL and FoxPro. Industries he has worked in include Hi-Tech, Automotive, Machinery, Oil & Gas, Trading and Retail.

any directorship in public companies and listed issuers

any family relationship with any director and/or major shareholder of the listed issuer

None None

any conflict of interests that the person has with the listed issuer

Other than traffic offences, the list of convictions for offences within the past 5 years and particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year, if any.

None None

The following section provides details on the senior executives who hold responsibility for management of the principal operations of the businesses within DGSB Group.


Business Structure by Segment

DIGITAL & INFRASTRUCTURE

SERVICESComprehensive range of

tele/data communication, networking and digital media

solutions and servicesTRADING & DISTRIBUTION SERVICES

Distribution and maintenance of computer networking, network security, storage and network

management solutions

BUSINESS PERFORMANCE

SERVICESIntegrated business solutions

based on SAP software


Corporate Structure

DiversifiedGatewaySolutionsBerhad

IT Active

IT Inactive

Diversified Gateway Berhad

ISS Consulting (S) Pte Ltd

ISS Consulting (Malaysia) Sdn Bhd

Cogent Business Solutions (S) Pte Ltd

ISS Consulting (Thailand) Ltd

Ledge Consulting Pte Ltd

Rangkaian Ringkas Sdn Bhd

PT ISS Consulting Indonesia

Cogent Consulting Sdn Bhd 70%

Unless stated otherwise, shareholding is 100%

83

,94

3

76

,28

7

10

1,8

72

70

,26

3

74

,16

0

REVENUE (RM’000) *

2014 2015 2016 2017 2018

(1,1

95

)

3,1

55

7,2

62

1,9

72 3,4

68

PROFIT/(LOSS) BEFORE TAX (RM’000) +

2014 2015 2016 2017 2018

42

,35

1

37

,86

8

43

,05

1

43

,18

4

44

,47

5

SHAREHOLDERS’ EQUITY (RM’000)

2014 2015 2016 2017 2018

88

,21

9

75

,70

9

83

,87

3

83

,82

6

85

,44

9

TOTAL ASSETS (RM’000)

2014 2015 2016 2017 2018

3.1

2

2.7

9 3.1

8

3.1

8

3.2

8

NET ASSET/SHARE (Sen)

2014 2015 2016 2017 2018


5-Year Financial Highlights 2014-2018

* Revenue for FYE 2016 and FYE 2017 has excluded discontinued operation amounting to RM2,242,183 and RM2,339,525 respectively

+ Profit before tax for FYE 2016 and FYE 2017 has excluded loss from discontinued operation amounting to RM3,233,840 and RM1,392,036 respectively.


Corporate Governance Overview Statement

The Board of Directors (Board) of Diversified Gateway Solutions Berhad (Company) is pleased to provide an overview of the corporate governance practices by the Company. The Board strongly believes the importance of having and adhering to a sound corporate governance framework for delivering sustainable value, enhancing shareholders’ confidence and achieving the Group’s corporate objective and vision.

The Board and Management are committed to ensuring that the business and affairs of the Company and its subsidiaries (Group) are in strict adherence with the doctrine and principles of good corporate governance including integrity, transparency, accountability and responsible business conduct. This is evident by the Group’s internal standards, processes, guidelines and systems.

This Statement summarises the application of the following three (3) Principles set out in the new Malaysian Code on Corporate Governance (MCCG) which came into force in April 2017 and governance standards prescribed in the ACE Market Listing Requirements (ACE LR) of Bursa Malaysia Securities Berhad (Bursa Securities):

(A) BoardLeadershipandEffectiveness;(B) EffectiveAuditandRiskManagement; and(C) Integrity in Corporate Reporting and Meaningful

Relationship with Stakeholders.

The Company’s detailed application of each Practice set out in the MCCG (CG Report) during the financial year ended (FYE) 31 March 2018 was approved by the Board on 13 July 2018. This Statement is to be read together with the CG Report 2018 which is available for reference at the Company’s website www.dgsbgroup.com.

PRINCIPLE A: BOARD LEADERSHIP & EFFECTIVENESS(a) BOarD rEspOnsiBiLitiEs

Board Leadership

The Board has the overall responsibility for corporate governance, strategic direction, corporate planning and overseeing the investment and business of the Group with the ultimate aim of creating and delivering sustainable value and long-term success.

Board chairman

The Chairman is responsible for instilling good corporate governance practices, leadership and effectiveness of the Board. The Board is chaired by Dato’ Mah Siew Kwok, a Non-Independent Non-Executive Director who has a strong presence as the Chairman of the Company and is able to provide effective leadership to the Board.

separation of positions of chairman and Executive Director

The Chairman and Executive Director are held by separate individuals and their roles and responsibilities are distinct as stated in the Board Charter.

access to information, advice and company secretary

The Board has full and unrestricted access to all information within the Company and the Group as well as the advice and services of senior management and the Company Secretary in carrying out its duties.

Board Meetings

The Board holds at least four (4) scheduled quarterly meetings with additional meetings being convened as and when necessary. Prior to each meeting, every Director is provided with the complete agenda and a set of Board papers well in advance to provide ample time to review matters to be deliberated at the meeting and so facilitate informed decision-making.

Senior Management are also invited to attend these meetings as and when required, to provide the Board with the necessary information and clarification on issues deliberated during the meetings.


CorPorate GovernanCe overview statement (Cont’d.)

A formal schedule of matters is adopted which includes strategy and policy issues, major investments, financial decisions and the annual business plan.

During FYE 31 March 2018, the Board met six (6) times during which it reviewed and approved various issues including the quarterly financial results of the Group for announcement to Bursa Securities, as well as the performance of the Group.

The attendance record of the Directors at the Board meetings during the period under review is provided below:

Directortotal Meetings

attended

Dato’ Mah Siew Kwok 5/6

Dato’ Dr Tan Seng Chuan (appointed on 10 November 2017)

2/2

Monteiro Gerard Clair(appointed on 10 November 2017)

2/2

Hoe Kah Soon 6/6

Hj. Ahmad Bin Khalid 6/6

Mah Yong Sun 5/6

Lau Chi Chiang (retired on 14 September 2017)

2/3

All Directors have complied with the minimum 50 percent attendance requirement at Board meetings during FYE 31 March 2018 as stipulated by the ACE LR of Bursa Securities Berhad. As such, the Board is satisfied with the level of time commitment given by the Directors of the Company towards fulfilling their duties and responsibilities.

Board charter

The Board has established a Board Charter as a key point of reference that clearly defines the roles and responsibilities of the Board. The Board Charter is periodically reviewed and updated in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board’s responsibilities. The Board Charter was reviewed by the Board on 28 May 2018 for consistency with the MCCG and Companies Act, 2016. The Board Charter is available for reference at the Company’s website www.dgsbgroup.com.

Directors’ code of Ethics

The Board observes a code of ethics in accordance with the code of conduct expected of Directors as set out in the Company’s Directors’ Code of Ethics established by the Companies Commission of Malaysia.

In line with good governance and transparency, a Whistleblowing Policy has been adopted by the Company which sets out the principle and grievance procedures for employees to raise genuine concerns of possible improprieties perpetrated within the Group.

Both the Code of Ethics and the Whistleblowing Policy are available for reference at the Company’s website www.dgsbgroup.com.

(B) cOMpOsitiOn & BOarD BaLancE

Board composition

The Board comprises six (6) members:

• 3 IndependentNon-ExecutiveDirectors• 2Non-IndependentNon-ExecutiveDirectors• 1ExecutiveDirector

The Board’s composition complies with the requirements mandated by the ACE LR of Bursa Securities. The Board, through annual review by the Nominating Committee (NC), is of the view that the current Board composition is appropriate in terms of its membership and size.

The Board’s composition has the mix of knowledge, skill, expertise and strength in those qualities which are relevant and which enable the Board to carry out its responsibilities in an effective and competent manner. There is also a balance in the Board with the presence of Independent Non-Executive Directors of the necessary calibre and experience to carry sufficient weight in the Board’s decision.

Although all the Directors have equal responsibility for the Group’s operations, the role of the Independent Non-Executive Directors is particularly important in providing an independent view, advice and judgment to take into account the interests of the Group, shareholders, employees and communities in which the Group conducts its businesses. The Profiles of the Directors are presented on pages 15 to 17 of Volume 1 of this Annual Report.



reinforce independence

The NC is responsible for assessing the independence of Independent Directors annually based on their independent and constructive views, deliberations and contributions during the Board meetings. The criteria for assessing independence developed by the NC will be applied upon admission, annually and when any new interest or relationship develops.

The NC and the Board have upon their assessment, concluded that the Independent Non-Executive Directors continue to demonstrate conduct and behaviour that are essential indicators of independence and their ability to act in the best interests of the Company, and that they continue to fulfil the definition of independence as set out in the ACE LR of Bursa Securities.

One of the recommendations of the MCCG states that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. None of the Independent Directors’ tenure has exceeded a cumulative term of nine (9) years.

(c) strEnGthEn cOMpOsitiOn

Board committees

The Board delegates certain responsibilities to the respective Committees of the Board which operate within clearly defined terms of reference. The Chairmen of the various Committees inform the Directors at Board meetings of matters and recommendations which the respective Committees deem should be highlighted to the Board.

The current composition of the Board Committees is as set out on page 14 of Volume 1 of this Annual Report.

nominating committee

The NC established by the Board is responsible for screening, evaluating and recommending suitable candidates to the Board, for appointment as Directors as well as filling the vacant seats of the Board Committees. The NC is comprised entirely of Independent Non-Executive Directors with the Chairman being independent and able to contribute effectively to the NC. Meetings of the NC are held as and when required, and at least once a year.

The current composition of the NC is as set out on page 14 of Volume 1 of this Annual Report.

The terms of reference of the NC are available for reference at the Company’s website www.dgsbgroup.com.

During the financial year ended (FYE) 31 March 2018, one (1) NC meeting was held in July 2017 and a circular resolution by the NC members in November 2017. The NC carried out the following activities:

• assessed thesize, compositionandeffectiveness of the Board Committees and each of its members

• reviewed theoverall compositionof theBoard interms of appropriate size, required mix of skills, experience, core competencies and effectiveness as well as adequacy of balance between Executive Director and Independent Non-Executive Directors

• evaluatedeachDirector’sperformanceandensured no conflict of interest

• assessedandconfirmed the independenceofthe Independent Directors

• reviewed the termofofficeandperformanceofthe Audit & Risk Management Committee (ARMC) and each of its members

• evaluated the trainingneedsof theBoard

• discussed thenominationandappointmentofnew candidates as Directors of the Company

The Board acknowledges the need for gender diversity for good governance practice and to enhance the efficient functioning of the Board. The Board believes the appointment of new members is guided by the skills, experience, competency and knowledge of the individual candidate and it shall review any potential candidate wherever reasonably possible. In line with this, a Board Diversity Policy has been adopted by the Company.

The Board currently is 83.3% male and 16.7% female. In terms of age, 16.7% aged 41-50, 33.3% aged 51-60 and 50% aged 61-70 years old respectively.



Directors’ training

The Directors are mindful of the need for continuous training to keep abreast of new developments and are encouraged to attend forums, seminars, workshops and conferences facilitated by external professionals in accordance with their respective needs in discharging their duties as Directors. All the Directors of the Company have attended and successfully completed the Mandatory Accreditation Programme prescribed under the ACE LR.

During the year under review, the NC reviewed and evaluated the training needs of the Directors and encouraged the individual Directors to identify their own training needs. The Company Secretary has periodically informed the Directors of the availability of appropriate courses, conferences and seminars and the Directors are encouraged to attend such training at the Company’s expense.

The training/courses attended by the Directors during FYE 31 March 2018 are as follows:

Director training attended Date

Dato’ Mah Siew Kwok • DutiesandResponsibilitiesunder theMalaysianCompanies Act 2016 (Act 777)

5 May 2017

• MalaysianPrivateEquityTechConference2017 18 May 2017

• FraudRiskManagementWorkshop 26 September 2017

• CaseStudyWorkshop for IndependentDirectorsRethinking – Independent Directors: A New Frontier

9 November 2017

• In-houseTalkbyBDO– “BudgetTaxBriefing2018” 15 November 2017

Hoe Kah Soon • BOSMid-YearOutlook2017 – Capturing Value in a Fully-Valued World

13 June 2017

Hj. Ahmad Bin Khalid • MalaysianCodeonCorporateGovernance2017– Key Features and Enhancements

6 December 2017

Monteiro Gerard Clair • 2017HitachiASEANPartnerLeadersForum 18 to 20 July 2017

Mah Yong Sun • WildDigital 24 & 25 May 2017

Dato’ Dr Tan Seng Chuan and Lau Chi Chiang (retired on 14 September 2017) have not attended any training during the financial year under review due to their tight travelling schedule and busy/heavy work commitments. Nevertheless, the Directors continue to devote sufficient time to update their knowledge and enhance their skills through other alternatives to meet the ever-changing commercial challenges and risks.

In addition, the Directors continuously receive briefings and updates on the Group’s businesses and operations, risk management activities, corporate governance, finance, new developments in the business environment, new regulations and statutory requirements from the Management, External Auditors, Company Secretary and the Internal Auditors during the Committees’ meetings and Board meetings. The Board will continue to evaluate and determine the training needs of its Directors to enhance their skills and knowledge.

re-election of Directors

In accordance with the Company’s Articles of Association, one third (1/3) of the Directors for the time being shall retire from office and be eligible for re-election at each AGM, provided always that all Directors shall retire from office once every three (3) years but shall be eligible for re-election. The Directors to retire every year shall be those who have been longest in office since their last election.

The Articles of Association of the Company further provide that Directors who are appointed by the Board to fill a casual vacancy or as an addition to the existing Board are subject to re-election by the shareholders at the next AGM following their appointment.



remuneration committee

The RC presently comprises one (1) Executive Director and two (2) Independent Non-Executive Directors. The RC is entrusted under its Terms of Reference to assist the Board, amongst others, to carry out an annual review of salaries, incentive arrangements and other employment conditions of the Executive Director. Meetings of the RC are held as and when required, and at least once a year.

The current composition of the RC is as set out on page 14 of Volume 1 of this Annual Report.

During the financial year ended (FYE) 31 March 2018, one (1) RC meeting was held in July 2017. The RC, in discharging its functions and duties, carried out the following activities:

• Reviewedand recommended thepaymentofDirectors’ Fees forFYE31March2017

• Reviewedand recommended thepaymentofDirectors’ Feesandbenefits for theperiod from1April2017untilthe next AGM of the Company

• Reviewedanddiscussed theDirectors’ servicecontractswith theCompanyorwithsubsidiariesandensuredthey be available at the Registered Office of the Company for inspection by the shareholders holding at least 5% of the total issued and paid-up share capital of the Company pursuant to Section 232 of the Companies Act, 2016

Directors’ remuneration

The remuneration of the Executive and Non-Executive Directors paid/payable by the Group for the financial year under review is as set out in the accompanying table:

category

Directors’Fees(rM)

Directors’salaries &

OtherEmoluments

(rM)

Benefits-in-kind

(rM)total

(rM)

Executive DirectorsDato’ Dr Tan Seng Chuan(appointed on 10 November 2017)

50,000 – – –

Lau Chi Chiang(retired on 14 September 2017)

– 219,520 (3) 13,970.83 (5) 233,490.83

Non-Executive DirectorsDato’ Mah Siew Kwok 180,000 (1) 7,000 (4) – 187,000

Monteiro Gerard Clair (appointed on 10 November 2017)

23,500 (2) 2,000 (4) – 25,500

Hoe Kah Soon 84,000 (2) 13,000 (4) – 97,000

Hj. Ahmad Bin Khalid 72,000 (2) 13,000 (4) – 85,000

Mah Yong Sun 72,000 (2) 9,000 (4) – 81,000

(1) Fees paid/payable by the Company for acting as the Chairman of the Board (2) Fees paid/payable by the Company for acting as a Non-Executive Director (3) Salaries and other emoluments paid by the Company and/or subsidiary companies for acting as Executive Director and Chief

Executive Officer(4) Meeting Allowances paid by the Company (5) Benefits-In-Kind paid by the Company and/or subsidiary companies for acting as Executive Director and Chief Executive Officer



PRINCIPLE B: EFFECTIVE AUDIT & RISK MANAGEMENT(a) aUDit & risk ManaGEMEnt cOMMittEE

The current composition of the ARMC comprises three (3) members, all of whom are Independent Non-Executive Directors, with all of them being independent Directors.

The ARMC Report is presented on pages 32 to 33 of Volume 1 of this Annual Report.

(B) risk FraMEWOrk

Details on the key features of the risk management framework are set out in the Statement on Risk Management & Internal Control on pages 29 to 31 of Volume 1 of this Annual Report.

(c) intErnaL aUDit FUnctiOn

Details of the Group’s internal control systems and the state of internal controls are further elaborated under the Statement on Risk Management & Internal Control, which has been reviewed by the Company’s External Auditors, provided separately on pages 29 to 31 of Volume 1 of this Annual Report.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS(a) UphOLD intEGrity in FinanciaL rEpOrtinG

The Board acknowledges its responsibility for ensuring that the Company’s and the Group’s financial statements present a true and fair view of the state of affairs and are prepared in accordance with the applicable Financial Reporting Standards in Malaysia and are in accordance with the provisions of the Companies Act, 2016.

The Board is also committed to providing the highest level of disclosure possible to ensure integrity and consistency of the financial reports. In preparing the financial statements, the Board considers that the Group had used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates.

The ARMC, established by the Board, holds a key responsibility for ensuring that the financial statements of the Company comply with the Financial Reporting Standards in Malaysia. Such statements comprise annual financial statements and quarterly financial reports. Upon recommendation given by the ARMC, the Board will engage in discussion and reviews before approving and subsequently releasing to Bursa Securities and the public.

The Chief Financial Officer (CFO) presents to the ARMC and the Board details of revenue and expenditure, for review of quarter-to-quarter and year-to-date financial performance against budget. The CFO provides assurance to the ARMC on a quarterly basis that appropriate accounting policies had been adopted and applied consistently.

The ARMC undertakes an annual assessment of the suitability and independence of the External Auditors in accordance with the External Auditor Independence Policy. Having satisfied itself with their performance and fulfilment of criteria as set out in the policy, the ARMC will recommend their re-appointment to the Board, after which the shareholders’ approval will be sought at the AGM.

