A L R E P O R T 2 0 1 A N N U - orionixl.com.my · RAHIMI BIN RAMLI Independent Non-Executive...

ANNUAL REPORT2019

ORION IXL BERHAD 200101019222 (554979-T)Level 5, Block B, Dataran PHB Saujana Resort, Section U2, 40150 Shah Alam, Selangor Darul Ehsan.

T : +603-7890 0638F : +603-7890 3163E : [email protected]

ORION IXL BERHAD 200101019222 (554979-T)

Corporate Information ...................................................................................... 2

Corporate Structure .......................................................................................... 3

Profile of Directors ....................................................................................... 4 - 7

Management Discussion and Analysis .................................................... 8 - 13

Sustainability Statement ......................................................................... 14 - 18

Audit Committee Report ......................................................................... 19 - 23

Corporate Governance Overview Statement ....................................... 24 - 30

Additional Compliance Information ...................................................... 31 - 32

Statement on Risk Management and Internal Control ....................... 33 - 34

Financial Statements ............................................................................. 35 - 152

Analysis of Shareholdings ................................................................... 153 - 154

Analysis of Warrant A Holdings .......................................................... 155 - 156

Notice of Annual General Meeting .................................................... 157 - 160

Form of Proxy

Contents

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BOARD OF DIRECTORS Yahya bin Razali Non-Independent Non-Executive Chairman Mohamad Shaharul bin Mohamad Shariff Executive Director / Group Chief Executive Director Abdul Rani bin Achmed Abdullah Executive Director Rahimi bin Ramli Independent Non-Executive Director Ahmad Sharmin bin Zahari Non-Independent Non-Executive Director Ahmad Ruslan Zahari bin Zakaria Independent Non-Executive Director AUDIT COMMITTEE Rahimi bin Ramli (Chairman) Yahya bin Razali Ahmad Ruslan Zahari bin Zakaria NOMINATION COMMITTEE Ahmad Ruslan Zahari bin Zakari (Chairman) Yahya bin Razali Rahimi bin Ramli REMUNERATION COMMITTEE Ahmad Sharmin bin Zahari (Chairman) Rahimi bin Ramli Ahmad Ruslan Zahari bin Zakaria COMPANY SECRETARY Wong Yuet Chyn (MAICSA 7047163) REGISTERED OFFICE No. 2-1, Jalan Sri Hartamas 8 Sri Hartamas 50480 Kuala Lumpur Wilayah Persekutuan (KL) Tel : (603) 6201 1120 Fax : (603) 6201 3121

HEAD/MANAGEMENT OFFICE Level 5, Block B, Dataran PHB, Saujana Resort, Section U2, 40150 Shah Alam, Selangor. Tel : (603) 7890 0638 Fax : (603) 7890 3163 Email : [email protected] SHARE REGISTRAR ShareWorks Sdn. Bhd. No. 2-1, Jalan Sri Hartamas 8 Sri Hartamas 50480 Kuala Lumpur Wilayah Persekutuan (KL) Tel : (603) 6201 1120 Fax : (603) 6201 3121 AUDITORS Messrs STYL Associates PLT (LLP0019500-LCA & AF1929) No. 902, 9th Floor, Block A, Damansara Intan No. 1, Jalan SS20/27, 47400 Petaling Jaya, Selangor Darul Ehsan. Tel : (603) 7724 2128 Principal Banker RHB Bank Berhad 1G & 2M, Jalan SS 21/58, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan. Tel : (603) 9206 8118 general line STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad Stock Name : ORION Stock Code : 0079 CORPORATE WEBSITE www.orionixl.com.my

CORPORATE information

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CORPORATE Structure

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YAHYA BIN RAZALI Non-Independent Non-Executive Chairman Malaysian, aged 64, male Yahya bin Razali was appointed as an Independent non-Executive Director 3rd August 2016 and was appointed as Chairman of Company on 29 October 2019. He was re-designated as Non-Independent Non-Executive Director on 3rd August 2017. He was appointed to the Board on 3 August 2016. He is a member of the Audit Committee and Nomination Committee. He obtained his Bachelor of Science (Finance) from Southern Illinois University and MBA from Berkeley, United States in 1982 and 1984 respectively. He worked with the Ministry of Culture, Youth and Sports of Malaysia from 1977 to 1979. In 1984, he joined the United State Leasing Corporation, San Francisco, United States as a Financial Analyst. In 1986, he worked as a Consultant with Alexander Proudfoot Productivity Consultant Pte Ltd in Singapore. He also held the position of Investment Manager and Executive Director for Selangor Foundation and Grand United Holdings Berhad respectively from 1988 to 1993. He was the Fund Manager cum Associate Director for Spectrum Asset Management Sdn Bhd, a licensed fund management company. He is also a Certified Financial Planner. Currently he is the Independent Non-Executive Director for UZMA Berhad, a company listed on the Main Market of Bursa Malaysia. He had attended all six (6) Board Meetings held during the financial year. MOHAMAD SHAHARUL BIN MOHAMAD SHARIFF Executive Director / Group Chief Executive Officer Malaysian, aged 50, male Mohamad Shaharul bin Mohamad Shariff was appointed as Executive Director of Orion on 18th September 2017. He was re-designated as Group Chief Executive Officer on 7th November 2017. From 2000 to 2003 he was the Head of Executive Chairman’s Office for Chase Perdana Berhad and Sitt Tatt Berhad as Chase Perdana which held direct shares in Sitt Tatt Berhad. Assisted the Executive Chairman to manage both companies and successfully centralized all administration of both companies which includes Administration, Finance and Accounts, Human Resource and Support Services. This was successfully implemented with taking into account of both different nature of business which comprises of Construction, Property development and Industrial Gas. Moved on to Asiankom Communication (M) Sdn Bhd as the Chief Executive Officer from 2004-2012. Helped build the company from a revenue of RM 2million in 2004 to RM 14 Million in 2012. In year 2012 he was appointed as the Chief Executive Officer of ASAP Sdn Bhd, he has managed to increase the revenue/sales to 200% annually till date. Responsible in the improvement of productivity whilst reducing staff and operational cost by 10%. He had

PROfilE Of directorS

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expanded the business to other parts of Asian countries and succeeded in developing and introducing successful new products by creating and build in-house operational applications to suit market demand & meet customer requirements. He holds a higher Diploma in Chartered Institute of Marketing, London Informatics College, Kuala Lumpur and was awarded Pingat Jasa Kebaktian (PJK) from Yam Tuan of Negeri Sembilan and In 2010 was awarded one of the top CEO in South East Asia. He had attended all six (6) Board Meetings held during the financial year. ABDUL RANI BIN ACHMED ABDULLAH Executive Director Malaysian, aged 53, male Abdul Rani Bin Achmed Abdullah was appointed as Executive Director of Orion on 1 August 2001. He obtained his Bachelor of Electrical Engineering from Purdue University, United States of America (“US”) in 1988 and a Master of Science in Engineering Business Management from Warwick University, United Kingdom (“UK”) in 2001. He started his career in 1989 working as a Wireline Engineer for Schlumberger Overseas SA until 1991. He then went to work as a Survey Engineer for Racal Survey (M) Sdn. Bhd. Doing regional work from 1992 to 1995. In 1996, he worked for his family-owned trading business. He then joined PROPEL-Johnson Controls Sdn. Bhd. (“PJC”) in 1997. Before leaving PJC in 2000, he was the Head of Special Projects and MIS responsible mainly for the design, development, implementation and operation of IT systems. He was also the Johnson Controls Inc’s Computerised Maintenance Management Systems (“CMMS”) resource person for its Asia operations. Other than Orion, he does not hold any directorship in other public companies. However he is a director of several private limited companies. He had attended all six (6) Board Meetings held during the financial year. RAHIMI BIN RAMLI Independent Non-Executive Director Malaysian, aged 49, male Rahimi Bin Ramli was appointed to the Board of Orion on 3 August 2016. Currently he is the Chairman of Audit Committee and Member of Nomination and Remuneration Committee. He graduated from Middlesex University, United Kingdom in 1993 with BA (Hons) in Accounting and Finance. In year 1995, he passed Association of Chartered Certified Accountants (ACCA)’s examination and admitted as Fellow of ACCA (FCCA) since year 2000. Rahimi is also a member of Malaysian Institute of Accountants (MIA) and Chartered Tax Institute of Malaysia (CTIM). He has served various companies for the past 23 years in particular in the field of audit, taxation, finance, treasury, investment and corporate advisory services. The companies comprising of accounting firm, private entity, public companies and government linked

Profile of directors(cont’d)

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corporations like KPMG, Usaha Tegas Management Sdn Bhd, KHR Business Advisory Sdn Bhd, Sapura Secured Technologies Sdn Bhd and Prokhas Sdn Bhd. Prior to his directorship in Orion, he was appointed as Independent, Non-Executive director in another listed company, SCH Group Berhad from year 2013 to 2017 and was the Executive Director of KHR Tax Services (Alor Setar) Sdn Bhd from 2003 to 2017. He had attended all six (6) Board Meetings held during the financial year. AHMAD RUSLAN ZAHARI BIN ZAKARIA Independent Non-Executive Director Aged 58, Male Ahmad Ruslan was appointed as Independent Non-Executive Director of the Company on 10 December 2018. He is also a member of the Audit Committee, Remuneration Committee and Nomination Committee. He graduated from the University of Newcastle-upon-Tyne, England in 1984 with a Bachelor of Arts in Economic Studies (Accounting & Financial Analysis). After graduation he trained as a Chartered Accountant at a firm in London and in 1986, he joined Merchants Business Growth Consulting, a pan European marketing consulting company, as its Group Financial Controller. In 1993, he left Europe and joined what is now CIMB Investment Bank Berhad in the Corporate Finance Department. In 1997, he assisted in the formation of Commerce Asset Ventures, the venture capital arm of CIMB Group. In 2000, he joined Clear Channel Communications, Inc. the leading global media organisation listed on the New York Stock Exchange as ASEAN Regional Director/Managing Director of Malaysian operations. In 2005, he was appointed as the Chief Executive Officer of Terengganu Incorporated, a strategic investment holding company for the Terengganu state. From 2008 to 2018, he was the Chief Executive Officer of Armstrong Marine & Offshore Sdn. Bhd., the official representative of Armstrong Corporation Holdings in Asia and the Pacific Rim, a company involved in offshore and shipping investments, oil trading, finance and project development. From 2010 to 2018, he was con-currently the Chief Executive Officer of Sungai Temau Mining (M) Sdn. Bhd. an iron ore mining company. Presently, he is the Founder and Principal of Connoisseur Consult Sdn. Bhd. He is an Independent Non-Executive Director of Minetech Resources Berhad where he is the Chairman of the Audit Committee and Remuneration Committee and a member of the Nomination Committee and Risk Management Committee. He is also an Independent Non-Executive Director of DWL Berhad (formerly known as Spring Gallery Berhad) where he is the Chairman of the Nomination Committee and Remuneration Committee and a member of the Audit Committee. He has no conflict of interest with the Orion. Since his appointment, he had attended three (3) Board Meetings held during the financial year.

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AHMAD SHARMIN BIN ZAHARI Non-Independent Non-Executive Director Aged 37, Male Ahmad Sharmin Bin Zahari was appointed as Non-Independent Non-Executive Director of the Company on 10th December 2018. He has been the Managing Director of Logikontrol Sdn Bhd since 2015. Logikontrol Sdn Bhd is a mechanical & electrical company licensed with CIDB G7, PKK ClassA, MOF, TNB Rakanniaga, Telekom and Suruhanjaya Tenaga and is involved with negotiations and business deals with the Home Ministry of Malaysia through direct awards and business relationships with clients such as TNB, JKR and other related government agencies. From 2008 to 2015, he was a Sales Engineer/Sales Director with Eltek Valere (M) Sdn Bhd, the subsidiary of Eltek Group which was established in 1999 and is a leading supplier of power for the telecommunication industry such as Maxis, Digi, Celcom, UMobile and Telekom and earning revenue of RM 40 million per year. He was an Electronics Engineer with Eltek Power Ptd Ltd, UK from 2007-2008. Eltek is a Global 500 company with 2000 employees in 100 countries. Eltek Power Ptd Ltd was established in 1983 in the UK. Eltek expertise lies in power conversion, i.e. the process of converting one type of current, i.e. AC to DC power and is also involved with process of adjusting the voltage making it suitable for specific delicate electronic equipment. He was active in pre-sales support and technical support. • Bachelor of Engineering (hons) in Digital Communications, University of Central Lancashire, UK • Malaysia Building Integrated Photovoltaic (MBIPV) Solar Competency, UiTM • SEDA Malaysia Grid-Connected Photovoltaic Systems Designer, UiTM Since his appointment, he had attended three (3) Board Meetings held during the financial year. OTHER INFORMATION ON DIRECTORS None of the Directors have any family relationship with any other Directors or major shareholders of Orion. None of the Directors have any conflict of interest with Orion nor any conviction for offences (other than traffic offences) within the past 5 years. The details of the Directors’ shareholdings are set out in page 154 of the Annual Report. Except for Encik Rahimi, Encik Yahya and Encik Ruslan, none of the other Directors hold any directorships in other public listed companies.

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MAnAgEMEnT DisCussiOn and analySiS

OVERVIEW OF GROUP’S BUSINESS AND OPERATIONS Orion IXL Berhad (“Orion” or “the Company”) Group (“the Group”) is an established technology and business solutions provider in Malaysia. The Group is principally involved in the provision of Computerised Maintenance Management Systems (“CMMS”). To complement its core CMMS business, the Group also provides other information technology (“IT”) services such as systems integration, support services and training. Additionally, the Group is also involved in managing moveable and immovable assets over their life cycles for asset owners. This includes asset maintenance, asset movement and asset audit. During the financial year, the Group has diversified into developing financial technology (“fintech”) solution, specialising in Financial Transaction Management Systems (“FTMS”), big data analysis, Artificial Intelligence (“AI”) and blockchain technology. This initiative is to provide the Group with recurring income stream on a long-term basis, adding to the project-based revenue. Moving forward, the Group will focus its efforts on developing its fintech business, given its first-mover advantage in the fintech space. Malaysia remains the key market for the Group’s services and its clientele ranges from various industries such as Banking and Financial Services, Education, Energy and Utilities, Healthcare, Oil and Gas, Property Development and Construction, Hospitality, Consultancy, Information and Communications Technology (“ICT”), Government Agencies, Mass Rapid Transport and Local Authorities among many others. As a public listed company, the Group’s long-term business objectives are to generate sustainable earnings supported by positive cash flows, maintain a positive and healthy financial position and endeavour to pay stable dividend yield to our shareholders. The Group strives to achieve these objectives by actively seeking good revenue and earnings growth investment opportunities coupled with our commitment to provide quality solutions and services through internal development and continuous improvement.

REVIEW OF FINANCIAL RESULTS AND FINANCIAL CONDITION ANALYSIS OF FINANCIAL RESULTS AND FINANCIAL CONDITION For the financial year ended 30 June 2019, the Group registered a revenue of RM5.70 million as compared to the preceding 18-month period ended 30 June 2018 of RM13.4 million. The reduction was mainly due to lesser contribution from both Malaysia and Overseas operations. Despite the Group having registered a lower revenue, the Group managed to post a profit after tax of RM1.60 million as compared to the preceding 18-month period of a loss after tax of RM1.54 million. The favourable result was mainly due to the reversal of impairment losses in trade receivables amounted to RM1.43 million and reversal of allowance of liquidated ascertained damage of RM700,000.

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Management Discussion and Analysis(cont’d)

Equity attributable to the owners of the Company as at 30 June 2019 stood at RM103.993 million, an improvement of RM18.43 million. The improvement was mainly due to the private placement of shares undertaken by the Company during the financial year. The Group has no borrowings for the financial year under review. There was no payment of dividend during the financial year under review.

REVIEW OF OPERATING ACTIVITIES CMMS Segment Since the acquisition of ASAP Sdn.Bhd. in 2017, the group has enhanced and launched the new generation of CMMS which is web based from the previous client-server base. The new CMMS system now caters for more features and easy implementation for multiple sites. This will now enable the Group to serve wider customer and market segments including cross border installations. The Group will also upgrade current customers to the new enhanced system to ensure existing customers enjoy the new features and continue with the maintenance contract. Other Acquisitions In line with the Group’s expansion plans, the Company has, on 13 September 2018, acquired the entire issued share capital of Ganda Integrasi Sdn. Bhd. (“GISB”), a company engaged in software development. As part of the above-mentioned expansionary strategy of the Group, GISB has, on 11 October 2018, entered into a Technical Services Agreement (“TSA”) with Sukaniaga Sdn. Bhd. (“Sukaniaga”) to provide all fintech services to be rendered by Sukaniaga to MyAngkasa Az Zahra Sdn. Bhd. (“MyAzZahra”). The SLA covers the development of MyAzZahra system, which provides online digital end-to-end solutions from the stage of loan application to loan approval process for Credit Cooperatives, including its operation and maintenance. The contract period is for 15 years from 11 October 2018 to 10 October 2033, in accordance with said TSA. In view of the immense business potential in fintech solutions for micro-financing industry, the Group has, on 21 December 2018, acquired 20% equity interest of Sukaniaga. The Group has achieved a big breakthrough in the fintech space, following the acquisition of Sukaniaga and the concession agreement between Sukaniaga and MyAngkasa Holding Sdn Bhd (wholly owned by Angkatan Koperasi Malaysia Berhad). On 5 April 2019, the Group has signed a Memorandum of Understanding (“MOU”) with Small Medium Enterprise Development Bank Malaysia Berhad (“SME Bank”) to automate the latter’s traditional banking business by developing a financial-processing platform that leverage robotic process automation. This includes a micro-financing and alternative credit-scoring

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engine platform targeting small and medium-sized enterprises (“SMEs”). SME Bank via its wholly owned subsidiary Center for Entrepreneur Development and Research Sdn.Bhd. is to provide a one stop centre for processing SME loans for various agencies called as “SCOREXCESS”. Further to this, the Group has, on 15 April 2019, announced the first overseas rollout of its fintech solution with a partnership agreement inked with Indonesia’s PT Kirana Investima Nusantara (“Nusantara”). The MOU with Nusantara is to develop a loan management system and alternative credit-scoring engine with AI to process micro-financing for 75,000 villages in Indonesia, for which loans are to be disbursed through Indonesia’s cooperatives. The Group is endeavours to keep our stakeholders updated on any new developments of the above MOUs via announcements and quarterly report made through Bursa Malaysia Securities Berhad. Partnership The Group has, on 15 August 2018, entered into a Strategic Partnership Agreement with Scalend Riametric Sdn. Bhd. (“Riametric”) to venture into fintech, specialising in FTMS, big data analysis, AI and blockchain technology. The collaboration with Riametric has enabled the Group to use Riametric’s proprietary - ‘Big Data Platform’, to offer to its customers of various industries, a database for developing, deploying, operating and managing big data infrastructure or environment. Along with this, the Group is also able to provide its support at every stage of system deployment from business case identification, development to operations. This initiative has enabled the Group to pursue additional business development opportunities with existing and prospective customers in order to stay ahead of the evolving technology landscape.

ANTICIPATED OR KNOWN RISKS The following are the key anticipated or known risks that the Group is exposed to that may have a material effect on its operations, performance, financial condition and liquidity. The Group’s plans and strategies to mitigate these risks have also been disclosed below: - (i) Business risks

The Group is principally involved in the provision of technology and business solutions. It is subject to risks inherent in the IT industry. These include, amongst others, changes in IT infrastructure, changes in laws and regulations applicable to the Group’s businesses, availability of skilled personnel, introduction of new technological products and services as well as growth slowdown in certain segments of the IT industry in the countries in which the Group operates. There can be no assurance that any material changes to these factors will not have a material adverse effect on the business operations of the Group.


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Nevertheless, the Group has been taking effective measures to mitigate the aforementioned risks such as prudent financial management and efficient operating procedures. Furthermore, the Group has constantly been keeping abreast of economic and regulatory changes in the relevant countries.

(ii) Foreign exchange risks The Group’s business operations are in Malaysia and United States of America. As such, the Group is exposed to foreign exchange risks in the event of repatriation of profits from other countries back to Malaysia. There is no assurance that any foreign exchange fluctuation will not have an adverse impact on the Group’s earnings. Although the Group does not actively hedge its foreign currency exposure, the Group will continue to assess the need to utilise financial instruments to hedge its currency exposure, taking into consideration factors such as foreign currency, exposure period and transaction costs.

(iii) Rapid technological changes / product changes

The ability of the Group to keep pace with rapid technological development in the IT industry may affect its earnings. The technology industry is characterised by rapid technological changes due to changing market trends, evolving industry standards, new technologies and emerging competition. The Group’s performance is dependent on its ability to enhance existing software products and services to respond to the constantly changing technological environment. There is no assurance that the Group’s products and services will achieve market acceptance or able to compete with competitors. Such circumstances may affect the financial performance of the Group. The Group seeks to limit these risks through its continuous investment in research and development (“R&D”) activities in order to remain technologically relevant and meet market’s expectations.

(iv) Competition risks

The Group continues to face competition from existing and new competitors who may be capable of offering similar solutions. Whilst the Group strives to remain competitive, there can be no assurance that any changes in the competitive environment would not have any material and adverse impact on the Group’s business and financial performance. Nevertheless, the Group strives to maintain its competitive edge by ensuring the quality of its solutions and services through stringent quality assurance procedures. The Group also continuously places importance on improving its solutions and services by investing in R&D activities, as mentioned earlier.


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FORWARD-LOOKING STATEMENT The Group’s Prospects The International Monetary Fund reported, in an update to its World Economic Outlook, that the pace of global economic activity remains weak since the sharp slowdown of global economy in the last three quarters of 2018. Escalating trade and geopolitical tensions coupled with the hike in tariffs remain key sources of risk to the global economic outlook. Rising uncertainties in business environment and international cooperation has resulted in the loss of business confidence, cut back on investment decisions and slower global trade momentum. Nonetheless, Asia still remains the fastest-growing major region in the world, accounting for more than two-thirds of global growth in 2019, with projected growth at 5% in 2019 and 5.1% in 2020. (Source: www.imf.org) The Malaysian economy, in recent years, has successfully transformed from an exporter of raw materials into a diversified economy. Malaysia’s gross domestic product (“GDP”) growth rate is expected to trend around 4.4% in 2019 and 4.5% in 2020, with services sector being the major contributor to the economy, accounting for more than half of Malaysia’s GDP. Currently, the Malaysian digital economy, on average, has grown 9% annually in value added terms between 2010 to 2016, which is faster than Malaysia’s GDP growth, reflecting ICT as a source of growth . (Source: www.tradingeconomics.com, www.mdec.my) In this digital era, businesses in nearly all industries are rapidly placing more focus on adopting technology-based solutions in managing their assets and facilities to bolster production, increase speed and efficiency and cut down on costs so as to improve their overall business performance and profitability in the long run. The increased awareness among the business users on the importance of technology and the benefits it brought about are the major drivers of our business. The CMMS market in Malaysia is expected to be soft, mainly attributable to the slowdown in new construction and infrastructure projects. However, with the current business presence in the government sector and its ongoing effort in marketing its IT solutions for analytics and business optimisation, it is expected that the Group will gain increased access to the network for future business opportunities and to achieve sustainable growth. The Group’s CMMS business remains optimistic as the Group has been in the process of bidding for a few major projects. Moving forward, it is expected that the FTMS will be the key contributor to the Group’s performance with the 15-year agreement with Sukaniaga. The micro-financing market in ASEAN is in nascent stages and the potential for micro-financing is huge due to the increase of digital users via mobile phone penetration rate of 80% in the region in 2018. According to statistics from the Co-operative Societies Commission of Malaysia, credit cooperatives in the country disbursed an estimated RM5 billion of microloan to government employees in 2017.


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The Groups objective is to convert this application and disbursements via the FTMS platform. The Group expects a positive outlook and steady revenue stream from 2020 onwards, in anticipation of higher loan disbursements from the credit cooperatives with the application of the simplified and efficient loan approvals through MyAzZahra. Currently, the Group has also taken its micro-financing fintech solution into the traditional banking sector and is looking at penetrating into other industries where the core big data analysis and AI engine may be applicable, in order to increase its market presence. At the same time, the Group is also on the lookout of opportunities for collaboration and expansion into the overseas market by actively exploring the possibility of deploying its automated platform and alternative credit-scoring engine targeting micro-financing market in other countries. These business moves are expected to sustain growth towards the Group’s prospects for the coming years and the Group believes that the successful implementation of MyAzZahra will increase the market confidence over the Group’s fintech solutions which in turn may open up many more business opportunities for the Group domestically or internationally. Dividend The Board will reassess the payment of dividends when the Group returns to profitability and when its growth funding needs are less pressing. The Group wish to thank all staff and Management for their relentless effort and commitment to the company. The Group appreciates and acknowledges shareholders for having a strong believe and support towards the Group’s business and endeavours.


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susTAinAbiliTyStatement

SUSTAINABILITY STATEMENT

OUR APPROACH

Sustainability has always been a pillar of the Group’s culture as we strive to achieve continuing growth andprofitability in a safe, caring and sustainable environment. We recognise that sustainability practices areinfluencing criterion in investors’ investment decisions.

With Bursa Malaysia Securities Berhad’s Sustainability Reporting Guide, the Group’s sustainability practicesare to ensure that economic, environmental and social risks and opportunities are tied in with ourgovernance framework and social responsibilities. This also enables our corporate success and behaviour tobe judged and measured by the public.

In this respect, as a responsible corporate citizen, our mission is to ensure high standards of governanceacross our business to promote responsible business practices, manage environmental impacts, and meetthe social needs of the community in which we operate.

Orion IXL Berhad (“Orion”)’s continued success in maintaining a sustainable business and generating long-term shareholder value is influenced by several internal and external factors. Each material factor presentsunique risks and opportunities to our organisation, and is a key consideration in our approach to strategyformulations and execution as it substantially influences the assessments and decisions of our stakeholders.We regularly review these factors to assess their impact on our business model over the near, medium andlong term.

OUR SCOPE

The statement covers Orion and its subsidiaries. Information disclosed in this Statement encompasses ourcore activities related to Computerised Maintenance Management System (“CMMS”) and FinancialTransaction Management System (“FTMS”) businesses. This report covers data which had been compiledinternally from 1 July 2018 to 30 June 2019.

PRODUCTS & SERVICES QUALITY HUMAN RESOURCEMANAGEMENT

ECONOMIC

Sustaining our economy Delivering sustainable returns

to our shareholders

Delivering quality products and services to achieve customers’ satisfaction

ENVIRONMENT

Conserving our environment Protecting and preserving the

environment

SOCIAL

Building a resilient workforce

Ensuring a positive workplace for our employees

Serving our community Contributing to the well-being of the community

around us

OUR APPROACH ON SUSTAINABILITY

Embrace Sustainability in Organisation Culture

Strengthen the Core

Build Regional Global Connectivity

Foster a High Performance Organisation


OUR APPROACH





OUR SCOPE



ECONOMIC


to our shareholders


ENVIRONMENT


environment

SOCIAL




around us



Strengthen the Core




OUR APPROACH





OUR SCOPE



ECONOMIC


to our shareholders


ENVIRONMENT


environment

SOCIAL




around us



Strengthen the Core



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Sustainability Statement(cont’d)

SUSTAINABILITY GOVERNANCE

Corporate Governance

The Board of Directors (“Board”) plays a vital guidance and oversight role in advancing sustainability acrossthe organisation with the assistance from Senior Management to oversee the implementation of theorganisation’s sustainability approaches and ensures that key targets are being met.

The Board also acknowledges that risk management and internal control are integral to our corporategovernance and that it is responsible for establishing a sound risk management framework and internalcontrol system as well as to ensure their adequacy and effectiveness. The review of the adequacy andeffectiveness of the risk management framework and the system of internal control is delegated by theBoard to our Audit Committee. Asides, the Group’s performance is also tracked with the assistance ofNomination Committee and Remuneration Committee.

The responsibility of the Board to promote and embed sustainability in the Group includes overseeing thefollowing:

• Stakeholders engagement;• Materiality assessment and identification of sustainability risks and opportunities relevant to us; and• Management of material sustainability risks and opportunities.

Ethical Business Practices

The Board recognises the importance of ethical business conduct across the operations to maintain ourstakeholders’ trust. Code of Business Conduct and Ethics is established to achieve a standard of ethicalbehaviour based on trustworthiness and values that can be accepted and uphold a spirit of responsibility.Our Whistle-Blowing Policy, uploaded on our website, provides all stakeholders a direct channel forreporting instances of misconduct that contradict to our Code of Business Conduct and Ethics and/or othernon-compliance offences.

Good governance is the bedrock of our business, led by ethical business practices and integrity. We haveembedded the highest standards of governance in our business not only by complying with the law butthrough processes and directives that continue to reinforce the principles.

