a-3a-3a, block a, oasis square office 47301 petaling jaya ......theta edge berhad (260002-w)...

Theta Edge Berhad (260002-W)

A-3A-3A, Block A, Oasis Square OfficeJalan PJU 1A/7A, Ara Damansara

47301 Petaling Jaya, Selangor Darul EhsanTel: 603-7622 1188Fax: 603-7666 6968

www.theta-edge.com

THETA

EDG

E BERHA

D (260002-W)

An

nu

al Re

po

rt 2018

Annual Report2018

DATE & TIME:Friday • 28 June 2019 • at 3.00 p.m.

LOCATION:Tropicana Golf & Country Resort, Ballroom 1, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan

ANNUAL REPORT 2018THETA EDGE BERHAD (260002-W)

[[Corporate Information 2

Group Corporate Structure 4

Board of Directors 6

Key Senior Management 16

Financial Highlights 19

Management Discussion and Analysis 20

Sustainability Statement 26

Corporate Governance Overview Statement 38

Audit and Risk Management Committee Report 64

Statement on Risk Management and Internal Control 72

Additional Compliance Information 79

Financial Statements 81

Analysis of Shareholdings 149

Personal Data Notice 152

Notice of Annual General Meeting 153

Statement Accompanying Notice of Annual General Meeting 160

Proxy Form

CORPORATE INFORMATION

AUDIT & RISK MANAGEMENT COMMITTEE

MOHAMED RIDZA BIN MOHAMED ABDULLA (Chairman, Senior Independent Non-Executive Director)

ABDUL HALIM BIN JANTAN (Member, Independent Non-Executive Director)

DATO’ RICHARD GEORGE AZLAN BIN ABAS (Member, Independent Non-Executive Director)

DATUK ADI AZUAN BIN ABDUL GHANI (Member, Non-Independent Non-Executive Director)

NOMINATION COMMITTEE

MOHAMED RIDZA BIN MOHAMED ABDULLA (Chairman, Senior Independent Non-Executive Director)

ABDUL HALIM BIN JANTAN (Member, Independent Non-Executive Director)

ANIS ZUHANI BINTI AHMAD (Member, Non-Independent Non-Executive Director)

REMUNERATION COMMITTEE

DATUK ADI AZUAN BIN ABDUL GHANI (Chairman, Non-Independent Non-Executive Director)

MOHAMED RIDZA BIN MOHAMED ABDULLA (Member, Senior Independent Non-Executive Director)

DATO’ RICHARD GEORGE AZLAN BIN ABAS (Member, Independent Non-Executive Director)

[2

BOARD OF DIRECTORS

DATO’ NOORDIN BIN SULAIMAN (Chairman, Non-Independent Non-Executive Director)

MOHAMED RIDZA BIN MOHAMED ABDULLA (Senior Independent Non-Executive Director)

DATO’ RICHARD GEORGE AZLAN BIN ABAS (Independent Non-Executive Director)

ABDUL HALIM BIN JANTAN (Independent Non-Executive Director)

DATO’ ISKANDAR MIZAL BIN MAHMOOD (Independent Non-Executive Director)

DATUK ADI AZUAN BIN ABDUL GHANI (Non-Independent Non-Executive Director)

ANIS ZUHANI BINTI AHMAD (Non-Independent Non-Executive Director)

A. SHUKOR BIN S.A. KARIM (Group Managing Director & Chief Executive Officer)


Corporate Information

COMPANY SECRETARIES

CYNTHIA GLORIA LOUIS (MAICSA 7008306)

CHEW MEI LING (MAICSA 7019175)

REGISTERED OFFICE

A-3A-3A, Block A Oasis Square Office Jalan PJU 1A/7A Ara Damansara 47301 Petaling Jaya Selangor Darul Ehsan Tel : 603 7622 1188 Fax : 603 7666 6968 AUDITORS

KPMG Desa Megat PLT (LLP0010082-LCA & AF 0759) Chartered Accountants Level 10, KPMG Tower 8, First Avenue, Bandar Utama 47800 Petaling Jaya Selangor Darul Ehsan Tel : 603 7721 3388 Fax : 603 7721 3399

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn Bhd Unit 32-01, Level 32, Tower A Vertical Business Suite, Avenue 3 Bangsar South, No. 8, Jalan Kerinchi 59200 Kuala Lumpur Tel : 603 2783 9299 Fax : 603 2783 9222

PRINCIPAL BANKERS

AmBank Islamic Berhad

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad Stock Name : THETA Stock Code : 9075

WEBSITE

www.theta-edge.com

[3


[4

Theta TechnologiesSdn Bhd

Theta Mobile Sdn Bhd

Theta TelecomsSdn Bhd

Theta MultimediaSdn Bhd

Theta GreentechSdn Bhd

Lityan ApplicationsSdn Bhd

Impianas Sdn Bhd

TH2.0 Sdn Bhd

Advanced BusinessSolutions (M) Sdn Bhd

GROUP CORPORATE STRUCTURE

[4

MISSION

To build a

&business


[5

MISSION STATEMENT

BOARD OF

DIRECTORS

DATO’ ISKANDAR MIZALBIN MAHMOODIndependentNon-Executive Director

DATO’ NOORDINBIN SULAIMANChairman, Non-IndependentNon-Executive Director

DATUK ADI AZUANBIN ABDUL GHANINon-IndependentNon-Executive Director

A. SHUKORBIN S.A. KARIMGroup Managing Director& Chief Executive Officer

MOHAMED RIDZABIN MOHAMED ABDULLASenior IndependentNon-Executive Director

ABDUL HALIMBIN JANTANIndependentNon-Executive Director

DATO’ RICHARD GEORGE AZLANBIN ABASIndependentNon-Executive Director

ANIS ZUHANIBINTI AHMADNon-IndependentNon-Executive Director

[6

[7


OUR BOARD

LENGTH OF SERVICE

MATRIX SKILLOUR BOARD

13%FEMALE

INDEPENDENTDIRECTORS

NON-INDEPENDENTDIRECTORS

50% 50%

87%MALE

0-3 Years25%

25%

50%

3-6 Years

5 Years Above

75%

63%

63%

50%

50%

25%

13%

CORPORATE

TELECOMMUNICATION /MEDIA / TECHNOLOGY

ACCOUNTING / FINANCE /CORPORATE FINANCE

FINANCIAL SERVICES

PUBLIC SERVICES

OIL & GAS

LEGAL / REGULATORY

[8

DIRECTOR’S PROFILE

DATO’ NOORDIN BIN SULAIMANChairman, Non-Independent Non-Executive Director

Male / 61 / Malaysian

Date of Appointment : • 16April2019 – Chairman,Non-IndependentNon-ExecutiveDirector

Qualification : • MasterinEnvironmentfromUniversitiPutraMalaysia • BachelorofArts(Hons)fromUniversitiMalaya • DiplomainScienceManagementfromtheNational InstituteofPublicAdministration

(INTAN) • PostGraduateResearchStudyfromUniversityofToyama,Japan

Working Experience : Dato’ Noordin bin Sulaiman was a State Financial Officer at Selangor and has over 32 years of working experience in the government sector, in the areas of land as well as development and administration. He began his career as an Assistant Director in the Prime Minister’s Department and thereafter held various positions with the Federal, State and local government.

He has been on the Board of Lembaga Tabung Haji (TH) since August 2018. Directorship of Listed : • 8April2019 – PutrajayaPerdanaBerhadIssuers and Public • 1November2018 – EcobuiltHoldingsBerhadCompanies • 15March2016 – KumpulanHartanahSelangorBerhad • 1February2003 – WorldwideHoldingsBerhad Board Committee : None

Declaration : • ArepresentativeofTH, the major shareholder of the Company • Nofamilyrelationshipwithanydirectorand/ormajorshareholderoftheCompanyand

does not have any equity interest in the Company and its subsidiaries • Noconflictof interestotherthandisclosedunderAdditionalComplianceInformation

Disclosure (Recurrent Related Party Transactions) in the Annual Report • Noconvictionsofoffences(otherthantrafficoffences,ifany)withinthepastfiveyears • Nopublicsanctionorpenaltiesimposedbyanyregulatorybodiesduringthefinancial

year

Meetings Attended : 0/0

[9


Director’s Profile

MOHAMED RIDZA BIN MOHAMED ABDULLASenior Independent Non-Executive Director


Date of Appointment : • 7November2007 – IndependentNon-ExecutiveDirector • 20May2014 – RedesignatedtoSeniorIndependentNon-ExecutiveDirector

Qualification : • BachelorofLaw(FirstClassHonours)fromtheInternationalIslamicUniversity,Malaysia • FellowMemberoftheInstituteofCharteredSecretariesandAdministrators(London)

(FCIS) • FellowoftheMalaysianSocietyofAdjudicators • AssociateMemberoftheCharteredInstituteofArbitrators(ACIArb)

Working Experience : Mohamed Ridza bin Mohamed Abdulla began his career as an advocate and solicitor at the firm of Rashid & Lee in Malaysia. He later joined Arab Malaysian Corporation Berhad (AMCB) as the group legal adviser. Being the group legal adviser, he was instrumental in setting up the legal department of the Amcorp Group of Companies. He left AMCB to become the General Legal Counsel of Technip Asia Pacific based in Kuala Lumpur and was previously attached at Technip headquarters in Paris, France. He is now the Managing Partner of Mohamed Ridza & Co. Prior to opening the firm, he was a partner and was head of his division at Zaid Ibrahim & Co.

Directorship of Listed Issuers and : NonePublic Companies

Board Committee : • ChairmanofAuditandRiskManagementCommittee • ChairmanofNominationCommittee • MemberofRemunerationCommittee

Declaration : • Nofamilyrelationshipwithanydirectorand/ormajorshareholderoftheCompanyanddoes not have any equity interest in the Company and its subsidiaries

• NoconflictofinterestwiththeCompany • Noconvictionsofoffences(otherthantrafficoffences,ifany)withinthepastfiveyears • Nopublicsanctionorpenaltiesimposedbyanyregulatorybodiesduringthefinancial

year


[10

DATO’ RICHARD GEORGE AZLAN BIN ABASIndependent Non-Executive Director


Date of Appointment : • 15June2010 – GroupManagingDirectorandChiefExecutiveOfficer • 1April2012 – RedesignatedtoExecutiveDirector • 20May2014 – RedesignatedtoNon-IndependentNon-ExecutiveDirector • 1June2016 – RedesignatedtoIndependentNon-ExecutiveDirector

Qualification : • BachelorofCommercefromtheUniversityofWesternAustralia • FellowandAsiaCouncilorofCharteredAccountantsAustraliaNewZealand • CharteredAccountantoftheMalaysianInstituteofAccountants

Working Experience : Dato’ Richard George Azlan bin Abas articled with Arthur Andersen from 1984 to 1989 and served the Arab-Malaysian Group from 1990 to 1996. He was the Group Chief Executive Officer of YPJ (Johor Education Foundation) Holdings Sdn Bhd from 1997 to 2002. He is presently the Managing Partner of Abas & Co Chartered Accountants.


Board Committee : • MemberofAudit&RiskManagementCommittee • MemberofRemunerationCommittee

Declaration : • Nofamilyrelationshipwithanydirectorand/ormajorshareholderoftheCompany • DetailsofshareholdingsheldintheCompanyaredisclosedonpages149to151ofthe

Annual Report • Noequityinterestinthesubsidiaries • NoconflictofinterestwiththeCompany • Noconvictionsofoffences(otherthantrafficoffences,ifany)withinthepastfiveyears • Nopublicsanctionorpenaltiesimposedbyanyregulatorybodiesduringthefinancial

year



[11


ABDUL HALIM BIN JANTANIndependent Non-Executive Director


Date of Appointment : 8August2014 – IndependentNon-ExecutiveDirector

Qualification : • HigherSchoolofCertificate • FellowMemberoftheMalaysianInsuranceInstitute

Working Experience : With over 35 years of experience, Abdul Halim bin Jantan is well known as a wise mentor and a resourceful advisor in the insurance broking industry. He is currently the Chief Executive Officer of Sterling Insurance Brokers (Sterling), an Insurance Broking and Consulting company which he started up in year 2000.

Prior to embarking his broking journey, he spent 14 years at American Malaysian Insurance Berhad (AMI), being his last position as the CEO of AMI. At AMI, he led the Underwriting and Claims Team responsible for the underwriting and claims administration for the construction and erection of the STAR and Putra Light Rail Transit Insurance Programme, led the growth of the company from a gross premium level of RM80 million to RM 150 million with consistent profitability over 6 years period, led the establishment of a subsidiary company, Asia Pacific Risk Management Centre (APRMC) and strategically established new divisions to create synergy and niche market.

At Sterling, he had developed and pioneered the insurances for power plant and large industrialized risks particularly in mega construction projects, including Malakoff Corporation Group, Sarawak Power Generation Sdn Bhd, Jimah Energy Ventures Sdn Bhd, C.T. Power Limited (Mauritius), Astronautic Technology Sdn Bhd, Indah Water Konsortium and Malaysian Resources Corporation Bhd.

Through the years, he has successfully established Sterling as the Premium Independent Power Plant (IPP) broker in the insurance and reinsurance market. He is expanding its portfolio into a more specialised industry i.e. Aviation, Marine Hull and Space.

In the field of training and ICT, he is the owner and director of Ultis Asia Sdn Bhd (Ultis Asia), an IT company that operates as an outsource provider offering to the market a comprehensive employee benefits solution comprising from business consultancy to software application and IT Infrastructure. Ultis Asia is a collaboration with Scion Global Sdn Bhd, a subsidiary of Patimas Computer Berhad comprises of IT experts with wide and varied experience from multinational insurance corporations as well as software Research & Development, bringing expertise in software application development and IT infrastructure. It introduces a sophisticated and comprehensive integrated business solution for insuring group employee benefits that would allow Underwriters, Corporations and SMEs to effectively and efficiently improve their overall processes.


Board Committee : • MemberofAuditandRiskManagementCommittee • MemberofNominationCommittee

Declaration : • Nofamilyrelationshipwithanydirectorand/ormajorshareholderoftheCompanyanddoesnot have any equity interest in the Company and its subsidiaries

• NoconflictofinterestwiththeCompany • Noconvictionsofoffences(otherthantrafficoffences,ifany)withinthepastfiveyears • Nopublicsanctionorpenaltiesimposedbyanyregulatorybodiesduringthefinancialyear



[12

DATO’ ISKANDAR MIZAL BIN MAHMOOD Independent Non-Executive Director


Date of Appointment : • 8November2017 – Chairman,Non-IndependentNon-ExecutiveDirector • 16April2019 – RedesignatedasIndependentNon-ExecutiveDirector

Qualification : • BSc.inBusinessAdministrationmajoringinAccountancy,BostonUniversity,USA

Working Experience : Dato’ Iskandar Mizal bin Mahmood has 29 years of experience in a multitude of companies ranging from multinationals to Government linked companies and spanning from investment banking to technology sectors at all levels from hands-on operations to leadership.

He started his career with an international audit firm Arthur Andersen & Co in 1989. He moved into merchant and investment banking serving Bumiputra Merchant Bankers Berhad and Commerce International Merchant Bankers Berhad (now known as CIMB Group). He joined Malaysia Airports Holdings Berhad (MAHB) in 1999 to undertake the Initial Public Offering and Listing of MAHB on Bursa Malaysia and assumed other responsibilities such as Corporate Finance, Strategic Planning, Business Development and Investor Relations.

In 2003, Ministry of Finance Malaysia and Khazanah Nasional Berhad appointed him to helm the leadership of Malaysian Technology Development Corporation Sdn Bhd. He was later appointed in 2005 to helm the leadership of Malaysian Biotechnology Corporation Sdn Bhd, one of the Government of Malaysia’s key technology initiatives at that time. He then ventured into the private education sector in 2011 by partnering with Manipal Education Global of India to set up Manipal International University in Malaysia. He also served as the Group Chief Executive Officer of Pos Malaysia Berhad in 2013 before taking on the role of Managing Partner and Director of a renowned local consulting firm, Ethos Consulting. He was on the Investment Panel Committee of Lembaga Tabung Haji (TH) from 2016 until 2018.

He was the Group Chief Executive Officer of Granatum Ventures Sdn Bhd, a wholly-owned company of Khazanah Nasional Berhad from July 2017 to January 2019.

Directorship of Listed Issuers and : • 16May2012 – GlobetronicsTechnologyBerhadPublic Companies

Board Committee : None



year



[13


DATUK ADI AZUAN BIN ABDUL GHANINon-Independent Non-Executive Director


Date of Appointment : 26February2004 – Non-IndependentNon-ExecutiveDirector

Qualification : • BSc.(Hons)AccountingfromQueen’sUniversityofBelfast,UK • FellowMemberoftheAssociationofCharteredCertifiedAccountants,UK,ACCA(FCCA) • MemberofMalaysianInstituteofAccountants(MIA)

Working Experience : Datuk Adi Azuan bin Abdul Ghani started his professional career in the auditing and accounting fields with PricewaterhouseCoopers, Kuala Lumpur in 1996 and was principally involved in the provision of audit and accounting services, mainly to banking and financial institutions before joining Lembaga Tabung Haji (TH) as the Divisional Head of Group Accounts in July 2002. Currently, he is the Chief Operating Officer of TH.