In this regard, in May 2018, the ARMC assessed the performance and the independence of Messrs BDO (BDO) as External Auditors of the Company and reviewed the level of non-audit services rendered by BDO to the Company for FYE 31 March 2018. The ARMC was satisfied with BDO’s technical competency and audit independence. The assessment is based on:

• theoverall comprehensivenessof theexternalaudit plan

• the timelinessandqualityofcommunicationsprovided under the plan and delivered during the audit

• thecompetencyand industryknowledgeofexternal audit staff

• theadequacyof resources toachieve thescopeas outlined in the plan

• the relationshipswith theCompanyoranyotherentity that may impair or appear to impair the External Auditor’s judgment or independence



Written assurance is sought from the External Auditors confirming their independence throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

The External Auditors continue to report to members of the Company on their findings from the audit on statutory financial statements which are included as part of the Company’s financial reports. The Company has always maintained a formal and transparent relationship with the External Auditors in seeking their professional advice and towards ensuring compliance with the accounting standards. It is the policy of the ARMC to meet with the External Auditors at least twice a year to discuss their audit plan, audit findings and the Group’s financial statements. These meetings are held without the presence of the Management.

A summary of the activities of the ARMC during the financial year are set out in the ARMC Report on pages 32 to 33 of Volume 1 of this Annual Report.

(B) EnsUrE tiMELy anD hiGh QUaLity DiscLOsUrE

Shareholders and members of the public may obtain information on the Group’s operations and activities, as well as press releases, announcements and financial information, etc. from the corporate website www.dgsbgroup.com.

(c) strEnGthEn rELatiOnship BEtWEEn cOMpany anD sharEhOLDErs

The AGM and other meetings of the shareholders, including any Extraordinary General Meeting of theCompany, are the principal forums for dialogue and interaction with shareholders. At such meetings, individual shareholders may raise questions or concerns with regard to the Company as a whole. Shareholders are also encouraged to participate in question and answer sessions. The Board, senior Management and relevant advisors are on hand to answer questions raised and provide clarifications as required. Where appropriate, the Board will undertake to provide written answers to any questions that cannot be readily answered at the meeting.

The Board will also ensure that each item of special business included in the notice of meeting is accompanied by a full explanation of the effects of the proposed resolution to facilitate understanding and evaluation of the issues involved.

In line with this, a Shareholders’ Communication Policy has been adopted by the Company which sets out the framework that it has put in place to promote effective communication with the shareholders so as to enable the shareholders to engage actively with the Company and exercise their rights as shareholders in an informed manner. The Shareholders’ Communication Policy is available for reference at the Company’s website www.dgsbgroup.com.

COMPLIANCE STATEMENTThis statement on the Company’s corporate governance practices is made in compliance with the Listing Requirements.

This Statement was approved by the Board on 13 July 2018.


Statement on Risk Management & Internal Control

The Malaysian Code on Corporate Governance requires the Board of Directors (Board) to maintain a sound system of risk management and internal control to safeguard shareholders’ investments and the Group’s assets. The Board of Diversified Gateway Solutions Berhad is committed to maintaining a sound system of internal control and effective risk management as part of its ongoing efforts to practise good corporate governance.

Introduction SYSTEM OF INTERNAL CONTROLThe Board confirms that the Management of the Group constantly reviews the system of internal control and implements appropriate measures to improve the system as and when it determines enhancement is required to ensure compliance.

The Management of the Group is responsible for identifying and assessing the risks that are attributable to the area of business and for formulating appropriate controls to mitigate the risk. It is also responsible for creating a risk-awareness culture and for building the necessary knowledge for risk management. It also has the responsibility of managing risks and setting internal controls associated with the operations, ensuring compliance with applicable laws and regulations.

The significant risk areas and controls are communicated to the Board, which meets regularly during the year, to ensure that all Directors maintain full and effective control over all significant strategic and operational issues.

Key elements of the Group’s internal control system include:

• Organisationanddefinitionof themanagementstructure of the Group, including areas of responsibility, segregation of authorities and limits. Clearly defined delegation of responsibilities by Board Committees as well as the Management of Head Office and companies within the Group, including authorisation levels for all aspects of the businesses.

• StandardOperatingProcedures forselectedkeyprocesses are established in operating units. These processes are reviewed periodically to reflect changing risks or to resolve any operational deficiencies to promote efficiency and accountability.

• Segregationofduties to reduce thepotential forerrorand to prevent collusion.

• Establishedstrategicbusinessplanandbudgetingprocess, where all operating units prepare budgets every year, for approval at company level, before being discussed and reviewed by the Executive Committee and/or the Board.

This Statement on Risk Management & Internal Control is prepared in accordance with Paragraph 15.26(b) of the Ace Market Listing Requirements (AMLR) and Guidance Note 11 of Bursa Malaysia Securities Berhad (Bursa Securities).

BOARD RESPONSIBILITIESThe Board affirms its responsibilities for the Group’s system of internal control, which includes the establishment of an effective control environment and appropriate internal control framework as well as review of its adequacy and integrity. This system is designed to identify and manage risk facing the business and covers financial, organisational, operational and compliance controls to safeguard shareholder investment and the Group’s assets.

Due to limitations inherent in any internal control system, such a system is designed to manage, rather than to eliminate the risk of failure to achieve the Group’s business objectives and corporate objectives. Accordingly, the system can only provide reasonable but not absolute assurance against material misstatement, losses or fraud.


statement on risk manaGement & internaL ControL (Cont’d.)

• ExecutiveCommitteemeetingsheld tomonitor theperformance of each operating unit against budget through monthly operations review meetings, including discussion of any significant issues with heads of operating units. The Executive Committee also reviews, discusses and plans the operational, financial and strategic issues affecting the Group, with all matters arising being promptly and efficiently dealt with.

• Regulardepartmentalmeetingswithinoperatingunitswhere operational and financial issues are deliberated.

• Presentation to theBoardof timely informationonperformance of the Group through quarterly Board documents as well as reports from various Committeesandsubsidiaries.Quarterlyperformancereports, benchmarked against budgets and objectives, provided to the Directors and discussed at the Audit & Risk Management Committee (ARMC) and/or Board meetings.

• Periodic reviewsby theoutsourced InternalAuditor toassess the adequacy of internal controls, integrity of financial information provided and the extent of compliance with established procedures and advising management on areas of improvement.

GOVErnancE MEchanisM

Individual Heads of Operating Units meet with the Senior Management/Executive Committee to review/discuss/revisit business objectives and strategies for the coming year’s business plan. Once the plan has been agreed upon, the business plan of the respective subsidiaries for the new financial year is presented to the Board of Directors for their review and adoption.

Senior Management/Executive Committee will conduct monthly/quarterly review by assessing each company’s progress against the budgeted business plan and financial budget. This review provides a forum for all to raise their concerns and suggestions, for periodical monitoring of performance and for major variances to be followed up.

EntErprisE risk ManaGEMEnt FraMEWOrk

The Group has in place a risk management framework which incorporates, amongst others, a structured process for identifying, evaluating and prioritising risks, as well as clearly defining the risk responsibilities and escalation process of significant risks and an Enterprise Risk management oversight framework. At present, the Group is in the midst of updating the existing risk management framework.

The Board’s primary objective and direction in managing the Group’s risks are focused on the achievement of the Group’s business objectives. Detailed areas of review are matched against the Risk Profiles and assessment, if any, as confirmation of material risks being covered. Any changes to the audit focus will be discussed with the Management of the Group for concurrence.

Monitoring reports are presented to the ARMC and thereafter to the Board for the required review and approvals. Management also has in place a process to conduct follow-up updates on its Risk Assessment periodically or as and when there is a significant change to the Group’s risk profile or business environment.

assUrancE MEchanisM

The ARMC is empowered by the Board with responsibilities relating to the Group’s accounting and reporting practices including reviewing and monitoring the effectiveness and adequacy of the Group’s system of internal controls. It is also charged with ensuring that an appropriate mix of techniques is used to obtain the level of assurance required by the Board.

The ARMC periodically receives and assesses reports from the independent assurance functions of the Group. The Internal Audit function provides the ARMC with an assessment on the adequacy and integrity of the Group’s system of internal control via reports from visits conducted at various operating units.

The External Auditors provide assurance in the form of their annual statutory audit of the Financial Statements. Areas for improvement, if any, identified during the course of the statutory audit by the External Auditors are brought to the attention of the ARMC through Management letters, or are articulated at the ARMC meetings.

The ARMC has met with the External Auditor twice during the financial year without the presence of Executive Directors.

Convening at the minimum on a quarterly basis, the ARMC monitors and reviews the implementation of safeguards, as well as the implementation and progress of any remedial action recommended in order to ensure that the risk management and control processes in relation to the Group are always in place.


statement on risk manaGement & internaL ControL (Cont’d.)

INTERNAL AUDIT FUNCTIONThe internal audit function of the Group is outsourced to a professional firm of auditors. The internal audit function provides the ARMC and the Board with reasonable assurance regarding the adequacy and integrity of the system of internal control.

Its principal responsibility is to undertake regular and systematic reviews of the system of internal control, risk management and governance processes and report on findings to the ARMC. The internal audit function adopts a risk-based approach and prepares its audit strategy and plan based on the risk assessment conducted on major operating units of the Group.

Internal audit review has been conducted during the year and improvement opportunities were reported at the Group’s quarterly ARMC meetings. The fee for this internal audit review conducted amounted to RM25,000.

COMMENTARY ON ADEQUACY & EFFECTIVENESSThe risk management and internal control systems described above have been in place for the year under review and up to the approval of this statement for inclusion in the annual report.

In making this statement, the Board has received assurance from the Executive Committee and Group Chief Financial Officer that the risk management and internal control systems are operating adequately and effectively in all material aspects for the reporting.

For the financial year under review, the Board is of the opinion that the above monitoring and reporting processes provide an adequate form of checks and balances and constitute a sufficient platform for timely and continuous identification of the Group’s principal risks.

These processes are adequate and sound to provide reasonable assurance in safeguarding shareholders’ investments, the interests of customers, regulators and employees, the Group’s assets and other stakeholders’ interests, as well as in addressing key risks impacting the business operations of DGSB.

rEViEW OF thE statEMEnt By EXtErnaL aUDitOrs

As required under Rule 15.23 of the ACE Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement on Risk Management & Internal Control, and reported to the Board that nothing has come to their attention that causes them to believe that the Statement on Risk Management & Internal Control intended to be included in the Annual Report for FYE 31 March 2018 is not prepared, in all material aspects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers to be set out, nor is the Statement on Risk Management & Internal Control factually inaccurate.

The limited assurance review was performed in accordance with the Malaysian Approved Standard on Assurance Engagements, ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information and Audit and Assurance Practice Guide (AAPG) 3 Guidance for Auditors on Engagements to Report on the Statement on Risk Management & Internal Control Included in the Annual Report which does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

cOncLUsiOn

There was no major internal control weakness identified that may result in any material loss or uncertainty that would require disclosure in the Annual Report. The Group will continue to take measures to strengthen the internal control and risk management environment.

This statement is made in accordance with approval from the Board of Directors dated 13 July 2018.


Audit & Risk Management Committee Report

The ARMC presently comprises three (3) members, appointed on 17 April 2018, as follows:

• ChowSeckKai (Chairman)– IndependentNon-Executive Director

• DrTangPenSan– IndependentNon-ExecutiveDirector• WanMaiGan– IndependentNon-ExecutiveDirector

The composition of the ARMC complies with the Rules 15.09(1) and 15.10 of the ACE Market Listing Requirements and MCCG as all three (3) members are Independent Non-Executive Director.

In performing its duties and discharging its responsibilities, the ARMC is guided by its Terms of Reference. The Terms of Reference are available for reference at the Company’s website www.dgsbgroup.com and were reviewed on 12 February 2018.

MEEtinGs

During the financial year under review, the ARMC held a total of five (5) meetings. Details of attendance are as follows:

committee Membertotal Meetings

attended

Hoe Kah Soon 5/5

Hj. Ahmad Bin Khalid 5/5

Mah Yong Sun 4/5

SUMMARY OF ACTIVITIESThe following is a summary of the main activities carried out by the ARMC during the financial year ended (FYE) 31 March 2018:

FinanciaL rEsULts

• Reviewedand recommended thequarterly financialresults and the annual audited financial statements of the Company and the Group to the Board for consideration and approval.

rELatED party transactiOns

• Reviewed relatedparty transactionswithin theCompany or the Group, including any transaction, mandate, procedure or course of conduct that raises questions of Management integrity.

EXtErnaL aUDitOr

• Reviewedandassessedtheperformanceandindependence of the External Auditors prior recommendation to theBoard for re-appointment;

• Reviewedand recommendedtheappointmentof theExternal Auditor, Messrs BDO, to the Board for consideration;

• Reviewedwith theExternalAuditor thescopeofwork,audit plan and fees for the statutory audit and thereafter recommendedto theBoard forapproval;

• ReviewedtheAuditCompletionof theCompany forFYE 31 March 2017 and recommended to the Board forapproval;

• ReviewedtheAuditedFinancialStatementsof theCompany for FYE 31 March 2017 and recommended to theBoard forapproval;

• ReviewedtheAuditPlanningof theCompany forfinancial year ending 31 March 2018 and thereafter recommendedto theBoard forapproval;

There were changes to the composition of the Audit & Risk Management Committee (ARMC) after the financial year ended, whereby, on 17 April 2018, Hoe Kah Soon, Hj. Ahmad Bin Khalid and Mah Yong Sun resigned as ARMC members.


aUdit & risk manaGement Committee rePort (Cont’d.)

• Discussedanypertinentpoints/reservationson issuesarising from audit of the Company’s accounts which the External Auditor may have to raise to the ARMC, in the absence of the executive Board members and Management;and

• Reviewedwith theExternalAuditorany issuesaffecting the operations of the Group, as well as the necessary remedial actions and thereafter reported the same to the Board.

intErnaL aUDit

• Reviewed theappointmentof the InternalAuditorandinternal auditdirection;

• Reviewed theProposed InternalAuditPlan for financialyear ending 31 March 2018 and recommended to the Board forapproval;

• Reviewed theProposedAuditPlan for financial yearending 31 March 2019 and thereafter recommended to theBoard forapproval;

• Reviewed the InternalAuditReport, status reportandrecommendations for corrective action plans submitted by the Internal Auditor and received regular updates on the implementation by the Group of the correctiveactionplans; and

• Reviewedwith the InternalAuditorany issuesaffecting the operations of the Group, as well as the necessary remedial actions and thereafter reported the same to the Board.

OthEr MattErs

• Reviewedand recommended to theBoard theARMCReport and Statement on Risk Management & Internal Control for inclusion in theAnnualReport; and

• Reported to theBoardon itsactivities, anysignificantissues and results.

INTERNAL AUDIT FUNCTIONThe Company has outsourced its internal audit function covering the Company, all of its local and foreign subsidiaries, to a professional firm, Crowe Horwath Governance Sdn Bhd, to provide support and assist the ARMC in discharging its duties and responsibilities with regards to the adequacy and integrity of the sound system of internal control. The Internal Auditors report directly to the ARMC.

During FYE 31 March 2018, the Internal Auditor provided the ARMC with a report on the state of internal control of the operating subsidiary within the Group and the extent of compliance of the with the Group’s established policies and procedures, as well as relevant statutory requirements.

The ARMC reviewed the report prepared by the Internal Auditor and carried out the recommendations as deemed fit, while continuing to monitor the state of internal control of the Group and report to the Board on a regular basis the status of progress on its recommendations.

The total cost incurred in respect of the Group’s internal audit function for FYE 31 March 2018 was RM25,000 (FYE 2017: RM65,000).

Further details of the Internal Audit function are set out in the Statement on Risk Management & Internal Control on pages 29 to 31 of Volume 1 of this Annual Report.


Statement on Directors’ Responsibility for Preparing the Financial Statements

The Directors are responsible for ensuring that the audited financial statements of the Group and of the Company are drawn up in accordance with the provisions of the Companies Act, 2016, the ACE Market Listing Requirements and the requirements of the applicable approved Malaysian Financial Reporting Standards issued by the Malaysian Accounting Standards Board.

The Directors are also responsible for ensuring that the annual audited financial statements of the Group and of the Company present a true and fair view of the state of affairs of the Group and of the Company as at the financial year end and of their financial performance and cash flows for the financial year then ended.

In preparing the audited financial statements of the Group and of the Company for the financial year ended 31 March 2018, the Directors have ensured that appropriate and relevant accounting policies have been adopted and consistently applied, reasonable and prudent estimates have been exercised and going concern basis adopted.

The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act, 2016, the ACE Market Listing Requirements and the requirements of the applicable approved Malaysian Financial Reporting Standards issued by the Malaysian Accounting Standards Board.

The Directors have overall responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Group and the Company to prevent and detect fraud and other irregularities.