Board of Directors

Nomination CommitteeRemuneration CommitteeAudit Committee

Review the Company’s processes for producing timely and accurate financial data, its

internal controls and independence of the Company’s external and internal auditors,

as well as oversees all risk management activities within

the Group

Assists the Board in developing and establishing competitive

remuneration policies and packages

Oversees matters related to the proposing suitable new

candidates for appointment to fill the seats of Board and Senior

Management

Oversees the Group’s sustainabilityinitiatives, and endorses the proposedsustainability initiatives and materialsustainability matters related to theGroup










Board of Directors





the Group





Management











Board of Directors





the Group





Management


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MATERIAL SUSTAINABILITY MATTERS

Economic

Shareholders

Our shareholders are the ultimate owners of the Company and as such, they are entitled to timely andquality information on the Group’s financial performance and position. Apart from the Annual GeneralMeeting where shareholders are encouraged to ask questions to the Board and Senior Management onbusiness operations, and the financial performance and position of the Group, the Group’s corporatewebsite at www.orionixl.com.my also provides a link on investor relations where quarterly and annualfinancial statements, announcements, financial information, annual reports, circulars/statements toshareholders and other pertinent information are uploaded on a timely basis when available.

Customers & Services

The Group values its customers as they are a major reason for its profitability. Our marketing and salesrepresentatives schedule regular meetings, both formal and informal, with our customers to build a strongand conducive relationship. The objective of this is to promote a culture of open communication, trust andreliability.

Our Group recognises that customers’ satisfaction is one of the key factors underlying the long termsustainability of our Group’s operations. It is the fundamental policy of our Group that all final products,services and software launched into the market must not contain any hazardous element, and must be ofhigh quality to ensure customers’ satisfaction. We uphold the belief that customers rights should bepreserved at all times and are on continuous endeavours to improve their bottom line and enhance theiroverall operational and management variables. We also wish to be a responsive and reliable partner to ourcustomers within their respective markets.

The Group has on December 2018 acquired a total of 20% equity interest of Sukaniaga Sdn. Bhd.(“Sukaniaga”). Pursuant to the Technical Services Agreement signed with Sukaniaga, for a contract period of15 years from 11 October 2018 to 10 October 2033, or the provision of all services to be rendered bySukaniaga to MyAngkasa Az Zahra Sdn Bhd including the development, operation and maintenance of theMyAzZahra system, an online loan application system portal which provides online digital end-to-endsolutions from the stage of the loan application to the loan approval process, including its operation andmaintenance.

To achieve sustainability in the run, the Group opined that other diversification shall also be ventured intoto enhance its financial performance and in turn its’ shareholders’ value.

Suppliers

To our suppliers, we are committed to enhance our processes and engagement to identify and managerisks, underpinned by values of integrity and transparency. We look to create value, by looking foropportunities to collaborate and to share best practices with our suppliers. Hence, the Group is ensuringonly the one with specific criteria met are engaged.

Regulatory Compliance

Our Group believes that strict compliance with all relevant laws and regulations is a requisite to promote anethical and responsible society. To this end, our Group strives to comply with all the relevant laws andregulations applicable to our business operations. Our Group’s commitment to proper compliance hasproven to be favourable and value-enhancing for our stakeholders.

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17



Environment

The Group is conscious of complying with all applicable environmental laws, guidelines and regulations,though we generally do not generate any major environmental concerns.

Energy & Water Saving Initiatives

Headquartered in a certified green building by the Green Building Index Accreditation Panel in Shah Alam,Selangor, Orion is aware of the impact of our business on the environment and has taken active steps toreduce our carbon footprint on the environment.

Action has also been taken to reduce the overall energy consumed by lighting. Where lighting in and aroundour office facilities and corridors need to be replaced, we have converted them to LED. The process is on-going and on stages.

Water is a limited resource, and as the world continues to advance and the global population continues togrow, an increasing strain is being placed on the supply of clean water. Water conservation is therefore anarea that our Group is working hard on, both improving the efficiency with which we use our water, as wellas working to educate our employees and the public about the need to conserve it.

Waste Management

Paper recycling initiatives are already in progress by encouraging the employees to prioritise electronicmeans to share and store documents, and to reduce printing or photocopying, otherwise, to use double-sided printing. Additionally, other materials such as furnishing and fixture are recycled or reused wherepossible.

Waste segregation has been done by placing different bins in and around our office area. Waste segregationis planned to be fully implemented in the coming years throughout the Group where recycling stations willbe set up in convenient locations.

Social

Employees

In Orion, employees are our greatest assets. We are made up of people with vast experience and industrybackground. Strengthening capability is key, hence we proactively provide opportunities for growth anddevelopment for talent in the organisation through targeted development plans and succession planning.Ensuring our long term sustainability, we continuously invest time and effort in recruiting, upskilling,engaging and rewarding talents/employees of the organisation accordingly.

We will continue to focus on human capital development to nurture our employees to their full potential.The Group also recognises that the Industrial Revolution 4.0 will place pressure in organisations tocontinuously upskill and reskill our workforce, to stay relevant and productive, so that they can executetheir roles and responsibilities efficiently. Employees are encouraged to attend internal or external trainingor pursue professional development to enhance their knowledge and skill for career enhancement andpersonal development, in the field of operational, financial, human resource management, technical skills,and others.

For critical and leadership roles, succession planning is vital to our long-term performance as part of ourGroup’s sustainability move. Our Nomination Committee will review the Group’s human resources planincluding the succession management framework and activities, human resources initiatives such as jobsand salary review, and the annual manpower budget. The succession planning across the Group isimplemented by stages and training programmes are designed specifically for management staff.

The Group recognised that the safety and well-being of its employees is the foundation of its success.Hence, we strive to provide a safe and healthy environment for our employees and to ensure safe practicesin all aspects of our business operations.

In addition to the day-to-day motivation measures, it is the Group’s tradition to have Hari Raya Aidilfitri,Chinese New Year, Deepavali, and Christmas & New Year celebrations and its represented a big part of ourculture to foster stronger relationships amongst the staff across generations, as well as business associatesto mingle around and celebrate the year past, while celebrating the festival.

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Social (cont’d)

Community

Our Group strongly believes in giving back to society and hence Orion had always devoted to philanthropy.We are deeply rooted in the community we operate and hence we actively engage in community outreachprogrammes and activities. We are proud of having the privilege to serve various segments of thecommunity towards providing for social empowerment and helping to make a positive difference for peopleacross all walks of life. We have from time to time made donations to various charitable organisation,helping the less fortunate members of our community is our way of giving back to society.

OUR COMMITMENT

As a responsible corporate citizen, the Group shall endeavour to undertake sustainable and responsiblepractices to add value to sustainable business growth, environmental stewardship and social responsibility.

Dividends

Rewarding our shareholder

Investment in our resources to ensure long-term

benefits to our various

stakeholders

Sustaining long term value

Reinvestment and

diversification

Advancing our business

Competitive remuneration, compensation,

benefits and trainings

Investing in our human resources

Continued upliftment of our

society’s well-being through

taxes and donations

Contributing to society

ANNUAL REPORT 2019

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AuDiT COMMiTTEE report

MEMBERS OF AUDIT COMMITTEE The Audit Committee (“AC” or the “Committee”) of Orion IXL Berhad (“Orion” or the “Company”) comprises wholly of the following Non-Executive Directors: Encik Rahimi bin Ramli (Chairman) Independent Non-Executive Director Encik Yahya bin Razali (Member) Non-Independent Non-Executive Director Encik Ahmad Ruslan Zahari bin Zakaria (Member) (appointed on 22 February 2019) Independent Non-Executive Director Encik Adnan bin Zainol (Member) (retired on 23 November 2018) Independent Non-Executive Director Encik Rahimi is a member of the Malaysian Institute of Accountants. Encik Rahimi meets the requirement of Rule 15.09 (1)(c)(i) of ACE Market Listing Requirements in that he is a Chartered Accountant and a member of the Malaysian Institute of Accountants. SECRETARY The Company Secretary of the Company also acts as the Secretary of the AC. TERMS OF REFERENCE The AC has discharged its functions and carried out its duties as set out in the Terms of Reference (“TOR”). The detailed TOR of the AC outlining the composition, duties and functions, authority and procedures of the AC are published and available on the Company’s website at www.orionixl.com.my.

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MEETINGS AND MINUTES Attendance at Meetings The record of attendance of the members of the AC for meetings held during the financial year ended 30 June 2019 (“FYE 2019”) are as follows: Name

Number of Meetings Attended

Percentage of Attendance

(%) Encik Rahimi bin Ramli 5/5 100 Encik Yahya bin Razali 5/5 100 Encik Ahmad Ruslan Zahari bin Zakaria 1/1 100 Encik Adnan bin Zainol 1/2 50 The quorum of the meeting is two (2). Meetings The AC will meet at least four (4) times a year although additional meetings may be called at any time at the discretion of the Committee. The meetings are pre-scheduled and are organised just before the Company’s Board of Directors’ (“Board”) meetings. Issues were deliberated during AC meetings before arriving at any decisions, conclusions or recommendations to be brought to the attention of the Board where necessary. The minutes of these deliberations of each AC meeting were properly minuted by the Company Secretary and subsequently recommended to the Board for review and approval. Notices and AC papers are circulated to all members prior to the meeting with sufficient time allocated for them to prepare themselves for deliberation on the matters being raised. Should the need arise, the Chairman has the discretion to call for the attendance of Management, internal auditors and external auditors during such meetings. During such meetings, the AC shall review the risk management and internal control processes, the quarterly and Year-end Financial Reports, the Internal and External Audit Plans and Reports, Related Party Transactions/Recurrent Related Party Transactions (“RRPT”), and all other areas within the scope of responsibilities of the AC under its TOR.

Audit Committee Report (cont’d)

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SUMMARY OF ACTIVITIES In respect of the FYE 2019, the AC in discharging its duties and functions carried out activities which are summarised broadly as follows: a) Internal Audit (“IA”)

The Company engaged Messrs. Eco Asia Advisory Sdn. Bhd. (“Eco Asia”) as an outsourced Internal Auditors to carry out the internal audit function of the Group for the year FYE 2019. The Internal Auditor reports directly to the AC on a half yearly basis by presenting its IA Reports during the AC meetings, whereby relevant issues identified in the IA Reports will be discussed together with the Management. Rectification or corrective measures, if necessary will be performed and follow-up will be carried out by the Internal Auditor for the purpose of reporting at the subsequent AC meetings. On 28 August 2018, Eco Asia tabled a follow-up review for the internal audit findings presented by previous IA, SF Chang Corporate Services Sdn Bhd in respect of review on account closing procedure on the Company as at 30 June 2018. On 23 May 2019, Eco Asia tabled the Internal Audit Review in respect of the Sales, Accounts Receivables, Collection and Credit Control of the Company. The reports outlined the audit objectives, audit limitations, scope of work, timeline, summary of IA review findings, potential risk or implication, detailed audit observation, follow-up on previous audit review and details of previous issues implemented with together with the IAs’ recommendations and the Management’s response. For the FYE 2019, the cost incurred for the internal audit function was RM21,271.

b) Financial Reporting

In overseeing and discharging its responsibilities in respect of financial reporting, the AC:

i. Reviewed the financial positions, quarterly financial reports and announcements

for the respective financial quarters prior to submission to the Board for consideration and approval. The 1st, 2nd, 3rd and 4th Quarter Interim Financial Reports were tabled at the AC meetings held on 30 November 2018, 21 February 2019, 23 May 2019 and 26 August 2019.

ii. Ensured the quarterly reports and Audited Financial Statements (“AFS”) were prepared in compliance with the Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards, and the Requirements of the Companies Act 2016 Malaysia while the quarterly reports took into consideration Rule 9.22 including Appendix 9B of the Listing Requirements;


22

Reviewed the various Board’s Policies and Procedures, Board Charter and procedures for RRPT;

iii. Reviewed the External Auditors’ Audit Plan (“Audit Plan”) for the FYE 2019 which

covered the engagement and reporting requirements, audit approach, areas of audit emphasis, significant events during the financial year, communication with the management, engagement team, the reporting and deliverables as well as the proposed audit fees;

iv. Reviewed the External Auditors’ Audit Review Memorandum and

recommendations and the AFS for the FYE 2019 on 23 October 2019; v. Considered the performance of External Auditors, reviewed the independence of

External Auditors and recommended to the Board for re-appointment; vi. Ensured the integrity of the financial information, received assurance from

management and person in charge of finance, that:-

- Appropriate accounting policies had been adopted and applied consistently; - The going concern basis applied in the Annual Consolidated Financial

Statements was appropriate; - Prudent judgement and reasonable estimates had been made in

accordance with the requirements set out in the MFRSs; - Adequate controls and processes were in place for effective and efficient

financial reporting and relevant disclosures under MFRSs and Listing Requirements; and

- The consolidated AFS and the Quarterly Condensed Consolidated Financial

Statements did not contain material misstatements and gave a true and fair view of the financial position.

vii. Reviewed the AC Report, Corporate Governance (“CG”) Overview Statement, CG

Report and Statement on Risk Management and Internal Control (“SORMIC”) for publication in the 2019 Annual Report; and

viii. Reviewed the SORMIC together with the Internal Auditors and External Auditors

and received assurance from management that the Group’s risk management and internal control systems are operating adequately and effectively in all material aspects before recommending the Statement to the Board.


ANNUAL REPORT 2019

23

c) External Audit

Messrs Ecovis AHL PLT (“Ecovis”) had on 21 May 2019 given notice in writing to the Board of their intention to resign as Auditors of the Company. Hence, the Board had appointed Messrs STYL Associates PLT (“STYL”) as new Auditors of the Company with effect from 22 July 2019. STYL presented their Audit Planning Memorandum for FYE 2019 on 25 July 2019 and had declared and confirmed that they were independent throughout their audit engagement. STYL presented their audit results at the AC meeting held on 26 August 2019. The Committee met three (3) times with the external auditors without the presence of the Executive Directors and Management. The AC had the opportunity to assess the cooperation extended by the Management to the External Auditors, their attitude and readiness to provide documentation and explanations, as well as the adequacy of resources in the Group’s Finance Department. The AC carried out an assessment of the performance and suitability of STYL based on the quality of services and relationship with Management, AC, Internal auditors and Board. The AC has been generally satisfied with the independence, performance and suitability of STYL. Based on the assessment, the AC recommended to the Board and shareholders for approval for the re-appointment of STYL as External Auditors for the FYE 2019.

CG PRACTICES Apart from discharging its duties with respect to the internal audit, financial reporting and external audit, the AC also reviewed the disclosures made in conjunction with the financial results and Annual Report of the Company in line with the principles and spirit set out in the Malaysian Code on CG, other applicable laws, rules, directives and guidelines. In addition, the AC together with all other Board Members and Management had reviewed the CG Report, AC Report, SORMIC together with other compliance disclosures.


24

CORPORATE gOvERnAnCEoverview Statement

The Board of Directors (“Board”) presents this Statement to provide shareholders and investors with an overview of the application of the Principles set out in the Malaysian Code on Corporate Governance (“CG”) (“MCCG”) by Orion IXL Berhad (“Orion” or the “Company”) and its subsidiaries (the “Group”) and should be read together with the CG Report 2019 of Orion (“CG Report”) which accompanies this Annual Report and is also available on Orion’s website at www.orionixl.com.my (“Orion’s Website”). The CG Report provides the details on how Orion has applied each Practice as set out in the MCCG during the financial year ended 30 June 2019 (“FYE 2019”). PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (a) BOARD RESPONSIBILITIES

The roles and responsibilities of the Board and Management, the Board Committees and the individual Directors are set out in the Board Charter which is accessible through Orion’s Website. The Board Charter will be reviewed on an annual basis or more frequently if necessary. It is the primary governance responsibility of the Board to provide stewardship and directions for the management of the Group. The Board’s responsibilities in respect of the stewardship of the Company include review and approve strategic plans and key business initiatives, corporate governance and internal control frameworks and promote a sound corporate culture which reinforces ethical, prudent and professional behaviour. While the Board sets the platform of strategic planning and policies, the Executive Directors are responsible for implementing the operational and corporate decisions while the Independent Non-Executive Directors ensure corporate accountability by providing unbiased and independent views, advice and judgement and challenging the Management’s assumptions and projections in safeguarding the interests of shareholders and investors. The Board has defined the roles and responsibilities for its Directors. In discharging their fiduciary responsibilities, the Directors deliberate and review the financial performance, the execution of strategic plans, the principal risks faced and the effectiveness of management mitigation plans, the appraisal of Executive Management, succession plan as well as the integrity of management information and systems of internal control of the Group. The day-to-day management of the business operations of Orion is led by the Executive Directors. The Board is constantly updated the team on the implementation of all business and operational initiatives and significant operational and regulatory challenges faced.

ANNUAL REPORT 2019

25

Corporate Governance Overview Statement(cont’d)

In furtherance of the above and to ensure orderly and effective discharge of its functions and responsibilities, the Board has established the following Board committees: • Audit Committee (“AC”) • Nomination Committee (“NC”) • Remuneration Committee (“RC”) The Board has defined the terms of reference for each Committee and the Chairman of these respective committees report and update the Board on significant matters and salient matters deliberated in the Committees. In order to foster a strong governance culture in the Group and to ensure a balance of power and authority, the roles of the Chairman and Executive Directors are strictly separated. This is also to maintain effective supervision and accountability of the Board and Executive Management. The Chairman is responsible for Board effectiveness and to ensure that the conduct and working of the Board is in an orderly and effective manner while the ED takes on the primary responsibility of managing the Group’s businesses and resources as well as overseeing and managing the day-to-day operations of the Group. The Board is supported by an External Company Secretary. The Company Secretary of Orion is qualified to act as Company Secretary under Section 235 of the Companies Act 2016, of which she is an Associate Member of the Malaysian Institute of Chartered Secretaries & Administrators. The Company Secretary provides the required support to the Board in carrying out its duties and stewardship role, providing the necessary advisory role with regards to the Company’s constitution, Board’s policies and procedures as well as compliance with all regulatory requirements, codes, guidance and legislation. Continuous training is vital for the Directors in discharging their duties effectively. All Directors are encouraged to attend appropriate external training programmes to gain insight and keep abreast with developments and issues relevant to the Group’s business, especially in the areas of corporate governance and regulatory requirements.

26


The external training programmes, seminars and/or conferences attended by the Directors in office at the end of FYE 2019 were as follows: Name of Directors

Date Mode of Training

Course Title

Yahya bin Razali 26 June 2019 Programme Digital Economy and Capital Market Series: Alibaba and Tencent’s Success Guide

Abdul Rani bin Achmed Abdullah

26 June 2019 Programme Digital Economy and Capital Market Series: Alibaba and Tencent’s Success Guide

Mohamad Shaharul bin Mohamad Shariff

26 June 2019 Programme Digital Economy and Capital Market Series: Alibaba and Tencent’s Success Guide

Rahimi bin Ramli 26 June 2019 Programme Digital Economy and Capital Market Series: Alibaba and Tencent’s Success Guide

Ahmad Ruslan Zahari bin Zakaria

26 June 2019

29 August 2018

5 December

2018

Programme

Programme

Programme

Digital Economy and Capital Market Series: Alibaba and Tencent’s Success Guide Advocacy Programme on Corporate Governance (“CG”) Assessment using the Revised ASEAN CG Scorecard Methodology Breakfast Series : Non-Financials – Does it Matter

Ahmad Sharmin bin Zahari

28 February – 1March 2019

26 June 2019

In-House Training

Programme

Mandatory Accrediation programme for Directors of Public Listed Companies Digital Economy and Capital Market Series: Alibaba and Tencent’s Success Guide

The Board (via the NC and with assistance of the Company Secretary) continuously evaluate and determine the training needs of the Directors to build their knowledge so that they can be up-to-date with the development of the Group’s business and industry that may affect their roles and responsibilities.

ANNUAL REPORT 2019

27


(b) BOARD COMPOSITION Orion is led and managed by a competent and experienced Board with a mix of suitably qualified and experienced professionals that are relevant to the business which enable the Board to carry out its responsibilities in an effective and competent manner. The current Board is drawn from different ethnic, cultural and socio-economic backgrounds and their ages range from 37 to 64 years to ensure that diverse viewpoints are considered in the decision making process. The profile of each Director is set out in pages 4 to 7 of this Annual Report. The Board currently has six members including two Independent Directors. The Board takes cognizance of the recommendation that at least half of the Board comprises of independent directors and although the Board has not made any decision at this juncture, going forward, the Board will review and deliberate on the merits of the recommendation vis a vis, the Group’s size, structure and dynamics during the coming financial year. During the FYE 2019, the Board through its NC conducted an annual review of the Board’s size, composition and balance and concluded that the Board’s dynamics are healthy and effective. The present members of the Board possess the appropriate skills, experience and qualities to steer the Group forward. The NC is also satisfied that the existing structure, size, composition, current mix of skills, competence, knowledge, experience and qualities of the existing Board members are appropriate to enable the Board to carry out its responsibilities effectively. The Board will continue to monitor and review the Board size and composition and will nominate new members as and when the need arises. The Board assesses the effectiveness of the Board as a whole, the committees of the Board and the contribution of each individual director. The evaluation process is led by the Chairman of the NC and supported by the Company Secretary annually. The Directors complete the relevant questionnaires regarding the effectiveness of the Board and its Board committees. The assessment by all Directors are summarised and disclosed at the NC’s meeting and reported at a Board meeting by the Chairman of the NC. The Board has also adopted the best practices for assessing the independence of Independent Directors annually and the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. When the Board retains an Independent Director who has served in that capacity for more than nine (9) years, the Board would justify its decision and seek shareholders’ approval. The re-election of Directors provides an opportunity for shareholders to renew their mandate conferred to the Directors. The Constitution of the Company provides that all directors shall retire by rotation once in every three (3) years or at least one-third (1/3) of the Board shall retire but shall be eligible to offer themselves for re-election at the Annual General Meeting (“AGM”). The above provisions are adhered to by the Board at every AGM.

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At the forthcoming 2019 AGM, Encik Ahmad Ruslan Zahari bin Zakaria and Encik Ahmad Sharmin bin Zahari who retire pursuant to Article 90 of the Company’s Constitution, have offered themselves for re-election. Encik Abdul Rani bin Achmed Abdullah is due to retire by rotation under Article 83 of the Constitution and being eligible has offered himself for re-election. Following the NC’s review on the performance of the three Directors and having noted their significant and valued contributions to the Board, the NC has recommended their re-election to the Board and the Board has concurred with such recommendation and is recommending that shareholders re-elect the said Directors at the forthcoming 2019 AGM.

(c) REMUNERATION The RC and Board are mindful of the need to remunerate and retain its Directors to ensure that their commitment remain and therefore their remuneration package is directly linked to their performance, service, seniority, experience and scope of responsibilities. The RC is responsible to establish, recommend and constantly review a formal and transparent remuneration policy framework and terms of employment for the Board to attract and retain directors which should be aligned with the business strategy and long-term objectives of the Group taking into consideration that the remuneration of the Board should reflect the Board’s responsibilities, expertise and complexity of the Group’s activities. The RC had reviewed the Directors’ fees and the Executive Directors’ remuneration for the FYE 2019 and recommended to the Board for approval.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

(a) AUDIT COMMITTEE The AC currently comprises of three members, all of whom are non-executive directors with also all of them are Independent Directors. The AC Chairman is Encik Rahimi bin Ramli. Although none of the current members of the AC is a former key audit partner involved in auditing the Group, the Group incorporated the policy into the terms of reference of the AC as stipulated in Practice 8.2 that the said key audit partner observed a cooling-off period of at least two years before being appointed a member of the AC.

The AC has policies and procedures to review, assess and monitor the performances, suitability and independence of the external auditors. Prior to the commencement of the annual audit, the AC will seek confirmation from the external auditors as to their independence. This independence confirmation would be re-affirmed by the external auditors to the AC upon their completion of the annual

ANNUAL REPORT 2019

29


audit. These confirmations were made pursuant to the Independence Guidelines of the Malaysian Institute of Accountants. Further details on the work performed by AC in furtherance of its oversight role are set out in the AC Report on pages 19 to 23 of this Annual Report.

(b) RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK

During FYE 2019, the Board and AC were assisted by the Executive Directors to maintain its risk management system, which is reviewed and updated constantly to safeguard shareholders’ investments and the Group’s assets. The Group’s internal audit function has been outsourced to an external consultant which reports directly to the AC. The internal audit function currently reviews and appraises the risk management and internal control processes of the Group. The Statement on Risk Management and Internal Control set out on pages 33 to 34 of this Annual Report provides an overview of the Group’s approach to ensure the effectiveness of the risk management and internal processes within the Group. The Board is overall responsible for maintaining and ensuring the integrity of a sound system of Internal Control which supports effective and efficient operations to safeguard shareholders’ interests and the Group’s business and assets. Going forward, the Board has restructured its risk management and internal control processes with the establishment of the AC.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS (a) COMMUNICATION WITH STAKEHOLDERS

Orion is committed to upholding high standards of transparency and promotion of investor confidence through the provision of comprehensive, accurate and quality information on a timely and even basis. Orion is in place good corporate disclosure policies and communication channels to ensure thorough and timely dissemination of material and reliable information to the public. All the announcements made, for example, annual reports and financial results will be released on the Bursa website. In addition, the Group’s Annual Report contains a review of its financial performance, supported by facts and standards. The AGM is the principal forum for dialogue with shareholders. Any queries or concerns relating to the Group may be conveyed to our Group Chief Executive Officer. Encik Mohamad Shaharul bin Mohamad Shariff Tel : 03-7890 0638 Fax : 03-7890 3163 Email : [email protected]

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(b) CONDUCT OF GENERAL MEETINGS

As stated earlier, the Board recognises the importance of communications with its shareholders and will take additional measures to encourage shareholders’ participation at general meetings as recommended by the MCCG. This includes the meeting chairman highlighting to shareholders and proxy holders, their right to speak up at general meetings, the conduct of poll voting for all resolutions tabled at general meetings and a review of the performance of the Group during the AGMs. To ensure effective participation of and engagement with shareholders at the AGM in 2018, all Directors, including members of AC, NC and RC, attended and participated in said AGM. In line with the best CG practice, the Notice of the 17th AGM and Annual Report are sent out to shareholders at least 28 days before the date of the meeting to allow sufficient time for shareholders to consider the proposed resolutions to be tabled at the AGM. This CG Overview Statement was approved by the Board of the Company on 23 October 2019.

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ADDiTiOnAl COMPliAnCEinformation

1. UTILISATION OF PROCEEDS

A private placement of 179,686,900 new Orion Shares was announced on 4 January 2019 (“Private Placement”) and is currently still being implemented. A total of 108,220,000 Orion Shares under the Private Placement have been issued at RM0.165 per share and were listed on 30 April 2019 amounting to a total of RM17,856,300.00 raised. On 17 September 2019, the Company obtained the approval of Bursa Securities for an extension of time up to 24 March 2020 to implement the Private Placement.

The utilization of proceeds from the above private placement is as follows:-

Details of Utilisation

Proposed Utilisation (RM’000)

Actual Utilisation (RM’000)

Balance Unutilised (RM’000)

Acquisition of 10% equity interest in Sukaniaga

10,000 10,000 -

Development of the myAzZahra system

6,906 3,376 3,530

Estimated expenses in relation to the Proposed Private Placement

950 950 -

Total 17,856 14,326 3,530

2. AUDIT AND NON-AUDIT FEES

The amount of audit fees incurred for statutory audit services rendered to the Group by the external auditors for the financial year ended 30 June 2019 (“FYE 2019”) amounted to RM124,000. The amount of the non-audit fees incurred for services rendered by the external auditors for the FYE 2019 amounted to RM5,000 for the Group and the Company.

3. MATERIAL CONTRACTS There were no material contract entered into by the Company and/or its subsidiaries involving Directors and Substantial Shareholders’ interests for the FYE 2019.

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4. STATEMENT OF DIRECTORS’ RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS The Directors are responsible for the preparation of the Annual Audited Financial Statements which give a true and fair view of the state of affairs of the Group and will ensure that they are presented in accordance with the provisions of the Companies Act 2016 and the applicable approved accounting standards in Malaysia. In the preparation of the financial statements for the FYE 2019, the Directors are satisfied that the Group had used appropriate accounting policies that were consistently applied and supported by reasonable and prudent judgment and estimates.