Board Committee : • ChairmanofRemunerationCommittee • MemberofAuditandRiskManagementCommittee


does not have any equity interest in the Company and its subsidiaries • NoconflictofinterestwiththeCompanyotherthandisclosedunderAdditionalCompliance

Information Disclosure (Recurrent Related Party Transactions) in the Annual Report • Noconvictionsofoffences(otherthantrafficoffences,ifany)withinthepastfiveyears • Nopublicsanctionorpenaltiesimposedbyanyregulatorybodiesduringthefinancial

year



[14

ANIS ZUHANI BINTI AHMADNon-Independent Non-Executive Director

Female / 48 / Malaysian

Date of Appointment : 19November2015 – Non-IndependentNon-ExecutiveDirector

Qualification : • B.Ed.TESL(Hons)fromUniversitiKebangsaanMalaysia • MasterinBusinessAdministrationfromUniversitiTeknologiMara(UiTM)

Working Experience : Anis Zuhani binti Ahmad has vast experience working in the private sector, holding key positions in several organisations including as a General Manager in Maju Holdings Group of Companies and Assistant General Manager in Bank Islam Malaysia Berhad. She has more than 15 years of extensive experience in Strategic Planning and Integrated Communication Management. She is now the General Manager, Group Public Affairs and Corporate Communications with Lembaga Tabung Haji (TH) since 2012. She is also a member of TH Nomination Committee.


Board Committee : Member of Nomination Committee


does not have any equity interest in the Company and its subsidiaries • NoconflictofinterestwiththeCompanyotherthandisclosedunderAdditionalCompliance

Information Disclosure (Recurrent Related Party Transactions) in the Annual Report • Noconvictionsofoffences(otherthantrafficoffences,ifany)withinthepastfiveyears • Nopublicsanctionorpenaltiesimposedbyanyregulatorybodiesduringthefinancial

year



[15


A. SHUKOR BIN S.A. KARIMGroup Managing Director and Chief Executive Officer


Date of Appointment : • 15June2010 – IndependentNon-ExecutiveDirector • 1April2012 – RedesignatedtoExecutiveDirector • 1December2012 – RedesignatedtoGroupManagingDirectorandChiefExecutive

Officer

Qualification : BSc. (Honours) in Computation from the University of Manchester, Institute of Science and Technology, UK

Working Experience : A. Shukor bin S.A. Karim began his career with the Government of Malaysia, Statistics Department in 1979. He later joined Sapura Group in 1982 where he was one of the founding members of Sapura Information Technology (IT) and developed Sapura’s IT business to be one of Malaysia’s biggest IT company with more than 1,000 employees in ASEAN and revenues exceeding RM600 million per annum in the late 1990s with more than 20 subsidiaries involved in various aspects of the IT industry, from sales and distribution, systems integration to software development and IT education.

He was involved in many high profiles IT projects in Malaysia and abroad. Amongst others, he was the Managing Director of STH Consortium which implemented the Total Airport Management System in KLIA. He was also involved in the Design and Implementation of the Cable plant for KLCC and in E-Government projects for the implementation of Generic Office Environment for the Government of Malaysia.

He was an Executive Director in Telecom Smart School Sdn Bhd, which implemented the Smart School Project for the Ministry of Education in Malaysia. He was directly involved in the setting up of the Asia Pacific Institute of Information Technology (APIT) (now known as Asia Pacific University (APU)) which is now one of Malaysia’s biggest IT education institute. He was deeply involved in the development of the IT Industry in Malaysia and served as Chairman of Persatuan Industri Komputer Dan Multimedia, Malaysia (PIKOM) from 1993 to 1995. He also served as Director in the Multimedia Development Corporation (now MDEC) for 2 years in the mid 1990s.

He was the Chairman of Packet One Networks (Malaysia) Sdn Bhd, (now known as Webe Digital Sdn Bhd (Webe)) a wholly owned subsidiary of Green Packet Berhad from 2011 to 2014.

Directorship of Listed Issuers and : 21May2008 – GreenPacketBerhad Public Companies

Board Committee : None



year



[16

KEY SENIOR MANAGEMENT’S PROFILE

A. SHUKOR BIN S.A. KARIMGroup Managing Director & Chief Executive Officer

Please refer Profile of Directors on page 15.

KAREN YAP PIK LIChief Financial Officer

Female / 46 / Malaysian

Date of Appointment : 1January2010 – ChiefFinancialOfficer

Qualification : • DiplomainCommerce(ManagementAccounting)fromKolejTunkuAbdulRahman • AssociateMemberoftheCharteredInstituteofManagementAccountantsUK,(CIMA)

(ACMA) • CharteredGlobalManagementAccountant(CGMA)fromtheAssociationofInternational

Certified Professional Accountants • CharteredAccountantoftheMalaysianInstituteofAccountants(MIA)

Working Experience : Karen Yap Pik Li began her career with the Finance Department of formerly Lityan Holdings Berhad on 1 September 1995 as an Accounts Executive and in the ensuing years, held various positions including General Manager of Corporate Services. She has more than 23 years of experience and involvement in the accounting, finance, procurement, businesses, project operations and all the corporate exercises and restructuring undertaken by the Group to date.

She is responsible for the management of the financial and commercial aspects of the Group’s

business and operations and overseeing the corporate functions and shared services of the Group.

Directorship of Listed Issuers and : None Public Companies

[17


Key Senior Management’s Profile

DR. NAS TAMIMI BIN IBRAHIM Chief Technology Officer


Date of Appointment : 4April2017 – ChiefTechnologyOfficer

Qualification : • BSc.inComputerScience(FirstClassHonours)fromUniversitiTeknologiMalaysia • Doctorate inManagement InformationSystems fromUniversity ofBradford,United

Kingdom

Working Experience : Dr. Nas Tamimi Bin Ibrahim started his career in 1986 as Analyst Programmer and later promoted to Systems Administrator at Malaysian International Shipping Corporation Bhd (MISC) before joining Telekom Malaysia (TM) in 1990. In TM he was appointed as Senior Systems Analyst and later promoted to Systems Manager in charge of the implementation of Corporate Information Data Warehouse and Executive Information Systems (EIS) before pursuing his Doctorate study in 1994.

Upon completion of his Doctorate study in 1997 he was appointed as Head of Consultancy and Customer Solution where he is primarily responsible for providing total customer solution and consultancy services for major customers of TM. He has successfully managed and implemented several customer solutions.

In 1999, he was appointed as the Project Director of TM’s subsidiary namely Telekom Smart School Sdn Bhd (TSS), where he was responsible delivering Smart School Integrated Solution for MSC Flagship Application for the Ministry of Education. He was later promoted to be the Chief Executive Officer of TSS from 2003 until 2007.

After serving TM/TSS for about 18 years, in January 2008, he left TM/TSS and joined a Joint Venture company as Project Director cum Chief Operating Officer (COO) responsible for securing and rolling out of e-Tanah project. In June 2009, he again moved on and worked for iLaunch Sdn Bhd as Project Director cum COO mainly responsible for e-Tanah pilot project recovery and operations in Penang.

HejoinedThetaEdgeBerhadin2012asSeniorGeneralManager–SpecialProjects.Heisnow heading the Solution Delivery division mainly responsible in delivering the IT projects undertaken by the Group.

Directorship of Listed Issuers and Public Companies : None

[18

Key Senior Management’s Profile

OTHMAN BIN OMARSenior Advisor


Date of Appointment : 30September2010 – ChiefOperatingOfficer 1January2019 – RedesignatedtoSeniorAdvisor

Qualification : • MasterinBusinessAdministrationfromUniversityofStrathclyde,UnitedKingdom • BSc.InAgribusinessfromUniversitiPertanianMalaysia

Working Experience : He served the Malaysian Public Service for over 15 years since 1981. He started with Malaysian Industrial Development Authority (MIDA) (1981) involved in formulation of investment policy and promotion of foreign director investment. He served Ministry of International Trade and Industry (MITI) (1983-1996) and held various positions including Deputy Commissioner General, Malaysia Pavilion Universal Exposition Seville Spain, Director, Malaysia Pavilion Taejon World Expo Republic of Korea and Principle Assistant Director, International Trade in charge of European Union & Asean countries.

He joined formerly Lityan Holdings Berhad (Lityan) in 1996 as General Manager, Investment and later was appointed as the Chief Executive Officer, Lityan (Philippines) Inc. (LPI) from 1998 to 2003, mainly overseeing the operation of Public Phones in Philippines with Globe Telecom Philippines. He was re-designated to Senior General Manager in Lityan in 2003 focusing on main project implementation, in all government agencies amongst others SPEKS, SAGA and ANGKASA.

He has retired as the Chief Operating Officer of the Company. However, he continues to serve the Group in a senior advisory capacity to ensure continuity on several large key projects and initiatives.


Save as disclosed, all the Key Senior Management have no family relationship with any Director and/or major shareholder of the Company, have no conflict of interest with the Company, have not been convicted of any offence within the past five years and have not been imposed any penalty by the relevant regulatory bodies during the financial year 2018.

[19


FIVE (5) YEARS FINANCIAL HIGHLIGHTS

2013 2014 2015 2016 2017 2018

FINANCIAL RESULTS

Revenue RM’000 94,903 98,319 150,482 136,316 90,453 70,469

Gross profit RM’000 6,123 8,050 24,810 23,889 13,807 11,909

Gross profit % % 6% 8% 16% 18% 15% 17%

Profit/(loss) before net finance costs, taxation, depreciation, allowances and other non cash items

RM’000 (3,176) (2,889) 12,632 15,926 6,858 4,805

Profit/(loss) before financecosts and taxation

RM’000 (7,609) (6,765) 3,013 3,229 2,161 (1,229)

Finance costs RM’000 403 355 580 1,530 722 342

Profit/(loss) for the year RM’000 (8,017) (7,130) 2,294 1,657 1,391 (1,608)

Basic Earnings/(loss) per share Sen (7.48) (6.65) 2.14 1.55 1.30 (1.50)

FINANCIAL POSITION

Total assets RM’000 86,362 82,450 137,882 98,829 90,887 79,507

Total liabilities RM’000 15,081 18,299 71,437 30,725 21,392 11,620

Net assets RM’000 71,281 64,151 66,445 68,104 69,495 67,887

Number of ordinary sharesin issue

‘000 107,241 107,241 107,241 107,243 107,243 107,243

Net assets per share RM 0.66 0.60 0.62 0.64 0.65 0.63

Cost bearing borrowings RM’000 3,009 4,207 49,136 11,951 3,924 754

Gearing 0.04 0.07 0.74 0.18 0.06 0.01

SHARE PERFORMANCE

Year high RM 0.58 0.65 0.48 0.48 0.68 0.55

Year low RM 0.22 0.20 0.23 0.24 0.25 0.24

Year close RM 0.39 0.33 0.28 0.29 0.46 0.27

Trading volumefor the year

’000 10,028 22,204 12,182 18,051 108,726 22,271

Market capitalisation RM’000 41,824 35,390 30,027 31,100 49,332 28,956

Price to book 0.59 0.55 0.45 0.45 0.71 0.43

[20

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW OF GROUP’S BUSINESS AND OPERATIONS

Theta Edge Berhad is an investment holding company with core business activities undertaken through its wholly-owned subsidiaries (the Group). The Group’s business activities comprise of Information Technology (IT) system integration (SI) works and provision of telecommunication engineering and communication services in the Technology, Media and Telecommunication (TMT) industry. The Group’s business is primarily in Malaysia. The Group has no significant diverse business outside the TMT industry.

The IT SI work has been the Group’s main core business for the last thirty five (35) years. SI works typically comprise of end to end deliverables from feasibility studies up to post project support and maintenance. The customers are mainly the Government ministries and agencies as well as other government linked companies.

The telecommunication segment works involves the provision of mechanical, electrical (CME) works and engineering services to the local telecommunication companies and to the multi-national telecommunication equipment vendors.

The Group through one of its wholly-owned subsidiary company possesses Network Facilities Provider (NFP), Network Service Provider (NSP) and Application Service Provider (ASP) licenses from the Malaysian Communications and Multimedia Commission (MCMC) which business includes undertaking Universal Service Provision (USP) projects and provision of satellite communication services.

The Group is also involved in the provision of green technology solutions which focuses on energy-savings solutions for corporates and organisations.

The mobility segment involves the provision of mobile communication services under the brand Mukminfon, a co-brand with a local Mobile Virtual Network Operator. As part of the focus to create and build on Intellectual Properties, the Group has designed and developed a suite of applications (Haj Mobility) to digitalise the Haj operations, to provide better experience for the benefit of pilgrims and improve operational efficiencies for Lembaga Tabung Haji (TH) during the Haj operations in Malaysia and the Holy land. Started in 2014 (1435H) Haj season, Haj Mobility is a first of its type in the world that focuses on Crowd Management and mass movement of pilgrims.

FINANCIAL RESULTS

Statements of Profit & Loss

FY2018 saw the effective date for the adoption of the new Malaysian Financial Reporting Standards (MFRS) mainly the MFRS 15, Revenue from Contracts with Customer and MFRS 9, Financial Instruments. The adoption of both MFRS did not have material impact to the financial statements.

[21


The Group posted a lower revenue of RM70.5 million as compared to RM90.5 million previously. The higher revenue in FY2017 of about 22.1% was due to the completion of material project milestones from SI projects in that year.

The current year shows a slight improvement in the gross margin as well as lower selling and distribution and administrative expenses due to lower manpower costs and cost cutting efforts. The higher other operating income in FY2017 was mainly due to bad debts recovered of approximately RM0.7 million and reversal of provision for litigation of RM2.6 million which was made in the preceding years.

The Group also written off the development costs for the Enterprise Hajj Registration and Management System (EHRAMS) of RM1.2m in the current year due to uncertainties of the commercialization of the application.

The income from short term investment was higher at RM1.03 million compared to RM0.7 million in FY2017 due to higher cash balances during the financial year.

Correspondingly, the Group reported a loss for the year of RM1.6 million for FY2018 against profit for the year of RM1.4 million in FY2017.

Statements of Financial Position

Total non-current assets of the Group had reduced by 40.0% from FY2017 mainly due to the write off of the development cost of RM1.2 million and the depreciation of plant and equipment which largely comprise of equipment for rental and services to customers. The equipment was depreciated in tandem with the duration of the contracts which had mostly been completed during the financial year.

The sharp drop of inventories and work in progress of 65.3% represents work that has been delivered and accepted by customers. There was a marked improvement in debtor days which was also contributed by the part settlement by TH Heavy Engineering Berhad Group of RM3.1 million pursuant to the Creditors’ Scheme of Arrangement.

Correspondingly, the Group’s cash and cash equivalents was RM46.3 million compared to RM29.5 million in FY2017. Cash not used for operations was placed in short term deposits with licensed financial institution. Average profit from short term deposits during FY2018 was net of tax of 3.4% per annum.

The Group’s gearing is very low at 0.01. The bank borrowings as at the end of FY2018 were Hire Purchase facilities to fund the capital expenditure for the purposes of equipment rental and services projects.

Net assets per share as at 31 December 2018 was RM0.63, a 3.1% decline from RM0.65 per share in the corresponding previous year.

Management Discussion And Analysis

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OPERATING ACTIVITIES

The Group’s key focus in FY2018 was to build order book through leveraging on TH Group and external strategic collaborations, develop new business such as green technology as well as further enhance and expand existing intellectual properties. However, FY2018 was challenging amidst the changes in the socio-economic-political landscape and tax regime which affected project deliverables and customer acceptance. Margins in existing and new project awards were also affected due to rising costs.

Operating segments are monitored and reported separately based on revenue contribution.

System Integration Works

IT SI works remains the major contributor to the Group’s business contributing approximately 81.2% of the Group’s total revenue for FY2018, a slight drop from 83.2% in FY2017. The higher revenue in FY2017 was mainly due to the variation order relating to the “Projek Pelaksanaan Peluasan e-Tanah untuk Negeri Sembilan Dan Melaka” project as well as other land system related projects and the completion of material milestones for the provision of ICT and Security works for TH Hotel & Convention Centre (THHCC) in Sepang.

The Group’s major SI works contributors in FY2018 comes from TH for various IT supply and services and TH Properties Sdn Bhd Group, mainly for THHCC project which contributes approximately 37.0% and 16.1% respectively of the Group’s revenue. Total revenue contribution from TH Group for FY2017 was about 51.2%.

The project for the THHCC had been completed up to the Certificate of Practical Completion (CPC) stage and the project’s Defect Liability Period will end in FY2019.

The Group had also embarked on SI works relating to vocational training equipments. In FY2017 the Group had successfully completed the provision of hydraulics and pneumatics training equipment for a Government agency. In FY2018, the Group obtained another project relating to automotive training equipment for the same agency.

Telecommunication services

Telecommunication services revenue reduced by 12.8% as compared to FY2017. This segment contributes about 18.8% of the Group’s total revenue for FY2018, compared to 16.8% in FY2017. The expansion of CME and engineering services to a wider range of customers as well as continuous efficiency efforts resulted in minimal gross loss position.

The services include the provision of satellite broadband service for TH Mobile Service Community, a mobile service that provides facilities and services in rural areas for the convenience of TH’s depositors to obtain TH’s services.

[23


Green Technology

The Group is making inroads in this segment which contributed about 1.4% of the Group’s revenue which comprise of energy savings works and audit as compared to nil in the previous year.