Analysis of Shareholdingsas at 29 June 2018

Issued and Paid-up Share Capital : RM150,833,829 comprising 1,355,877,090 ordinary shares (inclusive of DGSB’s share premium)

Class of Shares : Ordinary Shares

Voting Rights : 1 vote per ordinary share on a poll

Number of Shareholders : 9,813

DISTRIBUTION OF SHAREHOLDERSaccording to statistical summary of the record of Depositors as at 29 June 2018

no. of % of no. of % of issued size of holdings shareholders shareholders shares held capital

Less than 100 shares 562 5.72 23,277 0.00100 to 1,000 shares 3,521 35.88 1,416,709 0.101,001 to 10,000 shares 1,820 18.55 10,825,430 0.8010,001 to 100,000 shares 2,704 27.56 132,462,815 9.77100,001 to less than 5% of issued shares 1,203 12.26 740,867,650 54.645% and above of issued shares 3 0.03 470,281,209 34.68

total 9,813 100.00 1,355,877,090 100.00

LIST OF THIRTY LARGEST SHAREHOLDERSaccording to the record of Depositors as at 29 June 2018

nameno. of

shares held %

1. Insas Technology Berhad 270,000,000 19.91

2. M&A Nominee (Tempatan) Sdn BhdInsas Credit & Leasing Sdn Bhd for Omesti Holdings Berhad

117,157,709 8.64

3. Amsec Nominees (Tempatan) Sdn BhdPledged Securities Account – AmBank (M) Berhad for Omesti Holdings Berhad (SMART)

83,123,500 6.13

4. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account for Lau Chi Chiang

45,300,000 3.34

5. Robin Lim Jin Hee 23,701,000 1.75

6. Zulkifli Halim Bin Mustaffa 15,175,900 1.12

7. Tan Seng Chuan 15,000,000 1.11

8. Hong Kea Choon 11,750,000 0.87

9. Chong Kim Foo 10,000,000 0.74

10. Tan Aik Ping 9,412,500 0.69

11. Yong Hua Ting 8,200,000 0.60

12. Chin Lin Sheng 8,191,600 0.60

13. Woo Sui Chun 7,150,000 0.53

14. Christina Ingeburg Orth 7,118,394 0.53


anaLYsis of sharehoLdinGs (Cont’d.)

as at 29 June 2018

nameno. of

shares held %

15. Lian Shear Lee 5,504,000 0.41

16. Chong Ying Choy 5,000,000 0.37

17. Citigroup Nominees (Tempatan) Sdn BhdExempt an for OCBC Securities Private Limited (Client A/C-RES)

5,000,000 0.37

18. Lee Teng Choon 4,702,000 0.35

19. Ling Ong Sing 4,700,000 0.35

20. Lee Mee Leng 4,634,000 0.34

21. Leong Saik Yuen 4,580,000 0.34

22. Tio Sian Hooi 4,494,400 0.33

23. Thong Siau Chong 4,400,000 0.32

24. See Lian Soon 4,325,000 0.31

25. Lim Cheng Ten 4,145,000 0.31

26. Abdul Shukor Bin Abu Bakar 4,080,000 0.30

27. Lim Geok Choo 4,000,000 0.30

28. Yong Wee Tak 4,000,000 0.30

29. Tan Kim Neo 3,700,000 0.27

30. Laang Jhe Chan 3,200,000 0.24

total 701,655,003 51.75

SUBSTANTIAL SHAREHOLDERSaccording to the register of substantial shareholders as at 29 June 2018

name

< ------------------- no. of Ordinary shares held ------------------- >Direct

interest %Deemedinterest %

1. Insas Technology Berhad 270,000,000 19.91 – –

2. Insas Berhad – – 270,000,000 (1) 19.91

3. Dato’ Sri Thong Kok Khee – – 270,000,000 (2) 19.91

4. Omesti Holdings Berhad 200,281,209 14.77 – –

5. Omesti Berhad – – 200,281,209 (3) 14.77

LIST OF THIRTY LARGEST SHAREHOLDERS (CONT’D.)according to the record of Depositors as at 29 June 2018


anaLYsis of sharehoLdinGs (Cont’d.)

as at 29 June 2018

DIRECTORS’ INTERESTS IN THE COMPANY AND RELATED COMPANIESaccording to the register of Directors’ shareholdings as at 29 June 2018

Diversified Gateway solutions Berhad

< ---------------------- no. of Ordinary shares held ---------------------- >Direct


1. Dato’ Mah Siew Kwok 6,763,892 0.50 – –

2. Dato’ Dr Tan Seng Chuan 15,000,000 1.11 – –

3. Monteiro Gerard Clair – – – –

4. Chow Seck Kai – – – –

5 Dr Tang Pen San – – – –

6. Wan Mai Gan – – – –

related company



Omesti Berhad – Ordinary shares


2. Dato’ Dr Tan Seng Chuan – – – –

3. Monteiro Gerard Clair 12,111,400 2.80 67,998,300 (4) 15.70


5. Dr Tang Pen San – – – –


related company



Microlink solutions Berhad – Ordinary shares


2. Dato’ Dr Tan Seng Chuan – – – –

3. Monteiro Gerard Clair 3,613,647 2.16 – –


5. Dr Tang Pen San – – – –


nOtEs:(1) Deemed interest by virtue of Insas Technology Berhad, being a wholly-owned subsidiary of Insas Berhad (Insas) pursuant to Section 8(4) of

the Companies Act, 2016.(2) Deemed interest by virtue of his substantial interest in Insas pursuant to Section 8(4) of the Companies Act, 2016.(3) Deemed interest by virtue of Omesti Holdings Berhad (OHB), being a wholly-owned subsidiary of Omesti Berhad (Omesti) pursuant to

Section 8(4) of the Companies Act, 2016.(4) Deemed interest by virtue of his substantial interest in H2O Holdings Sdn Bhd (formerly known as Red Zone Development Sdn Bhd)

pursuant to Section 8(4) of the Companies Act, 2016.


Other Compliance Information

SHARE BUY-BACKThe Company did not purchase any of its own shares during the financial year ended (FYE) 31 March 2018.

STATUTORY AND NON-STATUTORY AUDIT FEESThe audit and non-audit fees paid or payable by the Company and the Group to the External Auditors for the FYE 31 March 2018 are set out as below:

Fee company (in rM) Group (in rM)

Audit 43,000 203,685

Non-Audit 3,000 5,000

MATERIAL CONTRACTSThere were no material contracts entered into by the Group and the Company involving the interest of its Directors and major shareholders of the Group and of the Company which were still subsisting as at the end of the financial year under review, or which were entered into since the end of the previous financial year.

RECURRENT RELATED PARTY TRANSACTIONSAt the 12th Annual General Meeting (AGM) of Diversified Gateway Solutions Berhad (DGSB) held on 14 September 2017, the Company had obtained the approval of the shareholders for the shareholders’ mandate to allow the Company and its subsidiaries (DGSB Group) to enter into recurrent related party transactions of a revenue or trading nature, which are necessary for its day-to-day operations and in the ordinary course of its business, with related parties (Recurrent Transactions).

The said mandate is effective from 15 September 2017 until the conclusion of the forthcoming AGM of the Company.


other ComPLianCe information (Cont’d.)

In accordance with Paragraph 3.1.5 of the Guidance Note 8 of the ACE Market Listing Requirements, details of the Recurrent Transactions conducted during FYE 31 March 2018 pursuant to the said shareholders’ mandate are as follows:

companies within DGsB Group transacting with related parties nature of transactions related party

interested Director / Major shareholders

aggregateValue of

transactionsduring FyE

31 March 18(rM)

DGSB Group (9) Receipt of administrative and management support, training and other related services from Omesti to DGSB Group

Omesti Berhad (Omesti) (3)

interested Director- Dato’ Mah Siew Kwok

(Dato’ Mah) (1)

interested Major shareholders- Omesti Holdings Bhd

(OHB) (2)

- Omesti (3)

450,000.00

Supply of computer hardware, software and services by Omesti Group to DGSB Group

Omesti and its subsidiary companies (Omesti Group) (4)

1,956.70

Supply of network and software solutions, network security, storage and network management solutions inclusive of technical / maintenance services by DGSB Group to Omesti Group

2,313,089,19

Provision of network connectivity and bandwidth services and project management services in relation to telecommunications by Omesti Group to DGSB Group

–

Renting of office spaces and provision of other related services from Omesti Group to DGSB Group

–

DGSB Group (9) Supply of network and software solutions inclusive of technical / maintenance services by DGSB Group to Ho Hup Group

Ho Hup Construction Company Berhad and its subsidiary companies (Ho Hup Group) (5)

interested Director- Dato’ Mah (1)

interested Majorshareholders- OHB (2)

- Omesti (3)

–



companies within DGsB Group transacting with related parties nature of transactions related party

interested Director / Major shareholders

aggregateValue of

transactionsduring FyE

31 March 18(rM)

DGSB Group (9) Renting of office spaces and procurement of other related services such as general maintenance services from Ho Hup Group

Ho Hup Group (5) interested Director- Dato’ Mah (1)

interested Major shareholders- OHB (2)

- Omesti (3)

–

DGSB Group (9) Provision of corporate secretarial, accounting and payroll services and other related services from CNS to DGSB Group

Continuous Network Services Sdn Bhd (CNS) (6)

63,436.13

DGSB Group (9) Supply of network and software solutions, network security, storage and network management solutions inclusive of technical / maintenance services by DGSB Group to MSB Group

Microlink Solutions Berhad and its subsidiary companies(MSB Group) (7)

–

Supply of computer hardware, software and services by MSB Group to DGSB Group

368,063.58

DGSB Group (9) Supply of software solutions, computer hardware services in relation to human capital management by MIHCM Asia to DGSB Group

MIHCM Asia Sdn Bhd (MIHCM Asia) (8)

–



Notes:

(1) Dato’ Mah is the Non-Executive Vice Chairman of Omesti and also a Major Shareholder of Omesti by virtue of his direct interest in Omesti. By virtue of his interest in Omesti, Dato’ Mah is deemed interested in the shares of Omesti’s subsidiary companies to the extent Omesti has an interest. Dato’ Mah’s direct interest in Omesti, DGSB, MSB and Ho Hup as at 31 March 2018 are set out below:

Name of Company

% of Interest

Direct Indirect

Omesti 19.053 –

DGSB 0.646 – (a)

MSB 0.704 – (a)

Ho Hup 1.37 13.614 (b)

(a) Cessation of deemed interest in the Company on 3 November 2017 pursuant to Section 8(4) of the Companies Act, 2016 (Act).

(b) Deemed interest by virtue of his substantial interest in Omesti pursuant to Section 8(4) of the Act and shareholdings held by his spouse and daughter pursuant to Section 59(11)(c) of the Act.

(2) OHB is an associate company of DGSB and immediate holding company of MSB.

(3) Omesti is the immediate holding company of OHB. Omesti is principally engaged in investment holding activities and the provision of management services, and through its subsidiaries, are engaged in the following:

(i) distribution and provision of maintenance for hardware and software;

(ii) provision of a comprehensive range of tele/data communication and networking solutions and services;

(iii) provision of legal, financial and commercial software products as well as services to develop and implement platform-independent software solutions;

(iv) provision of integrated business solutions based on SAP software and customised solutions which include, building automation and management, media publication and broadcasting solutions; and

(v) provision of customised systems integration of hardware platforms, continuous maintenance and after sales support services

(4) Omesti Group is Omesti and its subsidiary companies.

(5) Ho Hup Group is a related party to DGSB Group through a common ultimate Major Shareholder, Omesti. As at 31 March 2018, Ho Hup is a 13.26% associated company of OHB. Ho Hup Group is principally involved in foundation engineering, civil engineering, building contracting works and hire of plant and machinery.

(6) CNS is a related party to DGSB Group through an associate company, Omesti. CNS is principally engaged in the provision of corporate secretarial, accounting and payroll services.

(7) MSB Group is a related party to DGSB Group through an associate company, Omesti. As at 31 March 2018, MSB is a 59.28% owned subsidiary company of OHB. MSB is principally involved in investment holding and provision of research and development. Through its subsidiaries, MSB is involved in the following:

(i) provision of information technology solutions to the financial services industry and dealing in related products;

(ii) trading and marketing of computer software programs and products;

(iii) provision of research and development for information technology solutions to the financial services industry;

(iv) providing consultancy services in supporting and modifying banking software;

(v) distribution of licences and services related to CA Technologies Inc., a provider of IT management software and solutions (including distribution and maintenance of computer equipment);

(vi) distribution and provision of maintenance for hardware and software; and

(vii) provision of legal, financial and commercial software products as well as services to develop and implement platform-independent software solutions.

(8) MIHCM Asia is a related party to DGSB Group through an associate company, Omesti. As at 31 March 2018, MIHCM Asia is a 33.33% associated company of Continuous Network Advisers Sdn Bhd., a wholly-owned subsidiary of Omesti. MIHCM Asia is principally involved in distribution, marketing, implementing and maintenance of human capital management software solutions and services in Asia

(9) Cessation as Omesti’s subsidiary on 7 March 2018.


Notice of13th Annual General MeetingDiVErsiFiED GatEWay sOLUtiOns BErhaD(Company No. 675362-P)(Incorporated in Malaysia)

AGENDAas OrDinary BUsinEss:1. To receive the Audited Financial Statements for the financial year ended 31 March 2018

together with the Reports of the Directors and Auditors thereon.(Please refer to Explanatory Note)

2. To approve the payment of benefits payable to Non-Executive Directors of up to an amount of RM67,000 for the period from 6 September 2018 until the conclusion of the next AGM of the Company.

Resolution 1

3. To re-elect Dato’ Mah Siew Kwok retiring pursuant to Article 111 of the Company’s Articles of Association and being eligible, offered himself for re-election.

Resolution 2

4. To re-elect the following Directors retiring pursuant to Article 97 of the Company’s Articles of Association and being eligible, offered themselves for re-election:

(a) Dato’ Dr Tan Seng Chuan Resolution 3(b) Monteiro Gerard Clair Resolution 4(c) Dr Tang Pen San Resolution 5(d) Chow Seck Kai Resolution 6(e) Wan Mai Gan Resolution 7

5. To re-appoint Messrs BDO as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

Resolution 8

as spEciaL BUsinEss:6. To consider, and if thought fit, to pass the following resolution as an Ordinary Resolution:

aUthOrity tO aLLOt anD issUE sharEs pUrsUant tO sEctiOns 75 anD 76 OF thE cOMpaniEs act, 2016

Resolution 9

“THATsubjectalways to theCompaniesAct,2016and theapprovalsof the relevantauthorities, the Directors be and are hereby empowered, pursuant to Sections 75 and 76 of the Companies Act, 2016 to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad (Bursa Securities) and that such authority shall continue tobe in forceuntil theconclusionof thenextAGMof theCompany.”

NOTICE IS HEREBY GIVEN THAT the 13th Annual General Meeting of the Company will be held at Banquet

Hall, The Royal Selangor Golf Club, Jalan Kelab Golf, Off Jalan Tun Razak, 55000 Kuala Lumpur, on

Wednesday, 5 September 2018 at 10.00 am for the following purposes:


notiCe of 13th annUaL GeneraL meetinG (Cont’d.)

7. To consider, and if thought fit, to pass the following resolution as an Ordinary Resolution:

prOpOsED rEnEWaL OF sharEhOLDErs’ ManDatE anD nEW sharEhOLDErs’ ManDatE FOr rEcUrrEnt rELatED party transactiOns OF a rEVEnUE Or traDinG natUrE

Resolution 10

“THAT theCompanyand/or itssubsidiariesbeand is/areherebyauthorised toenter intorecurrent related party transactions from time to time with Related Parties who may be a Director, a major shareholder of the Company and/or its subsidiaries or a person connected with such a Director or major shareholder, as specified in section 2.3 of the Statement/Circular to Shareholders dated 31 July 2018 subject to the following:

i) the transactions are of a revenue or trading nature which are necessary for the day-to-day operations of the Company and/or its subsidiaries and are transacted on terms consistent or comparable with market or normal trade practices and/or based on normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minorityshareholders; and

ii) disclosure is made in the annual report of the aggregate value of transactions conducted during the financial year pursuant to the shareholders’ mandate in accordancewith theACEMarketListingRequirementsofBursaSecurities;

THAT the mandate given by the shareholders of the Company shall only continue to be in force until the conclusion of the next AGM of the Company or the expiry of the period within which the next AGM is required to be held pursuant to Section 340(2) of the Companies Act, 2016 (the Act) (but shall not extend to such extension as may be allowed pursuant toSection340(4)of theAct); unless revokedorvariedbyOrdinaryResolutionoftheshareholdersof theCompany ingeneralmeeting,whichever is theearlier;

AND THAT the Directors of the Company be authorised to complete and carry out such acts and actions as they may consider expedient or necessary to give effect to the shareholders’mandate.”

8. To consider, and if thought fit, to pass the following resolution as an Ordinary Resolution:

prOpOsED rEnEWaL OF aUthOrity FOr thE cOMpany tO pUrchasE its OWn sharEs

Resolution 11

“THAT,subject to theprovisionsof theCompaniesAct,2016 (Act), theArticlesofAssociation of the Company, Chapter 12 of the ACE Market Listing Requirements of Bursa Securities and any prevailing laws, orders, requirements, rules and regulations, guidelines issued by the relevant authorities at the time of purchase, the Company be and is hereby authorised to allocate an amount not exceeding the total audited retained profits of the Company for the purpose of purchasing such amount of ordinary shares (DGSB Shares) in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors of the Company may deem fit in the interest of the Company provided that the aggregate number of shares purchased pursuant to this resolution does not exceed ten percent (10%) of the total issued and paid-up share capital of the Company at the time of purchase (Proposed RenewalofShareBuy-BackAuthority);



AND THAT the Directors of the Company be and are hereby authorised to decide in their absolute discretion to deal with any DGSB Shares purchased by the Company pursuant to the Proposed Renewal of Share Buy-Back Authority, whereby the DGSB Shares purchased may be dealt with in the following manner:

(i) cancelled;or

(ii) retained as treasury shares for distribution as dividend and/or resold on Bursa Securitiesand/orcancelledsubsequently;or

(iii) partly retainedandpartlycancelled;or

(iv) suchothermannerasmaybepermittedby theAct;or

in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the timebeing in force;

AND FURTHER THAT the Directors of the Company be and are hereby authorised to carry out the Proposed Renewal of Share Buy-Back Authority immediately upon the passing of this resolution, which shall continue to be in force until:

(i) the conclusion of the next AGM of DGSB at which the ordinary resolution for the Proposed Renewal of Share Buy-Back Authority is passed, at which time it shall lapse unless by ordinary resolution passed at the meeting, the authority is renewed, either unconditionallyorsubject toconditions;or

(ii) the expiration of the period within which the next AGM after that date is required by law tobeheld;or

(iii) the authority is revoked or varied by ordinary resolution passed by the shareholders of DGSB in a general meeting,

whichever occurs first but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and to take all steps as are necessary and/or to carry out all such acts and actions as the Directors of the Company deem fit and expedient in the best interests of the Company and to give full effect to the Proposed Renewal of Share Buy-Back Authority with full powers to assent to any conditions, modifications, amendmentsand/orvariationsasmaybe imposedby the relevantauthorities.”

9. To transact any other business of which due notice shall have been given.

By Order of the Board

phanG ai tEE [MAICSA No. 7013346]Company Secretary

Kuala Lumpur31 July 2018



nOtEs:

(i) A member of the Company may appoint more than two (2) proxies to attend at the same meeting. Where a member appoints two (2) or more proxies, he shall specify in each Form of Proxy the proportion of his shareholdings to be represented by each proxy.

(ii) 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. An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (SICDA) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

(iii) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under Seal or under the hand of an officer or attorney duly authorised. A proxy may but need not be a member of the Company. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

(iv) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Registered Office of the Company at 10th Floor, Menara SMI, 6 Lorong P. Ramlee, 50250 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than twenty-four (24) hours before the time appointed for taking of the poll, and in default the instrument of proxy shall not be treated as valid.

(v) Only members whose names appears in the Record of Depositors on 27 August 2018 shall be entitled to attend, speak and vote at this meeting or appoint proxy/proxies to attend and/or vote on his/her behalf.

(vi) The resolutions set out in the Notice of 13th Annual General Meeting will be put to vote by poll pursuant to Rule 8.31A of the ACE Market Listing Requirements of Bursa Securities.

EXpLanatOry nOtEs:

agenda 1 audited Financial statements for the financial year ended (FyE) 31 March 2018

The audited financial statements are for discussion only under Agenda 1, as they do not require shareholders’ approval under the provision of Section 340(1)(a) of the Companies Act, 2016. Hence, they will not be put for voting.

resolution 1 Directors’ Benefits

The proposed Resolution 1, if passed, will authorise the payment of Directors’ benefits (being meeting attendance allowance) payable to the Non-Executive Directors for the period from 6 September 2018 until the conclusion of the next AGM of the Company. This authority, unless revoked or varied by the Company in a general meeting will expire at the conclusion of the next AGM of the Company.