Additional Compliance Information(cont’d)

ANNUAL REPORT 2019

33

sTATEMEnT On Risk MAnAgEMEnTand internal control

A. INTRODUCTION The Board is committed to maintain a sound system of internal control of the Group and is pleased to provide the following statement, which outlines the nature and scope of internal control of the Group during the year. B. BOARD RESPONSIBILITIES The Board has overall responsibility for maintaining a system of internal controls, which provides reasonable assessments of effective and efficient operations, internal controls and compliance with laws and regulations. The Board recognises the importance of sound internal controls and risk management in safeguarding the assets of the Group. The Group has in place an on-going process to identify, monitor and manage any significant risks through internal controls set out in order to attain a reasonable assurance that its business objectives are met. These controls are regularly reviewed by the Board and subject to continuous improvements. However, the Board also recognises that the control system in place cannot eliminate risk totally. The internal control system could only provide reasonable and not absolute assurance against material mis-statements or fraud. C. RISK MANAGEMENT FRAMEWORK The Board of Directors is aware that a sound system of internal control should be embedded in the operations of the Group and form part of its culture. This system should be capable of responding quickly to evolving risks to the business arising from factors within the Group and changes in the business environment. It should include procedures for reporting immediately to appropriate levels of management any significant control failings or weaknesses that are identified together with details of corrective action being taken. The Group has in place an on-going process for identifying, monitoring and managing significant risks that may affect the achievement of business objectives. Management is continuously reviewing potential risk areas through discussions at Audit Committee meetings. Where a particular risk is identified, it will be monitored with counter measures taken to mitigate risk if possible. D. INTERNAL AUDIT The Company had appointed an independent professional consulting firm to undertake its Internal Audit functions as part of its efforts to provide adequate and effective internal control systems. A risk analysis of the Group is conducted on a regular basis with the necessary measures being put up to assess and monitor the impact on its operation and business.

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Statement on Risk Management and Internal Control(cont’d)

The objectives of internal audit are to independently assess the system of internal controls as established by Management, the adequacy and integrity of such internal control system. The objectives of having an effective internal audit are as follows: (i) To identify needs and suggest internal control structure so as to minimise risk; (ii) To monitor and improve the effectiveness of the system of internal control; and (iii) To comply with the Bursa Malaysia Securities Berhad’s Listing Requirements for

internal audit function.

The scope as specified by the management which inclusive of the following aspects: (i) to ensure adherence to the system of controls pertaining to the operation, financial

and administrative functions established by the management; (ii) to evaluate the effectiveness of the accounting and internal control systems in

existence; (iii) to ensure as far as possible the completeness and accuracy of the records of the

Group; and (iv) to identify risks area and implement appropriate systems to manage and control these

risks and review the adequacy and integrity of the internal control systems.

The Board is of the view that there has been no significant breakdown or weaknesses in the system of internal control of the Group that may have a material impact on the operations of the Group for the financial year ended 30 June 2019. E. REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORS Pursuant to paragraph 15.23 of the ACE Market Listing Requirements, the External Auditors have reviewed this Statement and the Risk Management Statement for inclusion in the Annual Report for the financial year ended 30 June 2019, and reported to the Board that noting has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control. F. CONCLUSION The Board is of the opinion that based on the current level of activities, the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects. The Management will continue to take measures to strengthen the control environment.

ANNUAL REPORT 2019

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FINANCIAL STATEMENTS

Directors’ Report ...................................................................................... 36 - 41

Statement by Directors .................................................................................. 42

Statutory Declaration ..................................................................................... 42

Independent Auditors’ Report ................................................................ 43 - 50

Consolidated Statement of Financial Position ...................................... 51 - 52

Consolidated Statement of Profit or Loss and Other Comprehensive Income ....................................................... 53 - 54

Consolidated Statement of Changes In Equity ............................................ 55

Consolidated Statement of Cash Flows ................................................. 56 - 58

Statement of Financial Position ............................................................. 59 - 60

Statement of Profit or Loss and Other Comprehensive Income ...................................................................... 61

Statement of Changes In Equity .................................................................... 62

Statement of Cash Flows ......................................................................... 63 - 64

Notes to the Financial Statements ....................................................... 65 - 152

36

DiRECTORs’report

(Company No. 554979-T) 1

ORION IXL BERHAD(Incorporated in Malaysia)and its subsidiaries

Directors’ Report for the financial year ended 30 June 2019

Financial resultsCompany

RMProfit/(Loss) for the year attributable to:

Owners of the Company (2,176,660)Non-controlling interest -Profit/(Loss) for the year (2,176,660)

Reserves and provisions

Dividends

Group

No dividend was paid since the end of the previous financial period and the Directors donot recommend any dividend to be paid for the financial year under review.

RM

1,646,538(9,252)

1,637,286

The Directors have pleasure in presenting their report and the audited financialstatements of the Group and of the Company for the financial year ended 30 June 2019.

The Company is principally engaged in the provision of computerised maintenancemanagement systems and other information technology service such as systemsintegration, support services and training. The principal activities of the subsidiaries areset out in Note 6 to the financial statements.

There were no material transfers to or from reserves or provisions during the financialyear.

Subsidiaries

The details of the Company’s subsidiaries are disclosed in Note 6 to the financialstatements.

Principal activities

ANNUAL REPORT 2019

37

Directors’ Report(cont’d)


Directors of the Company and its subsidiaries

Abdul Rani bin Achmed AbdullahRahimi bin RamliYahya bin Razali **Mohamad Shaharul bin Mohamad Shariff **Ahmad Ruslan Zahari bin Zakaria (appointed on 10.12.2018)Ahmad Sharmin bin Zahari (appointed on 10.12.2018)Adnan bin Zainol (resigned on 23.11.2018)

** These Directors are also Directors of the Company’s subsidiaries.

Chua Choon YangPrabuddha Kumar Pronob Chakravertty

Directors’ interests in shares

As atDisposed 30.6.2019

The Company

Direct interest

Abdul Rani bin Achmed Abdullah 85,072

Yahya bin Razali -Mohamad Shaharul bin

Mohamad Shariff 40,929,000

Deemed interest

Abdul Rani bin Achmed Abdullah * 23,076,082- -

4,000,000

Directors of the Company’s subsidiaries who served since the beginning of the financialyear to the date of this report (not including those Directors listed above) are as follows:

-36,929,000

19,076,082 47,102,500

23,076,082

(66,178,582)

As at

The interests and deemed interests in the shares and warrants of the Company and of itsrelated corporations of those who were Directors at financial year end (including theinterests of the spouses or children of the Directors who themselves are not Directors ofthe Company) as recorded in the Register of Directors’ Shareholdings are as follows:

85,072 - -

Acquired1.7.2018

Numbers of ordinary shares

Directors who served since the beginning of the financial year to the date of this reportare as follows:

38



Directors’ interests in shares (continued)

As atDisposed 30.6.2019

The Company

Direct interest

Mohamad Shaharul bin Mohamad Shariff 6,811,000

Deemed interest

Abdul Rani bin Achmed Abdullah * 2,631,741

* Deemed interest held through Winnova Resources Sdn. Bhd.

As at

None of the other Directors holding office at 30 June 2019 had any interest in theordinary shares of the Company and of its related corporations during the financial year.

- -2,631,741

6,811,000 - -

1.7.2018

Numbers of warrants 2017/2022

Acquired

There were no arrangements during and at the end of the financial year which had theobject of enabling Directors of the Company to acquire benefits by means of theacquisition of shares in or debentures of the Company or any other body corporate.

Auditors’ remuneration

Details of auditors’ remuneration are disclosed in Note 24 to the financial statements.

Since the end of the previous financial period, no Director of the Company has receivednor become entitled to receive any benefit (other than those fees and other benefitsincluded in the aggregate amount of remuneration received or due and receivables byDirectors as shown in Note 22 to the financial statements) by reason of a contract madeby the Company or a related corporation with the Director or with a firm of which theDirector is a member, or with a company in which the Director has a substantial financialinterest.

Directors’ benefits

ANNUAL REPORT 2019

39


The movement of the Warrants 2017/2022 since last financial year end is as follow:

As at 1.7.2018

As at 30.6.2019

Warrants 232,927,485 232,927,485

The ordinary shares issued from the exercise of Warrants 2017/2022 shall rank paripassu in all respects with the existing issued ordinary shares of the Company except thatthey shall not be entitled to any dividends, rights, allotments and/or other distributions,the entitlement date of which prior to the date of allotment of the new shares arising fromthe exercise of Warrants 2017/2022.

No options were granted to any person to take up unissued shares of the Companyduring the financial year.

Issued

-

Indemnity and insurance for Directors, officers or auditors

During the financial year, the Company increased its issued and paid up ordinary sharescapital from RM95,637,906 to RM112,504,040 by way of issuance of 108,220,000ordinary shares through private placement for cash.

Options granted over unissued shares

There were no indemnity given to or insurance effected for, during or since the end of theyear, for any Director, officer or auditor of the Company in accordance with section 289 ofthe Companies Act, 2016.

-

Exercised

Warrants

On 2 August 2017, the Company issued 232,927,485 5-year free detachable Warrants2017/2022 pursuant to a renounceable rights issue of one (1) free warrants for every two(2) right shares of RM0.10 each held in the Company, at an exercise price of RM0.17.The Warrants are constituted by the Deed Poll dated 9 June 2017. Any Warrants2017/2022 not exercised by the date of maturity will lapse thereafter and cease to bevalid for purpose. The salient terms of warrant are disclosed in Note 15(a).

Number of Warrants 2017/2022

Issue of shares


40


Other statutory information

i)

ii)

i)

ii)

iii)

iv)

i)

ii)

that would render the amount written off for bad debts or the amount of the provisionfor doubtful debts in the Group and in the Company inadequate to any substantialextent, or

that would render the value attributed to the current assets in the financial statementsof the Group and of the Company misleading, or

which have arisen which render adherence to the existing method of valuation ofassets or liabilities of the Group and of the Company misleading or inappropriate, or

not otherwise dealt with in this report or the financial statements that would render anyamount stated in the financial statements of the Group and of the Companymisleading.

any charge on the assets of the Group and of the Company that has arisen since theend of the financial year and which secures the liabilities of any other person, or

any contingent liability in respect of the Group and of the Company that has arisensince the end of the financial year.

any current assets which were unlikely to be realised in the ordinary course ofbusiness have been written down to an amount which they might be expected so torealise.

all known bad debts have been written off and adequate provision made for doubtfuldebts, and

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

Before the financial statements of the Group and of the Company were made out, theDirectors took reasonable steps to ascertain that:

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


ANNUAL REPORT 2019

41


Other statutory information (continued)

i)

ii)

Auditors

Abdul Rani bin Achmed Abdullah Yahya bin RazaliDirector Director

Kuala Lumpur

Date: 31 October 2019

no contingent liability or other liability of any company in the Group has becomeenforceable, or is likely to become enforceable within the period of twelve monthsafter the end of the financial year which will or may substantially affect the ability ofthe Group and of the Company to meet their obligations as and when they fall due.

the financial performance of the Group and of the Company for the financial year thenended have not been substantially affected by any item, transaction or event of amaterial and unusual nature nor has any such item, transaction or event occurred inthe interval between the end of that financial year and the date of this report.

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

In the opinion of the Directors:

The auditors, Messrs. STYL ASSOCIATES PLT (converted from a conventionalpartnership, STYL ASSOCIATES, on 13 March 2019) , have indicated their willingness toaccept re-appointment.


42(Company No. 554979-T) 7



Kuala Lumpur


Subscribed and solemnly declared by the )abovenamed, Abdul Rani bin )Achmed Abdullah at Kuala Lumpur, ) in the Federal Territory on this date of ) 31 October 2019 )

Before me,

COMMISSIONER FOR OATHS


I, Abdul Rani bin Achmed Abdullah (NRIC No.: 660505-10-5099), being the directorprimarily responsible for the financial management of ORION IXL BERHAD, do solemnlyand sincerely declare that the financial statements set out on pages 51 to 152 are, to thebest of my knowledge and belief, correct and I make this solemn declarationconscientiously believing the same to be true, and by virtue of the provisions of theStatutory Declarations Act, 1960.

In the opinion of the Directors, the financial statements set out on pages 51 to 152 aredrawn up in accordance with Malaysian Financial Reporting Standards, InternationalFinancial Reporting Standards and the requirements of the Companies Act, 2016 inMalaysia so as to give a true and fair view of the financial position of the Group and of theCompany as of 30 June 2019 and of their financial performance and cash flows for thefinancial year then ended.

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

Statement by Directors pursuant to Section 251(2) of the Companies Act, 2016

Statutory Declaration pursuant to Section 251(1)(b) of the Companies Act, 2016

sTATEMEnT bydirectorSPuRsuAnT TO sECTiOn 251(2) Of THE COMPAniEs ACT 2016

sTATuTORydeclarationPuRsuAnT TO sECTiOn 251(1) Of THE COMPAniEs ACT 2016




Kuala Lumpur


Subscribed and solemnly declared by the )abovenamed, Abdul Rani bin )Achmed Abdullah at Kuala Lumpur, ) in the Federal Territory on this date of ) 31 October 2019 )

Before me,

COMMISSIONER FOR OATHS


I, Abdul Rani bin Achmed Abdullah (NRIC No.: 660505-10-5099), being the directorprimarily responsible for the financial management of ORION IXL BERHAD, do solemnlyand sincerely declare that the financial statements set out on pages 51 to 152 are, to thebest of my knowledge and belief, correct and I make this solemn declarationconscientiously believing the same to be true, and by virtue of the provisions of theStatutory Declarations Act, 1960.

In the opinion of the Directors, the financial statements set out on pages 51 to 152 aredrawn up in accordance with Malaysian Financial Reporting Standards, InternationalFinancial Reporting Standards and the requirements of the Companies Act, 2016 inMalaysia so as to give a true and fair view of the financial position of the Group and of theCompany as of 30 June 2019 and of their financial performance and cash flows for thefinancial year then ended.

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

Statement by Directors pursuant to Section 251(2) of the Companies Act, 2016

Statutory Declaration pursuant to Section 251(1)(b) of the Companies Act, 2016

ANNUAL REPORT 2019

43

inDEPEnDEnT auditorS’ report

TO THE MEMbERs Of ORiOn iXl bERHAD

8

Independent Auditors’ Report to the members ofORION IXL BERHAD

and its subsidiaries

Report on the Audit of the Financial Statements

Opinion

Basis for Opinion

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (onProfessional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics forProfessional Accountants (“IESBA Code”), and we have fulfilled our other ethicalresponsibilities in accordance with the By-Laws and the IESBA Code.

(Company No: 554979-T)(Incorporated in Malaysia)

We have audited the financial statements of ORION IXL BERHAD, which comprise thestatements of financial position as at 30 June 2019, and the statements of profit or lossand other comprehensive income, statements of changes in equity and statements of cashflows for the year ended 30 June 2019, and notes to the financial statements, including asummary of significant accounting policies, as set out on pages 51 to 152.

In our opinion, the accompanying financial statements give a true and fair view of thefinancial position of the Group and of the Company as at 30 June 2019, and of theirfinancial performance and their cash flows for the year then ended in accordance withMalaysian Financial Reporting Standards, International Financial Reporting Standards andthe requirements of the Companies Act 2016 in Malaysia.

We conducted our audit in accordance with approved standards on auditing in Malaysiaand International Standards on Auditing. Our responsibilities under those standards arefurther described in the Auditors’ Responsibilities for the Audit of the Financial Statementssection of our auditors’ report. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

44

Independent Auditors’ Report(cont’d)

9

(Company No: 554979-T)

Key Audit Matters

How our audit addressed the key audit matter

Our audit procedures focused on following:

•

•

•

•

Key audit matters are those matters that, in our professional judgement, were of mostsignificance in our audit of the financial statements of the Group and of the Company forthe current year. We have determined that there are no key audit matters to communicatein our report on the financial statements of the Company. These matters were addressed inthe context of our audit of the financial statements of the Group as a whole, and in formingour opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

As at 30 June 2019, the Grouprecorded intangibles assets ofRM5,040,713. For the purpose ofimpairment assessments, theintangible assets have beenallocated to groups of cashgenerating units (“CGUs”). Therecoverable amount of theunderlying CGUs is supported byvalue-in-use calculations which arebased on future discounted cashflows. Management concluded thatthe intangible assets are notimpaired as at 30 June 2019.

We determined this to be a keyaudit matter due to significantjudgement involved in determiningthe key assumptions used inperforming the impairment test,such as estimating future revenue,revenue growth, gross margin anddiscount rate used in the cash flowprojection prepared by themanagement in order to determinethe recoverable amount of theintangible assets.

Impairment assessment of intangible assets (refer to Note 5 to the financial statements) We assessed the appropriateness of

management’s judgements in identifying the cash-generating unit ('CGU').

We evaluated the reasonableness of themanagement’s cash flow projections bycomparing the previous forecast with actualresults to assess the performance of the businessand reliability of the forecast.

We evaluated and challenged theappropriateness of key assumptions applied bythe management in cash flow projection includingprojected revenue, costs, discount rate and anyunusual deviation; and

We performed sensitivity analysis on the keyassumptions used and evaluated the possibleimpact on the recoverable amount.

ANNUAL REPORT 2019

45


10


Key Audit Matters (continued)


Goodwill (refer to Note 10)

•

•

•

•

The Group reported a significantgoodwill amounting toRM70,198,098, which represents59.3% of the Group total assetsand 67.8% of the Group net assetsas at 30 June 2019. The goodwill istested for impairment annually.Management concluded that noimpairment is needed as at 30June 2019.

We focused on this matter due tosignificant management judgementinvolved in forecasting the futurecash flow and is based onassumptions that are affected byfuture markets and economicconditions.

We evaluated the management’s cash flowprojection by comparing the actual results withthe prior year cash flow projection to assess thebusiness performance and reliability of theforecast;

We assessed the appropriateness ofmanagement’s judgements in identifying thecash-generating unit ('CGU') to which goodwill isallocated;

Key audit matter

Our audit procedures included, among others, the following:

We challenged the appropriateness of keyassumptions applied by the management in cashflow projection by comparing them to externallyderived data as well as local economicdevelopment and industrial outlook;

We performed sensitivity analysis on the keyassumptions used and evaluated the possibleimpact on the value-in-use.

46 11


Key Audit Matters (continued)


•

•

• We performed sensitivity analysis on the keyassumptions used and evaluated the possibleimpact on the value-in-use.

As at 30 June 2019, the Grouprecorded a significant carryingamount of investment in anassociate amounting toRM9,717,406. Managementassessed the recoverable amountsof the associate by value-in-usecalculation which is based onestimated future discounted cashflow and concluded that noimpairment is needed.

We determined this to be a keyaudit matter due to significantjudgement involved used inforecasting the future cash flow andis based on assumptions that areaffected by future markets andeconomic conditions.

We challenged the appropriateness of keyassumptions applied by the management in cashflow projection by comparing them to externallyderived data as well as local economicdevelopment and industrial outlook;

We evaluated the management’s cash flowprojection by comparing the actual results withthe previous forecast to assess the businessperformance and reliability of the forecast;

Key audit matter

Impairment assessment oninvestment in an associate

Our audit procedures included, among others,the following:


ANNUAL REPORT 2019

4712


Information Other than the Financial Statements and Auditors’ Report Thereon

Responsibilities of the Directors for the Financial Statements

Our opinion on the financial statements of the Group and of the Company does not coverthe other information and we do not express any form of assurance conclusion thereon.

The Directors of the Company are responsible for the other information. The otherinformation comprises the information included in the Annual report, but does not includethe financial statements of the Group and of the Company and our auditors’ reportthereon.

The Directors of the Company are responsible for the preparation of financial statementsof the Group and of the Company that give a true and fair view in accordance withMalaysian Financial Reporting Standards, International Financial Reporting Standardsand the requirements of the Companies Act 2016 in Malaysia. The Directors are alsoresponsible for such internal control as the Directors determine is necessary to enablethe preparation of financial statements of the Group and of the Company that are freefrom material misstatement, whether due to fraud or error.

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 theother information is materially inconsistent with the financial statements of the Group andof the Company or our knowledge obtained in the audit, or otherwise appears to bematerially misstated.

In preparing the financial statements of the Group and of the Company, the Directors areresponsible for assessing the ability of the Group and of the Company to continue as agoing concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless the Directors either intend to liquidate theGroup or the Company or to cease operations, or have no realistic alternative but to doso.

If, based on the work we have performed, we conclude that there is a materialmisstatement of the other information, we are required to report that fact. We havenothing to report in this regard.


48 13


Auditors’ Responsibilities for the Audit of the Financial Statements

i)

ii)

iii)

iv) Conclude on the appropriateness of the Directors’ use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a materialuncertainty exists related to events or conditions that may cast significant doubt onthe ability of the Group or of the Company to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in ourauditors’ report to the related disclosures in the financial statements of theCompany or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of ourauditors’ report. However, future events or conditions may cause the Group or theCompany to cease to continue as a going concern.

Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Directors.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the internal control of theCompany.

Identify and assess the risks of material misstatement of the financial statements ofthe Group and of the Company, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for oneresulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

As part of an audit in accordance with approved standards on auditing in Malaysia andInternational Standards on Auditing, we exercise professional judgement and maintainprofessional scepticism throughout the audit. We also:

Our objectives are to obtain reasonable assurance about whether the financialstatements of the Group and of the Company as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditors’ report that includesour opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with approved standards on auditing in Malaysiaand International Standards on Auditing will always detect a material misstatement whenit 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 theeconomic decisions of users taken on the basis of these financial statements.


ANNUAL REPORT 2019

4914


Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

v)

vi)

Report on Other Legal and Regulatory Requirements

We also provide the directors with a statement that we have compiled with relevantethical requirements regarding independence, and to communicate with team allrelationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that wereof most significance in the audit of the financial statements of the Group and of theCompany for the current year and are therefore the key audit matters. We describe thesematters in our auditors' report unless law or regulation precludes public disclosure aboutthe matters in extremely rare circumstances, we determine that a matter should not becommunicated in out report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

Obtain sufficient appropriate audit evidence regarding the financial information ofthe entities or business activities within the group to express an opinion on thefinancial statements of the Group. We are responsible for the direction, supervisionand performance of the group audit. We remain solely responsible for our auditopinion.

In accordance with the requirements of the Companies Act 2016 in Malaysia, we reportthat the subsidiaries of which we have not acted as auditors, which are indicated in Note6 to the financial statements.

Evaluate the overall presentation, structure and content of the financial statementsof the Group and of the Company, including the disclosures, and whether thefinancial statements of the Group and of the Company represent the underlyingtransactions and events in a manner that achieves fair presentation.

We communicate with the Directors regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficienciesin internal control that we identify during our audit.


50 15


Other Matters

1.

2.

STYL ASSOCIATES PLT OOI LIP HOOFirm Number: LLP0019500-LCA & AF001929 Approval Number: 03444/08/2021 JChartered Accountants Chartered Accountant

Date:

Pulau Pinang

31 October 2019

The financial statements of the Group and of the Company for the financial periodended 30 June 2018 were audited by another firm of Chartered Accountants whosereport thereon dated 26 October 2018 expressed an unmodified opinion on thosefinancial statements.

This report is made solely to the members of the Company, as a body, inaccordance with Section 266 of the Companies Act 2016 in Malaysia and for noother purpose. We do not assume responsibility to any other person for the contentof this report.


ANNUAL REPORT 2019

51

COnsOliDATED sTATEMEnT Offinancial poSition

As AT 30 JunE 2019



Consolidated Statement of Financial PositionAs at 30 June 2019

2019 2018Note RM RM

ASSETS

Non-current assets

Property, plant and equipment 4 2,165,165 146,852Intangible assets 5 5,040,713 2,303,693Investment in an associate 7 9,717,406 -Other investments 8 77,893 1,561,529Finance lease receivable 9 - 44,831Goodwill 10 70,198,098 70,188,099

Total non-current assets 87,199,275 74,245,004

Current assets

Trade and other receivables 11 27,384,530 23,126,149Contract assets 12 2,908,935 1,948,528Finance lease receivable 9 - 47,005Cash and cash equivalents 13 895,136 1,633,149

Total current assets 31,188,601 26,754,831

Total assets 118,387,876 100,999,835

Equity

Equity attributable to owners of the Company:

Share capital 14 112,504,040 95,637,906Reserves 15 21,194,625 21,270,724Accumulated losses (29,705,399) (31,351,937)Equity attributable to Owners of the Company 103,993,266 85,556,693Non-controlling interests (483,614) (474,362)

Total equity 103,509,652 85,082,331

52

Consolidated Statement of Financial Position(cont’d)



Consolidated Statement of Financial Position (continued)As at 30 June 2019

2019 2018Note RM RM

Non-current liability

Finance lease payable 16 - 44,831

Total non-current liability - 44,831

Current liabilities

Trade and other payables 17 4,268,159 3,219,017Deferred income 18 - 41,357Provisions and contingent consideration

payable 19 10,610,065 12,565,294Finance lease payable 16 - 47,005

Total current liabilities 14,878,224 15,872,673

Total liabilities 14,878,224 15,917,504

Total equity and liabilities 118,387,876 100,999,835

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




2019 2018Note RM RM




Current liabilities







ANNUAL REPORT 2019

53



Consolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 30 June 2019

Note RM RM

Revenue 20 5,697,371 13,388,533

Other operating income 21 2,237,767 429,665Purchases and other direct costs (1,352,029) (6,535,376)Directors' remuneration 22 (804,233) (833,471)Depreciation of plant and equipment (193,500) (69,395)Amortisation of intangible assets (610,108) (705,161)Staff costs 23 (657,366) (501,339)Other operating expenses 24 (2,668,635) (7,000,438)

Profit/(Loss) from operations 1,649,267 (1,826,982)

Interest income 280,724 298,504

Finance costs 25 - (16,353)

Share of results from an associate, net of tax (292,594) -

Profit/(Loss) before taxation 1,637,397 (1,544,831)

Taxation 26 (111) -

Profit/(Loss) for the year/period 1,637,286 (1,544,831)

Other comprehensive income:(15,149) 76,073

Fair value changes on other investments (26,778) 36,029

1,595,359 (1,432,729)

Foreign currency translation

Total comprehensive income/(loss) for the year/period

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

COnsOliDATED sTATEMEnT Of PROfiT OR lOssand other comprehenSive income

fOR THE yEAR EnDED 30 JunE 2019

54



For the year ended 30 June 2019

Note RM RM

Profit/(Loss) attributable to:Owners of the Company 1,646,538 (1,578,064) Non-controlling interests (9,252) 33,233

Profit/(Loss) for the year/period 1,637,286 (1,544,831)

Total comprehensive income/(loss) attributable to: Owners of the Company 1,604,611 (1,465,962) Non-controlling interests (9,252) 33,233 Total comprehensive income/(loss) for the

year, net of tax 1,595,359 (1,432,729)

Basic and diluted 27 0.27 (0.59)


Earnings/(Loss) per share attributable to owner of the Company (sen)

Consolidated Statement of Profit or Loss and Other Comprehensive Income(continued)

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Consolidated Statement of Profit or Loss and Other Comprehensive Income(cont’d)




2019 2018Note RM RM




Current liabilities







ANNUAL REPORT 2019

55

COnsOliDATED sTATEMEnT OfchangeS in equity


(Com

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No.

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-(9

90,1

66)

Tota

l tran

sacti

ons w

ith o

wner

s16

,866

,134

--

--

-16

,866

,134

-16

,866

,134

Recla

ssific

ation

adju

stmen

t rela

ting

to th

e dis

posa

l of b

ond

inves

tmen

tde

signa

ted

at F

VOCI

--

--

(34,

172)

-(3

4,17

2)-

(34,

172)

(loss

) for

the

year

--

-(1

5,14

9)(2

6,77

8)1,

646,

538

1,60

4,61

1(9

,252

)1,

595,

359

At 30

June

2019

112,

504,

040

-21

,569

,085

(349

,539

)(2

4,92

1)(2

9,70

5,39

9)10

3,99

3,26

6(4

83,6

14)

103,

509,

652

The

acco

mpa

nying

not

es fo

rm a

n int

egra

l par

t of t

he fin

ancia

l sta

tem

ents.

Non-

cont

rollin

g in

tere

st S

hare

pr

emiu

m

Exc

hang

e Re

serv

es

Accu

mul

ated

lo

sses

Tota

l com

preh

ensiv

e inc

ome/

Tota

l com

preh

ensiv

e (lo

ss)/

War

rant

re

serv

e F

air va

lue

rese

rve

Tota

l

(Com

pany

No.