Intellectual properties and mobility

The Group continued to enhance its Haj Mobility application. All modules including several enhancements were fully deployed for TH to use in the operations for the Haj season. The Group continues to promote the application to other local Umrah operators.

The mobile service Mukminfon is currently being used by the Company’s employees. The Direct Selling License from the Ministry of Domestic Trade and Consumer Affairs was obtained in June 2018 and sales effort commenced in July 2018. The Group was working on various value-added services such as prepaid Visa card, e-wallet and mobile payments to market niches such as migrant workers to facilitate remittance to their respective home countries.

This segment has yet to report significant revenue contribution during the year.

Manpower

The headcount of the Group as at the end of the financial year was 312 as compared to 353 in FY2017. The reduction of 11.6% was due to normal attrition of staff and completion of projects. This resulted in 9.0% lower personnel costs. The Group faced challenges in manpower retention and skillset gap in the current job market for ICT personnel. The Group embarked on an Executive Coaching program for selected employees identified as potential leaders in the organization as part of succession planning.

Certifications

Following the Occupational Health & Safety Management System standard OHSAS 18001:2007 obtained in the previous years, the Group had also obtained the Environmental Management System standard ISO 14001: 2015 for the Management ofProject for ICTandTelecommunicationservicesandQualityManagementSystemstandard ISO9001:2015 for theTelecommunication division during the financial year. These certifications would improve the profile of the Group in terms of quality of services as well as efficiencies in operations, promote professional culture and continuous improvements.

Award

Theta Technologies Sdn Bhd, the main subsidiary company of the Group had received recognition award from Petronas Dagangan Berhad (PDB) for the “Excellent Performance in Contract Execution” in conjunction with the “PDB & Partners Collaborate towards Excellence (PDB PaCE) 2018”. The Group’s relationship with PDB started with the supply of ICT equipment in 2005 and subsequently progressed to provision of Infrastructure and Cabling services.


[24

OUTLOOK

There are no major shift or changes to the Group’s strategies and action plans to focus on building annuity businesses and sustainable recurring revenues. The Group’s key focus in 2019 would largely remain the same as FY2018, which is tobuildtheorderbook,growin-houseintellectualproperties,profitabilityandcashflowsustainability.Thesecouldcomefrom strategic collaborations and partnerships, identifying viable and strategic acquisitions, enhance existing and develop newproducts,minimizingmismatchofcashflowexposureaswellascontinuousimprovementonoperationalefficiencies.The Group expects 2019 to remain very competitive with pricing to be the main factor as value proposition. We hope that the stabilization of the economic and political environment may provide a positive impact to the Group going forward. On this basis, we expect a better financial performance of the Group for FY2019

BUSINESS AND OPERATION RISKS

The Group do not expect any exceptional risks to arise other than the normal operational risks associated to its current business undertaking. The Group has taken the necessary steps to protect itself and to mitigate the risks as and when it occurs.

The challenges in getting the right certain skillsets and manpower retention is expected to remain which may affect the deliverables of projects. The Group expect to reduce these challenges by further developing and hone the existing human capital.

The Group is also dependent on partners to maintain deliverables of certain contractual obligations. We reduce the risk of failures by partners by only selecting credible and capable partners in terms of experience and track record in the industry.

Changes in Regulations and Laws may have risk to the business and reporting and difficult to anticipate. Based on the assessment of the upcoming changes in the MFRS, the Group does not expect the application of the MFRS 16, Leases effective 1 January 2019 to have significant impact on its financial statements.

DIVIDEND POLICY

Currently there is no formalised Dividend Policy. The Group is striving to maintain its profitability. The Group expects to formalize a Dividend Policy in the coming medium term.


[25


CORPORATE STRUCTURE

The Group’s wholly-owned subsidiary, TH2.0 Sdn Bhd (“TH2.0”) had on 2 April 2018 entered into a Share Sale and Purchase Agreement (“SSPA”) with Ijara Management Company (“IMC”), a management service company, established by the Islamic Corporation for the Development of the Private Sector (“ICD”) under the laws of the Kingdom of Saudi Arabia, for the disposal of TH2.0’s entire 3,000,000 Ordinary Shares, representing a 50% of the equity holding in Taha Alam Sdn Bhd (“Taha Alam”) to IMC for a total consideration of RM1.00 only (“Disposal”). Following the Disposal, Taha Alam is no longer an associate of the Group.

CORPORATE DEVELOPMENT

The Group welcomes Dato’ Noordin bin Sulaiman as the new Chairman of the Board in April 2019. Dato’ Noordin’s wide experience at various Federal, State and local governments would provide the Board and Group with diverse perspective and guidance. Correspondingly, Dato’ Iskandar Mizal bin Mahmood was re-designated as independent director. His continued presence in the Board will provide the added independent oversight. Puan Anis Zuhani bin Ahmad had informed the Board that she will not seek re-election and will leave as a Board member at the conclusion of the coming Annual General Meeting. Puan Anis had been a valued Board member and we would like to convey our appreciation and thank you for the unwavering support and contribution rendered during her tenure.

On a sadder note, Encik Rahmat bin Harun, the former Managing Director of the Group and the founder of Theta Technologies Sdn Bhd (formerly Konsortium Jaya Sdn Bhd), the Group’s main subsidiary company, passed away during the financial year. Our heartfelt condolences to the family of Encik Rahmat on the loss of a man who was pivotal to the incorporation of the Group.

ACKNOWLEDGEMENT

I would like to thank our shareholders, Regulatory Authorities, customers, business partners and associates, main bankers and financial institutions and especially to all of our employees for their perseverance and unwavering support given to the Group. I would also like to express my appreciation to my fellow members of the Board for their invaluable guidance, efforts and support.

Shukor KarimGroup Managing Director & Chief Executive Officer


[26

SUSTAINABILITY STATEMENT

STAKEHOLDER ENGAGEMENT

We continued the engagement with our stakeholders actively throughout the year as part of our sustainability assessment process. Engagement with stakeholders allow us to gain more complete understanding of our materiality issues affecting the Group.

STAKEHOLDER ENGAGEMENT APPROACH

Direct interaction through Annual General Meeting

Timely announcement of quarterly results

Website at www.theta-edge.com

Senior Independent Non-Executive Director

Engagement with employees on an on-going basis at all levels

Community volunteering work

Health, Safety and Environmental Day

Managed by the relevant departments to ensure the adherence with regulatory requirements and expecta-tions

Participated in Government and Regulatory events

Engagement at all levels, including directors, manage-ment and operations

Call centre for customer care

Training and work exposure for internship students

Corporate Social Responsibility programmes

Communication at all levels with the business partners on a regular basis to better understand their needs and concerns

Investors & Shareholders

Employees

Business Partners

Government and Regulators

Customers

Communities

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MATERIAL TOPICS FOR THETA GROUP

The relevant GRI Standards Disclosure and the UN Sustainable Development Goals were selected based on the material topics identified. The Group is working towards adopting the GRI Standards core options in the future reporting.

ECONOMIC

ENVIRONMENTAL

SOCIAL

Customer Satisfaction

Product and Service Quality

Customer Data Privacy and Protection

Supply Chain Management

.

.

.

.

.

.

.

.

. .

..

. .

.

..

.

.

.

.

.

.

.

.

.

205 - Anti Corruption 9 - Innovation and Infrastructure

Climate Change and Carbon

302 – Energy

307 - Environmental Compliance

7 - Sustainable Energy

13 - Climate Action

17 - Partnership for Goals

Diversity

Training and Education

Employee Health and Safety

401 – Employment

403 - Occupational Health and Safety

404 - Training and Education

405 - Diversity and Equal Opportunity

413 - Local Communi-ties

418 - Customer Privacy

3 - Good Health and Well Being

5 - Gender Equality

8 - Decent Work

10 - Reduced Inequali-ties

11 - Sustainable Com-munities

SUSTAINABILITY PILLARS MATERIAL TOPICS GRI STANDARDSDISCLOSURE

UN SUSTAINABLEDEVELOPMENT GOALS

Sustainability Statement

[28


HEALTH, SAFETY & ENVIRONMENTAL

Health, Safety & Environmental (HSE) Prevention & Response Process

Accident Response Process

Identify risk factors Set countermeasure and improvement

Monitor

•Non-compliancewithHSEpolicy•Lackofproperon-siteandoff-

site management

•Setcontrolmeasurestocomplywith HSE policy

•ConductHSEtraining,properinformation and education to employees and stakeholders

•Evaluateperformance•Policyandprocesses•Conducton-siteandoff-siteaudit

on periodic basis•Yearlyauditbyexternalparties

Accidents Occurrence

Emergency Response

Accident Investigation

Recovery Actions Reoccurrence Prevention

•Identifytypeand risk level of accident

•Organiseanemergency HSE meeting

•Takeemergencyevacuation/first aid action

•Analysethecause of accident

•Takeactionto prevent reoccurrence

•Setandimplement recovery plans

•Executebusinesscontinuity plans

•Setplansto prevent reoccurrence

•Reviewtheeffectiveness of the accident response system

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The Group has been certified with OHSAS 18001:2007 for Occupational Health and Safety Management System and ISO 14001:2015 for Environmental Management System with the objective to provide healthy and safe operations and sustainable development, management and maintenance of all environmental practices and performance in the Group activities, processes and services.

The Group has established a Health, Safety and Environmental Committee (HSE) to oversee and manage the procedure identifying the hazard and environmental aspect by assessing the risk on the environmental impact and to determine the risk control measure. Internal audit by the HSE committee is regularly conducted to ensure compliance with the HSE policy. As for the surveillance audit, a certified body, National Institute of Occupational Safety and Health (NIOSH), accredited by Standards Malaysia is appointed to perform the audit annually.

As and when required, the external interested party such as, Department of Occupational Safety and Health (DOSH), Department of Environment (DOE), NIOSH or consultant will be consulted for advise.

The Emergency Response Team that was set up by the HSE is responsible to provide guidance to employees on preparation and actions needed for emergency situations in order to minimise severity and risks to employees, public and property and to respond to actual emergency situations accordingly. The structured procedures has been adopted in the following areas :-

• PlanningandIdentificationonthepotentialemergencysituation• NotificationonEmergencysituation• EmergencyResponseTeamresponsibility• FireandExplosionhandling• Evacuationprocess• RepairandRecoveryPlan• RiskPrevention• Fire,SpillageandEvacuationDrilltraining

The procedures on the incident reporting and investigation as well as prevention measures applies to any incident involving employees, contractors, public and visitors while at the workplace.

Energy Consumptions

The Group has created the awareness to reduce and manage the electricity. The electricity consumptions that monitored from the fourteen (14) offices including warehouse as per below highlighted an improvement of energy consumptions with a reduction of 6% in 2018 that equivalent to 22,785 kWh.

350,000 360,000 370,000 380,000

390,000 2017 388,749

2018 365,963

kWh consumptions


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SOCIAL

1) Employee

Our employees are the backbone of our operations and are directly responsible for all our business activities. Building a strong and sustainable talent pool is a key priority in our business strategy. We are giving the assurance to our customers that our business processes are served by a competent and qualified personnel. While academic qualifications are not the only determinant proficiencies, having a majority of employees with tertiary qualifications and work experiences enable us to establish a benchmark of talent.

• Human Capital Development Human capital is one of our key success factors and our performance depends on the performance of its

employees. We provide valuable training and development opportunities for employees. During the financial year ended 31 December 2018, 91 employees attended various trainings in the areas of technical trainings, technology updates and soft-skills.

As part of succession planning, the Group embarked on an Executive Coaching program for selected employees identified as future leaders of the Group.

• Employee Recruitment Employment is based on the Group’s requirements and needs, and are matched to individual work experiences

and qualifications.

• Diversity Diversity not only comes in the form of culture, race, and gender but also includes elements such as socio-

economic background, education level, geographic location and many others. A diversed base of perspectives also helps us better serve our customers who also come from diversed backgrounds. Diversity, therefore, drives the sustainability of our business as well as of our marketplace. It also helps us to better engage with our diversed marketplace thereby helping us better support and meet our customer needs.


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2018 2017

Total employees by gender

Male 186 220

Female 126 133

Total employees 312 353

Total employees by employment type and gender

Permanent (Male) 42.9% 45.3%

Contract (Male) 16.7% 17.0%

Permanent (Female) 30.1% 25.8%

Contract (Female) 10.3% 11.9%

Total employees by age group

< 30 years old 27.9% 32.3%

30 - 49 years old 63.1% 60.3%

≥ 50 years old 9.0% 7.4%

New employee hires by age

< 30 years old 8.4% 5.9%

30 - 49 years old 3.5% 7.4%

≥ 50 years old 0.0% 0.3%

11.9% 13.6%

Employee Indicators


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2018 2017

New employee hires by gender

Male 6.1% 8.2%

Female 5.8% 5.4%

11.9% 13.6%

Employee turnover by age

< 30 years old 13.1% 7.1%

30 - 49 years old 11.9% 12.4%

≥ 50 years old 1.3% 0.6%

26.3% 20.1%

Employee turnover by gender

Male 18.0% 11.3%

Female 8.3% 8.8%

26.3% 20.1%

Total workforce ethnicity

Malay 94.5% 94.0%

Chinese 4.2% 3.7%

Indian 1.3% 1.7%

Others 0.0% 0.6%

Employee Indicators (cont’d)


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2) Community

The Corporate Social Responsibility program is a platform to empower and enrich our communities and, by doing so, giving back to the community is a way of showing our appreciation.

The Group provides practical learning and workplace application experience opportunity for internship students. These internship programs are for a minimum of two (2) months and up to six (6) months in duration. In 2018, the Group has trained thirty four (34) students with varied skill and expertise from twelve (12) Universities and Colleges. They were trained on-the-job experience and exposed with wide variety of tasks and responsibilities. Four (4) of the students has been hired to serve the Group.

During the year, the Group has donated complete sets of desktop computer to Rumah Amal Daerah Yan who provide a special education for students with special educational needs. The Group also contributed 42” plasma display television to few identified ‘surau’ in Klang Valley for the purpose of indoor digital media.

TOTAL STAFF 2018 HEADCOUNT M F Malay Chinese Indian

Senior Management 1.3% 4 3 1 3 1 0

Heads of Business Units 1.0% 3 3 0 3 0 0

Managers 16.3% 51 37 14 42 7 2

Executive 75.3% 235 132 103 229 5 1

Non-Executive 6.1% 19 11 8 18 0 1

312 186 126 295 13 4

59.6% 40.4% 94.5% 4.2% 1.3%


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ECONOMIC

1) Innovation

During the year, the Group had implemented the eBadge pilot project for Lembaga Tabung Haji for 6,000 pilgrims in the 1439H Haj Season. Called “Aplikasi Pengesan eLPH” the high-tech tag is developed by the team of Research & Development of the Group to keep track on the movements of Malaysian haj pilgrims in the Holy Land and ensure pilgrims safety, especially during the Masyair period which involved the movement of a massive number of people from Makkah to Arafah, Muzdalifah and Mina.

The Group had a wide media coverage on the effectiveness and the benefit of the eBadge. eBadge has also been deployed to the Group for attendance tracking.

2) Customer

The Group specialises on a wide range of Information Technology solutions, Telecommunication Engineering Services and Green Technology, facility and energy management systems. The Group is committed to fulfil the customer requirements both from the government as well as private sector. On top of having the call centre for the existing customer queries, dedicated Project Managers has been assigned to manage the customer’s expectations to ensure the service quality is prioritised.

3) Corporate Governance

Good governance is an essential element of sustainability, and has been embedded throughout all our operations with policies in place stipulating the need for responsible business conduct. The Group is committed in providing the investment community and the public with timely, complete and accurate updates of the Group based on the principles of transparency, integrity and good corporate governance. Our corporate website aims to deliver comprehensive information in full compliance with the Best Practices in Corporate Disclosure, enabling our stakeholders to gain a better understanding of the Group’s performance and operations.


[35


4) Code of Business Ethics

The Group adopted the Code of Business Ethics published by its holding company, Lembaga Tabung Haji. The Code of Business Ethics is published in the Company’s website at www.theta-edge.com. The Code of Business Ethics also covers whistle-blowing provisions which provides the policy and information on the appropriate feedback channels to facilitate whistle-blowing. The Group has always been committed in upholding the highest standards of integrity, transparency and good governance in its operations. The Group had on 13 April 2012 signed the Malaysian Corporate Integrity Pledge. The Group pledges that it will abide by the Anti-Corruption Principles in the conduct of its business and operations with all stakeholders.

5) Corporate Disclosure Practices

The Group recognizes the importance of timely dissemination of accurate and material information relating to business and operations to stakeholders. The Group adheres to the disclosure requirements under the Listing Requirements of Bursa Malaysia Securities Berhad (“BMSB”), the Malaysian Financial Reporting Standards and any other relevant Acts, Laws or Regulations.

6) Corporate Website

Other than the public announcements through BMSB, the Group’s website at www.theta-edge.com provide the public with information on the Group and other information including a channel for stakeholders to submit queries to the Group via this website.


[36

Annual Operating Plan 2018

25th Annual General Meeting

Health, Safety & Environmental

Campaign

ACTIVITIES

[37


Annual Fire Drill/Evacuation Exercise

Hari Raya gathering with Staff

Charity program with Rumah Amal Yan Special Needs Children

Activities

[38

CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of Directors (“the Board”) of Theta Edge Berhad (“Company”) is committed to a corporate culture that is based on the principles of corporate governance and is practised by the Company and its subsidiaries (“the Group”). The Board is fully accountable to the shareholders and stakeholders, and will be bound to continuously enhance the level of corporate governance in the management of the Group’s business, its financial performance for the achievement of business profitability, preservation of long term shareholder’s value and the protection of shareholders’ interests, without failing to take into account the interests of other stakeholders.