The total estimated amount of meeting attendance allowance payable is calculated based on the number of scheduled Board and Board Committee meetings and the current composition of the Board and Board Committees remains unchanged.

resolution 9 authority to allot shares

Further information in relation to the general mandate for issue of securities is set out in the Statement Accompanying Notice of 13th AGM.

resolution 10 resolution pertaining to the proposed renewal of shareholders’ Mandate and new shareholders’ Mandate for recurrent related party transactions of a revenue or trading nature

Further information on the Recurrent Related Party Transactions is set out in Part B of the Statement/Circular to Shareholders dated 31 July 2018 which is dispatched together with the Company’s Annual Report 2018.

resolution 11 proposed renewal of authority for the company to purchase its Own shares (proposed renewal of share Buy-Back authority)

Further information on the Proposed Renewal of Share Buy-Back Authority is set out in Part A of the Statement/Circular to shareholders dated 31 July 2018 which is dispatched together with the Company’s Annual Report 2018.


Statement AccompanyingNotice of 13th Annual General Meeting(Pursuant to rule 8.29(2) of the aCe market Listing requirements of Bursa malaysia securities Berhad)

a. DEtaiLs OF thE inDiViDUaLs WhO arE stanDinG FOr rE-ELEctiOn as DirEctOrs

No individual other than the retiring Directors who are standing for re-election is seeking election as Director at the 13th Annual General Meeting (AGM).

B. statEMEnt rELatinG tO GEnEraL ManDatE FOr issUE OF sEcUritiEs in accOrDancE With rULE 6.04(3) OF thE acE MarkEt ListinG rEQUirEMEnts

The resolution in relation to the authority to allot and issue shares pursuant to Sections 75 and 76 of the Companies Act, 2016, is a renewal of the general mandate for the issue of new ordinary shares in the Company which was approved at the last AGM of the Company held on 14 September 2017.

As at 29 June 2018, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the 12th AGM held on 14 September 2017 and which will lapse at the conclusion of the 13th AGM.

The resolution, if passed, would provide flexibility to the Directors to undertake fund raising activities, including but not limited to placement of shares for the funding of the Company’s future investment projects, working capital and/or acquisitions, by the issuance of shares in the Company to such persons at any time, as the Directors consider it to be in the best interests of the Company. Any delay arising from and cost involved in convening a general meeting to approve such issuance of shares should be eliminated.

This authority, unless revoked or varied by the Company in a general meeting will expire at the conclusion of the next AGM of the Company.


Privacy Notice

DEAR SIRS/MADAMS,Thisprivacynotice forpersonaldata (“privacy notice”) is issued toall shareholdersofDiversifiedGatewaySolutionsBerhad(“company”, “we”, “us”or “our”), pursuant to thestatutory requirementsof thePersonalDataProtectionAct2010 (“pDpa”).

During the course of your dealings with us, we will collect and process your personal data (including any personal data previously collected from you) for purposes, including, to communicate with you, provide administrative assistance to you in the course of you being our shareholder, respond to your enquiries or input, invite you to meetings and events, provide you with notices, documents, information and/or updates relating to us and any matters relating to your involvement in the Board of Directors, for publication and dissemination of your personal data in any circulars, reports, minutes, websites, newsletters, bulletins, brochures, pamphlets or any other materials which may be published and circulated internally or to the general public, to comply with our legal and regulatory obligations (including monitor and where necessary make disclosure of matters relating to your involvement in any shares, debentures, participatory interests, rights, options, transactions and contracts) and other purposes required to operate and maintain ourbusinessassetout inourPrivacyPolicy (collectively referred toas “purposes”).

We will not disclose any of your personal data to any third party without your consent except to the Company’s group of companies (including the Company’s subsidiaries, related and/or associated companies), our professional advisers, vendors, suppliers, agents, contractors, service providers, business partners, insurance companies, banks and financial institutions, any governmental agencies, regulatory authorities and/or statutory bodies, within or outside Malaysia, where necessary, for the Purposes mentioned above, to any party who undertakes to keep your personal data confidential, to any person as set out in our Privacy Policy, or to whom we are compelled or required under the law to disclose to. A copy of our Privacy Policy is available on our website: http://www.dgsbgroup.com/?cur=page/page&id=115&title=PDPA.

It is necessary for us to collect and process your personal data. If you do not provide us with your personal data, or do not consent to this Privacy Notice, we will not be able to effectively provide services to you in connection with or incidental to your role as our shareholder or process your personal data for any of the Purposes, if at all.

We are committed to ensuring that your personal data is stored securely. You have the right to request for access to, request for a copy of and request to update or correct, your personal data held by us. You also have the right at any time to request us to limit the processing and use of your personal data, subject to our right to rely on any statutory exemptions and/or exceptions to collect, use and disclose your personal data.

Your written requests or queries should be addressed to:

pErsOnaL Data prOtEctiOn OFFicErAddress : Level 16, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala LumpurContact No : +603 4291 9233Fax No : +603 4291 7633Email Address : [email protected]

By providing your personal data to us, you consent to us processing your personal data in accordance with this Privacy Notice, and you confirm that all personal data provided by you is accurate and complete, and that none of it is misleading or out of date. You will promptly update us in the event of any change to your personal data.

To the extent that you have provided (or will provide) personal data about your family members, spouse, other dependents (if you are an individual), directors, shareholders, employees, representatives, agents (if you are a corporate entity/an organisation) and/or other individuals, you confirm that you have explained (or will explain) to them that their personal data will be provided to, and processed by, us and you represent and warrant that you have obtained their consent to the processing (including disclosure and transfer) of their personal data in accordance with this Privacy Notice.

In respect of minors (i.e. individuals under 18 years of age) or individuals not legally competent to give consent, you confirm that you are the parent or guardian or person who has parental responsibility over them or the person appointed by court to manage their affairs or that they have appointed you to act for them, to consent on their behalf to the processing (including disclosure and transfer) of their personal data in accordance with this Privacy Notice.

We reserve the right to update and amend this Privacy Notice or our Privacy Policy from time to time. We will notify you of any amendments to this Privacy Notice or our Privacy Policy via announcements on our website or other appropriate means. If we amend this Privacy Notice or our Privacy Policy, the amendment will only apply to personal data collected after we have posted the revised Privacy Notice or Privacy Policy.

In accordance with Section 7(3) of the PDPA, this Privacy Notice is issued in both English and Bahasa Malaysia. In the event of any inconsistencies or discrepancies between the English version and the Bahasa Malaysia version, the English version shall prevail.


Notis Privasi

KEPADA TUAN-TUAN DAN PUAN-PUAN,Notisprivasiuntukdataperibadi ini (“notis privasi”)diberikankepadasemuapemegangsahamDiversifiedGatewaySolutionsBerhad(“syarikat”, “kita” atau “kami”), selarasdenganobligasi statutori di bawahAktaPerlindunganDataPeribadi2010 (“pDpa”).

Sepanjang masa urusan anda dengan kami, kami akan mengumpul dan memproses data peribadi anda (termasuk data peribadi yang telah dikumpulkan sebelum ini) untuk tujuan berkomunikasi dengan anda, memberi bantuan pentadbiran kepada anda, memberi maklum balas terhadap pertanyaan atau input anda, menjemput anda ke mesyuarat dan acara kami, memberi anda notis, dokumen, maklumat dan/atau isu-isu terkini berkaitan dengan kami dan perkara-perkara berhubungan dengan penglibatan anda di Lembaga Pengarah, untuk penerbitan dan pendedahan data peribadi anda di pekeliling, laporan, minit, laman web, surat berita, buletin, brosur, risalah atau media lain yang mungkin diterbitkan dan diedarkan di dalam organisasi kami atau kepada orang awam, untuk memenuhi kewajipan kami dalam mematuhi undang-undang dan peraturan-peraturan (termasuk memantau dan membuat pendedahan tentang perkara-perkara yang berkaitan dengan penglibatan anda dalam apa-apa saham, debentur, kepentingan penyertaan, hak, opsyen, urus niaga dan kontrak), serta tujuan-tujuan lain yang kami perlukan untuk mengendalikan dan mengekalkan perniagaan kami sepertimana yang tertera dalam PolisiPrivasi kami (secarakolektifnyadirujuksebagai “tujuan-tujuan”).

Kami tidak akan mendedahkan apa-apa data peribadi anda kepada mana-mana pihak ketiga tanpa kebenaran anda kecuali kepada syarikat-syarikat di dalam kumpulan Syarikat (termasuk subsidiari, syarikat berkaitan dan/atau syarikat bersekutu kami), penasihat profesional, ejen, vendor, pembekal, kontraktor, pembekal perkhidmatan, rakan kongsi perniagaan, syarikat insurans, bank dan institusi kewangan, agensi kerajaan, pihak berkuasa dan/atau badan berkanun, di dalam atau di luar Malaysia, jikalau perlu, bagi Tujuan-Tujuan yang disebut di atas, kepada mana-mana pihak yang berjanji untuk menyimpan data peribadi anda secara sulit, kepada mana-mana pihak sepertimana yang tertera dalam Polisi Privasi kami, atau sekiranya diperlukan di bawah undang-undang. Sesalinan Polisi Privasi kami boleh didapati di laman web kami di http://www.dgsbgroup.com/?cur=page/page&id=115&title=PDPA.

Kami perlu mengumpul dan menyimpan data peribadi anda. Sekiranya anda tidak memberikan data peribadi anda kepada kami, atau tidak bersetuju dengan Notis Privasi ini, kami mungkin tidak dapat memberikan perkhidmatan secara efektif kepada anda berkaitan atau bersampingan dengan peranan anda sebagai pemegang saham kami atau memproses data peribadi anda bagi Tujuan-Tujuan yang disebut di atas.

Kami akan memastikan data peribadi anda disimpan dengan selamat. Anda mempunyai hak untuk meminta akses kepada, mendapat salinan, mengemaskini atau memperbetulkan data peribadi anda yang disimpan oleh kami. Anda juga mempunyai hak untuk meminta kami menghadkan pemprosesan dan penggunaan data peribadi anda pada bila-bila masa. Walaubagaimana pun, kami mempunyai hak untuk bergantung kepada mana-mana pengecualian dalam mengumpul, mengguna dan mendedah data peribadi anda.

Permintaan atau pertanyaan bertulis anda perlu disampaikan ke alamat di bawah:

pEGaWai pErLinDUnGan Data pEriBaDi Alamat : Level 16, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala LumpurNo Telefon : +603 4291 9233No Faks : +603 4291 7633Alamat Emel : [email protected]

Dengan memberikan data peribadi anda kepada kami, anda bersetuju untuk kami memproses data peribadi anda sepertimana yang tertera dalam Notis Privasi ini, dan anda mengesahkan bahawa semua data peribadi yang diberikan oleh anda adalah betul dan lengkap, dan tiada data peribadi yang mengelirukan atau yang belum dikemaskinikan. Anda mesti, dengan segera, mengemaskini data peribadi anda sekiranya terdapat apa-apa perubahan kepada data peribadi yang anda beri kepada kami.

Setakat mana yang anda telah memberikan (atau akan memberikan) data peribadi tentang ahli keluarga, pasangan, tanggungan anda (jikalau anda ialah seorang individu), pengarah, pemegang saham, wakil, ejen (jikalau anda ialah sebuah entiti korporat/organisasi) dan/atau individu lain, anda mengesahkan bahawa anda telah menjelaskan (atau akan menjelaskan) kepada mereka bahawa data peribadi mereka akan didedahkan kepada, dan akan diproses oleh, kami dan anda menyata dan menjamin bahawa anda telah diberi kuasa untuk mendedahkan data peribadi mereka kepada kami dan anda telah memperolehi persetujuan daripada mereka berkenaan dengan pemprosesan (termasuk pendedahan dan pemindahan) data peribadi mereka sepertimana yang tertera dalam Notis Privasi ini.

Berkenaan dengan individu yang belum mencapai usia dewasa (iaitu individu di bawah umur 18 tahun) atau individu yang tidak mempunyai kompeten untuk memberi persetujuan, anda mengesahkan bahawa anda ialah ibu bapa atau penjaga atau orang yang mempunyai kewajipan terhadap mereka atau orang yang dilantik oleh mahkamah untuk menguruskan urusan mereka atau mereka telah melantik anda untuk mewakili mereka, untuk memberi persetujuan bagi pihak mereka berkenaan dengan pemprosesan (termasuk pendedahan dan pemindahan) data peribadi mereka sepertimana yang tertera dalam Notis Privasi ini.

Kami berhak untuk mengemaskini dan meminda Notis Privasi ini atau Polisi Privasi kami dari semasa ke semasa. Sebarang perubahan atau pemindahan kepada Notis Privasi ini atau Polisi Privasi kami akan dimaklumkan melalui pengumuman di laman web kami atau melalui cara yang bersesuaian. Jika kami meminda Notis Privasi ini atau Polisi Privasi kami, pindaan itu hanya akan berkuat-kuasa untuk data peribadi yang dikumpul selepas kami memaparkan Notis Privasi atau Polisi Privasi kami yang terpinda.

Mengikut Seksyen 7(3) PDPA, Notis Privasi ini diterbitkan dalam Bahasa Inggeris dan Bahasa Malaysia. Sekiranya terdapat sebarang ketidakseragaman atau percanggahan di antara versi Bahasa Inggeris dan Bahasa Malaysia, versi Bahasa Inggeris akan digunapakai.

Form of ProxyDiVErsiFiED GatEWay sOLUtiOns BErhaD(Company No. 675362-P)(Incorporated in Malaysia)

I/We, NRIC No:

of

being a member/members of DIVERSIFIED GATEWAY SOLUTIONS BERHAD, hereby appoint

NRIC No:

of

or failing him/her, NRIC No:

of or failing whom,

THE CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us and on my/our behalf at the 13th annual General Meeting of the Company, to be held at Banquet hall, the royal selangor Golf club, Jalan kelab Golf, Off Jalan tun razak, 55000 kuala Lumpur, on Wednesday, 5 september 2018 at 10.00am or at any adjournment thereof in the manner as indicated below:

(Please indicate with an X in the spaces provided above how you wish your vote to be cast. If you do not indicate how you wish your proxy to vote on any Resolution, the proxy may vote as he or she thinks fit, or, at his or her discretion, abstain from voting)

rEsOLUtiOn FOr aGainst

RESOLUTION 1

RESOLUTION 2

RESOLUTION 3

RESOLUTION 4

RESOLUTION 5

RESOLUTION 6

RESOLUTION 7

RESOLUTION 8

RESOLUTION 9

RESOLUTION 10

RESOLUTION 11

Signed this day of 2018 number of Ordinary shares held

Signature of Shareholder(s)

nOtEs:(i) A member entitled to attend and vote at the meeting may appoint another person as his proxy to attend and vote in his stead. A proxy

may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation.(ii) A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting and where a member appoints two (2)

proxies, the appointment shall be invalid unless the member specifies the proportions of his holdings to be represented by each proxy.(iii) 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. An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (SICDA) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

(iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or if the appointer is a corporation, either under its common seal or under the hand of the attorney.

(v) The instrument appointing a proxy and the power of attorney (if any) under which it is signed or a notarially certified copy thereof shall be deposited at the Registered Office of the Company at 10th Floor, Menara SMI, 6 Lorong P. Ramlee, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding of the meeting or adjourned meeting.

(vi) Only members whose names appears in the Record of Depositors on 27 August 2018 shall be entitled to attend, speak and vote at this meeting or appoint proxy/proxies to attend and/or vote on his/her behalf.

(vii) The resolutions set out in the Notice of 13th Annual General Meeting will be put to vote by poll in accordance with Rule 8.31A of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

Fold this flap for sealing

Fold this flap for sealing

To: The COMPANY SECRETARY

DiVErsiFiED GatEWay sOLUtiOns BErhaD

10th Floor, Menara SMI,

6 Lorong P. Ramlee,

50250 Kuala Lumpur.

AFFIXSTAMPHERE


Contact Details of Subsidiaries

DiVErsiFiED GatEWay BErhaD(Co No 301306-T)

Level 16, Menara MaxisegarJalan Pandan Indah 4/2, Pandan Indah55100 Kuala Lumpur, MalaysiaT +603 4291 9233F +603 4291 7633

iss cOnsULtinG (MaLaysia) sDn BhD (Co No 446809-P)

Level 16, Menara Maxisegar Jalan Pandan Indah 4/2 Pandan Indah 55100 Kuala Lumpur, MalaysiaT +603 4291 9233F +603 4291 7633

iss cOnsULtinG (thaiLanD) LtD(Co No (5) 1662/2542)

323 United Center Building Level 19 Unit 1902C & 1903A Silom RoadBangrak Bangkok 10500 ThailandT +662 237 0553 F +662 237 0554

ranGkaian rinGkas sDn BhD(Co No 1013227-M)

Level 16, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala Lumpur, Malaysia.T +603 4291 9233 F +603 4291 7633

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DIV

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IFIED G

ATEWAY

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RT 20

18


Annual Report 2018



+603 4291 9233 +603 4291 7633

www.dgsbgroup.com



+603 4291 9233 +603 4291 7633

www.dgsbgroup.com


Financial Statements

Annual Report 2018

financial STaTEMEnTS

1Directors’ Report

7Statement by

Directors

7Statutory

Declaration

8independent

auditors’ Report

13Statements of

financial Position

15Statements of

Profit or loss and other comprehensive income

17consolidated Statement

of changes in Equity

18Statement of

changes in Equity

19Statements of

cash flows

22notes to the

financial Statements

VOLUME 2

What's inside

Visit www.dgsbgroup.com for more information

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The Directors hereby submit their report and the audited financial statements of the Group and of the company for the financial year ended 31 March 2018.

PRINCIPAL ACTIVITIESThe company is principally engaged in investment holding activities. The principal activities and the details of the subsidiaries are disclosed in note 7 to the financial statements. There have been no significant changes in the nature of these activities of the Group and of the company during the financial year.

RESULTSGroup Company

RM RM

loss for the financial year 2,250,310 39,568,509

attributable to: Owners of the parent 2,248,029 39,568,509 non-controlling interest 2,281 –

2,250,310 39,568,509

DIVIDENDSno dividend has been proposed, declared or paid by the company since the end of the previous financial year. The Directors do not recommend any dividend payment in respect of the current financial year.

RESERVES AND PROVISIONSThere were no material transfers to or from reserves or provisions during the financial year.

ISSUE OF SHARES AND DEBENTURESThe company did not issue any new shares or debentures during the financial year.