554

979-

T)20

OR

ION

IXL

BER

HA

D(In

corp

orat

ed in

Mal

aysi

a)an

d its

sub

sidi

arie

s

Con

solid

ated

Sta

tem

ent o

f Cha

nges

In E

quity

For t

he y

ear e

nded

30

June

201

9A

ttrib

utab

le to

ow

ners

of t

he C

ompa

ny

Non

-dis

trib

utab

le

Shar

eTo

tal

capi

tal

equi

tyR

MR

MR

MR

MR

MR

MR

MR

MR

M

At 1

Jan

uary

201

713

,310

,142

4,85

8,28

4-

(410

,463

)-

(8,2

04,7

88)

9,55

3,17

5(5

07,5

95)

9,04

5,58

0

Tran

sact

ions

with

ow

ners

-A

lloca

tion

of w

arra

nt re

serv

e-

-21

,569

,085

--

(21,

569,

085)

--

--

Rig

hts

shar

es is

sued

79,1

95,3

44-

--

--

79,1

95,3

44-

79,1

95,3

44-

Sha

re is

suan

ce e

xpen

ses

(1,7

25,8

64)

--

--

-(1

,725

,864

)-

(1,7

25,8

64)

Tota

l tra

nsac

tions

with

ow

ners

77,4

69,4

80-

21,5

69,0

85-

-(2

1,56

9,08

5)77

,469

,480

-77

,469

,480

Tran

sfer

pur

suan

t to

Sec

tion

618(

2) o

f Com

pani

es A

ct 2

016

4,85

8,28

4(4

,858

,284

)-

--

--

--

inco

me

for t

he p

erio

d-

--

76,0

7336

,029

(1,5

78,0

64)

(1,4

65,9

62)

33,2

33(1

,432

,729

)

At 3

0 Ju

ne 2

018/

1 J

uly

2018

95,6

37,9

06-

21,5

69,0

85(3

34,3

90)

36,0

29(3

1,35

1,93

7)85

,556

,693

(474

,362

)85

,082

,331

Tran

sact

ions

with

ow

ners

-P

rivat

e pl

acem

ent

17,8

56,3

00-

--

--

17,8

56,3

00-

17,8

56,3

00-

Sha

re is

suan

ce e

xpen

ses

(990

,166

)-

--

--

(990

,166

)-

(990

,166

)

Tota

l tra

nsac

tions

with

ow

ners

16,8

66,1

34-

--

--

16,8

66,1

34-

16,8

66,1

34

Rec

lass

ifica

tion

adju

stm

ent r

elat

ing

to th

e di

spos

al o

f bon

d in

vest

men

tde

sign

ated

at F

VO

CI

--

--

(34,

172)

-(3

4,17

2)-

(34,

172)

(loss

) for

the

year

--

-(1

5,14

9)(2

6,77

8)1,

646,

538

1,60

4,61

1(9

,252

)1,

595,

359

At 3

0 Ju

ne 2

019

112,

504,

040

-21

,569

,085

(349

,539

)(2

4,92

1)(2

9,70

5,39

9)10

3,99

3,26

6(4

83,6

14)

103,

509,

652

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

Non

-co

ntro

lling

in

tere

st S

hare

pr

emiu

m

Exc

hang

e R

eser

ves

Acc

umul

ated

lo

sses

Tota

l com

preh

ensi

ve in

com

e/

Tota

l com

preh

ensi

ve (l

oss)

/

War

rant

re

serv

e F

air v

alue

re

serv

e To

tal

56

COnsOliDATED sTATEMEnT OfcaSh flowSAs AT 30 JunE 2019



Consolidated Statement of Cash FlowsFor the year ended 30 June 2019

Note RM RMCash flow from operating activities

Profit/(Loss) before taxation 1,637,397 (1,544,831)

Adjustments for:Allowance for impairment losses on trade receivables 222,902 1,432,617Reversal of impairment loss on trade

receivables (1,432,617) -Amortisation of intangible assets 610,108 705,161Bad debts written off - 8,340Deposits written off - 4,950Depreciation of property, plant and

equipment 193,500 69,395Gain on disposal of investment in bond (58,605) -Gain on disposal of property, plant and

equipment - (30,756)Interest income (280,724) (298,504)Property, plant and equipment written off - 26,274(Reversal)/Provision for liquidated

ascertained damages (700,000) 1,095,420Unrealised loss on foreign exchange - 9,832Unwinding of discount - 16,353Share of results of an associate 292,594 -

484,555 1,494,251

Changes in working capital:Contract assets (960,407) (1,659,132)Trade receivables and other receivables (3,048,666) (16,503,899)Trade payables and other payables (223,249) 12,474,191Deferred income (41,357) 41,357

Cash used in operations (3,789,124) (4,153,232)

Tax paid (111) -Interest received 280,724 298,504

(3,508,511) (3,854,728)

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Operating profit before working capital changes

Net cash used in operating activities

ANNUAL REPORT 2019

57

Consolidated Statement of Cash Flows(cont’d)



Consolidated Statement of Cash Flows (continued)For the year ended 30 June 2019

Note RM RM

Cash flow from investing activities

Addition to intangible assets (3,347,128) (1,800,000)Investment in an associate (10,010,000) -Interest received - 4,410Net outflow on acquisition of a subsidiary (9,999) (70,993,621)Investment in bond fund - (1,500,000)Proceeds from disposal of investment in bond fund 1,481,291 -Proceeds from disposal of plant and equipment - 61,634Purchase of plant and equipment (2,211,740) (153,491)Receipt from finance lease receivable 91,836 41,339

(14,005,740) (74,339,729)

Cash flow from financing activities

Interest paid - (4,410)Proceeds from issuance of shares by way

of private placement, net of share issue expense 16,866,134 77,469,480

Advances from directors 17,162 -Repayment of finance lease payable (91,836) (41,339)

16,791,460 77,423,731

Net changes in cash and cash equivalents (722,791) (770,726)

Effect of foreign exchange rates changes on cash and cash equivalents

Cash and cash equivalents at the beginning of the year/period

Cash and cash equivalents at the end of the year/period B 895,136 1,633,149

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

2,404,6591,633,149

(784)(15,222)

Net cash generated from financing activities

Net cash used in investing activities

58

Consolidated Statement of Cash Flows(cont’d)



Consolidated Statement of Cash Flows (continued)For the year ended 30 June 2019

Note

A.

At 1January / At 1 July

Net changes from

financing cash flows At 30 June

RM RM RM2018

Finance lease liabilities - 91,836 91,836- 91,836 91,836

2019

Finance lease liabilities 91,836 (91,836) -Amount due to Directors - 17,162 17,162

91,836 (91,836) 17,162

B. Cash and cash equivalents

2019 2018Note RM RM

Cash and bank balances 13 221,663 981,126Fixed deposits placed with licensed

banks 13 673,473 652,023

895,136 1,633,149


Reconciliation of movement of liabilities to cash flows arising from financingactivities

Cash and cash equivalents included in the statement of cash flows comprise thefollowing statement of financial position amounts:




2019 2018Note RM RM




Current liabilities







ANNUAL REPORT 2019

59

sTATEMEnT Offinancial poSition

As AT 30 JunE 2019


ORION IXL BERHAD(Incorporated in Malaysia)

Statement of Financial PositionAs at 30 June 2019

2019 2018Note RM RM

ASSETS

Non-current assets

Plant and equipment 4 2,153,216 127,404Intangible assets 5 - 833,693Investment in subsidiaries 6 73,020,000 73,000,000Other investments 8 77,893 1,561,529

Total non-current assets 75,251,109 75,522,626

Current assets

Trade and other receivables 11 33,348,887 18,436,372Cash and cash equivalents 13 855,731 1,612,470

Total current assets 34,204,618 20,048,842

Total assets 109,455,727 95,571,468

Equity

Equity attributable to owners of the Company:

Share capital 14 112,504,040 95,637,906Reserves 15 21,544,164 21,605,114Accumulated losses (36,722,752) (34,546,092)

Total equity 97,325,452 82,696,928

60(Company No. 554979-T) 25


Statement of Financial Position (continued)As at 30 June 2019

2019 2018Note RM RM

Current liabilities


payable 19 10,214,645 11,469,874





Statement of Financial Position(cont’d)




2019 2018Note RM RM




Current liabilities







ANNUAL REPORT 2019

61

sTATEMEnT Of PROfiT OR lOssand other comprehenSive income




Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 30 June 2019

Note RM RM

Revenue 20 1,100,000 1,698,643

Other income 21 59,695 99,475 Purchases and other direct costs (719,216) (1,231,931) Directors' remuneration 22 (576,771) (703,471) Depreciation of plant and equipment (182,459) (52,743) Amortisation of intangible assets (62,527) (375,161) Staff costs 23 (563,657) (336,670) Other operating expenses 24 (1,512,449) (4,022,503)

Operating loss (2,457,384) (4,924,361)

Interest income 280,724 298,504 Finance costs 25 - (16,353)

Loss before tax (2,176,660) (4,642,210)

Taxation 26 - -

(2,176,660) (4,642,210)

Other comprehensive income:

Fair value changes on other investments, representing total other comprehensive (loss)/income (26,778) 36,029

Total comprehensive loss for the year/period (2,203,438) (4,606,181)


Loss for the year/period

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018




2019 2018Note RM RM




Current liabilities







62

sTATEMEnT OfchangeS in equityfOR THE yEAR EnDED 30 JunE 2019

(Com

pany

No.

554

979-

T)27

ORIO

N IX

L BE

RHAD

(Inco

rpor

ated

in M

alay

sia)

Stat

emen

t of C

hang

es In

Equ

ityFo

r the

yea

r end

ed 3

0 Ju

ne 2

019

Shar

eTo

tal

capi

tal

equi

tyNo

teRM

RMRM

RMRM

RM

At 1

Jan

uary

201

713

,310

,142

4,85

8,28

4-

-(8

,334

,797

)9,

833,

629

Tran

sact

ions

with

own

ers

-Allo

catio

n of

war

rant

rese

rve

15-

-21

,569

,085

-(2

1,56

9,08

5)-

-Rig

hts

shar

es is

sued

1479

,195

,344

--

--

79,1

95,3

44-S

hare

issu

ance

exp

ense

s(1

,725

,864

)-

--

-(1

,725

,864

)

Tota

l tra

nsac

tions

with

own

ers

77,4

69,4

80-

21,5

69,0

85-

(21,

569,

085)

77,4

69,4

80

Tran

sfer

pur

suan

t to

Sect

ion

618(

2) o

f Com

pani

es

Act 2

016

4,85

8,28

4(4

,858

,284

)-

--

-

--

-36

,029

(4,6

42,2

10)

(4,6

06,1

81)

At 3

0 Ju

ne 2

018/

1 J

uly

2018

95,6

37,9

06-

21,5

69,0

8536

,029

(34,

546,

092)

82,6

96,9

28

Tran

sact

ions

with

own

ers

-Priv

ate

plac

emen

t14

17,8

56,3

00-

--

-17

,856

,300

-Sha

re is

sura

nce

expe

nses

14(9

90,1

66)

--

--

(990

,166

)

Tota

l tra

nsac

tions

with

own

ers

16,8

66,1

34-

--

-16

,866

,134

Recla

ssific

atio

n ad

just

men

t rel

atin

gto

the

disp

osal

of b

ond

inve

stm

ent

desig

nate

d at

FVO

CI-

--

(34,

172)

-(3

4,17

2)

--

-(2

6,77

8)(2

,176

,660

)(2

,203

,438

)

At 3

0 Ju

ne 2

019

112,

504,

040

-21

,569

,085

(24,

921)

(36,

722,

752)

97,3

25,4

52

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

Accu

mul

ated

lo

sses

Tota

l com

preh

ensiv

e lo

ss fo

r the

yea

r

War

rant

re

serv

es

Non

-dis

tribu

tabl

e

Tota

l com

preh

ensiv

e lo

ss fo

r the

per

iod

Sha

re

prem

ium

F

air v

alue

re

serv

es

(Com

pany

No.

554

979-

T)20

OR

ION

IXL

BER

HA

D(In

corp

orat

ed in

Mal

aysi

a)an

d its

sub

sidi

arie

s

Con

solid

ated

Sta

tem

ent o

f Cha

nges

In E

quity

For t

he y

ear e

nded

30

June

201

9A

ttrib

utab

le to

ow

ners

of t

he C

ompa

ny

Non

-dis

trib

utab

le

Shar

eTo

tal

capi

tal

equi

tyR

MR

MR

MR

MR

MR

MR

MR

MR

M

At 1

Jan

uary

201

713

,310

,142

4,85

8,28

4-

(410

,463

)-

(8,2

04,7

88)

9,55

3,17

5(5

07,5

95)

9,04

5,58

0

Tran

sact

ions

with

ow

ners

-A

lloca

tion

of w

arra

nt re

serv

e-

-21

,569

,085

--

(21,

569,

085)

--

--

Rig

hts

shar

es is

sued

79,1

95,3

44-

--

--

79,1

95,3

44-

79,1

95,3

44-

Sha

re is

suan

ce e

xpen

ses

(1,7

25,8

64)

--

--

-(1

,725

,864

)-

(1,7

25,8

64)

Tota

l tra

nsac

tions

with

ow

ners

77,4

69,4

80-

21,5

69,0

85-

-(2

1,56

9,08

5)77

,469

,480

-77

,469

,480

Tran

sfer

pur

suan

t to

Sec

tion

618(

2) o

f Com

pani

es A

ct 2

016

4,85

8,28

4(4

,858

,284

)-

--

--

--

inco

me

for t

he p

erio

d-

--

76,0

7336

,029

(1,5

78,0

64)

(1,4

65,9

62)

33,2

33(1

,432

,729

)

At 3

0 Ju

ne 2

018/

1 J

uly

2018

95,6

37,9

06-

21,5

69,0

85(3

34,3

90)

36,0

29(3

1,35

1,93

7)85

,556

,693

(474

,362

)85

,082

,331

Tran

sact

ions

with

ow

ners

-P

rivat

e pl

acem

ent

17,8

56,3

00-

--

--

17,8

56,3

00-

17,8

56,3

00-

Sha

re is

suan

ce e

xpen

ses

(990

,166

)-

--

--

(990

,166

)-

(990

,166

)

Tota

l tra

nsac

tions

with

ow

ners

16,8

66,1

34-

--

--

16,8

66,1

34-

16,8

66,1

34

Rec

lass

ifica

tion

adju

stm

ent r

elat

ing

to th

e di

spos

al o

f bon

d in

vest

men

tde

sign

ated

at F

VO

CI

--

--

(34,

172)

-(3

4,17

2)-

(34,

172)

(loss

) for

the

year

--

-(1

5,14

9)(2

6,77

8)1,

646,

538

1,60

4,61

1(9

,252

)1,

595,

359

At 3

0 Ju

ne 2

019

112,

504,

040

-21

,569

,085

(349

,539

)(2

4,92

1)(2

9,70

5,39

9)10

3,99

3,26

6(4

83,6

14)

103,

509,

652

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

Non

-co

ntro

lling

in

tere

st S

hare

pr

emiu

m

Exc

hang

e R

eser

ves

Acc

umul

ated

lo

sses

Tota

l com

preh

ensi

ve in

com

e/

Tota

l com

preh

ensi

ve (l

oss)

/

War

rant

re

serv

e F

air v

alue

re

serv

e To

tal

ANNUAL REPORT 2019

63

sTATEMEnT Of caSh flowS




Statement of Cash FlowsFor the year ended 30 June 2019

Note RM RMCash flow from operating activities

Loss before tax (2,176,660) (4,642,210)

Adjustments for:Amortisation of intangible assets 62,527 375,161Deposits written off - 4,950Depreciation of plant and equipment 182,459 52,743Interest income (280,724) (298,504)Gain on disposal of investment in bond (58,605) -Gain on deemed disposal of plant and

equipment - (36,422)Plant and equipment written off - 26,274Unwinding of discount - 16,353

(2,271,003) (4,501,655)

Changes in working capital:

Trade and other receivables (1,208,477) (12,268,486)Trade and other payables (1,094,143) 12,272,134Amount due from subsidiaries (12,541,637) 495,042Deferred income (41,357) 41,357

Cash used in operations (17,156,617) (3,961,608)

Interest received 280,724 298,504

Net cash used in operating activities (16,875,893) (3,663,104)

Operating loss before working capital changes

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

64(Company No. 554979-T) 29


Statement of Cash Flows (continued)For the year ended 30 June 2019

Note RM RM

Cash flow from investing activities

Net outflow on acquistion of a subsidiary (20,000) (73,000,000) Investment in bond fund - (1,500,000) Proceeds from disposal of investment in bond fund 1,481,291 - Proceeds from disposal of plant and equipment - 59,634 Purchase of plant and equipment (2,208,271) (146,944)

Net cash used in investing activities (746,980) (74,587,310)

Cash flow from financing activity

Proceeds from issuance of shares by way of private placement, net of share issue expenses 16,866,134 77,469,480

Net cash generated from financing activity 16,866,134 77,469,480

Net changes in cash and cash equivalents (756,739) (780,934)

Cash and cash equivalents at the beginning of the period/year 1,612,470 2,393,404

Cash and cash equivalents at the end of the year/period A 855,731 1,612,470

Note

A Cash and cash equivalents

2019 2018Note RM RM

Cash and bank balances 13 182,258 960,447 Fixed deposits placed with licensed banks 13 673,473 652,023

855,731 1,612,470


Cash and cash equivalents included in the statement of cash flows comprise the following statement of financial position amounts:

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Statement of Cash Flows(cont’d)




2019 2018Note RM RM




Current liabilities







ANNUAL REPORT 2019

65

nOTEs TOthe financial StatementS



Notes to the Financial Statements

1 Corporate information

Principal place of business Registered office

Level 5, Block B, No.2-1, Jalan Sri Hartamas 8,Dataran PHB Saujana Resort, Sri Hartamas,Section U2, 50480 Kuala Lumpur,40510 Shah Alam, Selangor Wilayah Persekutuan, Malaysia

2 Basis of preparation

(a) Statement of compliance

•••

ORION IXL BERHAD is a public limited liability company, incorporated anddomiciled in Malaysia and is listed on the ACE of Bursa Malaysia Securities Berhad.The addresses of the principal place of business and registered office of theCompany are as follows:

The Company is principally engaged in the provision of computerised maintenancemanagement systems and other information technology service such as systemsintegration, support services and training. The principal activities of the subsidiariesare set out in Note 6 to the financial statements.

The consolidated financial statements of the Company as at and for the financialyear ended 30 June 2019 comprise the Company and its subsidiaries (togetherreferred to as the “Group” and individually referred to as “Group entities”).

The financial statements of the Group and the Company have been prepared inaccordance with Malaysian Financial Reporting Standards ("MFRSs"), InternationalFinancial Reporting Standards and the requirements of Companies Act, 2016 inMalaysia.

The following are accounting standards, interpretations and amendments of theMFRSs that have been issued by the Malaysian Accounting Standards Board("MASB") but have not been adopted by the Group and the Company.

Amendments to MFRS 3, Business Combinations (Annual Improvements toMFRS Standards 2015-2017 Cycle)

MFRSs, interpretations and amendments effective for annual period beginningon after 1 January 2019

MFRS 16, LeasesIC Interpretation 23, Uncertainty over Income Tax Treatments

66

Notes to the Financial Statements(cont’d)


2 Basis of preparation (continued)

(a) Statement of compliance (continued)

•

•

•

•

•

••

•

•

MFRSs, interpretations and amendments effective for annual period beginningon after 1 January 2019 (continued)

Amendments to MFRS 11, Joint Arrangements (Annual Improvements toMFRS Standards 2015-2017 Cycle)Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRSStandards 2015-2017 Cycle)Amendments to MFRS 119, Employee Benefits - Plan Amendment,Curtailment or SettlementAmendments to MFRS 123, Borrowing Costs (Annual Improvements to MFRSStandards 2015-2017 Cycle)

MFRSs, interpretations and amendments effective for annual periodsbeginning on or after 1 January 2020

Amendments to MFRS 3, Business Combinations - Definition of a BusinessAmendments to MFRS 101, Presentation of Financial Statements and MFRS108, Accounting Policies, Changes in Accounting Estimates and Errors -Definition of Material

Amendments to MFRS 128, Investments in Associates and Joint Ventures -Long-term Interests in Associates and Joint Ventures

MFRSs, interpretations and amendments effective for annual periodsbeginning on or after 1 January 2021

MFRS 17, Insurance Contracts

MFRSs, interpretations and amendments effective for annual periodsbeginning on or after a date yet to be confirmed

Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128,Investments in Associates and Joint Ventures - Sale or Contribution of Assetsbetween an Investor and its Associate or Joint Venture

The Group and the Company plan to apply the abovementioned accountingstandards, interpretations and amendments, where applicable, in the respectivefinancial years when the abovementioned accounting standards, interpretations andamendments become effective.

The Group and the Company do not plan to apply MFRS 17, Insurance Contractsthat is effective for annual periods beginning on or after 1 January 2021 as it is notapplicable to the Group and the Company.

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67




(a) Statement of compliance (continued)

(b) Basis of measurement

(c) Functional and presentation currency

(d) Use of estimates and judgements

The Group and the Company are currently still in process of assessing the impact ofthe new standards upon initial application of these standards.

The financial statements have been prepared on the historical cost basis other thanas disclosed in Notes 3 to the financial statements.

These financial statements are presented in Ringgit Malaysia (“RM”), which is theCompany’s functional currency. All financial information is presented in RM unlessotherwise stated.

The preparation of the financial statements in conformity with MFRSs requiresmanagement to make judgements, estimates and assumptions that affect theapplication of accounting policies and the reported amounts of assets, liabilities,income and expenses. Actual results may differ from these estimates.

The initial application of the accounting standards, interpretations or amendmentsare not expected to have any material financial impact to the current period and priorperiod financial statements of the Group and the Company except as mentionedbelow:

MFRS 16, Leases

MFRS 16 replaces the guidance in MFRS 117, Lease , IC Interpretation 4,Determining whether an Arrangement contains a Lease , IC Interpretation 115,Operating Leases - Incentives and IC Interpretation 127, Evaluating the Substanceof Transactions Involving the Legal Form of a Lease .

MFRS 16 introduces a single, on-balance sheet lease accounting model for lessees.A lessee recognises a right-of-use asset representing its right to use the underlyingasset and a lease liability representing its obligations to make lease payments.There are recognition exemptions for short-term leases and leases of low-valueitems. Lessor accounting remains similar to the current standard which continue tobe classified as finance or operating lease.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognised in the period in which the estimates arerevised and in any future periods affected.

68




(d) Use of estimates and judgements (continued)

(i) Impairment of intangible assets

(ii) Impairment on receivables

(iii) Contract's revenue recognition

There are no significant areas of estimation uncertainty and critical judgements inapplying accounting policies that have significant effect on the amounts recognisedin the financial statements other than those disclosed below:

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceed its recoverable amount. To determinethe recoverable amount, management estimates expected future cash flowsfrom each cash generating units and determines a suitable interest rate in orderto calculate the present value of those cash flows.

In the process of measuring expected future cash flow, management makesassumptions about future operating results. These assumptions relate to futureevents and circumstance. The actual results may vary, and may causesignificant adjustments to the Group's and Company's assets within the nextfinancial year.

In most cases, determining the applicable discount rate involves estimating theappropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.

The Group and the Company assess at each reporting date whether there isany objective evidence that a financial asset is impaired. To determine whetherthere is objective evidence of impairment, the Group and the Companyconsider factors such as the probability of insolvency or significant financialdifficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing offuture cash flows are estimated based on historical loss experience for assetswith similar credit risk characteristics.

The Group recognises project development revenue and expenses in profit orloss by using the stage of completion method. The stage of completion isdetermined by proportion of contract costs incurred for work performed to dateto the estimated total contract costs. Significant judgement is required indetermining the stage of completion, the extent of the estimated total revenueand costs, as well as recoverability of the project development. In making thejudgement, the Group evaluates based on past experience, external economicfactors and directors' judgement.

ANNUAL REPORT 2019

69




(d) Use of estimates and judgements (continued)

(iv) Impairment of goodwill on consolidation

(v) Impairment of an associate

3

i) financial instruments;ii) revenue recognition; andiii) impairment losses of financial instruments

(a) Basis of consolidation

(i) Subsidiaries

Goodwill is tested for impairment annually and at other times when suchindicators exist. This requires an estimation of the higher of value-in-use andfair value less cost to sell of the cash-generating units to which goodwill isallocated.

The Group performed impairment test on the carrying amount of associates atthe end of each reporting period or when there are indications of impairment.The recoverable amount of the associate is assessed by value-in-use which isbased on estimated future discounted cash flow.

Significant accounting policies

The accounting policies set out below have been applied consistently to the periodspresented in these financial statements and have been applied consistently byGroup entities, unless otherwise stated.

Arising from the adoption of MFRS 15, Revenue from Contracts with Customers and MFRS 9, Financial Instruments , there are changes to the accounting policies of:

as compared to those adopted in previous financial statements. No significantfinancial impact on adoptions of MFRS 15 and MFRS 9 on the Group's and theCompany's financial statements.

Subsidiaries are entities, including structured entities, controlled by theCompany. The financial statements of subsidiaries are included in theconsolidated financial statements from the date that control commences untilthe date that control ceases.

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(a) Basis of consolidation (continued)

(i) Subsidiaries (continued)

(ii) Business combination

• the fair value of the consideration transferred; plus•

•

•

if the business combination is achieved in stages, the fair value of theexisting equity interest in the acquiree; lessthe net recognised amount (generally fair value) of the identifiable assetsacquired and liabilities assumed.

the recognised amount of any non-controlling interests in the acquiree;plus

The Group controls an entity when it is exposed, or has rights, to variablereturns from its involvement with the entity and has the ability to affect thosereturns through its power over the entity. Potential voting rights are consideredwhen assessing control only when such rights are substantive. The Group alsoconsiders it has de facto power over an investee when, despite not having themajority of voting rights, it has the current ability to direct the activities of theinvestee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement offinancial position at cost less any impairment losses, unless the investment isclassified as held for sale or distribution. The cost of investment includestransaction costs.

Business combinations are accounted for using the acquisition method fromthe acquisition date, which is the date on which control is transferred to theGroup.

For new acquisitions, the Group measures the cost of goodwill at theacquisition date as:

When the excess is negative, a bargain purchase gain is recognisedimmediately in profit or loss.

Significant accounting policies (continued)

Transaction costs, other than those associated with the issue of debt or equitysecurities, that the Group incurs in connection with a business combination areexpensed as incurred.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionateshare of the acquiree’s identifiable net assets at the acquisition date.

ANNUAL REPORT 2019

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3


(iii) Loss of control

(iv) Associates

(v) Transactions eliminated on consolidation


Associates are entities, including unincorporated entities, in which the Grouphas significant influence, but not control, over the financial and operatingpolicies.

Investments in associates are accounted for in the consolidated financialstatements using the equity method less any impairment losses, unless it isclassified as held for sale or distribution. The cost of the investment includestransaction costs. The consolidated financial statements include the Group'sshare of the profit or loss and other comprehensive income of the associates,after adjustments if any, to align the accounting policies with those of theGroup, from the date that significant influence commences until the date thatsignificant influence ceases.

When the Group's share of losses exceeds its interest in an associate, thecarrying amount of that interest including any long-term investments is reducedto zero, and the recognition of further losses is discontinued except to theextent that the Group has an obligation or has made payments on behalf of theassociate.

Intra-group balances and transactions, and any unrealised income andexpenses arising from intra-group transactions, are eliminated in preparing theconsolidated financial statements.

Unrealised profits and losses arising from transactions with equity-accountedassociates are eliminated against the investment to the extent of the Group’sinterest in the investees. Unrealised losses are eliminated in the same way asunrealised gains, but only to the extent that there is no evidence of animpairment.

Upon the loss of control of a subsidiary, the Group derecognises the assetsand liabilities of the former subsidiary, any non-controlling interests and theother components of equity related to the former subsidiary from theconsolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest inthe former subsidiary, then such interest is measured at fair value at the datethat control is lost. Subsequently, it is accounted for as an equity accountedinvestee or as a financial asset depending on the level of influence retained.

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(vi) Non-controlling interests

(vii) Goodwill on consolidation

(b)

(i)


Non-controlling interests at the end of the reporting period, being the equity in asubsidiary not attributable directly or indirectly to the equity holders of theCompany, are presented in the consolidated statement of financial position andstatement of changes in equity within equity, separately from equity attributableto the owners of the Company. Non-controlling interests in the results of theGroup is presented in the consolidated statement of profit or loss and othercomprehensive income as an allocation of the profit or loss and thecomprehensive income for the year between non-controlling interests and theowners of the Company.

Monetary assets and liabilities denominated in foreign currencies at the end ofthe reporting period are retranslated to the functional currency at the exchangerate at that date.

Losses applicable to the non-controlling interests in a subsidiary are allocatedto the non-controlling interests even if doing so causes the non-controllinginterests to have a deficit balance.

Goodwill is measured at cost less accumulated impairment losses, if any. Thecarrying value of goodwill is reviewed for impairment annually or morefrequently if events or changes in circumstances indicate that the carryingamount may be impaired. The impairment value of goodwill is recognisedimmediately in profit or loss. An impairment loss recognised for goodwill is notreversed in a subsequent period.

Under the acquisition method, any excess of the sum of the fair value of theconsideration transferred in the business combination, the amount of non-controlling interests recognised and the fair value of the Group's previously heldequity interest in the acquire (if any), over the net fair value of the acquiree'sidentifiable assets and liabilities at the date of acquisition is recorded asgoodwill.

Where the latter amount exceeds the former, after reassessment, the excessrepresents a bargain purchase gain and is recognised as a gain in profit orloss.

Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functionalcurrencies of Group entities at exchange rates at the date of the transaction.

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3

(b)

(i)

(ii)

In the consolidated financial statements, when settlement of a monetary itemreceivable from or payable to a foreign operation is neither planned nor likely tooccur in the foreseeable future, foreign exchange gains and losses arising fromsuch a monetary item are considered to form part of a net investment in aforeign operation and are recognised in other comprehensive income, and arepresented in the foreign currency translation reserve (“FCTR”) in equity.