The Group has applied the following three main Principles in the Malaysian Code on Corporate Governance (“MCCG”) (“the Code”):-

Principle A - Board Leadership and effectivenessPrinciple B - Effective Audit and Risk Management, andPrinciple C - Integrity in corporate reporting and meaningful relationship with stakeholders

The Group’s Corporate Governance Framework is built principally on the following requirements and guidelines:-

• TheprinciplesandrecommendationsofMCCG• ThecorporategovernancerequirementsoftheMainMarketListingRequirements(“ListingRequirements”)ofBursa

Malaysia Securities Berhad (“Bursa Securities”)• Allrelevantlawsandregulations

The manner and extend of compliance are stated as follows:-

PRINCIPLE A - BOARD LEADERSHIP AND EFFECTIVENESS

I. BOARD RESPONSIBILITIES

Practice 1.1 Roles and Responsibilities of the Board

The Board provides the overall governance as well as stewardship and oversight for the direction and management of the Company and the Group.

In discharging its duties and functions effectively, the Board delegates certain responsibilities to its Board Committees. All committees have written terms of reference. These Committees are formed in order to enhance business and operating efficiency. The Chairman of the respective Committees will report to the Board the outcome of the Committees Meetings for the Board’s consideration and final decision. Minutes of the respective Meetings will be presented to the Board for its information. The Board retains full responsibility for the direction and control of the Company and the Group.

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Corporate Governance Overview Statement (Cont’d)

PRINCIPLE A - BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

I. BOARD RESPONSIBILITIES (CONT’D)

Practice 1.1 Roles and Responsibilities of the Board (Cont’d)

The Board establishes the vision and strategic objectives of the Group, directing policies, strategic action plans and stewardship of the Group’s resources. The Board’s roles and responsibilities amongst others include:-

(i) Reviewing, adopting and monitoring the Group’s strategic direction, annual business and operating plans and financial budgets;

(ii) Identifying and managing principal risks affecting the Group;(iii) Reviewing the adequacy and integrity of the Group’s management information systems, risk management

and internal controls;(iv) Reviewing and approving the quarterly and yearly financial results to ensure that they are fairly stated and

conform with the relevant regulations including acceptable accounting policies that result in balanced and understandable financial statements;

(v) Reviewing and approving material investment, acquisition or disposal of assets;(vi) Reviewing and approving the appointment, remuneration and succession plan for senior management; and(vii) Developing and implementing shareholders’ communication policy.

The Board reserves full decision-making powers on the following matters:-

(i) Conflict of interest issues relating to a substantial shareholder or a Director;(ii) Material acquisitions and deposition of assets not in the ordinary course of business in excess of RM1,000,000

in book value;(iii) Investment in capital projects;(iv) Authority levels in accordance with the Discretionary Authority Limit (‘‘DAL’’) to determine the matters reserved

for the Board, Board Committees or the Management;(v) Treasury policies;(vi) Risk management policies; and(vii) Key human resource issues.

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Practice 1.2 Roles of the ChairmanPractice 1.3 Separation of roles of Chairman and Group Managing Director and Chief Executive Officer

(“CEO”)

The roles of the Non-Independent Non-Executive Chairman and the CEO are mentioned in the Board Charter which is made available in the Company’s website www.theta-edge.com.

The Chairman and the CEO are held by different individuals. The Chairman is primarily responsible for ensuring Board’s effectiveness and conduct. The Chairman leads the Board in setting the Group’s key policies and direction, ensures effective operation of the Board and is the spokesperson for the Board.

The CEO is responsible for the day-to-day running of the business and implementation of the policies, strategies and decisions adopted by the Board. The CEO is assisted by the Senior Management and heads of each division in implementing and running of the Group’s day-to-day business operations.

The independent directors provide unbiased and independent views to safeguard the interests of shareholders. The independent directors are actively involved in the various Board Committees and contribute significantly to areas such as performance monitoring and enhancement of corporate governance and controls. They provide a broader view, independent assessment and opinions on management proposals presented by the CEO and Management.

Practice 1.4 Company Secretary

The Company Secretaries, Cynthia Louis and Chew Mei Ling are Associate members of the Malaysian Institute of Chartered Secretaries & Administrators (MAICSA).

The Company Secretaries whose appointment and removal are subject to the Board’s approval, attend all Board and Board Committee meetings. The Board has direct access to the advice and services of the Company Secretaries who are responsible to the Board for ensuring that the Board’s procedures are followed and that applicable rules and regulations are complied with.

In performing their duties, the Company Secretaries carry out, amongst others, the following tasks:-

• StatutorydutiesasrequiredundertheCompaniesAct,2016,MainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad(“BMSB”)andCapitalMarketandServicesAct,2007;

• FacilitatingandattendingBoardMeetingsandBoardCommitteeMeetings;• Maintainingrecordsforthepurposeofmeetingstatutoryobligations;• AssistingtheBoardwiththepreparationofannouncementsforreleasetoBMSBandtheSecuritiesCommission

Malaysia; and• RenderingadviceandsupporttotheBoardandManagement.


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Practice 1.5 Information and Support for Directors

Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors at least five business days in advance of board meetings unless in unavoidable circumstances. The Senior Management and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making.

Apart from the above, the Board members are supplied with information and reports on financial, operational, corporate, regulatory, business development and audit matters by way of board reports or upon specific request to enable them to discharge their duties and responsibilities. All Directors are notified of the corporate announcements released to BMSB, any amendment to BMSB Listing Requirements and any pertinent Regulatory changes. All Directors have access to the management and auditors for independent view and advice.

In furtherance of their duties, the Directors may seek independent professional advice if necessary, at the expense of the Company.

Meetings and Time Commitment

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilitiesasDirectorsoftheCompanyduringthefinancialyearended31December2018.Incompliancewiththe Listing Requirements, all the Directors do not hold directorships more than that prescribed under the Listing Requirements.Therewereeight[8]BoardofDirectors’Meetingsheldduringthefinancialyearended31December2018andthedetailsoftheattendanceoftheDirectors’MeetingsandCommitteesareasfollows:-

DirectorsBoard of Directors ARMC NC RC AGM

Dato’ Noordin bin Sulaiman (1) – – – – –

Mohamed Ridza bin Mohamed Abdulla 7/8 5/5 2/2 2/2 1/1

Dato’ Richard George Azlan bin Abas 8/8 – – 2/2 1/1

Abdul Halim bin Jantan 8/8 5/5 2/2 – 1/1

Dato’ Iskandar Mizal bin Mahmood 8/8 – – – 1/1

Datuk Adi Azuan bin Abdul Ghani 6/8 5/5 – 1/2 1/1

Anis Zuhani binti Ahmad 7/8 – 2/2 – 1/1

A. Shukor bin S.A. Karim (2) 8/8 – – – 1/1

Total Number of Meetings 8 5 2 2 1


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Practice 1.5 Information and Support for Directors (Cont’d)

Meetings and Time Commitment (Cont’d)

ARMC - Audit & Risk Management CommitteeNC - Nomination CommitteeRC - Remuneration CommitteeAGM - Annual General Meeting

Note :-(1) Dato’ Noordin bin Sulaiman was appointed as a Chairman to the Board on 16 April 2019.(2) A. Shukor bin S.A. Karim attended (by invitation) all the relevant Committee meetings in his capacity as the

CEO.

Main activities of the Board in year 2018

ThemainactivitiescarriedoutbytheBoardinyear2018aresetoutbelow:-

• Reviewedandapprovedtheannualreport,quarterlyresultsandfinancialstatements;• ReviewedandapprovedtheCompany’sannualoperatingplan,strategyandbudgets;• Receivedupdatesonriskmanagementandinternalcontrol;• ReceivedupdatesontheRecurrentRelatedPartyTransactionsbytheCompany;• Reviewedandvalidatedtheresultsofthe2017BoardEffectivenessEvaluation;• Reviewedthetermsofofficeandthecontribution,performanceandtheeffectivenessoftheBoardandindividual

directors, the ARMC, NC and RC and each member of the Board Committees to ensure that they have carried out their duties in accordance with their respective terms of reference; and

• ReviewedtheTalentandSuccessionManagementFrameworkforseniormanagementpositions.

Practice 2.1 Board Charter

The Company has in place a Board Charter that sets out, among others, the responsibilities, authorities, procedures, evaluations and structures of the Board and Board Committees, as well as the relationship between the Board with its management and shareholders. More information on the Board Charter can be found on the Company’s website at www.theta-edge.com.

The Board will review the Board Charter as and when necessary to ensure it remains consistent with the Board’s objectives and responsibilities, and all the relevant standards of corporate governance.

TheBoardCharterwaslastreviewedin14March2019.


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Practice 3.1 Code of Conduct and EthicsPractice 3.2 Whistleblowing Policies and Procedures

The Board observes the Directors’ Code of Ethics established by the Companies Commission of Malaysia. The Group adopts the Code of Business Ethics published by its holding company, Lembaga Tabung Haji (“TH”). The Code of Business Ethics is published in the Company’s website at www.theta-edge.com.

The Code of Business Ethics also covers whistle-blowing provisions which provides the policy and information on the appropriate feedback channels to facilitate whistle-blowing.

The Group has always been committed in upholding the highest standards of integrity, transparency and good governanceinitsoperations.TheCompanyhadon13April2012signedtheMalaysianCorporateIntegrityPledge.The Group pledges that it will abide by the Anti-Corruption Principles in the conduct of its business and operations with all stakeholders.

II. BOARD COMPOSITION

Practice 4.1 Board Composition and Independence

Board Composition

New Appointment Dato’NoordinbinSulaimanwasappointedastheChairman,Non-IndependentNon-ExecutiveDirectoron16April

2019.

Redesignation Dato’IskandarMizalbinMahmoodwasredesignatedasIndependentNon-ExecutiveDirectoron16April2019.

TheBoardcurrentlyconsistsofeight(8)memberscomprisingtheChairman,whoisaNon-IndependentNon-ExecutiveDirector,four(4)IndependentNon-ExecutiveDirectors,two(2)Non-IndependentNon-ExecutiveDirectorsandone(1) Executive Director.

TheBoardhascompliedwithParagraph15.02oftheListingRequirementswhichrequiresatleasttwo(2)directorsor one-third (1/3) of the Board, (whichever is the higher) to be Independent Directors. The presence of Independent Directors provides objectivity and independent judgment to decision making. Independent Directors currently comprise 50% of the Board members.

The presence of the Independent Directors, though not forming majority of the Board members, is sufficient to provide the necessary check and balance on the decision making process of the Board. The Board believes that the current composition is appropriate given the collective skills and experience of the Directors and Theta Group’s current size and nature of Theta’s business. Further, the Board is of the view that with the current Board size, there is no disproportionate imbalance of power and authority on the Board between the Non-Independent and Independent Directors. The Board will continue to monitor and review the Board size and composition as may be needed.


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II. BOARD COMPOSITION (CONT’D)

Practice 4.1 Board Composition and Independence (Cont’d)

Board Composition (Cont’d)

The Non-Executive Directors of the Company are independent of management and free from any business relationship which could materially interfere with the exercise of their judgment. They, particularly the Independent Non-Executive Directors, are actively involved in various Board Committees. They provide guidance, unbiased, fully balanced and independent and objective views, advice and judgment to various areas such as performance monitoring, enhancement of corporate governance and controls so as to safeguard the interest of shareholders and stakeholders and to ensure that the highest standards of conduct and integrity are maintained by the Group.

It is a mandatory practice to have the Directors concerned to declare their interests and abstain from the decision making process when a potential conflict of interest arises.

Annual Assessment of Independence

Criteria have been set to assess the independence of candidate for directors and existing directors based on the guidelines set out in the Listing Requirements.

On an annual basis, the Directors are required to confirm their independence by completing the independence checklist.

None of the Independent Director disclosed any relationships and/or transactions that could materially interfere with their independent judgements and decisions. The Board was satisfied with the level of independence demonstrated by all the Independent Directors.

Practice 4.2 and 4.3 Tenure of Independent Director

The Code recommends that the tenure of an Independent Director should not exceed a consecutive or cumulative termofnine(9)years.Uponcompletionofthenine(9)years,anindependentdirectormaycontinuetoserveontheBoard subject to his redesignation as a non-independent directors. In the event such Director is to be retained as an independent director, the Board must justify and seek annual Shareholders’ approval.

AtthelastTwenty-Fifth(25th)AnnualGeneralMeeting(“AGM”),theShareholdershadgiventheirapprovalforEncikMohamed Ridza bin Mohamed Abdulla (“Encik Mohamed Ridza”), whose term of office as Independent Director of theCompanyhadexceedednine(9)yearson7November2016toberetainedasanIndependentNon-ExecutiveDirector of the Company.

The Nomination Committee (NC) and the Board are confident that Encik Mohamed Ridza can be tasked to discharge his duties and responsibilities independently and objectively notwithstanding his tenure on the Board. The Company will seek its shareholders’ approval on the retention of Encik Mohamed Ridza as the Independent Non-Executive Director of the Company until the conclusion of the next AGM. In the event the Board continues to retain Encik MohamedRidzaasanIndependentDirectorafterthetwelfth(12th)year,annualshareholders’approvalmustbesought through a two-tier voting process to retain him as an Independent Director.

The other Independent Directors, namely Dato’ Richard George Azlan bin Abas, Encik Abdul Halim bin Jantan and Dato’IskandarMizalbinMahmoodhaveyettocompletetheirninth(9th)yearservingtheBoard.


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Practice 4.4 and 4.5 Board Diversity

The Board diversity not only relates to gender but also to professional experiences, business experiences, skills, knowledge, age, ethnicity and educational background.

The Company is led and managed by an experienced Board comprising members with a wide range of experience in the relevant fields such as management, information technology, telecommunication, finance and law. The Directors bring a broad range of skills, experiences and knowledge required to successfully direct and supervise the Group’s businessactivities.AbriefprofileofeachDirectorispresentedfrompage8topage15oftheAnnualReport.

The broad experience matrix, age and gender diversity of the Board during the financial year were as follows:

Directors

Industry / Background experience Age composition Gender

Pub

lic Service

Accounting / Finance

/Corp

orate Finance

Corp

orate

Financial Services

Legal/ Regulatory

Oil &

Gas

Telecomm

unication,M

edia &

Technology

46–50

51 - 55

56–60

61–65

Male

Female

Dato’ Noordin binSulaiman ü ü ü

Mohamed Ridza bin Mohamed Abdulla ü ü ü ü ü ü ü ü

Dato’ Richard GeorgeAzlan bin Abas ü ü ü

Abdul Halim bin Jantan ü ü ü ü ü

Dato’ Iskandar Mizalbin Mahmood ü ü ü ü ü ü ü

Datuk Adi Azuan binAbdul Ghani ü ü ü ü

Anis Zuhani binti Ahmad ü ü ü ü ü ü ü

A. Shukor bin S.A. Karim ü ü ü ü ü ü


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Practice 4.4 and 4.5 Board Diversity (Cont’d)

The Company does not have a policy on gender, ethnicity and age group for candidates to be appointed on the Board. The Group does not practice any form of gender, ethnicity and age group selection criteria. Any appointment and retention of directors is based on merit and without prejudice, taking into consideration the skills, experiences, knowledge and independence for the Board to be effective.

However,withtheappointmentofPuanAnisZuhanibintiAhmadtotheBoardon19November2015,theCompanyhad moved a step closer to meet the gender diversity policy.

Practice 4.6 Sourcing of Directors

The nomination and election process of Board Members are as follows:-

Appointment of New Directors

The Board does not set specific criteria for the selection and assessment of candidate for appointment as director. It is the Company’s policy to assess all potential Board candidates without regard to race, gender, age, nationality, religious beliefs, or any other factor not relevant to their competence and performance as a potential Board member aswellastomeettheregulatoryrequirementsuchastheCompaniesAct,2016andtheListingRequirements.Importance is placed on consideration that would add value and effectiveness to the Board and the Company.

The NC is responsible to recommend candidates to the Board to fill vacancies arising from resignation, retirement or other reasons or if there is a need to appoint additional directors with the required skills or profession to the Board in order to provide the diversity and close the competency gap in the Board identified by the NC. The potential candidate(s) may be proposed by existing directors, senior management, shareholders or third party referrals/independent sources.

Uponreceiptoftheproposal,theNCisresponsibletoconductanassessmentandevaluationontheproposedcandidates. The assessment/evaluation process may include amongst others, a review of the candidate’s resume, curriculum vitae and qualifications. The NC would also assess the candidate’s integrity, wisdom, commitment (including time commitment), independence, ability to make independent and analytical inquiries, ability to work as a team to support the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties and functions of the Board.

Upon completion of the assessment and evaluation of the proposed candidates, theNCwouldmake itsrecommendation to the Board. Based on the recommendation of the NC, the Board would evaluate and decide on the appointment of the proposed candidates.

On16April2019,Dato’NoordinbinSulaiman(“Dato’Noordin”)wasappointedtotheBoardasChairman,Non-Independent Non-Executive Director of the Company. Dato’ Noordin is a nominee of TH, the major shareholder of the Company. Dato’ Noordin’s vast experience in various designations in Federal, State and local governments provides the Board and the Group with invaluable views and guidance.