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


Directors’ Report

DIRECTORSThe Directors who have held office since the date of the last report are:

Diversified Gateway Solutions Berhad

Dato’ Mah Siew KwokDato’ Dr. Tan Seng chuan (appointed on 10 november 2017)Monteiro Gerard clair (appointed on 10 november 2017)Dr. Tang Pen San (appointed on 16 april 2018)chow Seck Kai (appointed on 16 april 2018)Wan Mai Gan (appointed on 16 april 2018)lau chi chiang (retired on 14 September 2017)Hoe Kah Soon (resigned on 16 april 2018)Hj ahmad Bin Khalid (resigned on 16 april 2018)Mah Yong Sun (resigned on 16 april 2018)

Subsidiaries of Diversified Gateway Solutions Berhad

lau chi chiangneo Poh lianRobin lim Jin HeeWisit WirayagornDato’ Wong Gian Kui (appointed on 18 april 2018)

DIRECTORS’ INTERESTSThe Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares and options over ordinary shares of the company and of its related corporations during the financial year ended 31 March 2018 as recorded in the Register of Directors’ Shareholdings kept by the company under Section 59 of the companies act 2016 in Malaysia were as follows:

<----------------------- Number of ordinary shares ----------------------->Balance

as at 1.4.2017/

*date ofappointment Bought Sold

Balanceas at

31.3.2018

Shares in the Company1

Direct interests

Dato’ Dr. Tan Seng chuan* 15,000,000 – – 15,000,000Dato’ Mah Siew Kwok 8,763,892 – – 8,763,892Hj ahmad Bin Khalid 30,001 – – 30,001

indirect interests

Dato’ Mah Siew Kwok2 738,490,001 – (738,490,001) –

Annual Report 2018DiVERSifiED GaTEWaY SOlUTiOnS BERHaD (675362-P)2

Directors’ report (cont’D.)

DIRECTORS’ INTERESTS (CONT ’D.)

<----------------------- Number of ordinary shares ----------------------->Balance

as at 1.4.2017/


Balanceas at

31.3.2018

Shares in the related corporationOmesti Berhad

Direct interests

Dato’ Mah Siew Kwok 88,896,424 – (6,765,000) 82,131,424Hj ahmad Bin Khalid 50,001 – – 50,001Mah Yong Sun 4,621,300 – – 4,621,300Monteiro Gerard clair* 8,464,400 774,400 – 9,238,800

indirect interests

Monteiro Gerard clair*3 68,431,300 – (289,000) 68,142,300

<-------------------- Number of warrants 2013/2018 -------------------->Balance

as at1.4.2017/


Balanceas at

31.3.2018

Warrants 2013/2018 in the related corporationOmesti Berhad

Direct interests

Dato’ Mah Siew Kwok 26,244,135 – – 26,244,135Mah Yong Sun 750,000 – – 750,000Monteiro Gerard clair* 71,000 688,500 – 759,500

indirect interests

Monteiro Gerard clair*3 20,382,500 – (20,382,500) –



DIRECTORS’ INTERESTS (CONT ’D.)

<------------------------ Number of ordinary shares ---------------------->Balance

as at 1.4.2017/


Balanceas at

31.3.2018

Shares in the related corporationMicrolink Solutions Berhad

Direct interests

Dato’ Mah Siew Kwok 1,271,536 – (92,600) 1,178,936Mah Yong Sun 3,850,213 – (2,676,800) 1,173,413Monteiro Gerard clair* 2,481,947 736,900 – 3,218,847

indirect interests

Dato’ Mah Siew Kwok4 97,052,093 2,169,700 – 99,221,793

<----------------------------- Number of options --------------------------->Balance

as at 1.4.2017/


Balanceas at

31.3.2018

Employees’ Shares Option Scheme (‘ESOS’) in the related corporationMicrolink Solutions Berhad

Direct interests

Monteiro Gerard clair* 1,000,200 – – 1,000,200

1 Cessation as subsidiary of Omesti Berhad on 7 March 2018.

2 Disposal of equity interest by Omesti Holdings Berhad during financial period from 1 April 2017 to 31 October 2017 and cessation of deemed interest in the Company pursuant to Section 8(4) of the Companies Act 2016 on 31 October 2017.

3 Deemed interest by virtue of his substantial interest in H2O Holdings Sdn Bhd (Formerly known as Red Zone Development Sdn Bhd) pursuant to Section 8(4) of the Companies Act 2016.

4 Deemed interest by virtue of his substantial interest in Omesti Berhad, pursuant to Section 8(4) of the Companies Act 2016.



DIRECTORS’ BENEFITSSince the end of the previous financial year, none of the Directors have received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by the Directors as shown in the financial statements) by reason of a contract made by the company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than the transactions entered into in the ordinary course of business with companies in which the Directors of the company have substantial financial interests as disclosed in note 26 to the financial statements.

There were no arrangements during and at the end of the financial year, to which the company is a party, which had the object of enabling the Directors to acquire benefits by means of the acquisition of shares in or debentures of the company or any other body corporate.

DIRECTORS’ REMUNERATIONThe details of Directors’ remuneration are disclosed in note 25 to the financial statements.

INDEMNITY AND INSURANCE FOR OFFICERS AND AUDITORSThere were no indemnity given to or insurance effected for the officers and auditors of the Group and of the company during the financial year.

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY(I) AS AT THE END OF THE FINANCIAL YEAR

(a) Before the financial statements of the Group and of the company were prepared, the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets other than debt which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

(b) in the opinion of the Directors, the results of operations of the Group and of the company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.

(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT

(c) The Directors are not aware of any circumstances:

(i) which would render the amount of bad debts written off or the amount of provision for doubtful debts in the financial statements of the Group and of the company inadequate to any material extent;

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

(iii) 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.



OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (CONT ’D.)

(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (CONT’D.)

(d) in the opinion of the Directors:

(i) there has not arisen any item, transaction or event of a material and unusual nature which is likely to affect substantially the results of operations of the Group and of the company for the financial year in which this report is made; and

(ii) no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve (12) months after the end of the financial year which would or may affect the ability of the Group and of the company to meet their obligations as and when they fall due.

(III) AS AT THE DATE OF THIS REPORT

(e) There are no charges on the assets of the Group and of the company which have arisen since the end of the financial year to secure the liabilities of any other person.

(f) There are no contingent liabilities of the Group and of the company which have arisen since the end of the financial year.

(g) The Directors are not aware of any circumstances not otherwise dealt with in the report or the financial statements which would render any amount stated in the financial statements of the Group and of the company misleading.

SIGNIFICANT EVENT DURING THE FINANCIAL YEARSignificant event during the financial year is disclosed in note 29 to the financial statements.

SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD Significant event subsequent to the end of the reporting period is disclosed in note 30 to the financial statements.

AUDITORS The auditors, BDO, have expressed their willingness to continue in office.

auditors’ remuneration of the company and its subsidiaries for the financial year ended 31 March 2018 amounted to RM46,000 and RM208,685 respectively.

Signed on behalf of the Board in accordance with a resolution of the Directors.

Dato’ Mah Siew KwokDirector

Kuala lumpur13 July 2018

Dato’ Dr. Tan Seng ChuanDirector



in the opinion of the Directors, the financial statements as set out on pages 13 to 61 have been drawn up in accordance with Malaysian financial Reporting Standards, international financial Reporting Standards, and the provisions of the companies act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the company as at 31 March 2018 and of the financial performance and cash flows of the Group and of the company for the financial year then ended.

On behalf of the Board

Dato’ Mah Siew KwokDirector


Dato’ Dr. Tan Seng ChuanDirector

i, Thoo W’y-Kit, being the officer primarily responsible for the financial management of Diversified Gateway Solutions Berhad, do solemnly and sincerely declare that the financial statements as set out on pages 13 to 61 are, to the best of my knowledge and belief, correct and i make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations act, 1960.

Subscribed and solemnly )declared by the abovenamed at )Kuala lumpur this )13 July 2018 ) Thoo W’y-Kit ca 31394

Before me:

BALOO A/L T. PICHAI (W 663)commissioner of Oaths


Statement By Directors

Statutory Declaration

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTSOPINION

We have audited the financial statements of Diversified Gateway Solutions Berhad, which comprise the statements of financial position as at 31 March 2018 of the Group and of the company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 13 to 61.

in our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the company as at 31 March 2018 and of their financial performance and their cash flows for the financial year ended in accordance with Malaysian financial Reporting Standards (MfRSs), international financial Reporting Standards (ifRSs) and the requirements of the companies act 2016 in Malaysia.

BASIS FOR OPINION

We conducted our audit in accordance with approved standards on auditing in Malaysia and international Standards on auditing (iSas). Our responsibilities under those standards are further described in the auditors’ Responsibilities for the audit of the financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

INDEPENDENCE AND OTHER ETHICAL RESPONSIBILITIES

We are independent of the Group and of the company in accordance with the By-laws (on Professional Ethics, conduct and Practice) of the Malaysian institute of accountants (By-laws) and the international Ethics Standards Board for accountants’ code of Ethics for Professional accountants (iESBa code), and we have fulfilled our other ethical responsibilities in accordance with the By-laws and the iESBa code.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the Group and of the company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Recoverability of trade receivables

as at 31 March 2018, the Group has trade receivables of RM30.8 million which include debts that are past due but not impaired of RM11.9 million. The details of trade receivables and its credit risk have been disclosed in note 9 to the financial statements.

We have focused on the recoverability of trade receivables as it requires a high level of management judgement and the amounts are material.

Management recognised impairment losses on trade receivables based on specific known facts or circumstances on customers’ abilities to pay.


Independent Auditors’ Reportto the Members of Diversified Gateway solutions Berhad(incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT ’D.)

KEY AUDIT MATTERS (CONT’D.)

1. Recoverability of trade receivables (Cont’d.)

Audit response

Our audit procedures, with the involvement of the component auditors included the following:

(i) assessed recoverability of receivables that were past due but not impaired by reviewing their historical bad debt expense, ageing profiles of the counter parties and past historical repayment trends;

(ii) inquired management on the action plans to recover overdue amounts; and

(iii) assessed cash receipts subsequent to the end of the reporting period for its effect in reducing amounts outstanding as at the end of the reporting period.

2. Recognition of deferred tax assets

The carrying amount of the deferred tax assets as at 31 March 2018 amounted to RM3.9 million, as disclosed in note 8 to the financial statements.

We have focused on this deferred tax assets recognition assessment as it requires significant judgements and estimates about the future results and key assumptions applied to profit forecast and projections in determining whether the deferred tax assets can be utilised. These key assumptions include forecast growth in future revenues and operating profit margins and growth rates.

Audit response

Our audit procedures, with the involvement of the component auditors included the following:

(i) Evaluated whether it is probable that the future taxable profits will be available by comparing taxable profit projections against recent performance, as well as assessed and challenged the assumptions used in projecting revenues and operating profit margins; and

(ii) Performed sensitivity analysis to stress test the key assumptions used in the profit projections.

3. Impairment assessment on the carrying amounts of investments in subsidiaries

as at 31 March 2018, investments in subsidiaries of the company was RM49.9 million as disclosed in note 7 to the financial statements. The company had made an impairment loss of RM60.6 million in respect of the carrying amounts of investments in subsidiaries during the financial year.

The determination of recoverable amounts requires significant judgements and estimates about the future results and key assumptions applied to cash flow projections of the subsidiaries in determining the recoverable amounts. in this instance, the recoverable amount is based on value-in-use. These key assumptions include different budgeted operating profit margins, growth rates, terminal values as well as determining an appropriate pre-tax discount rate.


inDepenDent AUDitors’ report (cont’D.)to the Members of Diversified Gateway solutions Berhad(incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT ’D.)

KEY AUDIT MATTERS (CONT’D.)

3. Impairment assessment on the carrying amounts of investments in subsidiaries (Cont’d.)

Audit response

Our audit procedures included the following:

(i) compared prior period projections to actual outcomes to assess reliability of management’s forecasting process;

(ii) assessed and challenged the key assumptions used in forecasting revenues, operating profit margins and growth rates;

(iii) assessed appropriateness of pre-tax discount rates used by management by comparing to the market data, weighted average cost of capital of the Group and relevant risk factors; and

(iv) Performed sensitivity analysis of our own to stress test the key assumptions used in the forecast.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT 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 company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

if, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTSThe Directors of the company are responsible for the preparation of financial statements of the Group and of the company that give a true and fair view in accordance with MfRSs, ifRSs, and the requirements of the companies act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the 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 ability of the Group and of the company to continue as going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the 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 iSas will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

as part of an audit conducted in accordance with approved standards on auditing in Malaysia and iSas, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• IdentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsoftheGroupandoftheCompany,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 areappropriate 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 andrelated disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group and of the company to continue as a going concern. if we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the 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.

• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany,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 activitieswithin 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 those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.



AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (CONT ’D.)

from the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our 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 subsidiaries 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.

BDOaf: 0206chartered accountants


Tan Yeong Tat03315/07/2019 Jchartered accountant



Group Company2018 2017 2018 2017

Note RM RM RM RM

ASSETS

Non-current assets

Property, plant and equipment 5 3,770,756 4,713,465 – –Goodwill 6 5,737,704 5,737,704 – –investments in subsidiaries 7 – – 49,912,301 110,542,301Deferred tax assets 8 3,872,122 3,623,261 – –Trade and other receivables 9 11,522,509 6,272,462 – –

24,903,091 20,346,892 49,912,301 110,542,301Current assets

inventories 10 2,616,522 2,444,670 – –Trade and other receivables 9 36,659,347 39,791,701 54,797 84,657current tax assets 5,619,178 5,202,147 – –cash and bank balances 11 18,420,633 17,663,321 4,480 61,589

63,315,680 65,101,839 59,277 146,246

TOTAL ASSETS 88,218,771 85,448,731 49,971,578 110,688,547


Statements of Financial PositionAs at 31 March 2018

Group Company2018 2017 2018 2017

Note RM RM RM RM

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital 12 150,833,829 150,833,829 150,833,829 150,833,829Reserves 13 (108,482,657) (106,358,354) (102,608,616) (63,040,107)

42,351,172 44,475,475 48,225,213 87,793,722Non-controlling interest 87,051 89,332 – –

TOTAL EQUITY 42,438,223 44,564,807 48,225,213 87,793,722

LIABILITIES

Non-current liabilities

Borrowings 14 19,984 252,424 – –Provision for post-employment benefits 17 4,164,246 1,238,977 – –Deferred tax liabilities 8 146,374 652,426 – –

4,330,604 2,143,827 – –Current liabilities

Trade and other payables 18 40,543,348 35,795,188 1,746,365 22,894,825Borrowings 14 906,596 2,944,909 – –

41,449,944 38,740,097 1,746,365 22,894,825

TOTAL LIABILITIES 45,780,548 40,883,924 1,746,365 22,894,825

TOTAL EQUITY AND LIABILITIES 88,218,771 85,448,731 49,971,578 110,688,547

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


stAteMents oF FinAnciAL position (cont’D.)

As at 31 March 2018

Group Company2018 2017 2018 2017

Note RM RM RM RM

CONTINUING OPERATIONS

Revenue 20 83,943,468 74,160,042 22,030,000 1,500,000

changes in inventories 942,714 (1,249,776) – –

Purchases (29,786,561) (28,762,138) – –

Direct expenses (1,569,001) (1,762,952) – –

Other operating income 2,683,578 2,208,838 24,717 133,108

Depreciation of property, plant and equipment (1,648,278) (1,634,078) – –

Employee benefits 25 (44,090,221) (32,737,007) (560,982) (408,372)

Other operating expenses (11,546,363) (6,446,392) (61,062,244) (720,717)

finance costs 21 (124,083) (308,637) – (139,401)

(loss)/Profit before tax (1,194,747) 3,467,900 (39,568,509) 364,618

Tax expense 22 (1,055,563) (1,635,850) – –

(loss)/Profit from continuing operations (2,250,310) 1,832,050 (39,568,509) 364,618

DISCONTINUED OPERATION

loss from discontinued operation, net of tax 23 – (1,402,413) – –

(loss)/Profit for the year (2,250,310) 429,637 (39,568,509) 364,618

Other comprehensive income, net of tax

Items that may be reclassified subsequently to profit or loss

foreign currency translations for foreign operations, net of tax 22 123,726 874,971 – –

Total comprehensive (loss)/income (2,126,584) 1,304,608 (39,568,509) 364,618


Statements of Profit or Loss and other Comprehensive IncomeFor the financial year ended 31 March 2018

Group Company2018 2017 2018 2017

Note RM RM RM RM

(loss)/Profit attributable to:

Owners of the parent (2,248,029) 416,603 (39,568,509) 364,618non-controlling interest (2,281) 13,034 – –

(2,250,310) 429,637 (39,568,509) 364,618

Total comprehensive (loss)/profit attributable to:

Owners of the company (2,124,303) 1,291,574 (39,568,509) 364,618non-controlling interest (2,281) 13,034 – –

(2,126,584) 1,304,608 (39,568,509) 364,618

Earnings per ordinary share attributable to owners of the parent (sen):

Basic and diluted continuing operations 24 (0.17) 0.13 Discontinued operation 24 – (0.10)

24 (0.17) 0.03



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Consolidated Statement of Changes In EquityFor the financial year ended 31 March 2018

Non-distributable

Share Share Accumulated Totalcapital premium losses equity

RM RM RM RM

Company

Balance as at 1 april 2016 135,587,709 15,246,120 (63,404,725) 87,429,104

Profit for the financial year – – 364,618 364,618

Other comprehensive income, net of tax – – – –

Total comprehensive income – – 364,618 364,618

Effects of the new companies act 2016 (note 12) 15,246,120 (15,246,120) – –

Balance as at 31 March 2017/1 april 2017 150,833,829 – (63,040,107) 87,793,722

loss for the financial year – – (39,568,509) (39,568,509)

Other comprehensive income, net of tax – – – –

Total comprehensive loss – – (39,568,509) (39,568,509)

Balance as at 31 March 2018 150,833,829 – (102,608,616) 48,225,213



Statement of Changes in EquityFor the financial year ended 31 March 2018

Group Company2018 2017 2018 2017

Note RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

(loss)/Profit before tax from continuing operations (1,194,747) 3,467,900 (39,568,509) 364,618

loss before tax from discontinued operation 23 – (1,392,036) – –


adjustments for:Bad debt written-off 58,059 – – –Depreciation of property, plant and

equipment 5 1,648,278 1,646,338 – –Dividend income 20 – – (22,030,000) –fair value adjustment on

non-current trade receivables 9(c) 1,351,436 107,121 – –impairment losses on: – trade receivables 9(e) 2,614,594 1,020,823 – – – investments in subsidiaries 7(b) – – 60,630,000 –interest expense 21 124,083 308,637 – 139,401interest income (292,907) (353,130) – –inventories written off 368,779 – – –inventories written down 402,083 – – –loss/(Gain) on disposal of property,

plant and equipment 8,000 (3,231) – –Reversal of impairment losses on: – trade receivables 9(e) (1,180,400) (207,569) – –Waiver of debt of amount owing

to a subsidiary – – – (91,725)Property, plant and equipment

written-off 5 450 28,811 – –net movement for post-employment

benefits 17 3,026,241 622,767 – –net unrealised loss on foreign

exchange 218,762 – 34,483 –net unrealised gain on foreign

exchange – (298,378) – –

Operating profit/(loss) before changes in working capital 7,152,711 4,948,053 (934,026) 412,294

changes in working capital:inventories (942,714) 1,249,776 – –Trade and other receivables (5,180,144) 1,359,317 29,860 –Trade and other payables 6,584,733 2,765,533 72,448 (62,913)

cash generated from/(used in) operations 7,614,586 10,322,679 (831,718) 349,381

income tax paid (2,383,900) (2,067,850) – –income tax refunded 37,888 – – –

net cash from/(used in) operating activities 5,268,574 8,254,829 (831,718) 349,381


Statements of Cash FlowsFor the financial year ended 31 March 2018

Group Company2018 2017 2018 2017

Note RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES

Repayments to related companies – (1,537,904) – (54,136)Repayments to related parties (1,836,573) – (1,341,350) –advances from/(Repayments to)

subsidiaries – – 2,115,959 (110,191)advances from/(Repayments to)

former ultimate holding company – 2,412,998 – (1,240)Repayments to former immediate

holding company – (106,441) – –interest received 292,907 353,130 – –(Placements)/Withdrawal of deposits

pledged to licensed banks (247,041) 2,840,653 – –Placements of deposits with licensed

banks with maturity more than three (3) months (70,906) – – –

Purchase of property, plant and equipment 5 (776,491) (877,307) – –

Proceeds from disposal of property, plant and equipment 41,800 3,556 – –

net cash (used in)/from investing activities (2,596,304) 3,088,685 774,609 (165,567)

CASH FLOWS FROM FINANCING ACTIVITIES

interest paid (124,083) (308,637) – (139,401)Repayments of hire purchase creditors (334,872) (310,712) – –

net cash used in financing activities (458,955) (619,349) – (139,401)

net increase/(decrease) in cash and cash equivalents 2,213,315 10,724,165 (57,109) 44,413


stAteMents oF cAsh FLows (cont’D.)