Non-monetary assets and liabilities denominated in foreign currencies are notretranslated at the end of the reporting date, except for those that aremeasured at fair value are retranslated to the functional currency at theexchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit orloss, except for differences arising on the retranslation of equity instrumentswhere they are measured at fair value through other comprehensive income ora financial instrument designated as a cash flow hedge, which are recognisedin other comprehensive income.

Operations denominated in functional currencies other than RinggitMalaysia

The assets and liabilities of operations denominated in functional currenciesother than RM, including goodwill and fair value adjustments arising onacquisition, are translated to RM at exchange rates at the end of the reportingperiod. The income and expenses of foreign operations, excluding foreignoperations in hyperinflationary economies, are translated to RM at exchangerates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive incomeand accumulated in the FCTR in equity. However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of thetranslation difference is allocated to the non-controlling interests. When aforeign operation is disposed of such that control, significant influence or jointcontrol is lost, the cumulative amount in the FCTR related to that foreignoperation is reclassified to profit or loss as part of the gain or loss on disposal.

Foreign currency (continued)

Foreign currency transactions (continued)


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3

(b)

(ii)

(c) Financial instruments

(i)

Operations denominated in functional currencies other than RinggitMalaysia (continued)

Recognition and initial measurement

Current financial year

A financial asset or financial liability is recognised in the statement of financialposition when, and only when, the Group or the Company becomes a party tothe contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without significant financingcomponent) or a financial liability is initially measured at fair value plus orminus, for an item not at fair value through profit or loss, transaction costs thatare directly attributable to its acquisition or issuance. A trade receivable withouta significant financing component is initially measured at the transaction price.

An embedded derivative is recognised separately from the host contract wherethe host contract is not a financial asset, and accounted for separately if, andonly if, the derivative is not closely related to the economic characteristics andrisks of the host contract and the host contract is not measured at fair valuethrough profit or loss. The host contract, in the event an embedded derivative isrecognised separately, is accounted for in accordance with policy applicable tothe nature of the host contract.

Financial instrument was recognised initially, at its fair value plus or minus, inthe case of a financial instrument not at fair value through profit or loss,transaction costs that were directly attributable to the acquisition or issue of thefinancial instrument.

Previous financial year

When the Group disposes of only part of its interest in a subsidiary thatincludes a foreign operation, the relevant proportion of the cumulative amountis reattributed to non-controlling interests. When the Group disposes of onlypart of its investment in an associate or joint venture that includes a foreignoperation while retaining significant influence or joint control, the relevantproportion of the cumulative amount is reclassified to profit or loss.

Foreign currency (continued)


Unless specifically disclosed below, the Group and the Company generally appliedthe following accounting policies retrospectively. Nevertheless, as permitted byMFRS 9, Financial Instruments , the Group and the Company have elected not torestate the comparatives.

ANNUAL REPORT 2019

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3

(c)

(i)

(ii)

(a) Amortised cost


Recognition and initial measurement (continued)

Financial instruments (continued)

Previous financial year (continued)

Financial instrument categories and subsequent measurement

Financial assets


Categories of financial assets are determined on initial recognition and are notreclassified subsequent to their initial recognition unless the Group or theCompany changes its business model for managing financial assets in whichcase all affected financial assets are reclassified on the first day of the firstreporting period following the change of the business model.

Amortised cost category comprises financial assets that are held within abusiness model whose objective is to hold assets to collect contractualcash flows and its contractual terms give rise on specified dates to cashflows that are solely payments of principal and interest on the principalamount outstanding. The financial assets are not designated as fair valuethrough profit or loss. Subsequent to initial recognition, these financialassets are measured at amortised cost using the effective interest method.The amortised cost is reduced by impairment losses. Interest income,foreign exchange gains and losses and impairment are recognised in profitor loss. Any gain or loss on derecognition is recognised in profit or loss.

Interest income is recognised by applying effective interest rate to thegross carrying amount except for credit impaired financial assets (see note3(i)(i)) where the effective interest rate is applied to the amortised cost.

An embedded derivative was recognised separately from the host contract andaccounted for as a derivative if, and only if, it was not closely related to theeconomic characteristics and risks of the host contract and the host contractwas not recognised as fair value through profit or loss. The host contract, in theevent an embedded derivative was recognised separately, was accounted for inaccordance with policy applicable to the nature of the host contract.

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3

(c)

(ii)

(b)

(i)

(ii) Equity investments

This category comprises investment in equity that is not held fortrading, and the Group and the Company irrevocably elect to presentsubsequent changes in the investment’s fair value in othercomprehensive income. This election is made on an investment-by-investment basis. Dividends are recognised as income in profit or lossunless the dividend clearly represents a recovery of part of the cost ofinvestment. Other net gains and losses are recognised in othercomprehensive income. On derecognition, gains and lossesaccumulated in other comprehensive income are not reclassified toprofit or loss.

Interest income is recognised by applying effective interest rate to thegross carrying amount except for credit impaired financial assets (seenote 3(i)(i)) where the effective interest rate is applied to theamortised cost.

Fair value through other comprehensive income category comprisesdebt investment where it is held within a business model whoseobjective is achieved by both collecting contractual cash flows andselling the debt investment, and its contractual terms give rise onspecified dates to cash flows that are solely payments of principal andinterest on the principal amount outstanding. The debt investment isnot designated as at fair value through profit or loss. Interest incomecalculated using the effective interest method, foreign exchange gainsand losses and impairment are recognised in profit or loss. Other netgains and losses are recognised in other comprehensive income. Onderecognition, gains and losses accumulated in other comprehensiveincome are reclassified to profit or loss.

Fair value through other comprehensive income



Financial instrument categories and subsequent measurement(continued)

Current financial year (continued)

Financial assets (continued)

Debt investments

ANNUAL REPORT 2019

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3

(c)

(ii)

(c)

(a)


Financial assets at fair value through profit or loss

Fair value through profit or loss category comprised financial assets thatwere held for trading, including derivatives (except for a derivative that wasa financial guarantee contract or a designated and effective hedginginstrument), contingent consideration in a business combination orfinancial assets that were specifically designated into this category uponinitial recognition.






Fair value through profit or loss

All financial assets not measured at amortised cost or fair value throughother comprehensive income as described above are measured at fairvalue through profit or loss. This includes derivative financial assets(except for a derivative that is a designated and effective hedginginstrument). On initial recognition, the Group or the Company mayirrevocably designate a financial asset that otherwise meets therequirements to be measured at amortised cost or at fair value throughother comprehensive income as at fair value through profit or loss if doingso eliminates or significantly reduces an accounting mismatch that wouldotherwise arise.

Financial assets categorised as fair value through profit or loss aresubsequently measured at their fair value. Net gains or losses, includingany interest or dividend income, are recognised in the profit or loss.

All financial assets, except for those measured at fair value through profit orloss and equity investments measured at fair value through othercomprehensive income, are subject to impairment assessment (see note3(i)(i)).

In the previous financial year, financial assets of the Group and the Companywere classified and measured under MFRS 139, Financial Instruments:Recognition and Measurement as follows:

78



3

(c)

(ii)

(a)

(b)

(c)

(d)

Available-for-sale category comprised investments in equity and debtinstruments that were not held for trading.

Held-to-maturity

Loans and receivables

Available-for-sale financial assets

Derivatives that were linked to and must be settled by delivery of unquotedequity instruments whose fair values could not be reliably measured weremeasured at cost.

Other financial assets categorised as fair value through profit or loss weresubsequently measured at their fair values with the gain or loss recognisedin profit or loss.

Held-to-maturity investments category comprised debt instruments thatwere quoted in an active market and the Group or the Company had thepositive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments weresubsequently measured at amortised cost using the effective interestmethod.

Loans and receivables category comprised debt instruments that were notquoted in an active market, trade and other receivables and cash andcash equivalents.

Financial assets categorised as loans and receivables were subsequentlymeasured at amortised cost using the effective interest method.






Financial assets at fair value through profit or loss (continued)

ANNUAL REPORT 2019

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3

(c)

(ii)

(d)

The categories of financial liabilities at initial recognition are as follows:

(a)

Financial liabilities


Fair value through profit or loss

Fair value through profit or loss category comprises financial liabilities thatare derivatives (except for a derivative that is a financial guaranteecontract or a designated and effective hedging instrument), contingentconsideration in a business combination and financial liabilities that arespecifically designated into this category upon initial recognition.

On initial recognition, the Group or the Company may irrevocablydesignate a financial liability that otherwise meets the requirements to bemeasured at amortised cost as at fair value through profit or loss:






Available-for-sale financial assets (continued)

Investments in equity instruments that did not have a quoted market pricein an active market and whose fair value could not be reliably measuredwere measured at cost. Other financial assets categorised as available-for-sale were subsequently measured at their fair values with the gainor loss recognised in other comprehensive income, except forimpairment losses, foreign exchange gains and losses arising frommonetary items and gains and losses of hedged items attributable tohedge risks of fair value hedges which were recognised in profit or loss.On derecognition, the cumulative gain or loss recognised in othercomprehensive income was reclassified from equity into profit or loss.Interest calculated for a debt instrument using the effective interestmethod was recognised in profit or loss.

All financial assets, except for those measured at fair value through profit orloss were subject to impairment assessment (see note 3(i)(i)).

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3

(c)

(ii)

(a)

(a)

(b)

(c)

(b)


Fair value through profit or loss (continued)

Financial liabilities categorised as fair value through profit or loss aresubsequently measured at their fair value with gains or losses, includingany interest expense are recognised in the profit or loss.

For financial liabilities where it is designated as fair value through profit orloss upon initial recognition, the Group and the Company recognise theamount of change in fair value of the financial liability that is attributable tochange in credit risk in the other comprehensive income and remainingamount of the change in fair value in the profit or loss, unless thetreatment of the effects of changes in the liability’s credit risk would createor enlarge an accounting mismatch.

Amortised cost

Other financial liabilities not categorised as fair value through profit or lossare subsequently measured at amortised cost using the effective interestmethod.

Interest expense and foreign exchange gains and losses are recognised inthe profit or loss. Any gains or losses on derecognition are alsorecognised in the profit or loss.

if doing so eliminates or significantly reduces an accounting mismatchthat would otherwise arise;a group of financial liabilities or assets and financial liabilities ismanaged and its performance is evaluated on a fair value basis, inaccordance with a documented risk management or investmentstrategy, and information about the group is provided internally on thatbasis to the Group’s key management personnel; or




Financial liabilities (continued)

if a contract contains one or more embedded derivatives and the hostis not a financial asset within the scope of MFRS 9, where theembedded derivative significantly modifies the cash flows andseparation is not prohibited.

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(c)

(ii)

(iii)

Trade date accounting refers to:

(a)

(b)

Settlement date accounting refers to:

(a)

(b)

the recognition of an asset to be received and the liability to pay for it onthe trade date, andderecognition of an asset that is sold, recognition of any gain or loss ondisposal and the recognition of a receivable from the buyer for payment onthe trade date.

the recognition of an asset on the day it is received by the Group or theCompany, andderecognition of an asset and recognition of any gain or loss on disposalon the day that is delivered by the Group or the Company.


Financial liabilities (continued)


In the previous financial year, financial liabilities of the Group and the Companywere subsequently measured at amortised cost other than those categorisedas fair value through profit or loss.

Fair value through profit or loss category comprised financial liabilities that werederivatives or financial liabilities that were specifically designated into thiscategory upon initial recognition.

Derivatives that were linked to and must be settled by delivery of unquotedequity instruments that did not have a quoted price in an active market foridentical instruments whose fair values otherwise could not be reliablymeasured were measured at cost.

Financial liabilities categorised as fair value through profit or loss weresubsequently measured at their fair values with the gain or loss recognised inprofit or loss.

Regular way purchase or sale of financial assets

A regular way purchase or sale of financial assets is recognised andderecognised, as applicable, using trade date or settlement date accounting inthe current year.



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(c)

(iii)

(iv) Financial guarantee contracts


• the amount of the loss allowance; and•


Financial guarantees issued are initially measured at fair value. Subsequently,they are measured at higher of:

the amount initially recognised less, when appropriate, the cumulativeamount of income recognised in accordance to the principles ofMFRS 15, Revenue from Contracts with Customers .

Liabilities arising from financial guarantees are presented together with otherprovisions.

In the previous financial year, fair value arising from financial guaranteecontracts was classified as deferred income and was amortised to profit orloss using a straight-line method over the contractual period or, when there wasno specified contractual period, recognised in profit or loss upon discharge ofthe guarantee. When settlement of a financial guarantee contract wasprobable, an estimate of the obligation was made. If the carrying value of thefinancial guarantee contract was lower than the obligation, the carrying valuewas adjusted to the obligation amount and accounted for as a provision.



Regular way purchase or sale of financial assets (continued)

Any change in the fair value of the asset to be received during the periodbetween the trade date and the settlement date is accounted in the same wayas it accounts for the acquired asset.

Generally, the Group or the Company applies settlement date accountingunless otherwise stated for the specific class of asset.

A financial guarantee contract is a contract that requires the issuer to makespecified payments to reimburse the holder for a loss it incurs because aspecified debtor fails to make payment when due in accordance with theoriginal or modified terms of a debt instrument.

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(c)

(v)

(vi)

(d)

(i)

A financial liability or a part of it is derecognised when, and only when, theobligation specified in the contract is discharged, cancelled or expires. Afinancial liability is also derecognised when its terms are modified and the cashflows of the modified liability are substantially different, in which case, a newfinancial liability based on modified terms is recognised at fair value. Onderecognition of a financial liability, the difference between the carrying amountof the financial liability extinguished or transferred to another party and theconsideration paid, including any non-cash assets transferred or liabilitiesassumed, is recognised in profit or loss.

Offsetting

Financial assets and financial liabilities are offset and the net amountpresented in the statements of financial position when, and only when, theGroup or the Company currently has a legally enforceable right to set off theamounts and it intends either to settle them on a net basis or to realise theasset and liability simultaneously.

Cost includes expenditures that are directly attributable to the acquisition of theasset and any other costs directly attributable to bringing the asset to workingcondition for its intended use, and the costs of dismantling and removing theitems and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. Forqualifying assets, borrowing costs are capitalised in accordance with theaccounting policy on borrowing costs. Cost also may include transfers fromequity of any gain or loss on qualifying cash flow hedges of foreign currencypurchases of property, plant and equipment.

Items of property, plant and equipment are measured at cost less anyaccumulated depreciation and any accumulated impairment losses.

Recognition and measurement

Property, plant and equipment



Derecognition

A financial asset or part of it is derecognised when, and only when, thecontractual rights to the cash flows from the financial asset expire ortransferred, or control of the asset is not retained or substantially all of the risksand rewards of ownership of the financial asset are transferred to anotherparty. On derecognition of a financial asset, the difference between the carryingamount of the financial asset and the sum of consideration received (includingany new asset obtained less any new liability assumed) is recognised in profitor loss.

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(d)

(i)

(ii)

(iii)


Property, plant and equipment (continued)

Recognition and measurement (continued)

Subsequent costs

Purchased software that is integral to the functionality of the related equipmentis capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment havedifferent useful lives, they are accounted for as separate items (majorcomponents) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment isdetermined by comparing the proceeds from disposal with the carrying amountof property, plant and equipment and is recognised net within “other income”and “other expenses” respectively in profit or loss.

Depreciation

Depreciation is based on the cost of an asset less its residual value. Significantcomponents of individual assets are assessed, and if a component has a usefullife that is different from the remainder of that asset, then that component isdepreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over theestimated useful lives of each component of an item of property, plant andequipment from the date that they are available for use. Leased assets aredepreciated over the shorter of the lease term and their useful lives unless it isreasonably certain that the Group will obtain ownership by the end of the leaseterm.

Freehold land is not depreciated. Property, plant and equipment underconstruction are not depreciated until the assets are ready for their intendeduse.

The cost of replacing a component of an item of property, plant and equipmentis recognised in the carrying amount of the item if it is probable that the futureeconomic benefits embodied within the component will flow to the Group or theCompany, and its cost can be measured reliably. The carrying amount of thereplaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or lossas incurred.

ANNUAL REPORT 2019

85



3

(d)

(iii)

The principal annual rates used are as follows:

Computers 20%Office equipment, furniture and fittings 10-20%Motor vehicles 20%Renovation 20%

(e)

(f) Research and development costs

(i)

(ii) the intention to complete the intangible asset and use or sell it;(iii) the ability to use or sell the intangible asset;(iv) how the intangible asset will generate probable future economic benefits;(v)

(vi)

Operating lease

Leases, where the Group or the Company does not assume substantially all therisks and rewards of ownership are classified as operating leases and, except forproperty interest held under operating lease, the leased assets are not recognisedon the statement of financial position. Property interest held under an operatinglease, which is held to earn rental income or for capital appreciation or both, isclassified as investment property and measured using fair value model.

the technical feasibility of completing the intangible asset so that it will beavailable for use or sale;

the availability of adequate technical, financial and other resources to completethe development and to use or sell the intangible asset; andthe ability to measure reliably the expenditure attributable to the intangibleasset during its development.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised inprofit or loss as an integral part of the total lease expense, over the term of thelease. Contingent rentals are charged to profit or loss in the reporting period inwhich they are incurred.

Expenditure on research activities is recognised as an expense in the period inwhich it is incurred.

An internally-generated intangible asset arising from development (or from thedevelopment phase of an internal project) is recognised if, and only if, all of thefollowing have been demonstrated:

Depreciation methods, useful lives and residual values are reviewed at end ofthe reporting period, and adjusted as appropriate.

Leased assets


Property, plant and equipment (continued)

Depreciation (continued)

86



3

(f) Research and development costs (continued)

(g) Intangible assets

(h)

(i)

(i)

The amount initially recognised for internally-generated intangible assets is the sumof the expenditure incurred from the date when the intangible asset first meets therecognition criteria listed above. Where no internally-generated intangible asset canbe recognised, development expenditure is recognised in profit or loss in the periodin which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reportedat costs less accumulated amortisation and accumulated impairment losses. Theaverage expected life of the development projects is five years. Development costsin progress are not amortised.

Intangible assets which represent licenses, copyrights and other incidental costsincurred, are stated at cost less accumulated amortisation and impairment losses,are amortised over a period of five (5) years.

Unless specifically disclosed below, the Group and the Company generallyapplied the following accounting policies retrospectively. Nevertheless, aspermitted by MFRS 9, Financial Instruments , the Group and the Companyelected not to restate the comparatives.

The Group and the Company recognise loss allowances for expected creditlosses on financial assets measured at amortised cost, debt investmentsmeasured at fair value through other comprehensive income, contract assetsand lease receivables. Expected credit losses are a probability-weightedestimate of credit losses.

Financial assets


Impairment


Cash and cash equivalents consist of cash on hand, balances and deposits withbanks and highly liquid investments which have an insignificant risk of changes infair value with original maturities of three months or less, and are used by the Groupand the Company in the management of their short term commitments. For thepurpose of the statement of cash flows, cash and cash equivalents are presentednet of bank overdrafts.

Cash and cash equivalents

ANNUAL REPORT 2019

87



3

(i)

(i)

The Group and the Company measure loss allowances at an amount equal tolifetime expected credit loss, except for debt securities that are determined tohave low credit risk at the reporting date, cash and bank balance and otherdebt securities for which credit risk has not increased significantly since initialrecognition, which are measured at 12-month expected credit loss. Lossallowances for trade receivables, contract assets and lease receivables arealways measured at an amount equal to lifetime expected credit loss.

When determining whether the credit risk of a financial asset has increasedsignificantly since initial recognition and when estimating expected credit loss,the Group and the Company consider reasonable and supportable informationthat is relevant and available without undue cost or effort. This includes bothquantitative and qualitative information and analysis, based on the Group’shistorical experience and informed credit assessment and including forward-looking information, where available.

Lifetime expected credit losses are the expected credit losses that result fromall possible default events over the expected life of the asset, while 12-monthsexpected credit losses are the portion of expected credit losses that result fromdefault events that are possible within the 12 months after the reporting date.The maximum period considered when estimating expected credit losses is themaximum contractual period over which the Group and the Company areexposed to credit risk.

The Group and the Company estimate the expected credit losses on tradereceivables using a provision matrix with reference to historical credit lossexperience.

An impairment loss in respect of financial assets measured at amortised cost isrecognised in profit or loss and the carrying amount of the asset is reducedthrough the use of an allowance account.

An impairment loss in respect of debt investments measured at fair valuethrough other comprehensive income is recognised in profit or loss and theallowance account is recognised in other comprehensive income.

Impairment (continued)



At each reporting date, the Group and the Company assess whether financialassets carried at amortised cost and debt securities at fair value through othercomprehensive income are credit- impaired. A financial asset is credit impairedwhen one or more events that have a detrimental impact on the estimatedfuture cash flows of the financial asset have occurred.


88



3

(i)

(i)


All financial assets (except for financial assets categorised as fair value throughprofit or loss, investments in subsidiaries) were assessed at each reporting date whether there was any objective evidence of impairment as a result of one ormore events having an impact on the estimated future cash flows of the asset.Losses expected as a result of future events, no matter how likely, were notrecognised. For an investment in an equity instrument, a significant orprolonged decline in the fair value below its cost was an objective evidence ofimpairment. If any such objective evidence exists, then the impairment loss ofthe financial asset was estimated.

An impairment loss in respect of loans and receivables and held-to-maturityinvestments was recognised in profit or loss and was measured as thedifference between the asset’s carrying amount and the present value ofestimated future cash flows discounted at the asset’s original effective interestrate. The carrying amount of the asset was reduced through the use of anallowance account.

An impairment loss in respect of available-for-sale financial assets wasrecognised in profit or loss and was measured as the difference between theasset’s acquisition cost (net of any principal repayment and amortisation) andthe asset’s current fair value, less any impairment loss previously recognised.Where a decline in the fair value of an available-for-sale financial asset hadbeen recognised in the other comprehensive income, the cumulative loss inother comprehensive income was reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that was carried atcost was recognised in profit or loss and was measured as the differencebetween the financial asset’s carrying amount and the present value ofestimated future cash flows discounted at the current market rate of return for asimilar financial asset.

The gross carrying amount of a financial asset is written off (either partially orfull) to the extent that there is no realistic prospect of recovery. This is generallythe case when the Group or the Company determines that the debtor does nothave assets or sources of income that could generate sufficient cash flows torepay the amounts subject to the write-off. However, financial assets that arewritten off could still be subject to enforcement activities in order to comply withthe Group’s or the Company’s procedures for recovery amounts due.





ANNUAL REPORT 2019

89



3

(i)

(i)

(ii)


Other assets



For the purpose of impairment testing, assets are grouped together into thesmallest group of assets that generates cash inflows from continuing use thatare largely independent of the cash inflows of other assets or cash-generatingunits. Subject to an operating segment ceiling test, for the purpose of goodwillimpairment testing, cash-generating units to which goodwill has been allocatedare aggregated so that the level at which impairment testing is performedreflects the lowest level at which goodwill is monitored for internal reportingpurposes. The goodwill acquired in a business combination, for the purpose ofimpairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of thecombination.

Impairment losses recognised in profit or loss for an investment in an equityinstrument classified as available-for-sale was not reversed through profit orloss.


The carrying amounts of other assets (except for inventories, contract assets,lease receivables, deferred tax asset, assets arising from employee benefits,investment property measured at fair value and non-current assets (or disposalgroups) classified as held for sale) are reviewed at the end of each reportingperiod to determine whether there is any indication of impairment. If any suchindication exists, then the asset’s recoverable amount is estimated. Forgoodwill and intangible assets that have indefinite useful lives or that are notyet available for use, the recoverable amount is estimated each period at thesame time.

If, in a subsequent period, the fair value of a debt instrument increases and theincrease could be objectively related to an event occurring after impairmentloss was recognised in profit or loss, the impairment loss was reversed, to theextent that the asset’s carrying amount did not exceed what the carryingamount would have been had the impairment not been recognised at the datethe impairment was reversed. The amount of the reversal was recognised inprofit or loss.

90



3

(i)

(ii)

(j)

(i)

(ii)

Equity instruments


An impairment loss in respect of goodwill is not reversed. In respect of otherassets, impairment losses recognised in prior periods are assessed at the endof each reporting period for any indications that the loss has decreased or nolonger exists. An impairment loss is reversed if there has been a change in theestimates used to determine the recoverable amount since the last impairmentloss was recognised. An impairment loss is reversed only to the extent that theasset’s carrying amount does not exceed the carrying amount that would havebeen determined, net of depreciation or amortisation, if no impairment loss hadbeen recognised. Reversals of impairment losses are credited to profit or lossin the financial year in which the reversals are recognised.

Instruments classified as equity are measured at cost on initial recognition and arenot remeasured subsequently.

Costs directly attributable to the issue of instruments classified as equity arerecognised as a deduction from equity.

Ordinary shares are classified as equity.

Impairment losses are recognised in profit or loss. Impairment lossesrecognised in respect of cash-generating units are allocated first to reduce thecarrying amount of any goodwill allocated to the cash-generating unit (group ofcash-generating units) and then to reduce the carrying amounts of the otherassets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

Issue expenses

Ordinary shares


The recoverable amount of an asset or cash-generating unit is the greater of itsvalue in use and its fair value less costs of disposal. In assessing value in use,the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time valueof money and the risks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or itsrelated cash-generating unit exceeds its estimated recoverable amount.

Other assets (continued)

ANNUAL REPORT 2019

91



3

(k)

(i)

(ii)


Short-term employee benefit obligations in respect of salaries, annual bonuses,paid annual leave and sick leave are measured on an undiscounted basis andare expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-termcash bonus or profit- sharing plans if the Group has a present legal orconstructive obligation to pay this amount as a result of past service providedby the employee and the obligation can be estimated reliably.

Remeasurements of the net defined benefit liability, which comprise actuarialgains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in othercomprehensive income. The Group determines the net interest expense orincome on the net defined liability or asset for the period by applying thediscount rate used to measure the defined benefit obligation at the beginning ofthe annual period to the then net defined benefit liability or asset, taking intoaccount any changes in the net defined benefit liability or asset during theperiod as a result of contributions and benefit payments.

Net interest expense and other expenses relating to defined benefit plans arerecognised in profit or loss.

The calculation of defined benefit obligations is performed annually by aqualified actuary using the projected unit credit method. When the calculationresults in a potential asset for the Group, the recognised asset is limited to thepresent value of economic benefits available in the form of any future refundsfrom the plan or reductions in future contributions to the plan. To calculate thepresent value of economic benefits, consideration is given to any applicableminimum funding requirements.

When the benefits of a plan are changed or when a plan is curtailed, theresulting change in benefit that relates to past service or the gain or loss oncurtailment is recognised immediately in profit or loss. The Group recognisesgains and losses on the settlement of a defined benefit plan when thesettlement occurs.

Short-term employee benefits

Defined benefit plans

Employee benefits

The Group’s net obligation in respect of defined benefit plans is calculatedseparately for each plan by estimating the amount of future benefit thatemployees have earned in the current and prior periods, discounting thatamount and deducting the fair value of any plan assets.

92



3

(k)

(iii)

(iv)

(l) Provisions


For share-based payment awards with non-vesting conditions, the grant datefair value of the share-based payment is measured to reflect such conditionsand there is no true-up for differences between expected and actual outcomes.

Termination benefits

Employee benefits (continued)

Share-based payment transactions

The grant date fair value of share-based payment granted to employees isrecognised as an employee expense, with a corresponding increase in equity,over the period that the employees unconditionally become entitled to theawards. The amount recognised as an expense is adjusted to reflect thenumber of awards for which the related service and non-market vestingconditions are expected to be met, such that the amount ultimately recognisedas an expense is based on the number of awards that meet the related serviceand non-market performance conditions at the vesting date.

The fair value of the employee share options is measured using a binomiallattice model. Measurement inputs include share price on measurement date,exercise price of the instrument, expected volatility (based on weighted averagehistoric volatility adjusted for changes expected due to publicly availableinformation), weighted average expected life of the instruments (based onhistorical experience and general option holder behaviour), expected dividends,and the risk- free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken intoaccount in determining fair value.

Termination benefits are expensed at the earlier of when the Group can nolonger withdraw the offer of those benefits and when the Group recognisescosts for a restructuring. If benefits are not expected to be settled wholly within12 months of the end of the reporting period, then they are discounted.

A provision is recognised if, as a result of a past event, the Group has a presentlegal or constructive obligation that can be estimated reliably, and it is probable thatan outflow of economic benefits will be required to settle the obligation. Provisionsare determined by discounting the expected future cash flows at a pre-tax rate thatreflects current market assessments of the time value of money and the risksspecific to the liability. The unwinding of the discount is recognised as finance cost.

ANNUAL REPORT 2019

93



3

(m)

(i) Revenue

(a)

(b)

(c)

(ii)

(n)

Revenue and other income


Current tax is the expected tax payable or receivable on the taxable income or lossfor the year, using tax rates enacted or substantively enacted by the end of thereporting period, and any adjustment to tax payable in respect of previous financialyears.