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Practice 4.7 Chairmanship of the Nomination Committee

The NC is a committee of the Board with the primary function of recommending appointments to the Board, Board Committees, Senior Management and other strategic positions as may be determined by the Board.

Chairman & Membership

(i) TheNCcomprisesaminimumoftwo(2)members,allofwhomareNon-ExecutiveDirectorswiththemajoritybeing Independent Directors.

(ii) The term of office of each member of the NC shall be one year and is subject to re-appointment thereafter at the discretion of the Board.

(iii) The Board shall ensure that any vacancy in the NC is filled within three (3) months of such vacancy arising.

(iv) The appointment of a committee member automatically terminates when the member ceases to be a Director.

(v) The Chairman of the NC is the Senior Independent Director or an Independent Director.

The composition of the NC during the financial year is as follows:-

Mohamed Ridza bin Mohamed Abdulla (Chairman)(Senior Independent Non-Executive Director)

Abdul Halim bin Jantan (Member) (Independent Non-Executive Director)

Anis Zuhani binti Ahmad (Member)(Non-Independent Non-Executive Director)


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Practice 5.1 Evaluation of Board, Board Committees and Individual Directors

The Board’s evaluation comprises Performance Evaluation of the Board and various Board Committees, Directors’ Self-Assessment and Assessment of the independence of the Independent Directors. The assessment of the Board is based on three main areas covering Individual Performance, Board Evaluation and Board Committee Evaluation.

For Individual Performance and Board Evaluation, the assessment criteria include among others, contribution and performance, calibre and personality, Board mix and composition, quality of information and decision making as well as participation at Board and Committee Meetings. The criteria for assessing the independence of an Independent Director include the relationship between the Independent Director and the Group and his or her involvement in any significant transaction with the Group. The results and recommendations from the evaluation were reported to the Board for further consideration and action, if required.

Directors who are subject to re-election at the next Annual General Meeting shall be assessed by the NC before recommendation is made to the Board and shareholders for their re-election.

Annual Assessment of Existing Directors & Board Committees

To ensure that the Board would be able to discharge its duties and responsibilities effectively, the NC has during the year carried out:-

(i) an assessment of the Directors, which includes the self-assessment carried out by the individual Directors;(ii) areviewontheretirementofDirectorsbyrotationeligibleforre-electionatthe25thAnnualGeneralMeeting;(iii) an assessment on the independence of the Independent Directors; (iv) a review and assessment on the composition and diversity of the Board Committees;(v) reviewed and recommended to the Board for re-appointment of Director who has served as an Independent

Non-Executive Director of the Company for a cumulative term of more than nine years and to seek shareholders’ approval at the forthcoming AGM;

(vi) assessed the training needs of the Directors; and(vii) an evaluation on the ARMC and the assessment criteria include effectiveness and quality of the external

and internal audits and financial reporting. The NC and the Board were satisfied with the performance and effectiveness of the ARMC.

There were no major concerns arising from the results of the assessments. The feedback confirmed that the Board and each of its committee continue to operate effectively and that each Director continues to make an effective contribution and demonstrates a strong commitment to their role.

The results of these assessment form the basis for the NC’s recommendation to the Board for the re-election of Directors at the forthcoming AGM.


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Re-election of Directors

In accordance with the provisions of the Company’s Constitution, at least one-third (1/3) of the Directors for the time being or if their number is not three (3) or multiples of three (3), then the number nearest to one-third (1/3) shall retire from office and shall be eligible for re-election at each Annual General Meeting (“AGM”). Consequently, each Director shall retire from office at least once in every three years but shall be eligible for re-election. A Director retiring at AGM shall retain office until the close of the AGM whether adjourn or not. Directors who are appointed to the Board during the year shall retire and seek re-election at the next AGM to be held following their appointments.

Encik Mohamed Ridza bin Mohamed Abdulla and Encik A. Shukor bin S.A. Karim who retire by rotation in accordance withClause96oftheCompany’sConstitutionandbeingeligible,offerthemselvesforre-election.

PuanAnisZuhanibintiAhmadwhoalsoretiresbyrotationinaccordancewithClause96oftheCompany’sConstitution,has indicated her intention not to seek for re-election. Hence, she will retain office until the close of the Twenty-Sixth (26th)AGM.

Dato’NoordinbinSulaimanwhoretiresinaccordancewithClause102oftheCompany’sConstitutionandbeingeligible, offers himself for re-election.

The Nomination Committee carried out an assessment and recommended the re-election of Encik Mohamed Ridza bin Mohamed Abdulla, Encik A. Shukor bin S.A. Karim and Dato’ Noordin bin Sulaiman at the forthcoming AGM to the Board.

Directors’ Training

All the Directors of the Company have attended the Mandatory Accreditation Programme. Directors are encouraged to attend relevant seminars and conferences to enhance their skills and knowledge and to keep abreast with the latest developments on laws and regulations.

For the year under review, the training programmes and seminars attended by the Directors are as follows:

DirectorsSeminar/Forum/

Conference/Training Organiser Date

Mohamed Ridza Bin Mohamed Abdulla

Selangor Synergies - Speaker IBR Asia Group &MBI Selangor

23-Jan-18

FinTech: Business Benefits and Conduct Challenges (Future Ethical challenge inFintech) - Speaker

Bank Negara Malaysia

23-May-18

UpdateonBlockchainandFinTech-Speaker Malaysian Bar 25-Jul-18


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Directors’ Training (Cont’d)



Dato’ Richard GeorgeAzlan Bin Abas

Limited Liability Partnership KL Bar Committee 17-Jan-18

The8thInternationalPublicSectorConference

ACCA, Singapore 1-2Mar2018

Public Practice Malaysian Instituteof Accountant

30-Aug-18

Case Study Workshop for Independent Directors : Rethinking - Independent Directors: Board Best Practices

Securities Commission

5-Sep-18

Sustainability Engagement Series Bursa MalaysiaBerhad

6-Sep-18

Technology & Audit MICPA CA ANZ 26-Sep-18

General Data Protection Regulation CA ANZ 30-Sep-18

Australian Privacy Act CA ANZ 30-Sep-18

Accounting & Finance Show Terrapin 16-17Oct2018

Practical Issues, Problems & Pitfalls in Registering a Limited Liability Partnership

MICPA 16-17Oct2018

World Congress of Accountants IFAC 5-8Nov2018


[51







Abdul Halim Bin Jantan

6thAsiaInsuranceBrokers’Summit- Panellist

Asia Insurance Review

13 - 14Mar2018

7thAsiaInsuranceBrokers’Summit Asia InsuranceReview

13 - 14Mar2018

Renewable Energy Conference,Shanghai China

Helvetia Swiss Ins Co Ltd

22-May-18

1st Asia Employee Benefits & InsuranceConference, Singapore“How Innovation in Health Insurance HelpingCompanies Save Costs” - Speaker

Asia InsuranceReview

3 - 4Jul2018

2ndAsiaEmployeeBenefits&InsuranceConference, Singapore

Asia Insurance Review

3 - 4Jul2018

MARIMConference2018 MARIM 17-18Jul2018

TheAsianCaptiveConference2018,Sasana Kijang BNM - Speaker

Labuan IBFC 1-2Aug2018

Breakfast Talk to Senior Management ofEtiqa - Speaker

Etiqa 3-Oct-18

PMB Group Risk & Compliance Day - Title: Emerging Trends In Risk Management And Importance Of Risk Management- Speaker

PLUSMalaysiaBhd

16-Oct-18

ARiMIRiskINNOVATIONForum2018,Singapore

Asia Risk Management

Institute

25-Oct-18

SETIARiskForum2018-Topic:EMERGINGTRENDS AND IMPORTANCE OF RISKMANAGEMENT - Speaker

SP Setia Bhd 14-Nov-18

4th ASEAN Insurance Forum - Speaker Bank NegaraMalaysia

29-Nov-18


[52






Dato’ Iskandar Mizal Bin Mahmood

Corporate Governance Briefing Sessions : MCCG Reporting & CG Guide

Bursa MalaysiaBerhad

28-Feb-18

Datuk Adi Azuan BinAbdul Ghani

TH Offsite: Charting the Future Tabung Haji 5–6Mar2018

TH Crisis Simulation Exercise Tabung Haji 10-Mar-2018

Digital Transformation Acceleration ProgramKickoff

MDEC 9-Apr-2018

MIAConference2018 MIA 9–10Oct2018

Anis Zuhani Binti Ahmad

Crisis Simulation Exercise Tabung Haji 10-Mar-18

Bengkel Pelan Pengurusan Risiko Rasuah TH Tabung Haji 11-Apr-18

Sustainability Engagement Series for Directors/CEO


6-Sep-18

Strategic, Recruitment, interviewing & SelectionWorkshop

Human ResourceDevelopment

Centre

7-Dec-18

Working Workshop on Performance Zubedy Consultant 10-Dec-18

A. Shukor Bin S.A. Karim

Corporate Governance Briefing Sessions : MCCG Reporting & CG Guide


28-Feb-18

ISO14001:2015EnvironmentManagementSystem

Theta Edge Berhad 6-Nov-17

Note:- The above does not include Dato’ Noordin bin Sulaiman who was appointed as a Chairman to the Board on 16 April

2019.

An assessment of the training needs was carried out by the NC and areas for training were identified at the Nomination CommitteeMeetingheldon13March2018.


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III. REMUNERATION

Practice 6.1 Remuneration Policy and Procedures for Directors and Senior Management

The objectives of the Directors’ remuneration policies are to attract, retain and motivate the Directors serving the Board of the Company. The Board through the RC shall ensure that the levels of remuneration are sufficient to attract and retain the right calibre of Directors to manage the strategic direction and oversight of the Group.

When reviewing the structure and level of Directors’ fees, which comprises base Director’s fee and additional fees for services rendered on Board Committee, the RC takes into consideration the respective Director’s roles and responsibilities in the Board and Committees.

The level of remuneration of Non-Executive Directors reflects their experience and level of responsibility undertaken by them. Non-Executive Directors will receive a fixed fee, with additional fees if they are members of Board Committees, with the Chairman of the ARMC, NC and RC receiving a higher fee/allowance in respect of his service as chairman of the respective committee. The fees for Directors are determined by the Board with the approval from Shareholders at the AGM. No Director is involved in deciding his own remuneration.

The details of the remuneration policy of the Company are available for reference at the Company’s website at www.theta-edge.com.

Practice 6.2 Remuneration Committee (RC)

The RC is appointed by the Board and has no executive powers. The appointment of a committee member automatically terminates when the member ceases to be a Director. The composition of the RC is as follows:-

Datuk Adi Azuan Bin Abdul Ghani (Chairman)(Non-Independent Non-Executive Director)

Mohamed Ridza Bin Mohamed Abdulla (Member)(Senior Independent Non-Executive Director)

Dato’ Richard George Azlan Bin Abas (Member)(Independent Non-Executive Director)

The RC comprising of three (3) Non-Executive Directors, majority of whom are Independent, has the primary responsibility to provide assistance to the Board in determining, reviewing and developing a remuneration policy and reward system for the Board, Board Committees, Senior Management and other strategic positions as may be determined by the Board. The remuneration package links rewards to corporate and individual performance. A remuneration policy is presently in place to ensure that the levels of remuneration are sufficiently attractive to retain Directors and Key Senior Management.


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III. REMUNERATION (CONT’D)

Practice 6.2 Remuneration Committee (RC)

The RC shall meet at least once a year and may invite other Board members, officers of the Company, employees and any other external parties to attend meetings or part thereof as and when necessary. The RC through its Chairman shall report to the Board at the next Board of Directors’ Meeting after each meeting. The Company Secretary is the Secretary to the RC.

TheRCheldtwo(2)meetingsduringthefinancialyearended31December2018.Thedetailsofthetermsofreferenceof the RC are available for reference at the Company’s website at www.theta-edge.com.

ThetermsofreferenceoftheRCwaslastreviewedin14March2019.

Practices 7.1 and 7.2 Disclosure of Remuneration of Directors and Senior Management

DetailsofDirectors’remunerationforthefinancialyearended31December2018aresetoutasbelow:-

Group

Fees(RM)

Salary & Bonus(RM)

Benefits-in kind(RM)

Retirement benefit(RM)

Other Emoluments

(RM)Total(RM)

ExecutiveDirector

– 600,000 – 150,000 200,000 950,000

Non-Executive Directors

270,000 – – – 138,000 408,000

Company

Fees(RM)

Salary & Bonus(RM)


Retirement benefit(RM)

Other Emoluments

(RM)Total(RM)

ExecutiveDirector

– 600,000 – 150,000 200,000 950,000


230,000 – – – 138,000 368,000


[55




Practices 7.1 and 7.2 Disclosure of Remuneration of Directors and Senior Management (Cont’d)

DetailsofDirectors’remunerationonanamedbasisforthefinancialyearended31December2018areasfollows:-

Fees Salary &Bonus(RM)


Retirementbenefit(RM)

OtherEmoluments

(RM)Total(RM)

Company(RM)

Subsidiaries(RM)

Executive Director

A. Shukor BinS.A. Karim

– – 600,000 – 150,000 200,000 950,000


Dato’ IskandarMizal Bin Mahmood

60,000 – – – – 24,000 84,000

Mohamed Ridza Bin MohamedAbdulla

50,000 5,000 – – – 32,500 87,500

Abdul Halim BinJantan

30,000 – – – – 27,500 57,500

Datuk Adi AzuanBin Abdul Ghani

30,000 20,000 – – – 25,000 75,000

Anis Zuhani Binti Ahmad

30,000 5,000 – – – 13,500 48,500

Dato’ RichardGeorge Azlan BinAbas

30,000 10,000 – – – 15,500 55,500

During the financial year, the RC conducted a review of the remuneration levels of the Directors taking into account various factors which include the time commitment required, the fiduciary and statutory duties required under the various laws and regulations.

The Directors who are shareholders of the Company will abstain from voting at the forthcoming Annual General Meeting on Resolutions pertaining to their respective Director’s fees, benefits and re-election of Directors.


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(i) Directors’ Fees of the Company

Number Proposed Fee Per Annum(RM)

Chairman of the Board 1 60,000

Chairman of the ARMC 1 50,000

Non-Executive Directors 6 30,000

Group Managing Director & CEO 1 –

TOTAL 9 290,000

The Company will be seeking the approval of the shareholders for the Proposed Director Fees for an amount uptoRM290,000forthefinancialyearending31December2019attheforthcomingTwenty-Sixth(26th)Annual General Meeting (“AGM”). The fees will not be paid until the approval of the Shareholders has been obtained at the forthcoming AGM.

(ii) Meeting Allowance

BoardPer Meeting

(RM)

ARMCPer Meeting

(RM)

NC / RCPer Meeting

(RM)

Chairman 3,000 3,000 2,000

Non-Executive Member 1,500 2,500 1,500

Group Managing Director & CEO – – –

The Company will be seeking the approval of the shareholders for the payment of directors’ benefits for an amountuptoRM238,000fromtheTwenty-Sixth(26th)AGMuptothenextAGMoftheCompany.

(iii) Director’s Fees of Subsidiary Companies

The Directors who also sit on the Board of the subsidiary companies are to be paid RM5,000 per annum per company after considering the fiduciary duties and responsibilities expected of the Directors sitting on the respective Boards.

The disclosure of Directors fees for subsidiary companies on a named basis is disclosed in the Directors’ Remuneration table above.


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(iv) Non-Executive Directors

The Non-Executive Directors are not entitled to any other benefits or incentive plan with the exception of the Directors & Officers Insurance coverage.

(v) Group Managing Director & Chief Executive Officer (“CEO”)

The CEO is not entitled to the above Directors’ fee or any meeting fees for Board or Board Committee meetings he attends for the Company or subsidiary companies. The CEO’s remuneration package reflected in his service contract is structured taking into account the fixed compensation which includes basic salary and allowances including gratuity, leave passage and hospitalisation and surgical insurance and a variable performance-linkedbonus.TheCEO’scontractisreviewedeverytwo(2)years,orsuchothertimeframeasmay be determined by the Board.

(vi) Senior Management

Disclosure of the Senior Management’s remuneration in an aggregate basis is set out in the Annual Audited Financial Statements in this Annual Report.

(vii) Directors & Officers (“D&O”) Insurance

The Directors together with the officers of the Group are covered under the D&O insurance in respect of any liabilities or claims arising from them discharging their duties as Directors and Officers of the Group, provided they have not acted negligently, fraudulently or in breach of their duties. During the financial year, the total amountofsuminsuredfortheDirectorsandOfficersisRM20,000,000foranyone(1)claimandinaggregateofallclaims.ThepremiumincurredbytheCompanyisRM50,360.


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PRINCIPLE B - EFFECTIVE AUDIT AND RISK MANAGEMENT

Practice 8.1 Audit and Risk Management Committee Composition and Chairman

Audit and Risk Management Committee (“ARMC”)

The primary objective of the ARMC is to assist the Board in fulfilling its responsibility relating to accounting, risk management and reporting practices of the Group. The ARMC is accorded all resources required to perform its duties, have full and unrestricted access to any information pertaining to the Group, have direct communication channels with the external and internal Auditors and is entitled to obtain any external legal or other independent professional advice as necessary. The composition of the ARMC is as follows:-

Mohamed Ridza Bin Mohamed Abdulla (Chairman)(Senior Independent Non-Executive Director)

Abdul Halim Bin Jantan (Member)(Independent Non-Executive Director) Datuk Adi Azuan Bin Abdul Ghani (Member)(Non-Independent Non-Executive Director)

Dato’ Richard George Azlan bin Abas (Member) (Appointed w.e.f. 14 March 2019)(Independent Non-Executive Director)

TheTermsofReferenceisdetailedintheARMCreportonpages64to69oftheAnnualReport.