Group Company2018 2017 2018 2017

Note RM RM RM RM

cash and cash equivalents at beginning of financial year

as previously reported 3,474,127 (7,223,268) 61,589 17,176

Effect of changes in exchange rates 161,931 (26,770) – –

3,636,058 (7,250,038) 61,589 17,176

cash and cash equivalents at end of financial year 11 5,849,373 3,474,127 4,480 61,589

RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIESHire purchase

creditors Group (Note 16)

RM

at 1 april 2017 530,086

non-cash flows – interest expense 28,180

cash flows (363,052)

at 31 March 2018 195,214



stAteMents oF cAsh FLows (cont’D.)


1. CORPORATE INFORMATIONThe company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the acE Market of Bursa Malaysia Securities Berhad.

The registered office of the company is located at 16th floor, KH Tower, 8 lorong P. Ramlee, 50250 Kuala lumpur.

The principal place of business of the company is located at level 16, Menara Maxisegar, Jalan Pandan indah 4/2, Pandan indah, 55100 Kuala lumpur.

The financial statements are presented in Ringgit Malaysia (RM), which is also the functional currency of the company.

The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 13 July 2018.

2. PRINCIPAL ACTIVITIESThe company is principally engaged in investment holding activities. The principal activities and the details of the subsidiaries are disclosed in note 7 to the financial statements. There have been no significant changes in the nature of these activities of the company and of its subsidiaries during the financial year.

3. BASIS OF PREPARATIONThe financial statements of the Group and of the company have been prepared in accordance with Malaysian financial Reporting Standards (MfRSs), international financial Reporting Standards (ifRSs) and the provisions of the companies act 2016 in Malaysia.

The accounting policies adopted are consistent with those of the previous financial year except for the effects of adoption of new MfRSs during the financial year. The new MfRSs and amendments to MfRSs adopted during the financial year are set out in note 31 to the financial statements.

The financial statements of the Group and of the company have been prepared under the historical cost convention except as otherwise stated in the financial statements.

4. OPERATING SEGMENTSThe Group has arrived at three (3) reportable segments that are organised and managed separately according to the nature of products and services, specific expertise and technological requirements, which requires different business and marketing strategies. The reportable segments are summarised as follows:

Business Performance Services : Provision of business performance improvement related services.

Trading and Distribution Services : Distribution and reselling of hardware and software and related services.

Digital and infrastructure Services : Provision of a comprehensive range of tele/data communication, networking, solutions and related services.

Other segments comprise operations related to investment holding activities and subsidiaries that have ceased operations and remained inactive.


Notes to the Financial Statements31 March 2018

4. OPERATING SEGMENTS (CONT ’D.)

The Group evaluates performance on the basis of profit or loss from operations before tax.

inter-segment revenue is priced along the same lines as sales to external customers and is eliminated in the consolidated financial statements. These policies have been applied consistently throughout the financial years.

The inter-segment assets are adjusted against the segment assets to arrive at total assets reported in the statements of financial position.

The inter-segment liabilities are adjusted against the segment liabilities to arrive at total liabilities reported in the statements of financial position.

(a) Operating segments

2018

BusinessPerformance

Services

Trading andDistribution

Services

Digital andInfrastructure

Services Others Elimination ConsolidationRM RM RM RM RM RM

RevenueExternal sales 69,618,060 – 14,312,498 12,910 – 83,943,468inter-segment sales – 111,422 – 22,030,000 (22,141,422) –

Total 69,618,060 111,422 14,312,498 22,042,910 (22,141,422) 83,943,468

interest income 97,557 – 195,350 – – 292,907finance costs (12,350) (41,810) (111,733) – 41,810 (124,083)

net finance income/(expense) 85,207 (41,810) 83,617 – 41,810 168,824

Depreciation of property, plant and equipment 294,723 24,234 1,329,321 – – 1,648,278

Segment profit/(loss) before tax 3,196,644 (78,726) (3,044,092) (46,035,740) 44,767,167 (1,194,747)

Other material non-cash items:fair value adjustment on long term

trade receivables – – 1,351,436 – – 1,351,436inventories written off – – 368,779 – – 368,779inventories written down – – 402,083 – – 402,083impairment losses on trade receivables 614,594 – 2,000,000 – – 2,614,594Reversal of impairment losses

on trade receivables (1,167,027) – (13,373) – – (1,180,400)

capital expenditure 538,254 – 238,237 – – 776,491

Segment assets 47,100,856 76,004 57,721,998 89,625,874 (106,305,961) 88,218,771

Segment liabilities 33,265,551 204,301 33,091,344 23,063,418 (43,844,066) 45,780,548

Notes to the FiNaNcial statemeNts (coNt’d.)

31 march 2018



(a) Operating segments (cont’d.)

2017

BusinessPerformance

Services

Trading andDistribution

Services

Digital andInfrastructure

Services OthersDiscontinued

operation

Elimination/Adjustment

fordiscontinued

operation ConsolidationRM RM RM RM RM RM RM

Revenue

External sales 51,425,583 61,547 22,672,912 – 2,339,525 (2,339,525) 74,160,042inter-segment sales – 2,941 3,301,718 1,500,000 – (4,804,659) –

Total 51,425,583 64,488 25,974,630 1,500,000 2,339,525 (7,144,184) 74,160,042

interest income – – 341,340 – – – 341,340finance costs (33,258) (82,190) (135,978) (139,401) – 82,190 (308,637)

net finance income/(expense) (33,258) (82,190) 205,362 (139,401) – 82,190 32,703

Depreciation of property, plant equipment 205,252 24,233 1,405,344 – 12,260 (13,011) 1,634,078

Segment profit/(loss) before tax 2,864,533 (203,732) 1,928,894 1,056,568 1,392,036 (3,570,399) 3,467,900

Other material non-cash items:

fair value adjustment on long term trade receivables – – 107,121 – – – 107,121

impairment losses on trade receivables 1,020,823 – – – – – 1,020,823

Reversal of impairment losses on trade receivables (180,823) – (26,746) – – – (207,569)

capital expenditure 438,772 – 440,785 – – (2,250) 877,307

Segment assets 35,950,351 231,601 84,344,466 118,801,421 – (153,879,108) 85,448,731

Segment liabilities 24,534,251 281,172 33,889,082 46,685,969 – (64,506,550) 40,883,924


31 march 2018



(b) Geographical segments

Segment Segment Revenue assets liabilities Depreciation

RM RM RM RM

2018

Malaysia 14,312,498 40,521,699 7,061,918 1,353,555Singapore 12,910 87,934 9,133,618 –Thailand 69,618,060 46,981,001 28,697,456 294,723indonesia – 628,137 887,556 –

83,943,468 88,218,771 45,780,548 1,648,278

2017

Malaysia 22,734,459 41,709,226 5,318,109 1,428,826Singapore (discontinued operation) 2,339,525 7,047,013 10,841,192 12,260 Thailand 51,425,583 35,950,351 23,675,980 205,252indonesia – 742,141 1,048,643 –

76,499,567 85,448,731 40,883,924 1,646,338

5. PROPERTY, PLANT & EQUIPMENT Depreciation

Balance charge for BalanceGroup as at the financial Translation as at2018 1.4.2017 Additions Disposal Write-off year adjustments 31.3.2018

RM RM RM RM RM RM RM

Carrying amount

computer hardware and software 762,491 566,340 – (14) (339,274) (19,322) 970,221

furniture and fittings 45,044 5,392 – (436) (11,246) (1,350) 37,404Motor vehicles 208,899 – (49,800) – (132,705) – 26,394Office equipment and computer

equipment 3,626,536 183,559 – – (1,142,856) – 2,667,239Renovation 70,495 21,200 – – (22,197) – 69,498

4,713,465 776,491 (49,800) (450) (1,648,278) (20,672) 3,770,756


31 march 2018


5. PROPERTY, PLANT & EQUIPMENT (CONT ’D.)

<------------------- As at 31.3.2018 ------------------->Accumulated Carrying

Cost depreciation amountRM RM RM

computer hardware and software 3,291,605 (2,321,384) 970,221furniture and fittings 393,358 (355,954) 37,404Motor vehicles 568,431 (542,037) 26,394Office equipment and computer equipment 8,695,268 (6,028,029) 2,667,239Renovation 218,939 (149,441) 69,498

13,167,601 (9,396,845) 3,770,756

DepreciationBalance charge for Balance

Group as at the financial Translation as at2017 1.4.2016 Additions Disposal Write - off year* adjustments 31.3.2017

RM RM RM RM RM RM RM

Carrying amount

computer hardware and software 548,791 445,955 – (25,074) (256,472) 49,291 762,491

furniture and fittings 30,031 10,742 – (3,500) (11,357) 19,128 45,044Motor vehicles 405,994 – – – (197,095) – 208,899Office equipment and computer

equipment 4,382,717 420,610 (325) (237) (1,162,397) (13,832) 3,626,536Renovation 89,512 – – – (19,017) – 70,495

5,457,045 877,307 (325) (28,811) (1,646,338) 54,587 4,713,465

<------------------- As at 31.3.2017 ------------------->Accumulated Carrying

Cost depreciation amountRM RM RM

computer hardware and software 3,307,567 (2,545,076) 762,491furniture and fittings 400,047 (355,003) 45,044Motor vehicles 1,066,430 (857,531) 208,899Office equipment and computer equipment 8,511,710 (4,885,174) 3,626,536Renovation 197,739 (127,244) 70,495

13,483,493 (8,770,028) 4,713,465

* included depreciation for discontinued operation as disclosed in note 23.


31 march 2018


5. PROPERTY, PLANT & EQUIPMENT (CONT ’D.)

(a) Each class of property, plant and equipment are measured after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses.

(b) Depreciation is calculated to write off the cost of the assets to their residual values on a straight line basis over their estimated useful lives. The principal annual depreciation rates are as follows:

computer hardware and software 20%furniture and fittings 10% – 15%Motor vehicles 20%Office equipment and computer equipment 15% – 20%Renovation 10% – 15%

(c) Directors estimate the useful lives of these property, plant and equipment to be within the periods mentioned above. These are common life expectancies applied in the industry in which the Group operates. changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

a ten percent (10%) difference in the average useful lives of these assets from Director’s estimates would result in approximately a RM164,828 (2017: RM164,634) variance in profit for the financial year.

(d) included in property, plant and equipment of the Group are certain motor vehicles acquired under hire purchase and lease arrangements with carrying amounts of RM76,194 (2017: RM191,006).

6. GOODWILLGroup

2018 2017RM RM

as at 1 april 2017/2016 5,737,704 5,737,704less: impairment losses for the financial year – –

as at 31 March 2018/2017 5,737,704 5,737,704

(a) Goodwill recognised in a business combination is an asset at the acquisition date and is initially measured at cost. after initial recognition, goodwill is measured at cost less accumulated impairment losses.

(b) Goodwill has been allocated to a cash Generating Unit (cGU) of the Group, which has been identified based on the following reportable segment:

Group2018 2017

RM RM

Business Performance Services 5,737,704 5,737,704


31 march 2018


6. GOODWILL (CONT ’D.)

(c) impairment assessment on the carrying amount of goodwill is performed at least on an annual basis. The Directors have made estimates about the future results and key assumptions applied to cash flow forecasts of the cGU in determining its recoverable amount.

Recoverable amount of goodwill for both financial years have been determined based on the value-in-use of the cGU, using the following assumptions:

(i) cash flow forecasts based on approved financial budgets covering five (5) years period;

(ii) Pre-tax discount rate of the Group of 9.9% (2017:11.9%) per annum;

(iii) forecasted growth rates ranging from 1% to 3% (2017: 1% to 3%) based on past performance of the segment; and

(iv) Terminal value based on the fifth year cash flow without incorporating any growth rate.

Management believes that there is no reasonably possible change in the key assumptions on which management has based its determination of the cGU’s recoverable amounts, which would cause the cGU’s carrying amount to materially exceed its recoverable amount.

Based on these assumptions, the Directors are at the view that no impairment loss is required as the recoverable amount determined is higher than the carrying amount of the cGU.

7. INVESTMENTS IN SUBSIDIARIESCompany

2018 2017RM RM

Unquoted shares, at cost 155,973,329 155,973,329less: accumulated impairment losses (106,061,028) (45,431,028)

49,912,301 110,542,301

(a) investments in subsidiaries which are eliminated on consolidation, are stated in the separate financial statements of the company at cost less impairment losses, if any.

all components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by MfRSs. The choice of measurement basis is made on a combination-by-combination basis. Subsequent to initial recognition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ shares of subsequent changes in equity.


31 march 2018


7. INVESTMENTS IN SUBSIDIARIES (CONT ’D.)

(b) The reconciliation of movements in impairment losses are as follows:

Company2018 2017

RM RM

as at 1 april 2017/2016 45,431,028 45,431,028impairment losses for the financial year 60,630,000 –

as at 31 March 2018/2017 106,061,028 45,431,028

(c) Details of the subsidiaries are as follows:

Country of

Name of company

incorporation/Principal place

of businessEffective equity

interest Principal activities2018 2017

% %

Direct subsidiaries

iSS consulting (Malaysia) Sdn Bhd

Malaysia 100 100 computer networking and digital media solutions and services.

iSS consulting (Thailand) ltd Thailand 100 100 advisers and consultants for computer software solutions.

Diversified Gateway Berhad Malaysia 100 100 Provision of computer network solutions and system integration.

Rangkaian Ringkas Sdn Bhd Malaysia 100 100 computer distribution and maintenance of computer networking, network security storage and network management solutions.

cogent consulting Sdn Bhd Malaysia 70 70 inactive.

iSS consulting (S) Pte ltd^# The Republic of Singapore

100 100 inactive.

ledge consulting Pte ltd^ The Republic of Singapore

100 100 inactive.

cogent Business Solutions (S) Pte ltd^

The Republic of Singapore

100 100 inactive.

PT iSS consulting indonesia^ indonesia 100 100 inactive.

^ Subsidiaries not audited by BDO Malaysia or BDO member firm.# classified as discontinued operation in previous financial year.


31 march 2018


7. INVESTMENTS IN SUBSIDIARIES (CONT ’D.)

(d) Summarised financial information of a subsidiary that has non-controlling interest as at the end of each reporting period prior to intra-group elimination is not disclosed as it is not material to the Group.

(e) The company assessed whether there were any indicators of impairment during the financial year. in doing this, management considered the current environments and performance of the subsidiaries. Management has considered the losses in certain subsidiaries in the current financial year as impairment indicators.

an impairment loss on investments in subsidiaries amounting to RM60,630,000 relating to a subsidiary, Diversified Gateway Berhad, has been recognised during the financial year due to declining business operations as a result of intense competition. The recoverable amount was determined based on a value-in-use calculation using cash flow projections based on financial budgets approved by the management covering a five (5)-year period. The discount rate applied to the cash flow projections was 9.9% based on the weighted average cost of capital of the Group.

Management believes that there is no reasonably possible change in the key assumptions on which management has based its determination of the recoverable amounts of the investments in subsidiaries, which would cause the carrying amounts of the investments in subsidiaries to materially exceed their recoverable amounts.

8. DEFERRED TAX(a) Deferred tax assets and liabilities are made up of the following:

Group2018 2017

RM RM

as at 1 april 2017/2016 (2,970,835) (3,461,460)Recognised in profit or loss (note 22) (784,042) 680,254Translation adjustments 29,129 (189,629)

as at 31 March 2018/2017 (3,725,748) (2,970,835)

Presented after appropriate offsetting:

Deferred tax assets, net (3,872,122) (3,623,261)Deferred tax liabilities, net 146,374 652,426

(3,725,748) (2,970,835)


31 march 2018


8. DEFERRED TAX (CONT ’D.)

(b) components and movements of deferred tax assets and deferred tax liabilities during the financial year prior to offsetting are as follows:

Group2018 2017

RM RM

Deferred tax assets

as at 1 april 2017/2016 (3,623,261) (3,653,636)Recognised in profit or loss: Unused tax losses 931,678 213,792 Provisions (1,209,668) 6,212Translation adjustments 29,129 (189,629)

as at 31 March 2018/2017 (3,872,122) (3,623,261)

Deferred tax liabilities

as at 1 april 2017/2016 652,426 192,176Recognised in profit or loss: Property, plant and equipment (506,052) 460,250

as at 31 March 2018/2017 146,374 652,426

(c) components of deferred tax as at the end of the reporting period comprise the tax effects of:

Group2018 2017

RM RM

Deferred tax assets

Unused tax losses 2,501,954 3,439,844Provisions 1,370,168 183,417

3,872,122 3,623,261

Deferred tax liabilities

Property, plant and equipment 146,374 652,426


31 march 2018


8. DEFERRED TAX (CONT ’D.)

(d) The amount of temporary differences for which no deferred tax assets have been recognised in the statements of financial position are as follows:

Group2018 2017

RM RM

Unused tax losses 49,636,028 43,876,773Unabsorbed capital allowances 111,757 87,300

49,747,785 43,964,073

Deferred tax assets of certain subsidiaries have not been recognised as it is not probable that future taxable profits of the subsidiaries would be available against which the deductible temporary differences could be utilised.

The deductible temporary differences do not expire under current tax legislation.