Interest income

Interest income is recognised as it accrues using the effective interest methodin profit or loss except for interest income arising from temporary investment ofborrowings taken specifically for the purpose of obtaining a qualifying assetwhich is accounted for in accordance with the accounting policy on borrowingcosts.

Income tax

Income tax expense comprises current and deferred tax. Current tax and deferredtax are recognised in profit or loss except to the extent that it relates to a businesscombination or items recognised directly in equity or other comprehensive income.

the customer simultaneously receives and consumes the benefits providedas the Group or the Company performs;

the Group’s or the Company’s performance creates or enhances anasset that the customer controls as the asset is created or enhanced; or

the Group’s or the Company’s performance does not create an asset withan alternative use and the Group or the Company has an enforceableright to payment for performance completed to date.

Revenue is measured based on the consideration specified in a contract with acustomer in exchange for transferring goods or services to a customer,excluding amounts collected on behalf of third parties. The Group or theCompany recognises revenue when (or as) it transfers control over a product orservice to customer. An asset is transferred when (or as) the customer obtainscontrol of the asset.

The Group or the Company transfers control of a good or service at a point in time unless one of the following overtime criteria is met:

94



3 Significant accounting policies (continued)

(n)

(o)

Deferred tax is recognised using the liability method, providing for temporarydifferences between the carrying amounts of assets and liabilities in the statementsof financial position and their tax bases. Deferred tax is not recognised for thefollowing temporary differences: the initial recognition of goodwill, the initialrecognition of assets or liabilities in a transaction that is not a business combinationand that affects neither accounting nor taxable profit or loss. Deferred tax ismeasured at the tax rates that are expected to be applied to the temporarydifferences when they reverse, based on the laws that have been enacted orsubstantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right tooffset current tax liabilities and assets, and they relate to income taxes levied by thesame tax authority on the same taxable entity, or on different tax entities, but theyintend to settle current tax assets and liabilities on a net basis or their tax assets andliabilities will be realised simultaneously. Deferred tax assets and liabilities are notdiscounted.

A deferred tax asset is recognised to the extent that it is probable that future taxableprofits will be available against which the temporary difference can be utilised.Deferred tax assets are reviewed at the end of each reporting period and arereduced to the extent that it is no longer probable that the related tax benefit will berealised.

Unutilised reinvestment allowance and investment tax allowance, being taxincentives that is not a tax base of an asset, is recognised as a deferred tax asset tothe extent that it is probable that the future taxable profits will be available againstwhich the unutilised tax incentive can be utilised.

The Group presents basic and diluted earnings per share data for its ordinary shares(“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinaryshareholders of the Company by the weighted average number of ordinary sharesoutstanding during the period, adjusted for own shares held.

Earnings per ordinary share

Diluted EPS is determined by adjusting the profit or loss attributable to ordinaryshareholders and the weighted average number of ordinary shares outstanding,adjusted for own shares held, for the effects of all dilutive potential ordinary shares,which comprise convertible notes and share options granted to employees.

Income tax (continued)

ANNUAL REPORT 2019

95



3 Significant accounting policies (continued)

(p)

(q)

Level 1:

Level 2:

Level 3: unobservable inputs for the asset or liability.

For non-financial asset, the fair value measurement takes into account a marketparticipant’s ability to generate economic benefits by using the asset in its highestand best use or by selling it to another market participant that would use the asset inits highest and best use.

Operating segments

An operating segment is a component of the Group that engages in businessactivities from which it may earn revenues and incur expenses, including revenuesand expenses that relate to transactions with any of the Group’s other components.Operating segment results are reviewed regularly by the management of theGroup, to make decisions about resources to be allocated to the segment and toassess its performance, and for which discrete financial information is available.

When measuring the fair value of an asset or a liability, the Group uses observablemarket data as far as possible. Fair value is categorised into different levels in a fairvalue hierarchy based on the input used in the valuation technique as follows:

The Group recognises transfers between levels of the fair value hierarchy as of thedate of the event or change in circumstances that caused the transfers.

Fair value measurements

Fair value of an asset or a liability, except for share-based payment and leasetransactions, is determined as the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between market participants at themeasurement date. The measurement assumes that the transaction to sell the assetor transfer the liability takes place either in the principal market or in the absence ofa principal market, in the most advantageous market.

quoted prices (unadjusted) in active markets for identical assets orliabilities that the Group can access at the measurement date.

inputs other than quoted prices included within Level 1 that areobservable for the asset or liability, either directly or indirectly.

96


(Com

pany

No.

554

979-

T)60

4Pr

oper

ty, p

lant

and

equ

ipm

ent -

Gro

up

RM

RM

RM

RM

RM

Cos

t

At 1

Jan

uary

201

762

4,84

622

4,40

735

1,71

624

2,27

01,

443,

239

Acqu

isiti

on o

f a s

ubsi

diar

y41

,204

24,2

2289

,624

-15

5,05

0Ad

ditio

ns15

,369

114,

127

-23

,995

153,

491

Dis

posa

ls/W

ritte

n of

f(5

69,0

28)

(216

,500

)(4

35,3

40)

(242

,270

)(1

,463

,138

)Fo

reig

n cu

rrenc

ytra

nsla

tion

(5,5

52)

(787

)-

-(6

,339

)

At 3

0 Ju

ne 2

018/

1 Ju

ly 2

018

106,

839

145,

469

6,00

023

,995

282,

303

Addi

tions

334,

781

138,

851

-1,

738,

108

2,21

1,74

0Fo

reig

n cu

rrenc

y tra

nsla

tion

1,18

316

8-

-1,

351

At 3

0 Ju

ne 2

019

442,

803

284,

488

6,00

01,

762,

103

2,49

5,39

4

Tota

lC

ompu

ters

Offi

ce

equi

pmen

t, fu

rnitu

re a

nd

fittin

gsM

otor

veh

icle

sR

enov

atio

n

ANNUAL REPORT 2019

97


(Com

pany

No.

554

979-

T)61

4Pr

oper

ty, p

lant

and

equ

ipm

ent -

Gro

up (c

ontin

ued)

RM

RM

RM

RM

RM

Dep

reci

atio

n

At 1

Jan

uary

201

760

4,82

220

3,49

435

1,71

619

3,81

61,

353,

848

Acqu

isiti

on o

f a s

ubsi

diar

y32

,427

17,2

4774

,291

-12

3,96

5C

harg

e fo

r the

per

iod

11,8

0524

,544

7,66

625

,380

69,3

95D

ispo

sals

/Writ

ten

off

(558

,992

)(2

03,3

24)

(427

,674

)(2

15,9

96)

(1,4

05,9

86)

Fore

ign

curre

ncy

trans

latio

n(5

,057

)(7

14)

--

(5,7

71)

At 3

0 Ju

ne 2

018/

1 Ju

ly 2

018

85,0

0541

,247

5,99

93,

200

135,

451

Cha

rge

for t

he y

ear

32,3

4634

,934

-12

6,22

019

3,50

0Fo

reig

n cu

rrenc

y tra

nsla

tion

1,12

315

5-

-1,

278

At 3

0 Ju

ne 2

019

118,

474

76,3

365,

999

129,

420

330,

229

Car

ryin

g am

ount

At 3

0 Ju

ne 2

018

21,8

3410

4,22

21

20,7

9514

6,85

2

At 3

0 Ju

ne 2

019

324,

329

208,

152

11,

632,

683

2,16

5,16

5

Com

pute

rs

Offi

ce

equi

pmen

t, fu

rnitu

re a

nd

fittin

gsM

otor

veh

icle

sR

enov

atio

nTo

tal

98


(Com

pany

No.

554

979-

T)62

4Pr

oper

ty, p

lant

and

equ

ipm

ent -

Com

pany

(con

tinue

d)

RM

RM

RM

RM

RM

Cos

t

At 1

Jan

uary

201

756

9,02

821

6,50

035

1,71

624

2,27

01,

379,

514

Addi

tions

9,40

211

3,54

7-

23,9

9514

6,94

4D

ispo

sals

/Writ

ten

off

(569

,028

)(2

16,5

00)

(351

,716

)(2

42,2

70)

(1,3

79,5

14)

At 3

0 Ju

ne 2

018/

1 Ju

ly 2

018

9,40

211

3,54

7-

23,9

9514

6,94

4

Addi

tions

331,

312

138,

851

-1,

738,

108

2,20

8,27

1

At 3

0 Ju

ne 2

019

340,

714

252,

398

-1,

762,

103

2,35

5,21

5

Tota

lC

ompu

ters

Offi

ce

equi

pmen

t, fu

rnitu

re a

nd

fittin

gsM

otor

veh

icle

sR

enov

atio

n

ANNUAL REPORT 2019

99


(Com

pany

No.

554

979-

T)63

4Pr

oper

ty, p

lant

and

equ

ipm

ent -

Com

pany

(con

tinue

d)

RM

RM

RM

RM

RM

Dep

reci

atio

n

At 1

Jan

uary

201

755

4,93

619

6,35

735

1,71

619

3,81

61,

296,

825

Cha

rge

for t

he p

erio

d5,

167

22,1

96-

25,3

8052

,743

Dis

posa

ls/W

ritte

n of

f(5

58,9

92)

(203

,324

)(3

51,7

16)

(215

,996

)(1

,330

,028

)

At 3

0 Ju

ne 2

018/

1 Ju

ly 2

018

1,11

115

,229

-3,

200

19,5

40

Cha

rge

for t

he y

ear

23,8

4132

,398

-12

6,22

018

2,45

9

At 3

0 Ju

ne 2

019

24,9

5247

,627

-12

9,42

020

1,99

9

Car

ryin

g am

ount

At 3

0 Ju

ne 2

018

8,29

198

,318

-20

,795

127,

404

At 3

0 Ju

ne 2

019

315,

762

204,

771

-1,

632,

683

2,15

3,21

6

Com

pute

rs

Offi

ce

equi

pmen

t, fu

rnitu

re a

nd

fittin

gsM

otor

veh

icle

sR

enov

atio

nTo

tal

100



5 Intangible assets

AcquiredSoftware Total

RM RM RM RMGroup

Cost

At 1 January 2017 - 1,250,539 - 1,250,539

Acquisition duringthe financial period 1,800,000 - - 1,800,000

At 30 June 2018 / 1 July 2018 1,800,000 1,250,539 - 3,050,539

Addition during the financial year - - 3,347,128 3,347,128

At 30 June 2019 1,800,000 1,250,539 3,347,128 6,397,667

Accumulated amortisation

At 1 January 2017 - 41,685 - 41,685

Amortisation during the financial period 330,000 375,161 - 705,161

At 30 June 2018 / 1 July 2018 330,000 416,846 - 746,846

Amortisation duringthe financial year 360,000 250,108 - 610,108

At 30 June 2019 690,000 666,954 - 1,356,954

Carrying amount

At 30 June 2018 1,470,000 833,693 - 2,303,693

At 30 June 2019 1,110,000 583,585 3,347,128 5,040,713

Internally generated

development costs

Work in progress -

development cost

ANNUAL REPORT 2019

101



5 Intangible assets (continued)

RMCompany

Cost

At 1 January 2017/30 June 2018/1 July 2018 1,250,539

Transferred to a subsidiary (1,250,539)

At 30 June 2019 -

Accumulated amortisation

At 1 January 2017 41,685

Amortisation during the financial period 375,161

At 30 June 2018/1 July 2018 416,846

Amortisation during the financial year 62,527 Transferred to a subsidiary (479,373)

At 30 June 2019 -

Carrying amount

At 30 June 2018 833,693

At 30 June 2019 -

Internally generated

development costs

102



5 Intangible assets (continued)

Key assumptions used in value-in-use calculation

Sensitivity to change in assumptions

[The remainder of this page is intentionally left blank]

A pre-tax discount value of discount rate of 15.8% (2018: 10.63%) was applied indetermining the recoverable amount of the respective CGU. The discount rate wasbased on the weighted average cost of capital.

The recoverable amount of the intangible assets has been determined based onvalue-in-use calculation using financial projections based on financial budgetsapproved by the management.

The management believes there are no reasonable possible changes in any of thekey assumptions that would cause the carrying values of the CGU to materiallyexceed their recoverable amounts.

ANNUAL REPORT 2019

103



6 Investment in subsidiaries

2019 2018Unquoted shares, at cost RM RM

At 1 July 2018/1 Jan 2017 73,067,901 67,901 Acquisition of a subsidiary 20,000 73,000,000

73,087,901 73,067,901

Less: Accumulated impairment lossesAt the beginning/end of the year/period (67,901) (67,901)

Carrying amount 73,020,000 73,000,000

(a) The details of the subsidiaries are as follow:

2019 2018% %

51 51

100 100

100 -

* Not audited by STYL Associates PLT# This subsidiary was consolidated based on its unaudited management account as

at 30 June 2019. The subsidiary is an insignificant component of the Group. Thefinancial statements of this subsidiary used for consolidation purpose werereviewed by STYL.

Effective equity interest

Country of incorporation

Company

Name of subsidiary Principal Activities

ASAP Sdn. Bhd. Malaysia

Cworks Systems Inc * #

Ganda Integrasi Sdn. Bhd.

To carry on the business ofsoftware development andprogramming services.

Investment companyMalaysia

Provision of computerisedmaintenance managementsystems and other informationtechnology services such assystems integration, supportservices and training. TheCompany had becomedormant during the currentfinancial year.

United States of America

104



6 Investment in subsidiaries (continued)

(b) Acquisition of subsidiaries

*

Fair valueRM RM

Plant and equipment 31,085 31,085Trade receivables 1,235,578 1,235,578Amount due from contract customers 289,396 289,396Other receivables and prepayments 48,099 48,099Finance lease receivable 133,175 133,175Cash and bank balancces 206,379 206,379Trade payables (1,499) (1,499)Other payables and accruals (797,137) (797,137)Finance lease payable (133,175) (133,175)

Group's interest in fair value of net identifiable assets 1,011,901 1,011,901

Identifiable intangible assets 1,800,000Goodwill on acquisition 70,188,099

Cost of combination 73,000,000

Carrying amount

On 2 August 2017, the Company acquired the entire equity interest in ASAP Sdn.Bhd. ("ASAP"), which operates in the Information and Communication Technologyindustry as software solution provider to asset and facility management system. TheGroup expects to extract synergies for the combined operations, which would lead toenlarged revenue stream and market share in the Computerised MaintenanceManagement Systems business.

The cost of combination that amounted to RM73,000,000 is made up byRM58,000,000 in cash consideration and RM15,000,000 in the form of contingentconsideration*.

On 17 October 2016, the Company has entered into a sales and purchaseagreement ("the Agreement") with ASAP's former shareholders ("ASAP Vendors")for the acquisition of the entire equity interest in ASAP. The Agreement contains aclause whereby ASAP Vendors provided a guarantee that ASAP will generatecumulative profit after tax of not less than RM15,000,000 ("Profit Guarantee") for 2consecutive 12 months periods calculated starting from 1 July 2017. The Companyand ASAP Vendors mutually agreed that the contingent consideration will beprogressively released to ASAP Vendors on quarterly basis upon satisfaction ofagreed terms and conditions to the Agreement.

The recognised amounts of assets and liabilities of ASAP Sdn. Bhd. at theacquisition date were as follows:

ANNUAL REPORT 2019

105




(b) Acquisition of subsidiaries

RM RMCash in hand 1 1

Group's interest in fair value of net identifiable assets 1 1

Goodwill on acquisition 9,999

Cost of acquisition 10,000

(b) Non controlling interest in a subsidiary

The Group's subsidiary that has material non-controlling interest ("NCI") is as follows:

2019 2018RM RM

49% 49%

Carrying amount of NCI (450,381) (474,362)

(Loss)/Profit allocated to NCI (9,252) 33,233

On 14 September 2018, the Company acquired 100% equity interest in GandaIntegrasi Sdn. Bhd. ("GANDA") for a total consideration of RM10,000, which carry onbusiness of financial technology and investment company. Subsequently theCompany acquired additional 9,999 shares in Ganda Integrasi Sdn. Bhd. forRM10,000 by way of increasing share capital in the subsidiary.

The recognised amounts of assets and liabilities of Ganda Integrasi Sdn. Bhd. at theacquisition date were as follows:

Carrying amount Fair value

Cworks Systems Inc

NCI percentage of ownership interest and voting interest

106




Summarised financial information before intra-group elimination

2019 2018RM RM

Statements of Financial PositionNon-current assets 1,296 3,118 Current assets - 5,173 Current liabilities (1,681,381) (1,631,319)

Net liabilities (1,680,085) (1,623,028)

Statements of Profit or Loss and Other Comprehensive Income

Revenue - 302,665 (Loss)/Profit for the year/period (18,882) 67,823

Statements of Cash FlowsCash flows used in operating activities/Net decrease

in cash and cash equivalents (833) (9,602)

7 Investment in an associate

2019 2018RM RM

Unquoted shares, at cost

At 21 December 2018 (date of acquisition) 10,010,000 - Share of post acquisition reserve (292,594) -

As at 30 June 9,717,406 -

The details of the associate is as follows:

2019 2018% %

20 -MalaysiaSukaniaga Sdn. Bhd.

Principally engaged inconsulting in internet and webbased supplying computerhardware and software

Cworks Systems Inc

Group

Proportion of Ownership

Interest/Voting Principal ActivitiesName of CompanyCountry of

incorporation

ANNUAL REPORT 2019

107



7 Investment in an associate (continued)

Group2019RM

Assets and Liabilities

Non-current assets 315,846 Current assets 196,913

Total assets 512,759

Non-current liabilities 20,000 Current liabilities 2,015,770

Total liabilities 2,035,770

Results

Net loss for the year (1,624,694)

Reconciliation of net assets to carrying amount as at 30 June 2019

Group's share of net liabilities (298,661) Goodwill 10,016,067

9,717,406

The investment in an associate is held through Ganda Integrasi Sdn. Bhd., asubsidiary of the Company.

The summarised financial information of the associate, not adjusted for theproportion of ownership interest held by the Group as at 30 June 2019, is as follow:

108



8 Other investments - Group/Company

2019 2019 2019Non-current Note RM RM RM

Fair value through othercomprehensive income 8.1 - 77,893 77,893

2018 2018 2018Non-current RM RM RM

Available-for-sale 25,500 1,536,029 1,561,529

8.1

RM

-

9 Finance lease receivable

2019 2018RM RM

Current

Finance lease receivable - 47,005

Non-current

Finance lease receivable - 44,831

Unquoted shares Bonds Total

Unquoted shares Bonds Total

Equity investment designated at fair value through other comprehensiveincome

At 1 July 2018, the Group designated the investment shown below as equitysecurity as at fair value through other comprehensive income because thisequity securities represents investment that the Group intends to hold for long-term strategic purposes. In 30 June 2018, this investment was classified asavailable-for-sale.

Fair value as at 30 June

2019

Cworks Sdn Bhd

Group

ANNUAL REPORT 2019

109



9 Finance lease receivable

RM RM RM

Within one year 49,908 2,903 47,005Between 1 and 5 years 45,743 912 44,831

95,651 3,815 91,836

10 Goodwill

2019 2018RM RM

At 1 July/1 January 2017 70,188,099 -Addition 9,999 70,188,099

At June 70,198,098 70,188,099

(a)

2019 2018RM RM

Software business 70,198,098 70,188,099

The effective interest rates of the Group are charged at rates of 4.42% (2018: 4.42%)per annum. The finance lease has been fully settled during the financial year.

Group

Goodwill has been allocated to the Group's cash-generating unit ("CGU")identified according to business segment as follows:

Group

2018

Future minimum

lease payments Interest

Present value of

minimum lease

payments

110



10 Goodwill (continued)

(b) Key assumptions used in value-in-use calculation

30 June 2019 30 June 2018

Budgeted gross profit margin 60% 32%Pre-tax discount rate 15.80% 10.63%Average revenue growth rate 10%-30% 50%Period covered 10 -14 years 5 years

Budgeted gross profit margin

Pre-tax discount rate

Revenue growth rates

Period

(c) Sensitivity to change in assumptions

The management believes there are no reasonable possible changes in any ofthe key assumptions that would cause the carrying amount of the CGU tomaterially exceed its recoverable amount.

The period cover for the Angkasa and SME bank loan management system was14 years and 10 years based on the remaining contract period in agreementwith the Group.

Revenue growth rates is based on the estimated growth rate of loan disbursedthrough Angkasa loan management system and SME bank loan managementsystem. The assumption is derived after taking into account consideration thecurrent and future industry market trend and outlook.

The pretax discount rate applied to the cash flow projection is based on theweighted average cost of capital of the Group.

The recoverable amount of goodwill has been determined based on value-in-use calculation using financial projections based on financial budgets approved bythe management.

The budgeted gross profit margin is based on the estimated gross marginapproved by the Board taking into consideration the direct expenses associatedwith the revenue.

ANNUAL REPORT 2019

111



11 Trade and other receivables

2019 2018 2019 2018Trade Note RM RM RM RM

Trade receivables 11.1 7,845,612 7,594,074 1,858,442 1,519,242 Less: Allowance

for impairment (222,902) (1,432,617) - -

7,622,710 6,161,457 1,858,442 1,519,242

Non-tradeOther receivables 11.2 15,286,078 11,922,626 13,773,637 11,916,326 Amount owing by

a subsidiary 11.3 - - 14,682,306 978,268 Amount owing by

an associate 11.3 1,717,304 - 1,464,647 - Amount owing by

a related party 11.4 2,191,092 3,083,134 2,207,092 3,083,134 Deposits 196,675 29,813 180,575 9,400 Prepayments 370,671 1,929,119 176,456 1,908,270

19,761,820 16,964,692 32,484,713 17,895,398

Less: Allowance for impairment

Amount owing by a subsidiary - - (994,268) (978,268)

27,384,530 23,126,149 33,348,887 18,436,372

11.1

11.2

Group Company

The Group’s and the Company's normal trade credit term ranges from 30 to 90days (2018: 30 to 90 days) and 30 days (2018: 30 days) respectively. Othercredit terms are assessed and approved on a case to case basis. Included intrade receivables of the Group and of the Company is a retention sum ofRM1,151,863 and RM56,442 (2018: RM1,151,863 and RM56,442)respectively. The trade receivables amounting to RM3,493,584 (2018:RM4,824,712), inclusive of retention sum of RM1,095,421(2018: RM1,095,421)were guaranteed by ASAP vendors.

Included in other receivables of the Group and of the Company is an amount ofRM10,698,047 (2018: RM11,703,749), inclusive of interest income fromdeposits in a stakeholder account of RM483,402 (2018: RM233,875) whichrepresents the balance of contingent consideration for acquisition of ASAP. Theamount for contingent consideration is placed in a stakeholder accountappointed by the Company in favour of ASAP Vendors and will progressively bereleased to ASAP Vendors upon satisfaction of agreed terms and conditions inthe sales and purchase agreement. Also included in the other receivables is anamount of RM2,880,409, inclusive of interest income of RM14,275 deposited ina stakeholder account which represents the remaining unutilised balance of fundarising from private placement of shares during the year.

112



11 Trade and other receivables (continued)

11.3

11.4

12 Contract assets

2019 2018RM RM

Amount due from contract customers 2,908,935 1,948,528

12.1 Amount due from contract customers

2019 2018RM RM

Aggregate costs incurred to date 8,881,852 9,772,099 Attributable profits 9,722,086 8,802,885

18,603,938 18,574,984

Less: Progress billings (15,695,003) (16,626,456)

Amount owing by contract customers 2,908,935 1,948,528

The amounts owing by a subsidiary and an associate represent non-tradetransactions which the balances are unsecured, non-interest bearing andrepayable on demand.

Included in amount owing by a related party of the Group and of the Company isan amount of RM2,083,134 (2018: RM3,083,134) which represents amountowing by Cworks Sdn. Bhd.

Group

The contract assets primarily relate to the Group's rights to consideration for workcompleted on system development contracts but not yet billed at the reporting date.

Included in the contract assets is an amount of RM2,840,251(2018: RM1,604,188)guaranteed by ASAP vendors.

Group

ANNUAL REPORT 2019

113



13 Cash and cash equivalents

2019 2018 2019 2018RM RM RM RM

Cash at bank 221,064 978,115 181,660 960,151Cash in hand 599 3,011 598 296Fixed deposits placed

with licensed banks 673,473 652,023 673,473 652,023

895,136 1,633,149 855,731 1,612,470

14 Share capital - Group/Company

Unit RM Unit RM

Issued and fully paid-up:

Ordinary sharesAt 1 July/January 598,956,390 95,637,906 133,101,420 13,310,142Issuance of shares:-private placement 108,220,000 17,856,300 465,854,970 79,195,344Transition to no par

value regime - - - 4,858,284Share issurance

expense - (990,166) - (1,725,864)

At 30 June 707,176,390 112,504,040 598,956,390 95,637,906

During the financial year, the Company increased its issued and paid up ordinaryshare capital from RM95,637,906 to RM112,504,040 by way of issuance of108,220,000 ordinary shares through private placement for cash.

2019 2018 Number of

shares Amount Number of

shares Amount

The fixed deposits interest is 3.25% (2018: 3.25%) per annum with a maturity of 90days (2018: 90 days).

Group Company

114



15 Reserves

2019 2018 2019 2018RM RM RM RM

Non-distributable

Warrant reserve 21,569,085 21,569,085 21,569,085 21,569,085Exchange reserve (349,539) (334,390) - -Fair value reserve (24,921) 36,029 (24,921) 36,029

21,194,625 21,270,724 21,544,164 21,605,114

a) Warrant reserve

i)

ii)

iii)

iv)

The Warrants are tradable upon listing in board lots of 100 units carryingrights to subscribe for 100 new ordinary shares at any time during theExercise Period or such other number of units as may be prescribed byBursa Malaysia Securities Berhad.

The holders of Warrants are not entitled to any voting rights or participate inany dividend, rights, allotments and/or other form of distribution in theCompany, until and unless such holders of the Warrants exercise their rightsinto new ordinary shares;

The new ordinary shares pursuant to be issued upon the exercise of theWarrants shall, upon issue and allotment, rank pari passu in all respects withthe then existing shares of the Company except that they will not be entitledto an dividends, rights allotments and/or distributions declared by theCompany, the entitlement date of which is prior to the date of allotment ofthe new shares; and

At the expiry of the Exercise Period, any Warrants not exercised shallautomatically lapse and cease to be valid for any purpose;

Group Company

The salient terms of the Warrants are as follows:

Each Warrant entitles the registered holder to subscribe for one (1) newordinary share of RM0.10 each at the Exercised Price of RM0.17 during the5-year period expiring on 26 July 2022 ("Exercise Period"), subject to theadjustments in accordance with the deed pool;

On 2 August 2017, the Company issued 232,927,485 free detachable warrants("Warrants") pursuant to the Rights Issue with Warrants exercise on the basisof one (1) Warrant for every two (2) rights shares subscribed and were listedand quoted on the ACE Market of Bursa Malaysia Securities Berhad.

ANNUAL REPORT 2019

115



15 Reserves (continued)

a) Warrant reserve (continued)

The Warrants are constituted by a deed poll dated 9 June 2017.

At the end of the financial period, all Warrants remained unexercised.

b) Exchange reserve

c) Fair value reserve

16 Finance lease payable

2019 2018RM RM

CurrentFinance lease payable - 47,005

- 47,005

Non-currentFinance lease payable - 44,831

- 44,831

- 91,836

The finance lease is repayable as follow:

RM RM RM

Within one year 49,908 2,903 47,005Between 1 and 5 years 45,743 912 44,831

95,651 3,815 91,836

Exchange reserve comprises all foreign exchange differences arising from thetranslation of the financial statements of a foreign subsidiary.

Fair value reserve comprises all changes arising from changes in fair value offinancial assets at fair value through other comprehensive income (FVOCI).

Present value of

minimum lease

payments

Group

2018

Future minimum

lease payments Interest

116



16 Finance lease payable (continued)

17 Trade and other payables

2019 2018 2019 2018Note RM RM RM RM

Trade

Trade payables 17.1 279,180 2,300,312 - 1,130,666 Amount owing to a related party 17.1 155,452 151,974 - -

434,632 2,452,286 - 1,130,666

Non-trade

Amount owing to a subsidiary 17.2 - - 413,263 22,028

Amount owing to related parties 17.2 1,697,051 485,531 200,000 -

Other payables 1,812,123 103,896 1,150,122 103,896 Accruals 307,191 162,196 152,245 106,469 Deposits received - 15,108 - 250 Amount due to Directors 17.2 17,162 - - -

3,833,527 766,731 1,915,630 232,643

4,268,159 3,219,017 1,915,630 1,363,309

17.1

17.2

The effective interest rate of the Group is charged at 4.42% per annum in 2018. Thefinance lease had been fully repaid during the year.

The normal trade credit term granted to the Group and to the Company isgenerally 15 to 30 days (2018: 15 to 30 days) and 15 days (2018: 15 days)respectively.

Amounts owing to a subsidiary, related parties and Directors are unsecured,interest-free and repayable on demand.