Practice 8.2 and 8.3 Oversight and Assessment of the Suitability and Independence of External Auditors

The Company’s independent External Auditors fill an essential role for the shareholders by enhancing the reliability of the Group’s financial statements and giving assurance of that reliability to users of the financial statements.

The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the External Auditors in seeking professional advice and ensuring the compliance with the relevant regulations and applicable approved accounting standards in Malaysia. The External Auditors attend ARMC meetings when necessary and have direct access to the ARMC and Internal Auditors for independent discussion.


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PRINCIPLE B - EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)

Independence of Auditors

The Board through the ARMC reviews and assess the independence of the External Auditors on a yearly basis. The ARMC works closely with the Management team in assessing the suitability of the External Auditors. The areas of assessment include among others, the External Auditors’ objectivity and independence, audit fees, size and competency of the audit team, audit strategy, audit reporting and partner involvement.

The External Auditors, in supporting their independence, provided the ARMC with a written assurance confirming their independence throughout the conduct of the audit engagement in accordance with the relevant professional and regulatory requirements. The External Auditors have provided such declaration in their annual audit plan presented to the ARMC of the Company during the financial year.

In the event a former audit partner is appointed as a member of the ARMC, the former key audit partner is to observe a cooling-offperiodofatleasttwo(2)yearsbeforebeingappointed.

The ARMC meets periodically to carry out its functions and duties pursuant to its terms of reference. During the financial year, the ARMC met the External Auditors twice without the presence of the Management.

Thenon-statutoryauditfeesincurredforservicesrenderedtotheGroupbyKPMGforFY2018wasRM10,000(FY2017: RM30,000).

The Board has considered the non-audit fees provided during the year by KPMG and is satisfied that the provision of those non-audit services during the year by KPMG does not compromise the Auditors’ independence.

The ARMC and the Board are satisfied with the performance, competence and independence of the External Auditors and the Board had recommended their re-appointment for Shareholders’ approval at the forthcoming AGM.

Practice 8.4 Independence of the Audit and Risk Management Committee

The ARMC currently comprises of four (4) members and all members are Non-Executive Directors with the majority being independent.

Practice 8.5 Financial Literacy of the Audit and Risk Management Committee

The ARMC possesses the right mix of skills to discharge its duties effectively. The Committee is led by Encik Mohamed Ridza bin Mohamed Abdulla with legal and corporate background. Datuk Adi Azuan bin Abdul Ghani and Dato’ Richard George Azlan bin Abas are members of the Malaysian Institute of Accountants (MIA) and they possess financial knowledge to provide satisfactory input on financial matters. Encik Abdul Halim bin Jantan possesses vast experience in the field of insurance, information technology and risk management. All the ARMC members are financially literate and equipped with the required business skills.


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Practices 9.1 and 9.2 Risk Management and Internal Control Framework

The Board has an overall responsibility in maintaining a sound internal control system that provides reasonable assurance of effective and efficient operations and compliance with internal procedures and guidelines.

An Enterprise Risk Management Framework has been established to ensure that the risk management framework is embedded and consistently adopted throughout the Group. A summary of the material risks that could affect the Group are monitored for changes in their exposure and are reported to the Board and ARMC during the course of the year, along with their related controls and action plans.

The Group’s approach to risk management and the principal risks faced by the Group are discussed in the Statement on RiskManagementandInternalControlassetoutonpages72to78oftheAnnualReport.

Practice 9.3 Establishing a Risk Management Committee

The Audit Committee was merged with the Risk Management Committee to form an Audit and Risk Management Committee witheffectfrom1December2012.

The ARMC comprises of four (4) members, majority of whom are Independent Non-Executive Directors.

Practices 10.1 and 10.2 Internal Audit Function

The Internal Audit & Risk Management Department (“IARMD”) is an in-house department, independent of the activities or operations of other business and operating units. None of the internal audit personnel has any relationships or conflict of interest that could impair their objectivity and independence in conducting their internal audit functions. Currently, the IARMD comprises of three (3) staff and is headed by Noor’ Azita binti Ibrahim. She holds a Bachelor in Accounting (Hons) and is a Chartered Accountant and member of the Malaysian Institute of Accountants and an Associate Member of The Institute of Internal Auditor Malaysia.

The Head of the IARMD reports directly to the ARMC with administrative reporting to the CEO, to performs regular review and appraisal of the effectiveness of risk management, internal control and governance processes of the Group. Accordingly, activities carried out include risk assessment and internal audits addressing both financial and operational aspects.

The internal audit function of the Group is carried out in accordance with a risk-based approach steered by internal policies, procedures and the Internal Control – Integrated Framework issued by The Committee of Sponsoring Organisations of Treadway Commission.

The planning process for the year’s audit work is undertaken by the internal audit team. Internal audit conducted in the previous years, key risk areas and fundamental controls are incorporated into the selection of the audit programme, which is approved by the ARMC.


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Practices 10.1 and 10.2 Internal Audit Function (Cont’d)

In carrying out internal audit review, detailed reports were issued to the ARMC covering operational aspects such as procurement and tendering processes, contract and project management. Apart from highlighting any deficiency or areas requiring the Management’s attention, the reports also included recommendations as well as proposed corrective actions to be implemented by the Management. Follow-up audits were then carried-out to determine whether corrective actions had been taken by the Management.

The Board has received assurance from the Head of Internal Audit & Risk Management that based on the current business environment and condition, the Group’s current risk management and internal control system are operating adequately and effectively in all material aspects. The Board has also received assurance that the Internal Audit function is free from any relationships or conflicts of interest which could impair their objectivity and independence and that the Internal Audit function is carried out in accordance with a recognized framework. The Head of the Internal Audit was also given the opportunity to meet with the ARMC without the presence of the Management.

PRINCIPLE C - INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH SHAREHOLDERS

Financial reporting

The Directors are responsible to present a true and fair assessment of the Group’s position and prospects in the annual reports and quarterly reports. The quarterly financial results were reviewed by the ARMC and approved by the Board of Directors prior to submission to BMSB. Statement of Directors’ Responsibilities

The financial statements of the Group and of the Company have been drawn up in accordance with Malaysian Financial ReportingStandardsandtherequirementsoftheCompaniesAct,2016inMalaysia.TheDirectorstakeresponsibilityinensuring that the financial statements give a true and fair view of the financial position of the Group and of the Company asat31December2018andoftheresultsandthecashflowsoftheGroupandoftheCompanyforthefinancialyearthen ended.

In preparing the financial statements, the Directors have:-

• Appliedtheappropriateandrelevantaccountingpoliciesonaconsistentbasis;• Madejudgementsandestimatesthatareprudentandreasonable;and• Preparedthefinancialstatementsonagoingconcernbasis.

The Directors are responsible to ensure that the Company keeps proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financialstatementscomplywiththerequirementsofCompaniesAct,2016.

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


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PRINCIPLE C - INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH SHAREHOLDERS (CONT’D)

Corporate Disclosures Policies and Procedures

Practice 11.1 Communication with Stakeholders

Recognizing the importance of timely dissemination of information to shareholders and other stakeholders, the Board is committed to ensuring that the shareholders and other stakeholders are well informed of major developments of the Company and the information is communicated to them through the following:-

(i) The Annual Report;

(ii) The various disclosures and announcements made to BMSB including the Quarterly Results and Annual Results;

(iii) Briefings to the Company’s key investors or other investment community in order to provide them a better understanding of the Group’s operations and explanation to any concern highlighted; and

(iv) The website at www.theta-edge.com which shareholders as well as members of the public are invited to access for the latest information on the Group.

The Board also encourages shareholders to communicate through other channels and has identified Encik Mohamed Ridza bin Mohamed Abdulla, the Senior Independent Non-Executive Director to whom concerns from the public may be conveyed. Encik Mohamed Ridza bin Mohamed Abdulla can be contacted via the following channel:

c/o Theta Edge Berhad A-3A-3A, Block A Oasis Square Office JalanPJU1A/7A,AraDamansara, 47301PetalingJaya Selangor Darul Ehsan

Email : [email protected] : 60376666968


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PRINCIPLE C - INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH SHAREHOLDERS (CONT’D)

Practice 11.2 Integrated Reporting

The Group has yet to adopt an integrated reporting.

Practice 12.1 Notice of Annual General Meeting

The Company’s AGM serves as a principal forum for dialogue with shareholders. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Meeting of Members are held as and when required.

TheCompanysendsouttheNoticeofAGMatleast28daysbeforethemeetinginordertofacilitatethefullunderstandingand evaluation of the issues involved.

Practice 12.2 Directors to attend General Meetings

All the Directors, including the Chairman of the ARMC, NC and RC would attend the General Meetings to allow the shareholders to raise questions and clarify any issues they may have relating to each resolution tabled for approval.

Practice 12.3 Electronic Voting

The Company’s Meeting of Members have been held in the Klang Valley since several past years and not in remote location. The venue of the Meeting of Members is easily assessible by the shareholders.

Considering the cost involved, it is currently not economically justifiable to enable voting in absentia or remote shareholders’ participation. However, the Company will monitor the development of technology and market practice to facilitate shareholders participation and the Board may consider implementing the same in the future.

The existing proxy form authorising proxies or Chairman of the meeting or in the case of a corporation, the appointment of a corporate representative is an alternative measure adopted by the Company.

Atthe25thAGMoftheCompany,allresolutionsareputtothevoteandIndependentScrutineerwasappointedtoverifythe votes and the results of the voting were announced instantaneously at the Meeting. The outcome of the Meeting of Members is promptly announced to Bursa Securities after the conclusion of the Meeting of Members.

STATEMENT ON COMPLIANCE WITH BEST PRACTICES OF THE CODE

ThisstatementispreparedincompliancewithParagraph15.25oftheListingRequirementsanditistobereadtogetherwiththeCGReport2018oftheCompanywhichisavailableintheCompany’swebsiteatwww.theta-edge.com. The Board is satisfied that the Company has complied with the Code during the financial year with regard to the recommendations supporting the Principles except as otherwise stated.

ThisstatementwaspresentedandapprovedattheBoardofDirectors’Meetingheldon14March2019.


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AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

The Board of Directors of Theta Edge Berhad (“Company”) is pleased to present the report of the Audit and Risk Management Committeeforthefinancialyearended31December2018.

AUDIT AND RISK MANAGEMENT COMMITTEE COMPOSITION AND MEETINGS

The Audit and Risk Management Committee (ARMC) comprises of four (4) members of the Board all of whom are Non-Executive Directors and three (3) of whom are Independent Directors:-

Chairman : Mohamed Ridza bin Mohamed Abdulla (Senior Independent Non-Executive Director)Members : Datuk Adi Azuan bin Abdul Ghani (Non-Independent Non-Executive Director) Abdul Halim bin Jantan (Independent Non-Executive Director) Dato’ Richard George Azlan bin Abas (Independent Non-Executive Director) (Appointed w.e.f. 14 March 2019)

TheARMCmetfive(5)timesduringthefinancialyear2018andtherecordofattendanceoftheARMCMembersisasfollows:-

Number of meetings

Attended Held

Mohamed Ridza bin Mohamed Abdulla 5 5

Datuk Adi Azuan bin Abdul Ghani 5 5

Abdul Halim bin Jantan 5 5

Dato’ Richard George Azlan bin Abas – –

Terms of Reference

The objective of the ARMC is to assist the Board to review the adequacy and integrity of the Group’s financial administration and reporting, internal control and risk management systems, including the management information system and systems of compliance with the applicable laws, regulations, rules, directives and guidelines.

TheARMC’sTermsofReferencewasreviewedandamendedon14March2019.

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AUDIT AND RISK MANAGEMENT COMMITTEE COMPOSITION AND MEETINGS (CONT’D)

Balance and Composition

1. The members of the ARMC are to be appointed by the Board and shall comprise of at least three (3) members, all of whom must be Non-Executive Directors, with a majority of them being Independent Directors.

2. NoneofthemembersoftheARMCshallbeanAlternateDirector.

3. Atleasttwo(2)membersoftheARMCmustbefinanciallyliteratewithsufficientfinancialexperienceandabilityand at least (1) one member of the ARMC must be an Accountant or have such other qualification as defined by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“BMSB”).

4. The ARMC shall have a mixture of expertise and experience, including an understanding of the industry(ies) in which the Group operates.

5. A Member of the ARMC may relinquish his membership in the ARMC with prior written notice to the Company Secretary.

6. IntheeventaformerkeyauditpartnerisappointedasamemberoftheARMC,theformerkeyauditpartneristoobserveacooling-offperiodofatleasttwo(2)yearsbeforebeingappointed.

7. IntheeventofanyvacanciesarisingintheARMCresultinginnon-complianceofParagraphs1,2and3above,thevacancy should be filled within three (3) months of it arising.

8. ThetermofofficeandperformanceoftheARMCandeachofitsmembersshallbereviewedbytheNominationCommittee annually to determine whether the ARMC and its members have carried out their duties in accordance with their terms of reference.

Chairman

1. Members of the ARMC shall elect a Chairman from among themselves who is an Independent Non-Executive Director.

2. IntheabsenceoftheChairmanoftheARMC,theothermembersoftheARMCshallamongstthemselveselectaChairman who must be an independent director to chair the meeting.

Secretary

The Company Secretary shall be the Secretary of the ARMC.

Audit and Risk Management Committee Report (Cont’d)

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AUDIT AND RISK MANAGEMENT COMMITTEE’S AUTHORITY, DUTIES AND RESPONSIBILITIES

Authority

1. In carrying out its duties and responsibilities, the ARMC shall, at the expense of the Company:-

(a) have the authority to investigate any activity within its Terms of Reference;(b) have full, free and unrestricted access to the Group’s records, properties, personnel and other resources;(c) have direct communication channels with the external and internal auditors;(d) be able to obtain independent professional or other advice in furtherance of its duties; and(e) be able to convene meetings with the external auditors, the internal auditors, or both, excluding the attendance

of the other Directors and employees, whenever deemed necessary.

2. TheARMC is not authorised to implement its recommendations on behalf of theBoard but shall report itsrecommendations back to the Board for consideration and implementation.

3. Where the ARMC is of the view that a matter reported by it to the Board has been not satisfactorily resolved resulting in a breach of the Main Market Listing Requirements, the ARMC is authorised to promptly report such matter to BMSB.

Duties and Responsibilities

1. To recommend the nomination of a person or persons as External Auditors and to consider the appointment and re-appointment of the External Auditors, the audit fee and any questions of resignation or dismissal of the External Auditors.

2. TodiscusswiththeExternalAuditorsbeforetheauditcommences,thenatureandscopeofaudit,andanyothermatters as the External Auditors may wish to discuss (without the presence of the management, if necessary).

3. To review the suitability, objectivity and independence of the External Auditors, and evaluate the performance of the External Auditors for re-appointment.

4. To act as an intermediary between the management or other employees, and the External Auditors.

5. To review with the External Auditors the following before reporting the same to the Board:-

(a) the audit plan;(b) evaluation of the system of internal controls; (c) their Audit Report;(d) the assistance given by the employees of the Company; and (e) the management letter and management response.


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AUDIT AND RISK MANAGEMENT COMMITTEE’S AUTHORITY, DUTIES AND RESPONSIBILITIES (CONT’D)

6. Toreviewthequarterly resultsandyear-endfinancialstatementsbeforesubmission to theBoard forapproval,focusing particularly on:-

(a) any changes in accounting policies and practices;(b) significant matters highlighted including financial reporting issues, significant judgments made by management,

significant and unusual events or transactions, and how these matters are addressed;(c) litigation that could affect results materially;(d) the going concern assumption; and(e) compliance with accounting standards in Malaysia and other legal requirements.

7. Inrelationtotheinternalauditfunction:-

(a) review the adequacy of the scope, function, competency, experience and resources of the internal audit function, and that it has necessary authority to carry out its work;

(b) the internal audit program, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;

(c) review the appraisal or assessment of the performance of the head of the internal audit function or the external firms appointed as internal auditors (where applicable);

(d) review the independence of internal audit function and whether internal audit personnel are free from any relationships or conflicts of interest;

(e) approve any appointment or termination of senior staff members of the internal audit function; (f) review on the appointment of external firms or any changes thereto, to undertake the internal audit function

and the related fees; and(g) being informed of any resignation of internal audit staff members and to provide the resigning staff member

an opportunity to submit his/her reasons for resigning.

8. ToconsiderandreportbacktotheBoardanyrelatedpartytransactionandconflictofinterestsituationthatmayarise within the Group including procedures or course of conduct that raises questions of management’s integrity.

9. Toconsiderthemajorfindingsofinternalinvestigationandtherespectivemanagement’sresponses.

10. To review and verify the allocation of share options given to the Group’s eligible employees is in accordance with the criteria for the employees share option scheme (“ESOS”) and the Main Market Listing Requirements of BMSB at the end of each financial year, if any.