(e) Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that future taxable profit will be available against which the tax losses and capital allowances can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

9. TRADE & OTHER RECEIVABLESGroup Company

2018 2017 2018 2017RM RM RM RM

Non-current

Trade receivables

Third parties 13,522,509 6,272,462 – –less: impairment losses (2,000,000) – – –

11,522,509 6,272,462 – –Current

Trade receivables

Third parties 17,459,460 22,564,909 – –amounts owing by subsidiaries – – 5,159,118 5,188,978amounts owing by related companies – 4,414,278 – –amounts owing by related parties 2,238,187 – – –

19,697,647 26,979,187 5,159,118 5,188,978


31 march 2018


9. TRADE & OTHER RECEIVABLES (CONT ’D.)

Group Company2018 2017 2018 2017

RM RM RM RM

less: impairment losses on – Third parties (433,695) (246,565) – – – amounts owing by subsidiaries – – (5,104,321) (5,104,321)

(433,695) (246,565) (5,104,321) (5,104,321)

19,263,952 26,732,622 54,797 84,657

Other receivables

Other receivables 8,309,070 4,916,936 – –Deposits 345,372 857,847 – –

8,654,442 5,774,783 – –

27,918,394 32,507,405 54,797 84,657Prepayments 8,740,953 7,284,296 – –

36,659,347 39,791,701 54,797 84,657

Total trade and other receivables: – non-current 11,522,509 6,272,462 – – – current 27,918,394 32,507,405 54,797 84,657

Loans and receivables 39,440,903 38,779,867 54,797 84,657

(a) loans and receivables are measured at amortised cost using the effective interest method.

(b) Trade credit terms of trade receivables granted by the Group and the company range from 30 to 120 days (2017: 30 days to 120 days) from date of invoice. They are recognised at their original amounts, which represent their fair values on initial recognition.


31 march 2018



(c) included in trade receivables is an amount totalling RM13,522,509 (2017:RM13,085,873), which is repayable on a fixed monthly instalment basis. The repayment term has been renegotiated during the financial year. The receivable is subject to a fixed weighted average effective interest rate of 6% (2017: 8%).

The instalments receivable are as follows:

Group2018 2017

RM RM

Gross trade receivable – not later than one (1) year – 7,203,934 – later than one (1) year and not later than five (5) years 16,483,228 7,491,222

16,483,228 14,695,156less: fair value adjustment (2,960,719) (1,609,283)

Present value of trade receivable 13,522,509 13,085,873

Repayable as follows:

Current assets: – not later than one (1) year – 6,813,411

Non-current assets: – later than one (1) year but not later than five (5) years 13,522,509 6,272,462

13,522,509 13,085,873

credit terms of this trade receivable of the Group is in accordance with the repayment schedules as contained in the agreement.

The reconciliation of movements in fair value adjustment is as follows:

Group2018 2017

RM RM

as at 1 april 2017/2016 (1,609,283) (1,502,162)fair value adjustment during the financial year (1,351,436) (107,121)

as at 31 March 2018/2017 (2,960,719) (1,609,283)


31 march 2018



(d) ageing analysis of trade receivables of the Group and the company are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM

neither past due nor impaired 7,385,366 23,035,400 54,797 84,657

Past due, not impaired1 to 30 days 3,987,647 4,271,481 – –31 to 60 days 5,372,283 2,518,778 – –61 to 90 days 1,352,814 1,760,642 – –91 to 120 days 549,289 490,213 – –More than 120 days 616,553 928,570 – –

11,878,586 9,969,684 – –Past due and impaired 13,956,204 246,565 5,104,321 5,104,321

33,220,156 33,251,649 5,159,118 5,188,978

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy customers with good payment records with the Group and the company. Most of the trade receivables of the Group and of the company arise from recurring business with the Group and the company.

Receivables that are past due but not impaired

at the end of the reporting period, majority of the trade receivables of the Group are active corporate customers with healthy business relationships, in which management is of the view that the amounts are recoverable based on payment history. The trade receivables of the Group that are past due but not impaired are unsecured in nature.

Receivables that are past due and impaired

Trade receivables of the Group and of the company that are past due and impaired at the end of the reporting period are as follows:

Individually impairedGroup Company

2018 2017 2018 2017RM RM RM RM

Trade receivables 13,956,204 246,565 5,104,321 5,104,321less: impairment losses (2,433,695) (246,565) (5,104,321) (5,104,321)

11,522,509 – – –


31 march 2018



(e) The reconciliation of movements in impairment losses are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM

as at 1 april 2017/2016 246,565 193,435 5,104,321 5,104,321charged during the financial year 2,614,594 1,020,823 – –impairment losses written-off (55,163) – – –Reversal of impairment losses (1,180,400) (207,569) – –Exchange difference 808,099 (760,124) – –

as at 31 March 2018/2017 2,433,695 246,565 5,104,321 5,104,321

The Group and the company make impairment of receivables based on an assessment of the recoverability of receivables. impairment is applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical bad debts, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgment to evaluate the adequacy of impairment of receivables. Where expectations differ from the original estimates, the differences would impact the carrying amount of the receivables.

Trade and other receivables that are individually determined to be impaired at the end of the reporting period relate to those receivables that exhibit significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

(f) The currency exposure profiles of trade and other receivables (excluding prepayments) are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM

Ringgit Malaysia (RM) 16,494,837 18,812,906 10,564 5,941Singapore Dollar (SGD) 137,865 1,868,690 39,540 74,023United States Dollar (USD) 67,959 – – –Thai Baht (THB) 22,121,610 17,372,904 – –indonesian Rupiah (iDR) 618,632 725,367 4,693 4,693

39,440,903 38,779,867 54,797 84,657


31 march 2018



(g) The following table demonstrates the sensitivity analysis of the (loss)/profit after tax of the Group and of the company to a reasonably possible change in the SGD, USD, THB and iDR exchange rates against RM, with all other variables held constant:

Increase/(Decrease)Group Company

2018 2017 2018 2017RM RM RM RM

(Loss)/Profit after tax

SGD/RM– strengthened by 10% (10,478) 142,020 (3,005) 5,625– weakened by 10% 10,478 (142,020) 3,005 (5,625)

USD/RM– strengthened by 10% (5,165) – – –– weakened by 10% 5,165 – – –

THB/RM– strengthened by 10% (1,681,242) 1,320,341 – –– weakened by 10% 1,681,242 (1,320,341) – –

iDR/RM– strengthened by 10% (47,016) 55,128 (357) 357– weakened by 10% 47,016 (55,128) 357 (357)

(h) credit risk concentration profile

The Group determines concentration of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the end of the reporting period are as follows:

<------------------------------------- Group ------------------------------------->2018 2017

RM % of total RM % of total

By country

Malaysia 15,472,726 50% 17,194,728 52%Singapore – – 1,651,524 5%Thailand 15,313,735 50% 14,158,832 43%

30,786,461 100% 33,005,084 100%

at the end of each reporting period, approximately 37% (2017: 46%) of the trade receivables of the Group were due from one (1) (2017: one (1)) major customer.


31 march 2018


10. INVENTORIESGroup

2018 2017RM RM

At cost

Hardware and software 1,468,281 2,261,111Hardware maintenance parts and spares 968,684 183,559

2,436,965 2,444,670At net realisable value

Hardware and software 179,557 –

2,616,522 2,444,670

(a) cost of computer hardware, software and spare parts are determined on a specific identification basis while costs of other inventories are determined on the first-in-first-out basis. The cost comprises all costs of purchase, cost of conversion plus other costs incurred in bringing the inventories to their present location and condition.

(b) cost of inventories of the Group recognised as an expense during the financial year amounted to RM28,843,847 (2017: RM10,730,653). The Group has written off inventories amounted to RM368,779 and has written down slow-moving inventories amounted to RM402,083 to their net realisable value.

(c) The Group writes down its obsolete or slow moving inventories based on assessment of their estimated net selling price. inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses current market prices and future demand when evaluating the adequacy of the write down for obsolete or slow moving inventories. Where actual results differ from the original estimates, the differences would impact the carrying amount of inventories.


31 march 2018


11. CASH & BANK BALANCESGroup Company

2018 2017 2018 2017RM RM RM RM

cash and bank balances 6,580,739 6,141,374 4,480 61,589Deposits with licensed banks 11,839,894 11,521,947 – –

as reported in the statements of financial position 18,420,633 17,663,321 4,480 61,589

less: Deposits pledged to licensed banks (11,768,988) (11,521,947) – – Deposits with licensed banks

with maturity more than three (3) months (70,906) – – –

Bank overdrafts included in borrowings (note 14) (731,366) (2,667,247) – –

cash and cash equivalents included in the statements of cash flows 5,849,373 3,474,127 4,480 61,589

(a) Deposits with licensed banks of the Group amounting to RM11,768,988 (2017: RM11,521,947) are pledged to licensed banks for credit facilities granted to certain subsidiaries of the Group as disclosed in note 15 to the financial statements.

(b) The weighted average effective interest rates of deposits of the Group at the end of the reporting period are as follows:

Group2018 2017

RM RM

fixed rates 2.08% 3.15%

Sensitivity analysis for fixed rate deposits as at the end of the reporting period was not presented as fixed rate instruments are not affected by changes in interest rates.

(c) The currency exposure profiles of cash and bank balances are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM

Ringgit Malaysia (RM) 6,903,106 7,837,852 4,480 61,589Singapore Dollar (SGD) 603 535,956 – –United States Dollar (USD) 31,579 – – –Thai Baht (THB) 11,471,148 9,272,739 – –indonesian Rupiah (iDR) 14,197 16,774 – –

18,420,633 17,663,321 4,480 61,589


31 march 2018


11. CASH & BANK BALANCES (CONT ’D.)

(d) The following table demonstrates the sensitivity analysis of profit or loss of the Group to a reasonably possible change in the SGD, THB and iDR exchange rates against RM, with all other variables held constant:

Increase/(Decrease)Group

2018 2017RM RM


SGD/RM– strengthened by 10% (46) 40,733– weakened by 10% 46 (40,733)

USD/RM– strengthened by 10% (2,400) –– weakened by 10% 2,400 –

THB/RM– strengthened by 10% (871,807) 704,728– weakened by 10% 871,807 (704,728)

iDR/RM– strengthened by 10% (1,079) 1,275– weakened by 10% 1,079 (1,275)

12. SHARE CAPITALGroup and Company

Number of ordinary shares Amount2018 2017 2018 2017

RM RM

Issued and fully paid-up

at 1 april 1,355,877,090 1,355,877,090 150,833,829 135,587,709

Effect of new companies act 2016 – – – 15,246,120

at 31 March 1,355,877,090 1,355,877,090 150,833,829 150,833,829

Owners of the parent are entitled to receive dividends as and when declared by the company and are entitled to one (1) vote per ordinary share at meetings of the company. all ordinary shares rank pari passu with regard to the company’s residual assets.


31 march 2018


13. RESERVESGroup Company

2018 2017 2018 2017RM RM RM RM

Non-distributable:

Reverse acquisition reserve (131,013,020) (131,013,020) – –Exchange translation reserve (498,478) (622,204) – –

(131,511,498) (131,635,224) – –Distributable:

Retained earnings/(accumulated losses) 23,028,841 25,276,870 (102,608,616) (63,040,107)

(108,482,657) (106,358,354) (102,608,616) (63,040,107)

(a) Reverse acquisition reserve

in previous financial years, the company acquired 630,000 ordinary shares, representing the entire issued and paid-up share capital of Diversified Gateway Berhad (DGB) for a purchase consideration of RM110,000,000 satisfied entirely by the issuance of 1,100,000,000 new ordinary shares in the company at an issue price of RM0.10 per share.

Upon completion of the acquisition of DGB, the company became the legal holding company of DGB whereas the former shareholders of DGB to whom the 1,100,000,000 shares were allotted became the majority shareholders of the company, controlling about 59.6% of the issued and paid-up share capital of the company. furthermore, the company’s key executive management are those of DGB. in accordance with MfRS 3 Business Combinations, the substance of such business combination between the company and DGB constituted a reverse acquisition whereby the acquirer and acquiree of the transaction for accounting purposes should be DGB (i.e. the legal subsidiary, accounting parent) and the company (i.e. the legal holding company, the accounting subsidiary) respectively.

Under reverse acquisition accounting, the consolidated financial statements, although issued under the name of the legal holding company, i.e. the company, represent a continuation of the financial statements of the legal subsidiary, i.e. DGB. accordingly, the consolidated financial statements together with the notes thereto cover DGB (as the accounting acquirer) and the company together with its other subsidiaries (as the accounting acquiree).

Exchange translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. it is also used to record the exchange differences arising from monetary items, which form part of the net investment of the Group in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.


31 march 2018


14. BORROWINGSGroup

2018 2017RM RM

Non-current liabilities

Hire purchase and lease creditors (note 16) 19,984 252,424

Current liabilities

Bank overdrafts (note 15) 731,366 2,667,247Hire purchase and lease creditors (note 16) 175,230 277,662

906,596 2,944,909

926,580 3,197,333

Total borrowings

Bank overdrafts (note 15) 731,366 2,667,247Hire purchase and lease creditors (note 16) 195,214 530,086

926,580 3,197,333

(a) Borrowings are classified as other financial liabilities, and measured at amortised cost using the effective interest method.

(b) at the end of the reporting period, the interest rate profiles of the borrowings are as follows:

Group2018 2017

RM RM

fixed rate 195,214 530,086floating rate 731,366 2,667,247

926,580 3,197,333

(c) as the end of the reporting period, the weighted average effective interest rates for the borrowings are as follows:

2018 2017

Fixed rate

– Hire purchase and lease creditors 6.34% 6.24%

Floating rate

– Bank overdrafts 11.60% 3.65%


31 march 2018


14. BORROWINGS (CONT ’D.)

(d) The currency exposure profiles of borrowings are as follows:

Group2018 2017

RM RM

Ringgit Malaysia (RM) 306,090 522,234Thai Baht (THB) 620,490 2,675,099

926,580 3,197,333

(e) The following table demonstrates the sensitivity analysis of the Group to a reasonably possible change in the THB exchange rates against RM, with all other variables held constant:


2018 2017RM RM


THB/RM– strengthened by 10% 47,157 (203,308)– weakened by 10% (47,157) 203,308

(f) The table below summarises the maturity profile of the Group’s liabilities at the end of the reporting period based on contractual undiscounted repayment obligations:

On demandor withinone year

One tofive years Total

Group RM RM RM

As at 31 March 2018

Hire purchase and lease creditors 182,737 20,997 203,734Bank overdrafts 731,366 – 731,366

Total undiscounted financial liabilities 914,103 20,997 935,100

As at 31 March 2017

Hire purchase and lease creditors 306,083 261,999 568,082Bank overdrafts 2,667,247 – 2,667,247

Total undiscounted financial liabilities 2,973,330 261,999 3,235,329


31 march 2018


14. BORROWINGS (CONT ’D.)

(g) The following table demonstrates the sensitivity analysis of profit or loss of the Group if interest rates at the end of each reporting period changed by one hundred (100) basis points with all other variables held constant:

2018 2017 Loss after tax Profit after tax

100 bp 100 bp 100 bp 100 bp Group increase decrease increase decrease

RM RM RM RM

floating rate instruments 5,558 (5,558) (20,271) 20,271

Sensitivity analysis for fixed rate borrowings as at the end of the reporting period was not presented as fixed rate instruments are not affected by changes in interest rates.

(h) Borrowings that are not carried at fair values and whose carrying amounts are reasonable approximation of fair values are as follows:

2018 2017Carrying Carrying

Group amount Fair value amount Fair valueRM RM RM RM

Hire purchase and lease creditors 195,214 181,965 530,086 476,843

The fair value of borrowings is categorised as level 2 in the fair value hierarchy. There is no transfer between levels in the hierarchy during the financial year.

carrying amounts of hire purchase and lease creditors are reasonable approximation of fair values due to the current rates offered to the Group approximate the market rates for similar borrowing of the same remaining maturities.

15. BANK OVERDRAFTSBank overdrafts of the Group bear effective interest rates ranging from 8.70% to 12.12% (2017: 2.80% to 4.55%) per annum and are secured by the following:

(a) Pledge of fixed deposits as disclosed in note 11 to the financial statements;

(b) Personal guarantee of certain Directors of the company; and

(c) corporate guarantees of the related corporations.


31 march 2018


16. HIRE PURCHASE & LEASE CREDITORSGroup

2018 2017RM RM

Minimum hire purchase and lease payments: – not later than one (1) year 182,737 306,083 – later than one (1) year and not later than five (5) years 20,997 261,999

203,734 568,082less: future interest charges (8,520) (37,996)

Present value of hire purchase and lease creditors 195,214 530,086

Repayable as follows:

Current liabilities – not later than one (1) year 175,230 277,662

Non-current liabilities – later than one (1) year and not later than five (5) years 19,984 252,424

195,214 530,086

17. PROVISION FOR POST-EMPLOYMENT BENEFITSThe Group operates an unfunded defined Retirement Benefit Scheme (the Scheme) for eligible employees. Under the Scheme, eligible employees are entitled to post-employment benefits calculated by reference to their length of services and earnings.

The amount recognised in the statements of financial position is as follows:

Group2018 2017

RM RM

Present value of unfunded defined benefit obligations 4,164,246 1,238,977

analysed as follows:

non-current liabilities – more than five (5) years 4,164,246 1,238,977


31 march 2018


17. PROVISION FOR POST-EMPLOYMENT BENEFITS (CONT ’D.)

Movements during the financial year in the amount recognised in the statements of financial position in respect of the Scheme are as follows:

Group2018 2017

RM RM Balance as at 1 april 2017/2016 1,238,977 495,126net service cost recognised in profit or loss 3,026,241 622,767Exchange difference (100,972) 121,084

Balance as at 31 March 2018/2017 4,164,246 1,238,977

certain assumptions are used in the actuarial valuation and due to the long term nature of this Scheme, such estimates are subject to uncertainty.

Key assumptions used for this valuation (presented by weighted average) are as follows:

2018 2017

Discount rate 3.51% 3.51%

Salary increase rate 5.00% 5.00%

annual voluntary resignation rate 0.00% – 15.74% 0.00% – 18.87%

Mortality rate Thai Mortality table of 2008

Thai Mortality table of 2008

normal retirement age 55 years 55 years


31 march 2018


18. TRADE & OTHER PAYABLESGroup Company

2018 2017 2018 2017RM RM RM RM

Trade payables

Third parties 10,996,182 8,724,702 – –

Other payables

Other payables and accruals 7,579,892 4,742,737 564,228 491,690amount owing to a subsidiary – – – 19,879,558amounts owing to related companies – 1,556,793 – 22,177amounts owing to related parties 11,117,288 – 1,182,137 –amount owing to former immediate holding

company – 3,828,902 – 530,500amount owing to former ultimate holding

company – 7,568,166 – 1,970,900

18,697,180 17,696,598 1,746,365 22,894,825

Other financial liabilities 29,693,362 26,421,300 1,746,365 22,894,825Unearned revenue 10,849,986 9,373,888 – –

40,543,348 35,795,188 1,746,365 22,894,825

(a) Trade and other payables (excluding unearned revenue) are classified as other financial liabilities, and measured at amortised cost using the effective interest method.