CompanyGroup

ANNUAL REPORT 2019

117



18 Deferred income

2019 2018 2019 2018RM RM RM RM

Current portion - 41,357 - 41,357

The movement of deferred income during the financial year/period is as below:

2019 2018 2019 2018RM RM RM RM

At 1 July / 1 January 41,357 246,338 41,357 - Recognised in profit or

loss during the financial year/period (41,357) (279,740) (41,357) (57,901)

Advance receipts during the financial year/period - 99,258 - -

Exchange fluctuation - (24,499) - 99,258

At 30 June - 41,357 - 41,357

19 Provisions and contingent consideration payable

2019 2018 2019 2018RM RM RM RM

Liquidated ascertained damages 395,420 1,095,420 - -

Contingent consideration payable 10,214,645 11,469,874 10,214,645 11,469,874

10,610,065 12,565,294 10,214,645 11,469,874

Group Company

Deferred income represents advance receipts from maintenance arrangements.These arrangements ranged from 1 to 12 months (2018: 1 to 12 months) for theGroup and the Company. Deferred income is recognised in profit and loss uponcommencement of the arrangement and is amortised on a straight line basis overthe arrangement period.

Group Company

Group Company

118



19 Provisions and contingent consideration payable (continued)

(a) Liquidated ascertained damages ("LAD")

The movement of the provisions for LAD is as follows:

2019 2018RM RM

At beginning of the year/period 1,095,420 - (Reversal)/Provision during the year (700,000) 1,095,420

At end of the year/period 395,420 1,095,420

(b) Contingent consideration payable - Group/Company

RM

At the date of acquisition of ASAP 15,000,000Less: Payment released during the period (3,530,126)At 30 June 2018/1 July 2018 11,469,874Less: Payment released during the year (1,255,229)

At 30 June 2019 10,214,645

20 Revenue

RM RM RM RM

Revenue from contract with customers 5,697,371 13,388,533 1,100,000 1,698,643

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Provision for LAD is recognised in respect of late delivery of systemdevelopment undertaken by the Company. The provision has been recognisedfor the expected LAD claims provided by the terms and conditions stated in theagreement. The LAD amounting to RM700,000 was reversed out during theyear as ASAP vendors had guaranteed to bear the amount.

On 17 October 2016, the Company and ASAP Vendors mutually agreed thepart of the consideration amounting to RM15,000,000 will be progressivelyreleased to ASAP Vendors upon the satisfaction of agreed terms andconditions stated in the agreement for sales and purchase of shares in ASAPSdn. Bhd.

The movement of the contingent consideration payable during the financialperiod/year are as follows:

Group

Group Company

ANNUAL REPORT 2019

119


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ANNUAL REPORT 2019

121



21 Other operating income

RM RM RM RM

Other income 1,090 - 1,090 -Gain on disposal of

plant and equipment - 36,422 - 36,422Gain on foreign

exchange 24,640 - - -Rental income 16,500 63,053 - 63,053Reversal of impairment

losses on trade receivables 1,432,617 - - -

Reversal of allowanceof liquidated ascertained damage 700,000 - - -

Supplies of manpower - 330,190 - -Waiver of debt 4,315 - - -Gain on disposal of investment in bonds 58,605 - 58,605 -

2,237,767 429,665 59,695 99,475

22 Directors' remuneration

RM RM RM RM

Fees 480,667 630,202 277,667 500,202Salaries and other emoluments 266,500 181,000 266,500 181,000EIS 142 - 95 -EPF 55,680 21,600 31,680 21,600Socso 1,244 669 829 669

804,233 833,471 576,771 703,471

Group Company Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018


Period from 1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

122



23 Staff costs

RM RM RM RM

Salaries, wages, allowance, overtime and bonus 594,334 421,343 503,734 312,223

EIS 415 - 412 - EPF 55,364 70,812 55,364 22,260 Socso 7,253 9,184 4,147 2,187

657,366 501,339 563,657 336,670

24 Other operating expenses

RM RM RM RM

Included in the other operating expenses is as follow:

Allowance for impairment on

trade receivables 222,902 1,432,617 - -

- Current year 124,000 122,300 81,000 96,200 Bad debts written off - 8,340 - - Deposits written off - 4,950 - 4,950 Property, plant and

equipment written off - 26,274 - 26,274 Provision for

liquidated ascertained damages - 1,095,420 - -

Rental of office premises 182,147 153,497 115,058 77,721

Unrealised loss on foreign exchange - 9,832 - -

25 Finance costs

RM RMInterest expense on:Unwinding of discount - 16,353


Period from 1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018


Period from 1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Auditors’ remuneration

Group/Company Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

ANNUAL REPORT 2019

123



26 Taxation

RM RM RM RM

Current tax - Under provision in prior year (111) - - -

Reconciliation of tax expense

RM RM RM RM

Profit/(Loss) before taxation 1,637,397 (1,544,831) (2,176,660) (4,642,210)

Income tax using Malaysian tax rates at 24%* 392,975 (370,759) (522,398) (1,114,130)

Non-deductible expenses 489,757 1,202,071 270,481 1,122,871

Non-taxable income (1,036) (8,741) - (8,741) Exempted income (1,328,064) (806,293) - - Effect of different tax

rates in other countries 667 (16,278) - -

Deferred tax assetsnot recognised 445,701 - 251,917 -

Underprovision of current tax in prior year (111) - - -

(111) - - -

Deferred tax assets have not been recognised on the following items:

2019 2018 2019 2018RM RM RM RM

Unutilised capital allowance 37,549 94,045 31,265 53,618

10,836,028 8,922,441 9,994,449 8,922,441

10,873,577 9,016,486 10,025,714 8,976,059

CompanyGroup

Group Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Company Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

* Malaysia subsidiary income tax is calculated at the statutory tax rate of 24% (2018:24%) of the estimated assessable profit for the financial year.

CompanyGroup

Unutilised tax losses

Period from 1.1.2017 to 30.6.2018

Period from 1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Year from 1.7.2018 to 30.6.2019

124



27 Earnings/(Loss) per share

(a)

2019 2018RM RM

Net profit/(loss) for the financial year attributable to owners of the Company 1,646,538 (1,578,064)

Weighted average number of ordinary sharein issue (unit '000) 617,635 267,662

Basic earnings/(loss) per share (sen) 0.27 (0.59)

(b) Fully diluted earnings/(loss) per share

28 Operating segments

The basic earnings/(loss) per share has been calculated based on theconsolidated profit/(loss) after taxation for the financial year attributable toowners of the Company for the Group and the weighted average number ofordinary shares in issue during the financial year are as follows:

Segment information is primarily presented in respect of the Group's businesssegment which based on the Group's management and internal reporting structure.Thre is no information on business segments as the Group is principally involved inthe provision of computerised maintenance management systems and otherinformation technology services such as systems intergration, support services andtraining.

Segment revenue, results, assets and liabilities include items directly attributable to asegment and those where a reasonable basis of allocation exists. Inter-segmentrevenue is eliminated on consolidation.

Segment profit is used to measure performance as management believes that suchinformation is the most relevant in evaluating the results of certain segments relativeto other entities that operate within these industries.

Group

Diluted earnings/(loss) per share is equal to the basic earnings/(loss) pershare because the conversion have an anti-dilutive effect.

The accounting policies of the segments are consistent with the accounting policiesof the Group.

The total of segment assets is measured based on all assets (including goodwill) ofa segment, as included in the internal management reports that are reviewed by theGroup's executive directors. Segment total assets are used to measure the return ofassets of each segment.

The total of segment liabilities is measured based on all liabilities of a segment, asincluded in the internal management reports that are reviewed by the Group'sExecutive Directors.

ANNUAL REPORT 2019

125


(Com

pany

No.

554

979-

T) 9

0

28O

pera

ting

segm

ents

(con

tinue

d)

Tota

lR

MR

MR

MR

M

Rev

enue

Tota

l rev

enue

5,69

7,37

1

-

-

5,

697,

371

Res

ults

Seg

men

t ope

ratin

g re

sults

1,66

8,04

6

(1

8,77

9)

-

1,

649,

267

Incl

uded

in th

e se

gmen

t pro

fit/(l

oss)

are

:D

epre

ciat

ion

and

amor

tisat

ion

(801

,711

)

(1,8

97)

-

(8

03,6

08)

Rev

ersa

l of l

iqui

date

d as

certa

ined

dam

ages

700,

000

-

-

70

0,00

0

In

tere

st in

com

e28

0,72

4

-

-

280,

724

Sha

re o

f los

s fro

m a

n a

ssoc

iate

292,

594

-

-

29

2,59

4

Asse

tsS

egm

ent a

sset

s 13

3,96

4,07

8

1,29

6

(1

5,57

7,49

8)

11

8,38

7,87

6

Seg

men

t lia

bilit

ies

27,8

37,9

45

1,68

1,38

1

(1

4,64

1,10

2)

14

,878

,224

Cap

ital e

xpen

ditu

re2,

211,

740

-

-

2,21

1,74

0

Inte

r-se

gmen

t El

imin

atio

nsM

alay

sia

2019

Uni

ted

Stat

es o

f Am

eric

a

126


(Com

pany

No.

554

979-

T) 9

0

28O

pera

ting

segm

ents

(con

tinue

d)

Mal

aysi

a

Uni

ted

Stat

es o

f Am

eric

aIn

ter-

segm

ent

Elim

inat

ions

Tota

lR

MR

MR

MR

M

Rev

enue

Tota

l rev

enue

13,0

85,8

6830

2,66

5-

13,3

88,5

33

Res

ults

Seg

men

t ope

ratin

g re

sult

(1,8

94,8

05)

67,8

23-

(1,8

26,9

82)

Incl

uded

in th

e se

gmen

t (lo

ss)/p

rofit

are

:(7

71,5

39)

(3,0

17)

-(7

74,5

56)

Pro

visi

on fo

r liq

uida

ted

asce

rtain

ed

dam

ages

1,09

5,42

0-

-1,

095,

420

Inte

rest

inco

me

298,

504

--

298,

504

Inte

rest

exp

ense

(16,

353)

--

(16,

353)

Asse

tsS

egm

ent a

sset

s 10

2,02

5,47

38,

291

(1,0

33,9

29)

100,

999,

835

Seg

men

t lia

bilit

ies

15,2

87,0

881,

631,

319

(1,0

00,9

03)

15,9

17,5

04

Cap

ital e

xpen

ditu

re15

3,49

1-

-15

3,49

1

Dep

reci

atio

n an

d am

ortis

atio

n

2018

ANNUAL REPORT 2019

127



28 Operating segments (continued)

Major customers

2019 2018RM RM

Customer A 600,000 1,200,000Customer B 600,000 -Customer C 1,374,978 7,268,923Customer D 1,500,000 -Customer E 700,000 -

4,774,978 8,468,923

29 Financial instruments

29.1

(i) Amortised cost (“AC”)(ii) Fair value through other comprehensive income ("FVOCI")

FVOCIRM RM RM

Financial assets

Group

Other investments 77,893 77,893 -Trade and other receivables 27,013,859 - 27,013,859Contract assets 2,908,935 - 2,908,935Cash and cash equivalents 895,136 - 895,136

30,895,823 77,893 30,817,930

All the inter-segment transactions were carried out on normal commercial basis andin the ordinary course of business.

The table below provides an analysis of financial instruments as at 30 June2019 categorised as follows:

Carrying amount AC

2019

The following are major customers with revenue equal or more than 10% of the totalgroup revenue:

Group

Categories of financial instruments

128



29 Financial instruments (continued)

29.1

FVOCI2019 RM RM RM

Company

Other investments 77,893 77,893 -Trade and other receivables 33,172,431 - 33,172,431Cash and cash equivalents 855,731 - 855,731

34,106,055 77,893 34,028,162

RM RM

Financial liabilities

Group

Provisions and contingent consideration payable 10,610,065 10,610,065Trade and other payables 4,268,159 4,268,159

14,878,224 14,878,224

Company

Provisions and contingent consideration payable 10,214,645 10,214,645Trade and other payables 1,915,630 1,915,630

12,130,275 12,130,275

(i) Available-for-sale ("AFS")(ii) Loans and receivables (“L&R”)(iii) Financial liabilities measured at amortised cost (“FL”)

2019

Categories of financial instruments (continued)

The table below provides an analysis of financial instruments as at 30 June2018 categorised as follows:

Carrying amount AC

Carrying amount AC

ANNUAL REPORT 2019

129




29.1

AFSRM RM RM

Financial assets

Group

Other investments 1,561,529 1,561,529 -Finance lease receivable 91,836 - 91,836Trade and other receivables 21,197,030 - 21,197,030Cash and cash equivalents 1,633,149 - 1,633,149

24,483,544 1,561,529 22,922,015

AFSRM RM RM

Financial assets

Company

Other investments 1,561,529 1,561,529 -Trade and other receivables 16,528,102 - 16,528,102Cash and bank balances 1,612,470 - 1,612,470

19,702,101 1,561,529 18,140,572

RM RMFinancial liabilities

Group

Provisions and contingent consideration payable 12,565,294 12,565,294Finance lease payable 91,836 91,836Trade and other payables 3,219,017 3,219,017

15,876,147 15,876,147Company

Provision and contingent consideration payable 11,469,874 11,469,874Trade and other payables 1,363,309 1,363,309

12,833,183 12,833,183

Carrying amount FL

Carrying amount L&R

2018

Categories of financial instruments (continued)

Carrying amount L&R

130




29.2

2019 2018RM RM

Net gains/(losses) on:

Debts instruments designated at fair value through other comprehensive income- recognised in profit or loss 58,605 -- recognised in other comprehensive income (1,278) -- reclassified from other comprehensive income to profit or loss (34,172) -

Equity instruments designated at fair value through other comprehensive income - recognised in other comprehensive income (25,500) -

Available for sale financial assets - 36,029

Financial assets at amortised cost 1,490,439 -

Financial liabilities at amortised cast 700,000 (1,111,773)

Loans and receivables - (1,445,907)

2,190,439 (2,521,651)

Group

Net gains and losses arising from financial instruments

ANNUAL REPORT 2019

131




29.2

2019 2018RM RM

Net gains/(losses) on:

Debts instruments designated at fair value through other comprehensive income

- recognised in profit or loss 58,605 - - recognised in other comprehensive income (1,278) - - reclassified from other comprehensive income to profit or loss (34,172) -

Equity instruments designated at fair value through other comprehensive income

- recognised in other comprehensive income (25,500) -

Available for sale financial assets - 36,029

Financial assets at amortised cost 280,724 -

Financial liabilities at amortised cost - 16,353

Loans and receivables - 293,554

278,379 345,936

29.3 Financial risk management

• Credit risk• Liquidity risk• Market risk

29.4 Credit risk

Company

Net gains and losses arising from financial instruments

The Group has exposure to the following risks from its financial instruments:

Credit risk is the risk of a financial loss if a customer or counterparty to afinancial instrument fails to meet its contractual obligations. The Group’sexposure to credit risk arises principally from the individual characteristics ofeach customer and investment in debt securities. The Company’s exposure tocredit risk arises principally from loans and advances to subsidiaries andfinancial guarantees given to banks for credit facilities granted to subsidiaries.There are no significant changes as compared to prior periods.

132




29.4 Credit risk (continued)

Trade receivables and contract assets

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit riskarising from trade receivables and contract assets are represented by thecarrying amounts in the statements of financial position.

Management has taken reasonable steps to ensure that receivables that areneither past due nor impaired are stated at their realisable values. A significantportion of these receivables are regular customers that have been transactingwith the Company. The Group uses ageing analysis to monitor the credit qualityof the receivables. Any receivables having significant balances past due morethan 30 days, which are deemed to have higher credit risk, are monitoredindividually.

Risk management objectives, policies and processes for managing therisk

Management has a credit policy in place and the exposure to credit risk ismonitored on an ongoing basis. Normally financial guarantees given by banks,shareholders or directors of customers are obtained, and credit evaluations areperformed on customers requiring credit over a certain amount.

At each reporting date, the Group or the Company assesses whether any of thetrade receivables and contract assets are credit impaired.

The gross carrying amounts of credit impaired trade receivables and contractassetsare written off (either partially or full) when there is no realistic prospect ofrecovery. This is generally the case when the Group or the Companydetermines that the debtor does not have assets or sources of income thatcould generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables and contract assets that are written offcould still be subject to enforcement activities.

There are no significant changes as compared to previous year.

ANNUAL REPORT 2019

133





Trade receivables and contract assets (continued)

Concentration of credit risk

2019 2018RM RM

Malaysia 7,622,710 6,140,041United States - 21,416

7,622,710 6,161,457

Recognition and measurement of impairment loss

The exposure of credit risk for trade receivables as at the end of the reportingperiod by geographic region was:

Group

In managing credit risk of trade receivables and contract assets, the Groupmanages its debtors and takes appropriate actions (including but not limited tolegal actions) to recover long overdue balances. Generally, trade receivableswill pay within 30 days.

The Group uses an allowance matrix to measure ECLs of trade receivables forall segments. Consistent with the debt recovery process, invoices which arepast due 90 days will be considered as credit impaired.

Loss rates are calculated using a ‘roll rate’ method based on the probability of areceivable progressing through successive stages of delinquency to 90 dayspast due.

Loss rates are based on actual credit loss experience over the past three years.The Group also considers differences between (a) economic conditions duringthe period over which the historic data has been collected, (b) current conditionsand (c) the Group’s view of economic conditions over the expected lives of thereceivables. Nevertheless, the Group believes that these factors are immaterialfor the purpose of impairment calculation for the year.

134






Recognition and measurement of impairment loss (continued)

Group RM RM RM

Current (not past due) 2,747,959 (6,000) 2,741,9591-30 days past due 153,834 - 153,83431-60 days past due 31,881 - 31,88161-90 days past due 12,271 (2,435) 9,836More than 90 days past due 4,899,667 (214,467) 4,685,200

7,845,612 (222,902) 7,622,710

Company RM RM RM

Current (not past due) 530,000 - 530,000More than 90 days past due 1,328,442 - 1,328,442

1,858,442 - 1,858,442

Group RM RM RM

Current (not past due) 3,388,244 - 3,388,2441-30 days past due 1,142,379 - 1,142,37931-60 days past due 734,034 - 734,03461-90 days past due 636,000 - 636,000More than 90 days past due 1,693,417 (1,432,617) 260,800Impaired -

7,594,074 (1,432,617) 6,161,457

The following table provides information about the exposure to credit risk fortrade receivables as at 30 June 2019 which are grouped together as they areexpected to have similar risk nature.

2019

Net balance

Gross carrying amount

Loss allowance

Net balance

2018


Loss allowance


Loss allowance

Net balance

ANNUAL REPORT 2019

135







Company RM RM RM

Current (not past due) 56,442 - 56,44231-60 days past due 636,000 - 636,00061-90 days past due 636,000 - 636,000More than 90 days past due 190,800 - 190,800

1,519,242 - 1,519,242

2019 2018RM RM

At beginning of the year/period 1,432,617 -Impairment loss 222,902 1,432,617Write back of impairment loss (1,432,617) -At end of the year/period 222,902 1,432,617

Cash and cash equivalents

The cash and cash equivalents are held with banks and financial institutions. Asat the end of the reporting period, the maximum exposure to credit risk isrepresented by their carrying amounts in the statements of financial position.

These banks and financial institutions have low credit risks. In addition, some ofthe bank balances are insured by government agencies. Consequently, theGroup and the Company are of the view that the loss allowance is not materialand hence, it is not provided for.

Net balance

2018


Loss allowance

The movement in the allowance for impairment loss of trade receivables duringthe year are as follows:

Group

136


(Company No. 554979-T) 100



Other receivables

Financial guarantees

Exposure to credit risk, credit quality and collateral

2019 2018RM RM

Domestic 7,622,710 6,140,041United States - 21,416

7,622,710 6,161,457

Inter-company loans and advances

As at the end of the reporting period, the maximum exposure to credit risk isrepresented by their carrying amounts in the statements of financial position.

Credit risks on other receivables are mainly arising from deposits andprepayments paid for expenditures and amount deposits in stakeholder accountwhich represents the balance of contingent consideration for acquisition ofASAP and remaining balance from private placement. These deposits andprepayments will be charge out to profit or loss or financial positions when it metcriteria for recognition.

As at the end of the reporting period, the Company did not recognised anyallowance for impairment losses.

As the Group does not hold any collateral, the maximum exposure to credit riskis represented by the carrying amount of the financial assets as at the end ofthe reporting period.

Risk management objectives, policies and processes for managing therisk

The Company provides unsecured loans and advances to subsidiaries andrelated companies.

The exposure of credit risk for trade receivables as at end of the financial period by geographic region was:

Group

As at the end of the reporting period, the maximum exposure to credit risk isrepresented by the carrying amount in the statement of financial position. TheCompany does not specifically monitor the ageing of the advances to thesubsidiaries and related companies. Nevertheless, these advances arerepayable on demand.

ANNUAL REPORT 2019

137


(Company No. 554979-T) 102



Inter-company loans and advances (continued)

Recognition and measurement of impairment loss

•

•

RM RM

2019

Individually not impairedAmount due from a subsidiary - nominal amount 13,688,038 -

Individually impairedAmount due from a subsidiary - nominal amount 994,268 978,268

14,682,306 978,268

Individually impaired (994,268) (978,268)

Net amount 14,682,306 978,268

Generally, the Company considers loans and advances to subsidiaries have lowcredit risk. The Company assumes that there is a significant increase in creditrisk when a subsidiary’s financial position deteriorates significantly. As theCompany is able to determine the timing of payments of the subsidiaries’ loansand advances when they are payable, the Company considers the loans andadvances to be in default when the subsidiaries are not able to pay whendemanded. The Company considers a subsidiary’s loan or advance to becredit impaired when:

The subsidiary is unlikely to repay its loan or advance to the Company infull; andThe subsidiary is continuously loss making and is having a deficitshareholders’ fund.

The Company determines the probability of default for these loans andadvances individually using internal information available.

Amount due from subsidiaries that are impaired at the reporting date and the movement of the allowance accounts used to to record the impairment are as follows:

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Company

138


(Company No. 554979-T) 102



Inter-company loans and advances (continued)


Movement in allownce account used to record the impairment is as follow:

RM RM

At beginning of the year 978,268 978,268Charge for the year 16,000 -At end of the year 994,268 978,268

29.5 Liquidity risk

[The remainder of this page is intentionally left blank]

Liquidity risk is the risk that the Group will not be able to meet its financialobligations as they fall due. The Group’s exposure to liquidity risk arisesprincipally from its various payables, loans and borrowings.

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Company

The Group maintains a level of cash and cash equivalents and bank facilitiesdeemed adequate by the management to ensure, as far as possible, that it willhave sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis couldoccur significantly earlier, or at significantly different amounts.

ANNUAL REPORT 2019

139


(Com

pany

No.

554

979-

T) 1

03

29Fi

nanc

ial i

nstr

umen

ts (c

ontin

ued)

29.5

Liqu

idity

risk

(con

tinue

d)

Mat

urity

ana

lysi

s

RM

RM

RM

2019

Gro

up

Prov

isio

ns a

nd c

ontin

gent

con

side

ratio

n 10

,610

,065

10,6

10,0

6510

,610

,065

Trad

e an

d ot

her p

ayab

les

4,26

8,15

94,

268,

159

4,26

8,15

9

14,8

78,2

2414

,878

,224

14,8

78,2

24

Com

pany

Prov

isio

ns a

nd c

ontin

gent

con

side

ratio

n 10

,214

,645

10,2

14,6

4510

,214

,645

Trad

e an

d ot

her p

ayab

les

1,91

5,63

01,

915,

630

1,91

5,63

0

12,1

30,2

7512

,130

,275

12,1

30,2

75

The

tabl

ebe

low

sum

mar

ises

the

mat

urity

prof

ileof

the

Gro

up’s

and

the

Com

pany

’sfin

anci

allia

bilit

ies

asat

the

end

of th

e re

porti

ng p

erio

d ba

sed

on u

ndis

coun

ted

cont

ract

ual p

aym

ents

.

Car

ryin

g am

ount

Con

trac

tual

cash

flow

sU

nder

1

year

140


(Com

pany

No.

554

979-

T) 1

04

29Fi

nanc

ial i

nstr

umen

ts (c

ontin

ued)

29.5

Liqu

idity

risk

(con

tinue

d)

Mat

urity

ana

lysi

s (c

ontin

ued)

RM

RM

RM

RM

2018

Gro

up

Prov

isio

ns a

nd c

ontin

gent

con

side

ratio

n pa

yabl

e12

,565

,294

12,5

65,2

9412

,565

,294

-Fi

nanc

e le

ase

paya

ble

91,8

3695

,651

49,9

0845

,743

Trad

e an

d ot

her p

ayab

les

3,21

9,01

73,

219,

017

3,21

9,01

7-

15,8

76,1

473,

219,

017

3,21

9,01

7-

Com

pany

Prov

isio

ns a

nd c

ontin

gent

con

side

ratio

n pa

yabl

e11

,469

,874

11,4

69,8

7411

,469

,874

-Tr

ade

and

othe

r pay

able

s1,

363,

309

1,36

3,30

91,

363,

309

-

12,8

33,1

8312

,833

,183

12,8

33,1

83-

Car

ryin

g am

ount

Con

trac

tual

cash

flow

sU

nder

1

year

Mor

e th

an 1

to

5 y

ears

ANNUAL REPORT 2019

141


(Company No. 554979-T) 105


29.6 Market risk

29.6.1 Currency risk

Exposure to foreign currency risk

USDRM

Group

2019

Trade and other payables (663,480)

Net exposure (663,480)

Market risk is the risk that changes in market prices, such as foreign exchangerates, interest rates and other prices that will affect the Group’s financialposition or cash flows.

The Group is exposed to foreign currency risk on sales, purchases andborrowings that are denominated in a currency other than the respectivefunctional currencies of Group entities. The currencies giving rise to this risk are primarily U.S. Dollar (“USD”).

Denominated in

Risk management objectives, policies and processes formanaging the risk

Management of the Group monitors the foreign currency movement ona portfolio basis.

The Group’s exposure to foreign currency (a currency which is otherthan the functional currency of the Group entities) risk, based oncarrying amounts as at the end of the reporting period are as follows:

Balances recognised inthe statement of financialposition

142


(Company No. 554979-T) 106


29.6 Market risk (continued)

29.6.1 Currency risk (continued)

Exposure to foreign currency risk (continued)

USDRM

Group

2018

Trade and other receivables 25,729Cash and cash equivalents 860Trade and other payables (652,444)

Net exposure (625,855)

Currency risk sensitivity analysis

2019 2018RM RM

USD (50,424) (47,565)

Denominated in

Balances recognised inthe statement of financialposition

A 10% (2018: 10%) strengthening of the Malaysia Ringgit against thefollowing currencies at the end of the reporting period would havedecreased post-tax profit or loss by the amounts shown below. Thisanalysis is based on foreign currency exchange rate variances that theGroup considered to be reasonably possible at the end of the reportingperiod. The analysis assumes that all other variables, in particularinterest rates, remained constant.

Profit or loss

A 10% (2018: 10%) weakening of Malaysia Ringgit against the abovecurrencies at the end of the reporting period would have had equal butopposite effect on the above currencies to the amounts shown above,on the basis that all other variables remained constant.

ANNUAL REPORT 2019

143


(Company No. 554979-T) 107



29.6.2 Interest rate risk

Exposure to interest rate risk

2019 2018RM RM

Fixed rate instruments

Financial assets 14,251,929 12,447,608Financial liabilities - 91,836

Fixed rate instruments

Financial assets 14,251,929 12,355,772

The Group’s variable rate borrowings are exposed to a risk of change incash flows due to changes in interest rates. Short term receivables andpayables are not significantly exposed to interest rate risk.

Risk management objectives, policies and processes formanaging the risk

The Group's policy is to obtain the most favourable interest ratesavailable. Any surplus funds of the Group will be placed with licensedfinancial institutions to generate interest income. The Group managesthe net exposure to interest rate risks by maintaining sufficient lines ofcredit to obtain acceptable lending costs and by monitoring theexposure to such risks on an ongoing risks.

The interest rate profile of the Group’s and the Company’s significantinterest-bearing financial instruments, based on carrying amounts as atthe end of the reporting period are as follows:

Group

Company

144


(Company No. 554979-T) 108



29.6.2 Interest rate risk (continued)

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

29.6.3 Other price risk

29.7 Fair value information

The Group does not account for any fixed rate financial assets andliabilities at fair value through profit or loss, and the Group does notdesignate derivatives as hedging instruments under a fair value hedgeaccounting model. Therefore, a change in interest rates at the end ofthe reporting period would not affect profit or loss.

The Group and the Company do not have any quoted investments andhence is not exposed to equity price risk.

The carrying amounts of cash and cash equivalents, short term receivables andpayables and short term borrowings reasonably approximate their fair valuesdue to the relatively short term nature of these financial instruments.