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AUDIT AND RISK MANAGEMENT COMMITTEE’S AUTHORITY, DUTIES AND RESPONSIBILITIES (CONT’D)

11. To review and consider the appropriateness and adequacy of internal process for risk oversight and management. In particular, the ARMC shall:-

(a) review the Enterprise Risk Profile/Register to ensure comprehensive and effective management key risks;(b) review and recommend risk management strategies, policies and risk tolerance limits for Board’s approval;(c) develop and implement adequate risk assessment, monitoring and management policies and procedures;(d) ensure the risk management framework is embedded and consistently applied throughout the Group;(e) review the appropriateness of Management’s response to key risk areas and follow-up on management risk

treatment action plans reported by the Risk Working Committee (“RWC”);(f) provide regular reporting and timely update on the operations of the Enterprise Risk Management (“ERM”)

framework to the Board; (g) receive regular reports on the risk profile, material risks (both financial and non-financial) faced by the Group

and action plans taken by the Management to mitigate the risks; and(h) review the appointment of external firms or any changes thereto, for the provision of governance, risk and

compliance advisory services, if deemed required.

12. Inrelationtomajorbusinessinvestmentproposalsand/orfeasibility:-

(a) to review and evaluate the viability of the proposal/feasibility study prepared that all risks have been considered and are within the Group’s strategic goals; and that action plans or strategies to mitigate identified risks are adequate;

(b) to conduct meetings with the project sponsor(s) and Chief Executive Officer (“CEO”), if necessary, to discuss risk matters related to the proposal; and

(c) to make recommendation to the Board on the appropriate course of action to take.

13. To oversee the Group’s internal compliance and control systems established by the Management, including reviewing the effectiveness of these systems and approving Management’s programmes and policies to ensure effectiveness.

14. To review and recommend the proposed provisions, allowances and/or writing off of assets in excess of RM1,000,000.

15. To recommend the disposal(s) of assets in excess of RM1,000,000.

16. AnyotherfunctionsasdirectedbytheBoard.


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AUDIT AND RISK MANAGEMENT COMMITTEE MEETING AND MINUTES AND SUMMARY OF ACTIVITIES

Meeting and Minutes

1. The ARMC shall meet at least four (4) times during a financial year, but additional meetings may be called at any time at the discretion of the Chairman. In order to form a quorum, the quorum for meeting shall be at least two (2)memberswhereamajorityofmemberspresentmustbeIndependentDirectors.Themembersmayparticipatein a meeting by means of conference telephone, conference videophone or any similar or other communications equipment by means of which all person participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at such meeting.

2. TheExecutiveDirectors,SeniorManagementandinternalauditorandarepresentativeoftheExternalAuditorsshallnormally attend the meetings but may be asked to leave a meeting as and when deemed necessary by the ARMC. Other persons may attend meetings only upon the invitation of the ARMC.

3. Questions arising at any meeting of the ARMC shall be decided by a majority of votes of the members present. In the case of equality of votes, the Chairman of ARMC shall not have a second or casting vote.

4. The ARMC shall meet with the External Auditors without the presence of executive board members, management andotheremployeesoftheCompanyatleasttwo(2)timesorwheneverdeemednecessaryduringafinancialyear.

5. The ARMC shall meet with the internal auditor without the presence of the executive board members, management and other employees of the Company whenever deemed necessary.

6. Minutesof themeetings shall beduly entered into thebooksprovided for thepurposeof all resolutions andproceedings of all meetings of the ARMC. The minutes shall be formally tabled to the Board for noting and action.

The ARMC written terms of reference is made available on the website of the Company at www.theta-edge.com.

Summary of Activities of the ARMC

AsummaryoftheARMCactivitiesforthefinancialyearended31December2018areasfollows:-

Financial Reporting Review

(a) ReviewedtheGroup’sauditedfinancialstatementsforthefinancialyearended31December2017anddiscussedaudit findings with the External Auditors before recommending the same for the Board’s approval;

(b) Reviewed the Directors’ responsibility statement for annual audited financial statements;(c) Reviewed the unaudited quarterly financial report of the Group including variances against budgets and targets,

changes in assets and liabilities, equities and cashflow; and(d) Reviewed and recommended the unaudited quarterly financial results for the Board’s approval prior to their release

to BMSB.


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AUDIT AND RISK MANAGEMENT COMMITTEE MEETING AND MINUTES AND SUMMARY OF ACTIVITIES (CONT’D)

External Audit

(a) Reviewed and discussed with the External Auditors the nature, materiality and scope of their audit plan and the proposedauditfeesfortheGroupforthefinancialyearended31December2018beforethecommencementofthe audit;

(b) Assessed and reviewed the performance and independence of External Auditors covering areas such as External Auditors’ capacity, audit team, audit scope, audit communication, quality processes and independence;

(c) Without the presence of Executive Directors and Management, discussed with the External Auditors on the assistance provided by Management during the course of audit, the competency of the finance and accounting team and the adequacy of the Group’s internal control; and

(d) Discussed the updates of new developments in accounting standards issued by the Malaysian Accounting Standards Board and the readiness of the Group for the Malaysian Business Reporting System (MBRS) submission platform based on the eXtensible Business Reporting Language (XBRL).

Internal Audit and Risk Management

(a) Reviewedtheinternalauditors’planforyear2018,RiskManagementAnnualPlan;(b) Reviewed the internal audit reports issued by the Internal Audit & Risk Management Department and thereafter

discussed the Management’s actions taken to improve the systems of internal control; and(c) Reviewed the identified corporate risk assessment and risk mitigation plans on a half-yearly basis.

Related Party Transactions

(a) Reviewed the related party transactions and outstanding receivables that arose within the Group;(b) Reviewed the draft circular to Shareholders in relation to the Proposed Renewal of the Existing Shareholders’

Mandate for Recurrent Related Party Transactions of a Revenue or Trading in Nature and Renewal of the Existing General Mandate for Contracts which are Revenue in Nature and recommended the same for the Board’s approval;

(c) Reviewed the inter-company Management fee within the Group; and(d) Reviewed the provision of continued financial support for subsidiary companies.

Others

(a) Reviewed the Audit and Risk Management Committee Report and the Statement on Risk Management & Internal Control prior to submission to the Board for consideration and inclusion in the Annual Report; and

(b) Reviewed the ARMC Terms of Reference.


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INTERNAL AUDIT & RISK MANAGEMENT FUNCTION

The internal audit function is performed in-house by the Internal Audit and Risk Management Department (“IARMD”), which has a direct reporting line to the Audit and Risk Management Committee (“ARMC”).

The internal audit activities are carried out based on the approved annual Internal Audit Plan. It was designed via risk based approached to cover projects, and other operational and supports unit within the Group. IARMD plays a key role in undertaking independent, regular review and appraisal of the effectiveness of risk management, internal control, compliance and governance processes of the Group. Accordingly, the activities carried out include risk assessments and internal audits addressing both financial and operational aspects effectively in a transparent manner.

In carrying out internal audit review, detailed reports were tabled to the ARMC during its meeting held on quarterly basis. Apart from highlighting any deficiency or areas requiring the management’s attention, the reports also included recommendations as well as proposed corrective actions to be implemented by the management. Follow-up audits were conducted and the status of implementation of corrective actions were also tabled to the ARMC.

Thekeyauditsandreviewscompletedin2018are:• AuditonRecruitmentProcess;• AuditonProjectManagementforSolutionsDelivery;• SpecialAuditReviewonTHiJARIProject;• AuditReviewonThetaMobileSdnBhd;and• AuditReviewonSales2017.

The selection and the areas covered were prioritized primarily based on the risk profiles of the business units within the Group.

The total cost incurred by the IARMD in relation to the conduct of the Internal Audit and risk management functions of the Groupforthefinancialyearended31December2018wasRM295,941.70.


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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

This Statement on Risk Management and Internal Control (“Statement”) is made pursuant to Bursa Malaysia Securities Berhad Listing Requirements which requires the Board of Directors (“Board”) to include in its Company Annual Report a statement about the state of its internal control. The Malaysian Code on Corporate Governance requires all listed companies to establish and maintain a sound risk management framework and internal control system to safeguard shareholders’ investment and the company’s assets.

Accordingly, the Board is pleased to provide the Statement that was prepared in accordance with the “Statement on Risk Management & Internal Control – Guidelines for Directors of Public Listed Issuers” issued by Bursa Malaysia Securities Berhad (“BMSB”) which outlines the nature and scope of internal control and risk management of the Group during the financial year.

BOARD’S RESPONSIBILITY

The Board acknowledges its overall responsibility in establishing a sound risk management framework and internal control system and reviewing its adequacy and integrity of the system, to safeguard the interests of the shareholders and Group’s assets. The Board is of the view that the risk management framework and internal control system are designed to manage, rather than eliminate the Group’s risks within an acceptable risk tolerance, to achieve the policies, goals and objectives of the Group. It can therefore only provide reasonable, rather than absolute assurance of effectiveness against material misstatement of losses and fraud.

The Board has established appropriate control structure and process for identifying, evaluating, monitoring, and managing significant risks that may affect the achievement of business objectives. The control structure and process which have been instituted throughout the Group are updated and reviewed from time to time to suit the changes in the business environment, and this on-going process has been in place for the whole financial year under review and up to the date of approval of this statement for inclusion in the annual report.

KEY INTERNAL CONTROL ELEMENTS

The key elements of the internal control system established by the Board provide the required oversight and effective governance of internal control comprised of the following:-

(1) Authority and Responsibility

Audit and Risk Management Committee (“ARMC”)

The Board through the ARMC provides the oversight on the risk management and internal control matters relating to the activities of the Group. The ARMC reviews the adequacy and effectiveness of the risk management and internal control on an on-going basis including approving risk management strategies, frameworks, risk tolerance and policies. The ARMC assists the Board in identifying, assessing, managing and controlling the risks in areas of strategic, operational, legal, finance and other risks to ensure that the risk management process is in place and functioning.

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KEY INTERNAL CONTROL ELEMENTS (CONT’D)

(1) Authority and Responsibility (Cont’d)

Board Committees

The Board also delegated certain responsibilities to Board Committees such as the Nomination Committee and Remuneration Committee to assist the Board in its responsibilities and oversight function within its respective Terms of Reference and report to the Board of their recommendations when required.

Management Committee

The Management is responsible to implement the Board’s policies and direction and to ensure that the day to day management of the Group’s activities in achieving those objectives is consistent with the Board’s risk strategy, risk appetite and policies. The daily running of the business is entrusted to the Group Managing Director (“GMD”) andChiefExecutiveOfficer(“CEO”)andtheManagementteam.UnderthepurviewoftheGMD&CEO,theHeadsof respective Business Divisions and departments of the Group are empowered with responsibility of managing their respective operations. The GMD & CEO actively communicate the Board’s expectations through the weekly management and sales meetings attended by Senior Management and Heads of Business Divisions. Matters pertaining to action items in achieving business objectives as well as operational and financial risks are deliberated and decided.

Project Steering Committees (“PSC”)

PSC is established for certain key large projects to provide the oversight, review and monitoring of the project procurement processes, implementation and deliverables as well as key issues pertaining to the operations of the projects. PSC members usually comprise of Key Senior Management and include the relevant Head of Business Divisions.

Any material issues that arise from the matters deliberated in the Management Committee and PSCs is highlighted and reported to the ARMC and Board.

(2) Organisation Structure

The Group has an established organisation structure with clear defined lines of authority, responsibility and accountability to meet its business strategies and objectives within a reasonable control environment.

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

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(3) Risk Management Framework

An Enterprise Risk Management Framework (“ERMF”) has been established to ensure that the risk management framework is embedded and consistently adopted throughout the Group.

Risk Governance

The Board has established a governance structure with clear delineated responsibilities, authority limits and accountability aligned to business and operational requirements which will support the maintenance of a strong control environment. It has extended the responsibilities of the Board through the ARMC to include assessment of internal controls through the Internal Audit and Risk Management Department. The ARMC shall act within its term of reference and authority delegated by the Board to ensure that the ERMF is embedded and consistently adopted throughout the Group.

Risk Appetite

Risk appetite is defined as the level of risk the Group is prepared to accept to achieve its strategic direction and business objectives. The risk parameters will change on an on-going basis depending on the prevailing business environment, changes in strategies and business objectives and stakeholders’ expectations.

Risk Management Processes

An approach is undertaken to balance risk or impact against returns or objectives and is established for all relevant material risks. Each business divisions analyses and identifies the material risks in relation to the respective business and operations on a periodic basis. The risk is then assessed and measured to quantify and assess the risk impact and likelihood. Risk controls and mitigation plan are put in place to as measures to control and mitigate risk based on prioritized risk. Risk are then monitored and report on the progress and compliance and is then reported to the ARMC on a periodic basis.

Risk Culture

The key factors of the Group’s risk culture include the following:-• StrongtopdownapproachandcorporategovernanceapproachdrivenbytheBoard• Organisationwithcleardefinedrolesandresponsibilitiesandclearpolicies,proceduresandguidelines• Integrityinfiduciarydutiesandadherencetobusinessethics• Compliancetoprevailinglaws,regulationsandinternalcontrols

The Group has established a Corporate risk profile consisting of identified material risks in the areas of business, financial, project management and operations. The impact of these risks was assessed and evaluated against the Group’s risk tolerance. Each risk is regularly reviewed and reported to the ARMC and Board.


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(4) Internal Audit Function

The Internal Audit Department (“IAD”) was set up by Board to provide independent assurance of the adequacy of internal control and governance systems. Internal audit activities are guided by an Internal Audit Charter which is approved by the ARMC.

IAD carries out regular reviews on business processes to assess the adequacy and effectiveness of internal control, compliance with regulations, and highlight significant risks and control weaknesses affecting the Group. IAD also performs ad-hoc tasks, investigations or reviews as and when requested by the Board, ARMC and Management.

ARMC meetings are held regularly to deliberates audit findings, management responses, and monitor the actions taken by Management in areas with significant control weaknesses. Follow-up audits are conducted to review the adequacy and effectiveness of corrective actions taken by management on all significant matters raised. IAD’s annual audit plans are reviewed and approved by the ARMC to ensure the adequacy of coverage of significant and high-risk areas.

The Head of Internal Audit and Risk Management are given the opportunity to meet with the ARMC without the presence of the management, whenever deemed necessary.

(5) Planning, Monitoring and Reporting

Annual Operating Plans & Budgets

Operating plans and budgets are prepared by the respective Heads of Business Divisions on an annual basis. The Group’s operating plan and budgets are presented to the Board for deliberations and approval. Actual performance against budgets are presented to the ARMC and Board on a quarterly basis highlighting key factors contributing to the variances, if any.

Financial Reporting

The Board monitors the Group’s performance by reviewing the quarterly results and operations and examines the announcement made to the Bursa Securities. These are reviewed by the ARMC before they are tabled to the Board.

Related Party Transactions

All related party transactions are reported to the ARMC and Board on a quarterly basis. Details of transactions, revenue recognition and amount owing as at end of each reporting quarter were provided.


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(5) Planning, Monitoring and Reporting (Cont’d)

Management & Sales Meeting

Progress of revenues against target and key sales activities to achieve the business objectives are discussed with the Heads of Business Divisions in the weekly management and sales meeting.

Project Progress

Certain key project progress is being monitored and reviewed by the respective Project Steering Committees on a periodic basis.

MaterialLitigationandCorporateUpdates

The Board also receives reports on the updates of material litigation or any pertinent corporate matters when occurred and during the Board meetings held on a periodic basis.

(6) Internal Controls, Policies and Procedures

Business Process

A system of internal controls is reflected in the business processes which is based on segregation of duties, is in place to ensure the compliance to the limits of authority and adequate independent checks within the multi-tier authorization and approval processes.

Authority Limit

The Board has established a Discretionary Authority Limit (“DAL”) for approving revenue and capital expenditures for each level of management and has also established cheque signatories’ authority level for approving payments. Major capital investments, acquisitions and disposals exceeding a certain threshold must be referred to the Board or the relevant Committee for approval.

Procurement

There is a centralised and coordinated procurement function for purchases of assets and inventories, project development and maintenance expenditures, which enables the Group to leverage on the economies of scale and ensures adherence to authority limits, policies and procedures. The existing procurement and accounting processes are capable of keeping track of the accuracy, integrity and recording of its assets and expenditures.


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(6) Internal Controls, Policies and Procedures (Cont’d)

Human Resource

The Group emphasises on human resource development and training as it recognizes the value of its staff in contributing to its growth. There are proper guidelines within the Group for recruitment, performance appraisals and promotion to ensure that only suitably qualified and competent personnel across all levels of management are hired and retained. The Group is also dedicated to continuously develop employees with the relevant and appropriate skills by conducting regular training programs to ensure staff is adequately trained and competent in discharging their responsibilities.

Health, Safety and Environment (HSE)

The Group is committed to ensuring the risk of health, safety and environmental impact in the work place is adequately managed.TheGrouphasthecertificationfortheOHSAS18001:2007OccupationalHealth&SafetyManagementSystemandISO14001:2015fortheEnvironmentalManagementSysteminrelationtothemanagementofprojectfor Information and Communication Technology (ICT) and telecommunication services. A HSE committee which comprisedofsix(6)managementandsix(6)employeesmeetsonregularbasistodiscussonHSEissuesandtoensure adherence to HSE policies.