(b) Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 60 days (2017: 30 to 60 days) from date of invoice.

(c) Unearned revenue represents advance billings for contract works and maintenance services.

(d) amounts owing to a subsidiary represented advances and payments made on behalf, which were unsecured, interest-free and repayable on demand in cash and cash equivalents.

(e) amounts owing to related companies, former immediate and ultimate holding companies and related parties represent advances, management fees and payments made on behalf, which are unsecured, interest-free and repayable on demand in cash and cash equivalents.


31 march 2018


18. TRADE & OTHER PAYABLES (CONT ’D.)

(f) The currency exposure profiles of trade and other payables (excluding unearned revenue) are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM

Ringgit Malaysia (RM) 12,480,678 6,723,784 1,746,365 22,894,825Singapore Dollar (SGD) 85,553 7,444,749 – –United States Dollar (USD) 511,256 – – –Thai Baht (THB) 15,728,319 12,243,458 – –indonesian Rupiah (iDR) 887,556 9,309 – –

29,693,362 26,421,300 1,746,365 22,894,825

(g) The following table demonstrates the sensitivity analysis of the Group to a reasonably possible change in the SGD, USD, THB and iDR exchange rates against RM, with all other variables held constant:


2018 2017RM RM


SGD/RM – strengthened by 10% 6,502 (565,801) – weakened by 10% (6,502) 565,801

USD/RM – strengthened by 10% 38,855 – – weakened by 10% (38,855) –

THB/RM – strengthened by 10% 1,195,352 (930,502) – weakened by 10% (1,195,352) 930,502

iDR/RM – strengthened by 10% 67,454 (707) – weakened by 10% (67,454) 707

(h) The maturity profile of the trade and other payables of the Group and of the company at the end of the reporting period based on contractual undiscounted repayment obligation is repayable on demand or within one year.


31 march 2018


19. CONTINGENT LIABILITIESGroup Company

2018 2017 2018 2017RM RM RM RM

corporate guarantees given to financial institutions and leasing corporation for credit facilities granted to a subsidiary – – 18,600,000 18,600,000

Bank guarantees given by financial institutions in respect of projects of the Group 2,472,311 584,277 – –

The Group and the company designate corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance contracts as defined in MfRS 4 insurance contracts.

The Directors are of the view that the chances of the financial institutions and leasing corporation to call upon the guarantees are remote. accordingly, the fair values of the above guarantees are negligible.

20. REVENUEGroup Company

2018 2017 2018 2017RM RM RM RM

Sale of computer, hardware, software and accessories 52,452,319 44,297,992 – –

Project management, consultancy, maintenance and software support services 31,491,149 29,862,050 – –

Dividend income – – 22,030,000 1,500,000

83,943,468 74,160,042 22,030,000 1,500,000


31 march 2018


20. REVENUE (CONT ’D.)

Revenue is measured at the fair value of the consideration received or receivables, net of discounts and rebates:

(i) Sale of computer hardware, software and accessories

Revenue from sale of computer hardware, software and accessories is recognised when the significant risks and rewards of ownership of the goods have been transferred to the customer and where the Group does not have continuing managerial involvement over the goods, which coincides with delivery of goods and acceptance by customers.

(ii) Project management and consultancy services

Revenue is recognised upon the rendering of services and when the outcome of the transaction can be estimated reliably. in the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable.

(iii) Maintenance and software support services

Revenue from provision management maintenance and software support services is allocated evenly throughout the period of contracts. income for the expired period is recognised in the profit or loss on accrual basis and income relating to the unexpired period is carried forward as unearned revenue.

(iv) Dividend income

Dividend income is recognised when the right to receive payment is established.

21. FINANCE COSTSGroup Company

2018 2017 2018 2017RM RM RM RM

interest expense on:

– overdrafts 92,345 265,933 – –– trust receipts 3,558 2,679 – –– hire purchase and leases 28,180 40,025 – –– amounts owing to subsidiaries – – – 139,401

124,083 308,637 – 139,401


31 march 2018


22. TAX EXPENSEGroup

2018 2017RM RM

current income tax – continuing operations:

– Malaysian income tax 291,208 81,922– foreign income tax 1,542,796 873,794– Under/(Over) provision in prior years 5,601 (120)

1,839,605 955,596Deferred tax – continuing operations (note 8):

– Relating to originating and reversal of temporary differences (614,253) 674,042– (Over)/Under provision in prior years (169,789) 6,212

(784,042) 680,254

1,055,563 1,635,850

income tax expense attributable to:

continuing operations 1,055,563 1,635,850Discontinued operation (note 23) – 10,377

1,055,563 1,646,227

(a) Malaysian income tax is calculated at the statutory tax rate of 24% (2017: 24%) of the estimated taxable (loss)/profit for the fiscal year.

(b) Tax expense for other taxation authorities are calculated at the rates prevailing in those respective jurisdictions.


31 march 2018


22. TAX EXPENSE (CONT ’D.)

(c) numerical reconciliation between the tax expense and the product of accounting (loss)/profit multiplied by applicable tax rates of the Group and of the company are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM


Tax at Malaysian statutory tax rate of 24% (2017: 24%) (286,739) 832,296 (9,496,442) 87,508

Tax effects in respect of:

non-allowable expenses 442,706 1,030,735 24,047,642 208,772non-taxable income – (9,456) (14,551,200) (339,147)Unused tax losses and unabsorbed

capital allowances not recognised 1,388,091 5,869 – 42,867Utilisation of tax losses and

capital allowances not recognised in prior years – (160,500) – –

Differential in tax rates (324,307) (69,186) – –

1,219,751 1,629,758 – –(Over)/Under provision of tax expense

in prior years 5,601 (120) – –(Over)/Under provision of deferred tax

in prior years (169,789) 6,212 – –

1,055,563 1,635,850 – –

(d) Tax on each component of other comprehensive income is as follows:

GroupBefore tax Tax effect After tax

RM RM RM

items that may be reclassified subsequently to profit or loss:

2018

foreign currency translations 123,726 – 123,726

2017

foreign currency translations 874,971 – 874,971


31 march 2018


23. DISCONTINUED OPERATION On 11 January 2017, iSS consulting (S) Pte ltd (iSS(S)), a wholly owned subsidiary of the company has ceased its operations following a management buyout of certain business operations at a cash consideration of RM112,000. This transaction is to strengthen the financial position of the Group and does not have any material financial effect to the Group.

loss attributable to the discontinued operation was as follows:

2017Note RM

Results of discontinued operation

Revenue 2,339,525Direct expenses (2,382,032)

Gross loss (42,507)Other operating income 249,037Other operating expenses (1,598,566)

Loss before tax (1,392,036)Tax expense 22 (10,377)

Loss for the year (1,402,413)Other comprehensive income, net of tax –

Total comprehensive loss for the year (1,402,413)

The following items have been charged in arriving loss before tax from discontinued operation:

2017RM

Depreciation of property, plant and equipment 12,260Property, plant and equipment written off 28,811Rental of office 243,106

cash flows attributable to the discontinued operation are as follows:

2017RM

inflow/(Outflow)

Operating activities (2,200,668)investing activities (192,021)financing activities 2,228,864


31 march 2018


24. EARNINGS PER ORDINARY SHARE(a) Basic earnings per ordinary share

Group2018 2017

(loss)/profit attributable to owners of the parent used in the computation of basic earnings per share (RM)

– continuing operations (2,248,029) 1,819,016– Discontinued operation – (1,402,413)

Total group (2,248,029) 416,603

Weighted average number of ordinary shares in issue 1,355,877,090 1,355,877,090

Basic earnings per ordinary share (sen) – continuing operations (0.17) 0.13 – Discontinued operation – (0.10)

Total group (0.17) 0.03

(b) Diluted earnings per ordinary share

Diluted earnings per ordinary share equals basic earnings per ordinary share as there are no potential dilutive equity instruments.

25. EMPLOYEE BENEFITSTotal employee benefits recognised in profit or loss are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM

Salaries, wages, bonuses and allowances 36,262,206 29,471,135 – –Defined contribution plans 1,304,890 1,315,389 – –net movement for post-employment

benefits 3,026,241 622,767 – –Other employee benefits 3,496,884 1,327,716 560,982 408,372

44,090,221 32,737,007 560,982 408,372

(a) included in the employee benefits of the Group are remuneration paid to Executive and non-Executive Directors amounting to RM821,280 (2017: RM1,520,772).

(b) The estimated monetary value of benefits-in-kind received by the Directors otherwise than in cash from the Group amounted to RM31,371 (2017: RM41,350).


31 march 2018


25. EMPLOYEE BENEFITS (CONT ’D.)

(c) Remuneration of Directors and other key management personnel during the financial year are as follows:

Group Company2018 2017 2018 2017

RM RM RM RM

Directors’ fees 481,500 408,000 481,500 408,000

Salaries, and other short term employee benefits:

Directors 821,280 1,520,772 44,000 372Other key management personnel 641,178 1,385,013 – –

1,462,458 2,905,785 44,000 372

26. RELATED PARTY DISCLOSURES(a) identities of related parties

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

The company has controlling related party relationships with its subsidiaries, related corporations and their

subsidiaries.

(b) in addition to transactions detailed elsewhere in the financial statements, the Group and the company had the following transactions with related parties during the financial year:

Group2018 2017

RM RM

Sale of goods and services to related parties/companies 2,317,424 5,989,792Purchase of goods and services from related parties/companies 370,019 112,146corporate secretarial services fees paid/payable to a related party/

company 63,436 49,623Management fees paid/payable to a related party/former

ultimate holding company 450,000 480,000


31 march 2018


26. RELATED PARTY DISCLOSURES (CONT ’D.)

(b) in addition to transactions detailed elsewhere in the financial statements, the Group and the company had the following transactions with related parties during the financial year: (continued)

Company2018 2017

RM RM

Dividend received/receivable from a subsidiary 22,030,000 1,500,000corporate secretarial services fees paid/ payable to a related party/

related company 48,340 36,161

Related parties transactions described above were carried out on terms and conditions mutually agreed with the respective related parties.

(c) Key management personnel are the persons who have authorities and responsibilities for planning, directing and controlling the activities of the Group or of the company either directly or indirectly. This includes any Director, whether executive or otherwise, of the Group and of the company.

The remuneration of the Directors and other members of key management are disclosed in the note 25 to the financial statements.

27. OPERATING LEASE COMMITMENTSThe Group has operating lease commitments in respect of rental of premises as at the end of each reporting period, as follows:

Future minimum lease payments

Group2018 2017

RM RM

not later than one (1) year 607,234 652,317later than one (1) year and not later than five (5) years 36,716 360,865

643,949 1,013,182


31 march 2018


28. CAPITAL & FINANCIAL RISK MANAGEMENT(a) capital management

The primary objective of the Group’s capital management is to ensure that entities of the Group would be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The overall strategy of the Group remains unchanged from financial year ended 31 March 2017.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. no changes were made in the objectives, policies or processes during the financial years ended 31 March 2018 and 31 March 2017.

The Group monitors capital using a gearing ratio, which is total borrowings divided by total equity. The Group has a target gearing ratio of 25% to 50% determined as the proportion of total borrowings to equity. The gearing ratios as at 31 March 2018 and 31 March 2017 are as follows:

Group2018 2017

RM RM

Total borrowings (note 14) 926,580 3,197,333

Total equity 42,438,223 44,564,807

Gearing ratio 2.2% 7.2%

Pursuant to the requirement of Bursa Malaysia Guidance note no. 3/2006, the Group is required to maintain a consolidated shareholders’ equity equal to or not less than the twenty-five percent (25%) of the issued and paid-up share capital of the Group. The Group has complied with this requirement for financial year ended 31 March 2018.

The Group is also required to maintain a maximum debt-to-equity ratio of 1.0 to comply with a bank covenant, failing which, the bank may call an event of default. The Group has complied with this requirement.

(b) financial risk management

The Group’s financial risk management objective is to optimise value creation for shareholders whilst minimising the potential adverse impact arising from fluctuations in foreign currency exchange and interest rates and the unpredictability of the financial markets.

The Group operates within an established risk management framework and clearly defined guidelines that are regularly reviewed by the Board of Directors and does not trade in derivative financial instruments. financial risk management is carried out through risk review programmes, internal control systems, and adherence to the financial risk management policies of the ultimate holding company. The Group is exposed mainly to credit risk, liquidity and cash flow risk, interest rate risk and foreign currency risk.


31 march 2018


28. CAPITAL & FINANCIAL RISK MANAGEMENT (CONT ’D.)

(b) financial risk management (cont’d.)

information on the management of the related exposures is detailed below:

(i) credit risk

cash deposits and trade and other receivables may give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. it is the Group’s policy to monitor the financial standing of the counter parties on an ongoing basis to ensure that the Group is exposed to minimal credit risk.

The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms with its customers are mainly on credit, except for new customers, where deposits in advance are normally required. The credit period is generally for a period of one (1) month, extending up to four (4) months for major customers except for one customer of Group which is repayable on fixed monthly basis as disclosed in note 9(c) to the financial statements. Each customer has a maximum credit limit and the Group seeks to maintain strict control over its outstanding receivables via a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management.

The credit risk profile analysis of has been disclosed in note 9 to the financial statements.

(ii) liquidity and cash flow risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all operating, investing and financing needs are met. in liquidity risk management strategy, the Group measures and forecasts its cash commitments and maintains a level of cash and cash equivalents deemed adequate to finance the Group’s activities.

The Group is actively managing its operating cash flows to ensure all commitments and funding needs are met. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines available.

The analysis of financial instruments by remaining contractual maturities has been disclosed in notes 14 and 18 to the financial statements respectively.

(iii) interest rate risk

The Group’s exposure to risk of changes in interest rates is related primarily to the Group’s cash deposits placed with licensed banks and borrowings. interest rate exposure arising from the Group’s borrowings is managed through the use of fixed and floating rates debts. The Group does not use derivative financial instruments to hedge these risks.

The interest rate profile and sensitivity analysis of interest rate risk has been disclosed in notes 11 and 14 to the financial statements respectively.


31 march 2018


28. CAPITAL & FINANCIAL RISK MANAGEMENT (CONT ’D.)

(b) financial risk management (cont’d.)

information on the management of the related exposures is detailed below: (cont’d.)

(iv) foreign currency risk

foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates.

The Group and the company are exposed to foreign currency risk as a result of the foreign currency denominated transactions entered into by the Group and the company during the course of business. The foreign currencies primarily involved are United States Dollar (USD), Singapore Dollar (SGD), Thai Baht (THB), and indonesia Rupiah (iDR) respectively. Transactions in all other currencies are minimal. The Group monitors the movement in foreign currency exchange rates closely to ensure their exposure is minimised. The Group does not use derivative financial instruments to hedge these risks.

The sensitivity analysis for foreign currency risk has been disclosed in notes 9, 11, 14 and 18 to the financial statements respectively.

29. SIGNIFICANT EVENT DURING THE FINANCIAL YEAROn 2 november 2017, insas Technology Berhad (iTB), a wholly-owned subsidiary of insas Berhad, a company listed in the Main Market of Bursa Malaysia Securities Berhad, had acquired a total of 270,000,000 ordinary shares, representing 19.91% of the total issued share capital of the company via direct business transaction from Omesti Berhad, a company listed in the Main Market of Bursa Malaysia Securities Berhad for a total cash consideration of RM12,825,000, which represents a purchase price of RM0.0475 per share of the company.

30. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIODProposed private placement of up to 10% of the total number of issued shares of the company (Proposed Private Placement)

On 21 March 2018, the company announced that M&a Securities Sdn Bhd proposes to undertake a private placement of up to 10% of the issued shares of the company. The additional listing application to Bursa Malaysia Securities Berhad (Bursa Securities) in relation to the Proposed Private Placement has been submitted on the same.

Subsequently, on 26 March 2018, the company announced that Bursa Securities had, vide its letter dated 26 March 2018, approved the listing of and quotation for up to 135,587,700 new ordinary shares in the company to be issued pursuant to the Proposed Private Placement on the acE Market of Bursa Securities subject to the following conditions:

(a) the company and M&a Securities Sdn Bhd must fully comply with the relevant provisions under the acE Market listing Requirements pertaining to the implementation of the Proposed Private Placement;

(b) the company and M&a Securities Sdn Bhd to inform Bursa Securities upon the completion of the Proposed Private Placement; and

(c) the company to furnish Bursa Securities with a written confirmation of its compliance with the terms and conditions of Bursa Securities’ approval once the Proposed Private Placement is completed.


31 march 2018


30. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD (CONT ’D.)

On 26 June 2018, the company announced that M&a Securities Sdn Bhd has fixed the issue price at RM0.068 per placement share to be issued pursuant to the private placement. The aforementioned issue price of RM0.068 per placement share represents a discount of approximately 9.69% or RM0.0073 to the five (5)-day weighted average market price of the company’s shares from 20 June 2018 to 26 June 2018 of approximately RM0.0753.

31. ADOPTION OF NEW MFRSs & AMENDMENT TO MFRSs31.1 New MFRSs adopted during the financial year

The Group and company adopted the following Standards of the MfRS framework that were issued by the Malaysian accounting Standards Board (MaSB) during the financial year:

Title Effective Date

amendments to MfRS 112 Recognition of Deferred Tax Assets for Unrealised Losses

1 January 2017

amendments to MfRS 107 Disclosure Initiative 1 January 2017

amendments to MfRS 12 Annual Improvements to MFRS Standards 2014-2017 Cycle

1 January 2017

adoption of the above Standards did not have any material effect on the financial performance or position of the Group and of the company.


31 march 2018


31. ADOPTION OF NEW MFRSs & AMENDMENT TO MFRSs (CONT ’D.)

31.2 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2018

The following are Standards of the MfRS framework that have been issued by the MaSB but have not been early adopted by the Group and the company:

Title Effective Date


1 January 2018

MfRS 15 Revenue from Contracts with Customers 1 January 2018

clarification to MfRS 15 1 January 2018

MfRS 9 Financial Instruments (IFRS as issued by IASB in July 2014) 1 January 2018

amendments to MfRS 2 Classification and Measurement of Share-based Payment Transactions

1 January 2018


1 January 2018

ic interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018

amendments to MfRS 140 Transfers of Investment Property 1 January 2018

amendments to MfRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts

See MfRS 4Paragraphs 46

and 48

MfRS 16 Leases 1 January 2019

ic interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019

amendments to MfRS 128 Long-term Interests in Associates and Joint Ventures 1 January 2019

amendments to MfRS 9 Prepayment Features with Negative Compensation 1 January 2019


1 January 2019


1 January 2019


1 January 2019


1 January 2019

amendments to MfRS 119 Plan Amendment, Curtailment or Settlement 1 January 2019

Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020

MfRS 17 Insurance Contracts 1 January 2021

amendments to MfRS 10 and MfRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred

The Group and company are in the process of assessing the impact of implementing these Standards and amendments, as the effects would only be observable in future financial years.


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Annual Report 2018

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