ANNUAL REPORT 2019

145


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ANNUAL REPORT 2019

147


(Company No. 554979-T) 111

30 Capital management

2019 2018RM RM

Provisions and contingent consideration payable 10,610,065 12,565,294Finance lease payable - 91,836Trade and other payables 4,268,159 3,219,017Less: Deposits with a licensed bank (673,473) (652,023)Less: Cash and bank balances (221,663) (981,126)

Net debt 13,983,088 14,242,998

Total equity 103,509,652 85,082,331

Total net debt and equity 117,492,740 99,325,329

Net debt to net debt and equity ratio 12% 14%

31 Operating lease commitments

2019 2018 2019 2018RM RM RM RM

Future minimum lease payables:

-within 1 year 257,375 82,578 222,210 27,600-within 2 to 5 years 352,621 6,900 343,830 6,900

609,996 89,478 566,040 34,500

Company

Operating lease payment represent rentals payable by the Group and the Companyfor use of the office premises and equipments. Leases are fixed for three to fiveyears term.

The objective of the Group on capital management is to ensure that it maintains astrong credit rating and safeguard the Group's ability to continue as a going concern,so as to support its business, maintain the market confidence and maximiseshareholder value.

The Group manages its capital structure and makes adjustments to it in the light ofchanges in economic conditions or expansion of the Group. The Group may adjustthe capital structure issuing new shares, returning capital to shareholders oradjusting the amount of dividends to be paid to shareholders or sell assets to reducedebts.

Group

Group

148


(Company No. 554979-T) 112

32 Related parties

32.1 Identity of related parties

The Company has related party relationship with:

(i)

(ii)The directors who are the key management personnel.

Related parties Relationship

CFR Sdn. Bhd.

Cworks Sdn. Bhd.

Winnova Resources Sdn. Bhd. Related by a common director.

Tekad Maju Solutions Sdn. Bhd.

32.2 Significant related party transactions

RM RM RM RM

Disposal of plant and equipment

- 59,636 - 59,636

Management fee expense- Cworks Sdn. Bhd. - 1,258,868 - 1,258,868

Purchases from- Cworks Sdn. Bhd. - 1,327,601 - 1,327,601

28,000 456,000 - -

Year from 1.7.2018 to 30.6.2019

Period from

1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

Company

Its subsidiary and associates companies as disclosed in Note 6 and Note 7to the financial statements; and

The significant related party transactions of the Group and Company are shown below.

Related by a common Director, who is ashareholder of the company.

Related by a common Director of thecompany.

Related by a common director, who is ashareholder of the company.

Group

- Cworks Techologies Sdn. Bhd.

- Tekad Maju Solutions Sdn. Bhd.

ANNUAL REPORT 2019

149


(Company No. 554979-T) 113

32 Related parties (continued)

32.2 Significant related party transactions (continued)

RM RM RM RMSales to

- CFR Sdn. Bhd. - 540,000 - 540,000

Advances from- Winnova

Resources Sdn.Bhd. 1,200,000 - 200,000 -

Advances to/(from)

- MyAngkasa AzZahra Sdn. Bhd. 107,957 - 107,957 -

- Cworks SystemInc - - 16,000 -

- Ganda Integrasi Sdn. Bhd. - - 13,688,038 -

- Sukaniaga Sdn. Bhd. 1,717,304 - 1,464,647 -

- ASAP Sdn Bhd - - (391,235) -

Transfer of intangible assets to a subsidiary

- ASAP Sdn Bhd - - 771,166 -

Repayment from

- Cworks Sdn. Bhd. 1,000,000 1,000,000 -

Directors' remunerations- Fees 480,667 630,202 277,667 500,202- Salaries and other emoluments 266,500 181,000 266,500 181,000- EPF 55,680 21,600 31,680 21,600- EIS 142 - 95 -- Socso 1,244 669 829 669

804,233 833,471 576,771 703,471

Group Company

Year from 1.7.2018 to 30.6.2019

Period from

1.1.2017 to 30.6.2018

Year from 1.7.2018 to 30.6.2019

Period from 1.1.2017 to 30.6.2018

-

150


(Company No. 554979-T) 115

33 Material Litigation

(i) On 28 June 2017, Sporty Beans Sdn. Bhd. ("Sporty Beans") filed a Writ andStatement of Claim against ASAP Sdn. Bhd. In the Shah Alam High Court vide SuitNo. BA-22NCvC-384-06/2017 for breach of a joint venture agreement to design,develop, deploy and launch an e-portal.

Sport Beans alleged that ASAP had breached the joint venture agreement. SportyBeans is claiming for approximately RM45.41 million for loss of profits as a result ofthe alleged breach of agreement by ASAP.

ASAP's legal counsel has put in an appearance for the case. ASAP had earlierobtained a legal opinion for the Letter of Demand dated 15 February 2017 served onASAP that Sporty Bean's allegations are frivolous and unsubstantiated as ASAP isnot a party to the joint venture agreement with the Plaintiff.

ASAP had filed an application to strike out Sporty Beans's claim against ASAPtogether with an affidavit in support on 28 August 2017. The court had decided todismiss ASAP's interlocutory application to strike out the Writ and Statement of Claimwith cost in the cause and proceed to next trial.

On 9 October 2019, Sporty Beans solicitors had withdrawn representing SportyBeans. The case will be fixed for continual trial on 25 and 26 November 2019.

The former shareholders of ASAP, namely Dato' Paduka Mohamad Sharaff bin HajiMohd Shariff, Prabuddha Kumar Pronob Chakravertty and Lilibeth Gamboa Belinariohad on 28 July 2017 agreed to fully indemnify the company against all claims,actions, damages, losses, liabilities, costs and expenses that the Company or ASAPmay inccur, suffer or be liable for in connection with the above case. As such, there isno immediate operational and financial impact to the Company. The Board ofDirectors of the Company will also further deliberate on its next course of action withregards to the above case.

On 9 August 2019, Sporty Beans had called two witnesses and the Director hascompleted his evidence for Sporty Beans.

In the opinion of the Directors, the Company has received full indemnity from the two parties and a director of the company against all claims, actions, damages, losses, liabilities, costs and expenses in connection with the legal suit by Sporty Beans. In the circumstances and as the trial of the matter has yet to complete, no provision is recognised at the reporting date.

ANNUAL REPORT 2019

151


(Company No. 554979-T) 116

33 Material Litigation (continued)

(ii) In April 2019, Prabuddha Kumar Pronob Chakravertty ("Plaintiff") had in the KualaLumpur High Court vide Suit No. WA-22NCC-196-04/2019 filed a Writ and Statementof Claim against ASAP Sdn. Bhd. and its direcctors for inter alia, failed, neglectedand/or omitted to reply to Plaintiff's queries made to the Board of ASAP in respect ofthe purported irregular transactions in ASAP. The Plaintiff claims he might bejeopardised and prejudiced as a director of ASAP on what he perceives as irregularand suspicious transactions in ASAP. In this action, the Plaintiff seeks variousdeclaratory orders against ASAP and its directors and damages to be assessedagainst them.

In May 2019, Prabuddha Kumar Pronob Chakravertty ("Plaintiff") in the Kuala LumpurHigh Court vide Suit No. WA-22NCC-240-05/2019 against Orion IXL Berhad andclaims that Orion has breached a Notice of Assignment entered into between partieson or about 1.7.2019 and hence led to the purported termination of the Notice ofAssignment by the Plaintiff. Flowing from the breaches, the Plaintiff seek variousdeclaration against Orion inter alia, that the Notice of Assignment is lawfullyterminated and that Orion to pay the Plaintiff a sum of RM10,214,646 being thealleged unpaid profit guarantee pursuant to the Sale and Purchase Agreement dated17.10.2016 ("Sale and Purchase Agreement"). The Plaintiff is also seeking damagesto be assessed against Orion.

The management is of the the view that there is no financial impact to Orion. Theonly financial related claim which Plaintiff seeks is to injunct Orion from releasing,utilising and disposing off the monies which is currently held in a stakeholder'saccount.

The parties had exchanged the pleadings and Orion and ASAP had filed striking outapplication and a summary determination application to summarily dispose off thePlaintiff's action on question of law or on the construction of documents. On 17October 2019, The plaintiff had instructed his solicitor to withdraw the both casesagainst the Group. Orion and ASAP had requested for withdrawal of both suitswithout liberty to file a fresh both suits.The judge had fixed a short case managementon 12 November 2019.

152


(Company No. 554979-T) 117

33 Material Litigation (continued)

(iii)

1 A declaration that ASAP has breached the Sub-Contract dated 1 July 2018;2

3

4

5 General damages to be assessed;6

7

34 Date of Authorisation for Issue

The court had instructed the defendants to file defence on/before 4 November 2019 and parties to file interlocatory applications (if any) on/before 18 November 2019. The case management will be fixed on 3 December 2019.

Special damages in the sum of RM10,337,700.00 against Orion and ASAPwhether jointly or severally; orAlternatively, special damages in the sum of RM10,337,700.00 againstPrabuddha in the event Prabuddha is found to be personally liable.

These financial statements were authorised for issue by the Board of Directors on 31October 2019.

This action was filed by Capstone Technologies Sdn. Bhd. ("Plaintiff") in the KualaLumpur High Court vide Suit No. WA-22NCC-544-10/2019 in 1 October 2019 againstOrion IXL Berhad, ASAP Sdn. Bhd. and Prabuddha Kumar Pronob Chakraverttyclaiming for breach of a sub-contract agreement dated 1 July 2018.

Pursuant to the Write and the Statement of the Claim, the Plaintiff is claiming for interalia of the following:

A declaration that the Sub-Contract dated 1 July 2018 had been lawfullyterminated;A declaration that Orion and ASAP whether jointly or severally have breachedthe agreement to pay the Plainiff a sum of RM135,000.00 per month on 20th ofevery month for every month from 20.12.2018 to 20.07.2019;In the alternative, in the event Prabuddha is found to be personally liable,Prabuddha to pay the Plaintiff a sum of RM135,000.00 per month that was tobe paid on 20th of every month starting from 20.12.2018 to 20.07.2019;

The Board had obtained the legal opinion in this matter and do not foresee that Writand Statement of Claims will have any material financial and operational impact onthe Group.

ANNUAL REPORT 2019

153

AnAlysis OfShareholdingS

As AT 30 sEPTEMbER 2019

SHARE CAPITAL

Total Number of Issued Shares : 707,176,390

Class of Shares : Ordinary shares

Voting Rights : One vote per ordinary share

Size of Shareholdings No. of % ofShares Held Shares

10 Less than 100 297 *405 100 to 1,000 125,111 0.02 896 1,001 to 10,000 6,336,480 0.90

1,925 10,001 to 100,000 88,243,862 12.48 764 100,001 to less than 5 % of issued shares 568,541,640 80.40

1 5% and above of the issued shares 43,929,000 6.21

4,001 TOTAL 707,176,390 100

* Less than 0.01%

(WITHOUT AGGREGATING SECURITIES FROM DIFFERENT SECURITIES ACCOUNT BELOGING TO THE SAME PERSON)

Name of Shareholders No. of Shares Held Percentage (%)

1 M&A Nominee (Tempatan) Sdn Bhd 43,929,000 6.21 Majestic Salute Sdn Bhd for Mohamad Shaharul bin Mohamad Shariff

2 Koh Kin Lip 20,000,000 2.83 3 CGS-CIMB Nominees (Tempatan) Sdn Bhd 20,000,000 2.83

Pledged Securities Account for Terence Wong @ Huang Thar-Rearn4 RHB Nominees (Tempatan) Sdn Bhd 15,000,000 2.12

Tan Ah Loy @ Tan May Ling5 M&A Nominee (Tempatan) Sdn Bhd 14,000,000 1.98

Majestic Salute Sdn Bhd for Khoo Chee Siang6 UOB Kay Hian Nominees (Asing) Sdn Bhd 13,685,000 1.94

Exempt An for UOB Kay Hian Pte Ltd (A/C Clients)7 Koh Chee Meng 13,528,800 1.91 8 CIMB Group Nominees (Asing) Sdn Bhd 12,864,000 1.82

Exempt An for DBS Bank Ltd (SFS)9 M&A Nominee (Tempatan) Sdn Bhd 12,783,700 1.81

Pledged Securities Account for Chow Dai Ying (M&A)10 CIMSEC Nominees (Tempatan) Sdn Bhd 11,800,000 1.67

CIMB for Mohamed Nizam bin Abdul Razak (PB)11 Citigroup Nominees (Tempatan) Sdn Bhd 11,709,800 1.66

Employees Provident Fund Board (PHEIM)12 Maybank Nominees (Tempatan) Sdn Bhd 7,168,700 1.01

Maybank Trustees Berhad for Dana Makmur Pheim (211901)13 RHB Nominees (Tempatan) Sdn Bhd 6,800,000 0.96

Chan Shook Fun14 Citigroup Nominees (Tempatan) Sdn Bhd 6,521,700 0.92

Great Eastern Life Assurance (Malaysia) Berhad (LBF)15 Cheah King Fui 6,180,000 0.87 16 TA Nominees (Tempatan) Sdn Bhd 6,027,000 0.85

Pledged Securities Account for Oh Kim Sun17 Affin Hwang Nominees (Tempatan) Sdn Bhd 6,000,000 0.85

Pledged Securities Account for Tan Roy Soon (TAN8615M)18 HSBC Nominees (Asing) Sdn Bhd 5,888,000 0.83

DZ Privatbank for NPB Sicav - NPB ASIA (EXCL. JAPAN)19 AMSEC Nominees (Tempatan) Sdn Bhd 4,896,300 0.69

Pledged Securities Account for Cheah King Fui20 Lee Yean Fat @ Li Fat 4,000,000 0.57 21 Chia Siea Chok 3,882,000 0.55 22 Pang Shiew Wai 3,700,000 0.52 23 Chin Chin Seong 3,500,000 0.49 24 RHB Capital Nominees (Tempatan) Sdn Bhd 3,500,000 0.49

Pledged Securities Account for Choong Foong Ming (CEB)25 Mah Siew Hoe 3,500,000 0.49 26 Yong Kian Keong 3,447,200 0.49

ANALYSIS OF SHAREHOLDINGS AS AT 30 SEPTEMBER 2019

SHAREHOLDING DISTRIBUTION SCHEDULE (AS PER THE RECORD OF DEPOSITORS)

LIST OF 30 LARGEST SECURITIES ACCOUNT HOLDERS

No. of Shareholders

154

27 CGS-CIMB Nominees (Tempatan) Sdn Bhd 3,067,500 0.43 Pledged Securities Account for Tan Tzer Siew

28 Loh Chiew Hor 3,000,000 0.42 29 Lee Choon Hooi 3,000,000 0.42 30 Teoh Wei Teck 3,000,000 0.42

TOTAL 276,378,700 39.08

NO. OF SHARES HELD NAME OF SHAREHOLDERS DIRECT % INDIRECT %

1. Mohamad Shaharul bin Mohamad Shariff 43,929,000 6.21 - -

NAME OF DIRECTORS DIRECT % INDIRECT %

1. Abdul Rani bin Achmed Abdullah 85,072 0.01 - -2. Yahya bin Razali - - - -3. Rahimi bin Ramli - - - -4. Mohamad Shaharul bin Mohamad Shariff 43,929,000 6.21 - -5. Ahmad Ruslan Zahari bin Zakaria - - - -6. Ahmad Sharmin bin Zahari - - - -

NO. OF SHARES HELD

SUBSTANTIAL SHAREHOLDERS (AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS)

DIRECTORS' SHAREHOLDINGS (AS PER THE REGISTER OF DIRECTORS' SHAREHOLDINGS)

Analysis of Shareholdings(cont’d)

ANNUAL REPORT 2019

155

AnAlysis Ofwarrant a holdingS

As AT 30 sEPTEMbER 2019

No. of Warrants :

Exercise Price of Warrants : RM0.17

Exercise Period of Warrants : 27 July 2017 to 26 July 2022

Number of Warrant Holders : 891

Size of Warrant holdings No. of % ofWarrants Held Warrant

4 Less than 100 200 *21 100 to 1,000 9,300 *

104 1,001 to 10,000 746,425 0.32434 10,001 to 100,000 21,785,525 9.35328 100,001 to less than 5% of warrants 210,386,035 90.32- 5% and above of the warrants - -

891 TOTAL 232,927,485 100

* Less than 0.01%

Name of Warrant holders

1. Kenanga Nominees (Tempatan) Sdn Bhd 10,835,000 4.65 Pledged Securities Account for Chong Soong Huat

2. Chin Chin Seong 8,383,600 3.60 3. 6,811,000 2.92

Majestic Salute Sdn Bhd for Mohamad Shaharul bin Mohamad Shariff4. 6,650,000 2.86 5. 5,598,500 2.40 6. 5,221,300 2.24 7. 5,002,000 2.15

8. 3,745,099 1.61

9. 3,724,700 1.60 10. 3,699,000 1.59 11. 3,153,000 1.35 12. Tan Lee Gek 2,898,700 1.24 13. Teh Aik Sin 2,800,000 1.20 14. 2,631,741 1.13

Majestic Salute Sdn Bhd for Winnova Resources Sdn Bhd15. 2,500,000 1.07 16. 2,280,000 0.98

Exempt An for UOB Kay Hian Pte Ltd (A/C Clients)17. Samsulbahari bin Mohd Noor 2,220,000 0.95 18. On Thiam Chai 2,000,000 0.86 19. Chan Yoon Chai 2,000,000 0.86 20. Yong Ka Huat 2,000,000 0.86 21. 2,000,000 0.86 22. 1,900,000 0.82 23. Chia Aun Ling 1,852,700 0.80 24. Lim Ah Poh 1,800,000 0.77

Pledged Securities Account for Koh Geok Kang (E-JBU)

M&A Nominee (Tempatan) Sdn Bhd

Loh Lee WanTeh Boon King

Percentage (%)

Tan Kheak Chun

CIMSEC Nominees (Tempatan) Sdn Bhd

Loh Pek Har

Public Nominees (Tempatan) Sdn Bhd

232,927,485

No. of Warrants Held

CIMB for Mohamed Nizam bin Abdul Razak (PB)

Teh Boon King

Chua Tick Yaw

ANALYSIS OF WARRANT A HOLDINGS AS AT 30 SEPTEMBER 2019

WARRANT DISTRIBUTION SCHEDULE

LIST OF 30 LARGEST WARRANT ACCOUNT HOLDERS (WITHOUT AGGREGATING WARRANT FROM DIFFERENT

No. of Warrant holders

WARRANT ACCOUNTS BELONGING TO THE SAME REGISTERED WARRANT HOLDER)

UOB Kay Hian Nominees (Tempatan) Sdn Bhd

Arunachalam A/L Nagappan

M&A Nominee (Tempatan) Sdn Bhd

Chin Chin Seong

Wong Hang Seng

156

Analysis of Warrant A Holdings(cont’d)

25. Cheang Kwoay Yin 1,800,000 0.77 26. Loh Chiew Hor 1,750,000 0.75 27. Chan Lip Sin 1,739,000 0.75 28. Public Nominees (Tempatan) Sdn Bhd 1,583,200 0.68

Pledged Securities Account for Gary Lee Seaton (E-JBU)29. Tong Sian Teng 1,582,500 0.68 30. Chin Soon Hin 1,582,400 0.68

TOTAL 101,743,440 43.68

DIRECTORS' WARRANT HOLDINGS

NAME OF DIRECTORS % %

1. Abdul Rani bin Achmed Abdullah - - 2,631,741* 1.132. Yahya bin Razali - - - -3. Rahimi bin Ramli - - - -4. Mohamad Shaharul bin Mohamad Shariff 2.92 - -5. Ahmad Ruslan Zahari bin Zakaria - - - -6. Ahmad Sharmin bin Zahari - - - -

* Deemed interested by virtue of warrant holdings in Winnova Resources Sdn Bhd.

6,811,000

INDIRECTDIRECTNO. OF WARRANTS HELD

ANNUAL REPORT 2019

157

nOTiCE Ofannual general meeting

NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Seventeenth (“17th”) Annual General Meeting (“AGM”) of ORION IXL BERHAD will be held at Redang Room, Bukit Jalil Golf & Country Resort, Jalan Jalil Perkasa 3, Bukit Jalil, 57000 Kuala Lumpur, Wilayah Persekutuan (KL) on Friday, 29 November 2019 at 8.30 a.m. for the following purposes:- AGENDA AS ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the

financial year ended 30 June 2019 (“FY2019”) together with the Reports of the Directors and Auditors thereon.

(See Explanatory Note 1)

2. To approve the payment of Directors’ Fees of

RM450,000.00 for the financial year ending 30 June 2020 (“FY2020”) be and is hereby approved.

(Ordinary Resolution 1)

3. To re-elect the following Directors who are retiring

under Article 90 of the Company’s Constitution:- (i) Encik Ahmad Ruslan Zahari bin Zakaria (ii) Encik Ahmad Sharmin bin Zahari

(Ordinary Resolution 2) (Ordinary Resolution 3)

4. To re-elect Encik Abdul Rani bin Achmed Abdullah who

retires under Article 83 of the Company’s Constitution. (Ordinary Resolution 4)

5. To re-appoint Messrs STYL Associates PLT as Auditors of

the Company for the FY2020 and to authorise the Directors to fix their remuneration.

(Ordinary Resolution 5)

AS SPECIAL BUSINESS To consider and if thought fit, to pass the following Ordinary Resolutions and Special Resolution:

6. Proposed Directors’ Benefits

“THAT the payment of Directors’ Benefits amounting to RM25,000.00 for the period commencing after the date of this AGM to the date of the next AGM be and is hereby approved.”

(Ordinary Resolution 6) (See Explanatory Note 2)

158

7. Authority to Allot and Issue Shares Pursuant to Sections 75 and 76 of the Companies Act 2016 (“CA 2016”) “THAT pursuant to Sections 75 and 76 of the CA 2016 and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue and allot shares of the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit, provided that the aggregate number of shares issued pursuant to this resolution shall not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company and the Directors be and are also empowered to obtain approval for the listing and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next AGM of the Company.”

(Ordinary Resolution 7) (See Explanatory Note 3)

8. Special Resolution

Proposed Adoption of the New Constitution of the Company “THAT approval be and is hereby given to revoke the existing Constitution of the Company within immediate effect and in place thereof, the proposed new Constitution of the Company as set out in Appendix I accompanying the Company’s Annual Report for the FY2019, be and is hereby adopted as the Constitution of the Company, AND THAT the Directors of the Company be and are hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all acts and things and take all such steps as may be considered necessary to give full effect to the foregoing.”

(Special Resolution 1) (See Explanatory Note 4)

9. To transact any other business for which due notice shall have been given in accordance with the Company’s Constitution and the CA 2016.

Notice of Annual General Meeting(cont’d)

ANNUAL REPORT 2019

159

By Order of the Board ORION IXL BERHAD WONG YUET CHYN (MAICSA 7047163) Company Secretary Kuala Lumpur 31 October 2019 Notes:- i. Pursuant to Section 334 of the CA 2016, a member shall be entitled to appoint another person as his proxy to exercise all or

any of his rights to attend, participate, speak and vote in his stead. ii. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notary

certified copy of that power or authority, shall be deposited at the registered office of the Company at No. 2-1, Jalan Sri Hartamas 8, Sri Hartamas, 50480 Kuala Lumpur, Wilayah Persekutuan (KL) not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll, and in default, the instrument of proxy shall not be treated as valid.

iii. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

iv. Where a Member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint only one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

v. If the appointor is a corporation, this form must be executed under its common seal or under the hand of an attorney duly authorised.

vi. Where a Member 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.

vii. In respect of deposited securities, only members whose names appear on the Record of Depositors on 22 November 2019, shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf.

viii. Pursuant to Paragraph 8.31A(1) of the ACE Market Listing Requirements (“AMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), all the resolutions set out in this Notice will be put to vote by way of poll.

Explanatory Note on Ordinary Business 1. Item 1 of the Agenda

The audited financial statements are laid in accordance with Section 340(1) (a) of the CA 2016 for discussion only under Agenda 1. They do not require shareholders’ approval and hence, will not be put for voting.

Explanatory Notes on Special Business 2. Proposed Directors’ Benefits

The Proposed Ordinary Resolution 6, if passed, will authorise and approve of the payment of Directors’ benefits comprised of allowances pursuant to the requirements of Section 230 of the CA 2016 for the period commencing after the date of this AGM to the date of the next AGM.

The Directors’ Benefits comprise meeting allowance payable to each Director, where applicable, for their attendance of Board and Committee meetings.

3. Authority to Issue Shares pursuant to Sections 75 and 76 of the CA 2016

The proposed Ordinary Resolution 7, is proposed for the purpose of renewing the general mandate for issuance of shares by the Company under Sections 75 and 76 of the CA 2016. The Ordinary Resolution 7, if passed, will give the Directors of the Company authority to issue ordinary shares in the Company at any time in their absolute discretion for such purposes as the Directors would consider is in the best interest of the Company. The authorisation, unless revoked or varied by the Company at a General Meeting, will expire at the conclusion of the next AGM the Company.


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As at the date of this Notice, no shares had been issued and allotted since the general mandate granted to the Directors at the last Annual General Meeting held on 23 November 2018 and this general mandate will lapse at the conclusion of the 17th AGM of the Company. The General Mandate, if granted, will provide flexibility to the Company for any possible fund raising activities, including but not limited to, further placing of shares, for the purpose of funding future investment project(s), working capital and/or acquisitions. 4. Proposed Adoption of the New Constitution of the Company

That Special Resolution 1, if passed, will bring the Company’s Constitution in line with the CA 2016 which came into force on 31 January 2017, the updated provisions of the AMLR and the prevailing statutory and regulatory requirements, details of which are set out in Appendix I accompanying the Company’s Annual Report 2019. Pursuant to Section 36 of the CA 2016, the proposed adoption of the new Constitution of the Company, if passed as a Special Resolution by a majority of not less than 75% of the members who are entitled to vote, and do vote in person or by proxy, shall take immediate effect and it shall bind the Company and the members accordingly.

✄

ORION IXL BERHAD 200101019222 (554979-T) FORM OF PROXY

CDS Account No. - -

No. of Shares Held

I / We _____________________________________________________________________________________________________

(FULL NAME IN BLOCK LETTERS) (NRIC No./ Company Registration No./ Passport No. _______________________________________________________________ ) of _______________________________________________________________________________________________________

(FULL ADDRESS) being a member/members of ORION IXL BERHAD, hereby appoint Name of Proxy

NRIC No./Passport No. % of Shareholdings to be Represented

Address and/or failing him/her

Name of Proxy

NRIC No./Passport No. % of Shareholdings to be Represented

Address or failing him/her, the CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Seventeenth Annual General Meeting of the Company to be held at Redang Room, Bukit Jalil Golf & Country Resort, Jalan Jalil Perkasa 3, Bukit Jalil, 57000 Kuala Lumpur, Wilayah Persekutuan (KL) on Friday, 29 November 2019 at 8.30 a.m., or at any adjournment thereof. Ordinary Resolutions: FOR AGAINST 1. Approval of Directors’ Fees 2. Re-election of Encik Ahmad Ruslan Zahari bin Zakaria 3. Re-election of Encik Ahmad Sharmin bin Zahari 4. Re-election of Encik Abdul Rani bin Achmed Abdullah 5. Re-appointment of Auditors 6. Approval of Directors’ Benefits 7. Authority to Allot and Issue Shares Pursuant to Sections 75 and 76 of the Companies Act 2016 Special Resolution: 8. Adoption of New Constitution of the Company (Please indicate with an “X” in the space provided on how you wish to cast your vote. If you do not do so, the proxy will vote or abstain from voting at his discretion). Dated this ___________ day of ___________________, 2019. __________________________ Signature(s) of member(s) Notes:- i. Pursuant to Section 334 of the Companies Act 2016, a member shall be entitled to appoint another person as his proxy to exercise all or any of his rights to attend, participate, speak and vote in his stead. ii. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notary certified copy of that power or authority, shall be deposited at the registered office of the Company at No. 2-1, Jalan Sri Hartamas 8, Sri Hartamas, 50480 Kuala Lumpur, Wilayah Persekutuan (KL) not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll, and in default, the instrument of proxy shall not be treated as valid. iii. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. iv. Where a Member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint only one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. v. If the appointor is a corporation, this form must be executed under its common seal or under the hand of an attorney duly authorised. vi. Where a Member 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. vii. In respect of deposited securities, only members whose names appear on the Record of Depositors on 22 November 2019, shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf. viii. Pursuant to Paragraph 8.31A(1) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, all the resolutions set

out in this Notice will be put to vote by way of poll.

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AFFIXSTAMP

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AFFIX

STAMP The Company Secretary

ORION IXL BERHAD 200101019222 (554979-T) No. 2-1, Jalan Sri Hartamas 8 Sri Hartamas 50480 Kuala Lumpur Wilayah Persekutuan (KL)

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ANNUAL REPORT2019

ORION IXL BERHAD 200101019222 (554979-T)Level 5, Block B, Dataran PHB Saujana Resort, Section U2, 40150 Shah Alam, Selangor Darul Ehsan.

T : +603-7890 0638F : +603-7890 3163E : [email protected]

ORION IXL BERHAD 200101019222 (554979-T)

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