Quality Management

AsubsidiaryoftheGrouphadobtainedtheISO9001:2015forthePlan,Supply,Delivery,Install,Testing,Integration& Commissioning of Telecommunication System. This certification demonstrates our commitment for continuous quality improvement.

Insurance

Sufficient insurance coverage on major assets and project works are in place to ensure the Group’s assets and works are adequately covered against any mishap that could result in material loss.

(7) Business Code of Ethics and Conduct

The Board observes the Directors’ Code of Ethics established by the Companies Commission of Malaysia. The Group adopts the Code of Business Ethics published by its holding company, Lembaga Tabung Haji. The Code of Business Ethics is published in the Company’s website at www.theta-edge.com. The Code of Ethics also covers whistle-blowing provisions which provides the policy and information on the appropriate feedback channels to facilitate whistle-blowing. The Code of Ethics is communicated to the staff for their awareness and adherence through annual reminder and during the induction of new employees. The employees are also required to provide declaration of conflict of interest upon recruitment and updates on an annual basis.


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Adequacy and Effectiveness of the Group’s Risk Management and Internal Control System

The Board has received assurance from the Chief Executive Officer, Chief Financial Officer and Head of Internal Audit & Risk Management that based on the current business environment and condition, the Group’s current risk management and internal control system are operating adequately and effectively in all material aspects. The Board has also received assurance that the Internal Audit function is free from any relationships or conflicts of interest which could impair their objectivity and independence and that the Internal Audit function is carried out in accordance with a recognized framework.

The Board is of the view that the risk management and internal control system is satisfactory and no material internal control failures or any of the reported weaknesses have resulted in material losses or contingencies during the financial year under review. The Board is of the view that the present system of internal control is adequate for the Group to manage its risks and to achieve its business objectives. The Board is committed in ensuring that the Group continuously reviews the internal control system so that it is effective in enhancing shareholders’ investments and safeguarding the Group’s assets.

Review of the Statement by External Auditors

The External Auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in Audit and Assurance Practice Guide (“AAPG”) 3, Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”)forinclusionintheannualreportoftheGroupfortheyearended31December2018,andreportedtotheBoardthat nothing has come to their attention that cause them to believe that the statement intended to be included in the annual report of the Group, in all material respects:

(a)hasnotbeenpreparedinaccordancewiththedisclosuresrequiredbyparagraphs41and42oftheStatementonRisk Management and Internal Control: Guidelines for Directors of Listed Issuers, or

(b) is factually inaccurate.

AAPG 3 does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and Management thereon. The Auditors are also not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems.

CONCLUSION

The Board is of the view that the present system of internal control is adequate for the Group to manage its risks and to achieve its business objectives. The Board is committed in ensuring that the Group continuously reviews the internal control system so that it is effective in enhancing shareholders’ investments and safeguarding the Group’s assets.

ThisstatementwasmadeinaccordancewitharesolutionoftheBoardofDirectorsdated14March2019.


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ADDITIONAL COMPLIANCE INFORMATION

(i) Utilisation of Proceeds

Duringthefinancialyearended31December2018,therewerenoproceedsreceivedbytheCompanyfromanycorporate proposals.

(ii) Audit and Non-Audit Fees

The fees payable to the External Auditors, Messrs KPMG Desa Megat PLT in relation to the audit and non-audit services rendered to Theta Edge Berhad (“the Company” or “TEB”) and its subsidiary companies for the financial yearended31December2018areasfollows:-

TEB Group (RM) (RM)

Audit 45,000 132,000Non-Audit Fees 10,000 10,000

Total 55,000 142,000

(iii) Material Contracts

There are no material contract(s) (not being contracts entered into in the ordinary course of business) by the Group involving directors and substantial shareholders’ interest with the Company and/its subsidiary companies during the financial year.

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(iv) Recurrent Related Party Transactions of a Revenue or Trading Nature

TheCompanyhadattheAnnualGeneralMeetingheldon31May2018obtainedtheshareholders’mandatetoenter into Recurrent Related Party Transactions (“RRPT”) of a revenue nature, which are necessary for the day-to day operations on the terms not more favourable to the related party than those available to the public and not to the detriment of the minority shareholders.

The breakdown of the aggregate value and type of recurrent related party transactions conducted pursuant to the shareholders’mandateforthefinancialyearended31December2018issetoutbelow:

Related Party with whomthe Group is transacting

Nature ofTransactions

Companywithin the

Groupinvolvedin RRPT

InterestedRelated

Party

Aggregatevalue

(RM’000)

Lembaga Tabung Haji (TH) Group and/or its associated company(ies)

(Recipient)

(i) The Provision of ICT application support services

(ii) The Provision of maintenance for ICT hardware and software systems

(iii) The Provision of all related ICT system integration, system implementation and related services

(iv) The Provision of telecommunication and data transmission services

(v) The Provision of desktop management services and hardware leasing

THETA Group

and/or itsassociated company

(Provider)

*TH Group,Dato’

Noordin binSulaiman, Datuk Adi Azuan bin

Abdul Ghani and Anis

Zuhani binti Ahmad

37,670

Notes: *TH is the holding company of the Company.

Dato’ Noordin bin Sulaiman, Datuk Adi Azuan bin Abdul Ghani and Puan Anis Zuhani binti Ahmad are the Directors of the Company and are nominated and appointed by TH and they are deemed interested in the Proposal.

Additional Compliance Information (Cont’d)


[[Directors’ Report 82Statement of Financial Position 86Statement of Profit or Loss and

Other Comprehensive Income87

Statement of Changes in Equity 88Statement of Cash Flows 89Notes to the Financial Statement 92

FINANCIALSTATEMENTS

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DIRECTORS’ REPORTfortheyearended31December2018

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company forthefinancialyearended31December2018.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiaries and joint venture are stated in Note 4 and Note 5 to the financial statements.

There has been no significant change in the nature of these activities during the financial year.

ULTIMATE HOLDING COMPANY

TheCompanyisasubsidiaryofLembagaTabungHaji,astatutorybodyestablishedundertheTabungHajiAct1995(Act535) in Malaysia and regarded by the Directors as the Company’s ultimate holding company, during the financial year and until the date of this report.

SUBSIDIARIES

The details of the Company’s subsidiaries are disclosed in Note 4 to the financial statements.

RESULTS

Group Company RM’000 RM’000

Loss for the year attributable to: OwnersoftheCompany 1,608 14,219

RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the year under review.

DIVIDEND

No dividend was paid nor declared during the financial year and the Directors do not recommend any dividend to be paid for the financial year under review.

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DIRECTORS OF THE COMPANY

Directors who served during the financial year until the date of this report are: Dato’ Iskandar Mizal bin MahmoodMohamed Ridza bin Mohamed AbdullaAbdul Halim bin JantanDatuk Adi Azuan bin Abdul GhaniAnis Zuhani binti AhmadDato’ Richard George Azlan bin AbasA. Shukor bin S.A. Karim DIRECTORS’ INTERESTS IN SHARES

The interests and deemed interests in the ordinary shares of the Company and of its related corporations of those who were Directors at financial year end as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares At At 1.1.2018 Bought Sold 31.12.2018

Interests in the Company Dato’RichardGeorgeAzlanbinAbas 910,000 – – 910,000

NoneoftheotherDirectorsholdingofficeat31December2018hadanyinterestintheordinarysharesoftheCompanyand of its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors as shown in the financial statements or the fixed salary of full time employees of the holding corporation) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

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

Directors’ Reportfortheyearended31December2018(Cont’d)

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ISSUE OF SHARES

There were no changes in the issued and paid-up capital of the Company.

OPTIONS GRANTED OVER UNISSUED SHARES

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

INDEMNITY AND INSURANCE COSTS

During the financial year, Theta Edge Berhad and its subsidiaries, are covered under Directors and Officers Liability Insurance. ThetotalamountofinsuranceeffectedfortheDirectorsandOfficersoftheGroupisRM20million.TheinsurancepremiumincurredbytheCompanyisRM50,360.

OTHER STATUTORY INFORMATION

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

(i) all known bad debts have been written off and adequate provision made for doubtful debts, and

(ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.

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

(i) that would render the amount written off for bad debts or the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

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

(iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.


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OTHER STATUTORY INFORMATION (CONT’D)

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

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

(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet its obligations as and when they fall due.

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 December2018havenotbeensubstantiallyaffectedbyanyitem,transactionoreventofamaterialandunusualnaturenor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

AUDITORS

The auditors, KPMG Desa Megat PLT, have indicated their willingness to accept re-appointment.

Theauditors’remunerationisdisclosedinNote16tothefinancialstatements.

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

Dato’ Iskandar Mizal bin MahmoodDirector

A. Shukor bin S.A KarimDirector

Kuala Lumpur,

Date:14March2019


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STATEMENT OF FINANCIAL POSITIONasat31December2018

Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Assets Plantandequipment 3 4,188 8,349 582 660 Investmentsinsubsidiaries 4 – – 71,626 66,904 Investment in joint venture 5 – 15 – – Intangibleassets 6 – 1,216 – – Deferredtaxassets 7 3,902 3,902 – –

Total non-current assets 8,090 13,482 72,208 67,564

Inventories 8 4,421 12,732 – – Currenttaxassets 48 27 – – Tradeandotherreceivables 9 20,616 35,176 45,020 45,256 Cashandcashequivalents 10 46,332 29,470 3,545 3,629

Total current assets 71,417 77,405 48,565 48,885

Total assets 79,507 90,887 120,773 116,449

Equity Sharecapital 11 107,243 107,243 107,243 107,243 Reserves 12 (39,356) (37,748) (41,449) (27,230)

Equity attributable to owners of the Company 67,887 69,495 65,794 80,013

Liabilities Loansandborrowings 13 – 754 – –

Total non-current liabilities – 754 – –

Loansandborrowings 13 754 3,170 – – Currenttaxliabilities 26 39 6 8 Tradeandotherpayables 14 10,840 17,429 54,973 36,428

Total current liabilities 11,620 20,638 54,979 36,436

Total liabilities 11,620 21,392 54,979 36,436

Total equity and liabilities 79,507 90,887 120,773 116,449

Thenotesonpage92to142areanintegralpartofthesefinancialstatements.

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STATEMENT OF PROFIT OR LOSS ANDOTHER COMPREHENSIVE INCOME

fortheyearended31December2018


Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Revenue 15 70,469 90,453 15,186 25,606Costofsales (58,560) (76,646) (10,152) (19,885)

Gross profit 11,909 13,807 5,034 5,721Otheroperatingincome 784 3,525 4,733 2,607Sellinganddistributioncosts (4,362) (5,074) (158) (204)Administrativeexpenses (7,385) (8,488) (4,968) (5,416)Otherexpenses (3,209) (2,287) (19,005) (1,704)

Results from operating activities (2,263) 1,483 (14,364) 1,004Financeincome 1,034 684 170 103Financecosts (342) (722) – –Share of losses of equity accountedjointventure,netoftax – (6) – –

(Loss)/Profitbeforetax 16 (1,571) 1,439 (14,194) 1,107Incometaxexpense 17 (37) (48) (25) (49)

Total comprehensive (expense)/ incomefortheyear (1,608) 1,391 (14,219) 1,058

Basic (loss)/earnings per ordinaryshare(sen) 18 (1.50) 1.30

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STATEMENT OF CHANGES IN EQUITYfortheyearended31December2018

Share Accumulated Total capital losses equity RM’000 RM’000 RM’000

Group

At 1 January 2017 107,243 (39,139) 68,104Totalcomprehensiveincomefortheyear – 1,391 1,391

At 31 December 2017/1 January 2018 107,243 (37,748) 69,495Totalcomprehensiveexpensefortheyear – (1,608) (1,608)

At 31 December 2018 107,243 (39,356) 67,887

Note11 Note12

Company

At 1 January 2017 107,243 (28,288) 78,955Totalcomprehensiveincomefortheyear – 1,058 1,058

At 31 December 2017/1 January 2018 107,243 (27,230) 80,013Totalcomprehensiveexpensefortheyear – (14,219) (14,219)

At 31 December 2018 107,243 (41,449) 65,794

Note11 Note12


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STATEMENT OF CASH FLOWSfortheyearended31December2018

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities(Loss)/Profitbeforeincometax (1,571) 1,439 (14,194) 1,107Adjustments for: Depreciationofplantandequipment 5,311 8,080 157 114 Amortisationofdevelopmentcost – 289 – – Plantandequipmentwrittenoff – 6 – – Reversalofprovisionforlitigation – (2,595) – (2,595) Loss on disposal in investment in joint venture 15 – – – Share of losses of equity-accounted jointventure,netoftax – 6 – – Gainondisposalofplantandequipment (22) – – – Baddebtsrecovered (35) (689) (12) (12) Tradereceivablewrittenoff – 37 – – Impairmentlossonreceivables 311 247 19,068 – Reversal of impairment loss on amountduefromsubsidiaries – – (220) (206) Developmentcostwrittenoff 1,216 – – – Impairmentlossoninventories 74 – – – Inventorieswrittenoff 6 – – – (Reversal)/Impairment loss for diminution ininvestmentinsubsidiaries – – (4,722) 1,796 Lossonforeignexchange 192 – – – Financecosts 342 722 – – Financeincome (1,034) (684) (170) (103)

Operating profit/(loss) before changes in working capital 4,805 6,858 (93) 101Changes in working capital: Inventories 8,231 1,675 – – Tradeandotherreceivables 14,091 (14,313) (18,600) (28,976) Tradeandotherpayables (6,589) 1,394 18,545 26,974

Cash generated from/(used in) operating activities 20,538 (4,386) (148) (1,901)


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Cash generated from/(used in) operating activities 20,538 (4,386) (148) (1,901)

Financecostspaid (342) (722) – – Financeincomereceived 1,034 684 170 103 Incometaxpaid (78) (114) (27) (42) Incometaxrefunded 8 25 – –

Net cash generated from/(used in) operating activities 21,160 (4,513) (5) (1,840)

Cash flows from investing activities Proceeds from disposal of plant and equipment 26 – – – Purchaseofplantandequipment (1,154) (1,893) (79) (237)

Net cash used in investing activities (1,128) (1,893) (79) (237)

Cash flows from financing activities Repaymentofrevolvingcredit – (1,900) – – Repaymentoffinanceleaseliabilities (3,170) (6,127) – – Movementinpledgeddeposits 1,690 (649) 1,694 (550)

Net cash (used in)/generated from financing activities (1,480) (8,676) 1,694 (550)

Net change in cash and cash equivalents 18,552 (15,082) 1,610 (2,627)Cashandcashequivalentsat1January 25,888 40,970 147 2,774

Cash and cash equivalents at 31 December 44,440 25,888 1,757 147

Statements of Cash Flowsfortheyearended31December2018(Cont’d)


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Statements of Cash Flowsfortheyearended31December2018(Cont’d)

Cash and cash equivalents

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


Depositswithlicensedbanks 37,029 24,342 3,087 3,484Cashandbankbalances 9,303 5,128 458 145

46,332 29,470 3,545 3,629Less:Pledgeddeposits (1,892) (3,582) (1,788) (3,482)

44,440 25,888 1,757 147


[92

NOTES TO THE FINANCIAL STATEMENTS

Theta Edge Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business is as follows:

Registered office and principal place of business

A-3A-3A, Block A, Oasis Square Office,JalanPJU1A/7A,AraDamansara,47301PetalingJaya,Selangor Darul Ehsan

TheconsolidatedfinancialstatementsoftheCompanyasatandforthefinancialyearended31December2018comprisethe Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interests in joint venture.

The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiary companies are stated in Note 4 to the financial statements.

TheultimateholdingcorporationisLembagaTabungHaji,astatutorybodyestablishedundertheTabungHajiAct1995(Act 535).

ThefinancialstatementswereapprovedbytheBoardofDirectorson14March2019.

1. BASIS OF PREPARATION

(a) Statement of compliance

The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements oftheCompaniesAct2016inMalaysia.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019• MFRS16,Leases• ICInterpretation23,Uncertainty over Income Tax Treatments• AmendmentstoMFRS3,Business Combinations (Annual Improvements to MFRS Standards 2015-

2017 Cycle)• AmendmentstoMFRS9,Financial Instruments – Prepayment Features with Negative Compensation• AmendmentstoMFRS11,Joint Arrangements (Annual Improvements to MFRS Standards 2015-2017

Cycle)• AmendmentstoMFRS112,Income Taxes (Annual Improvements to MFRS Standards 2015-2017 Cycle)• AmendmentstoMFRS119,Employee Benefits Plan Amendment, Curtailment or Settlement• AmendmentstoMFRS123,Borrowing Costs (Annual Improvements to MFRS Standards 2015-2017

Cycle)• AmendmentstoMFRS128, Investments in Associates and Joint Ventures – Long-term Interests in

Associates and Joint Ventures

Notes to the Financial Statements (Cont’d)

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1. BASIS OF PREPARATION (CONT’D)

(a) Statement of compliance (Cont’d)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2020• AmendmentstoMFRS3,Business Combinations – Definition of a Business• AmendmentstoMFRS101,Presentation of Financial Statements and MFRS 108, Accounting Policies,

Changes in Accounting Estimates and Errors – Definition of Material

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021• MFRS17,Insurance Contracts

MFRSs, Interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed• AmendmentstoMFRS10,Consolidated Financial Statements and MFRS 128, Investments in Associates

and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company plans to apply the abovementioned accounting standards, amendments and interpretations, where applicable:

• fromtheannualperiodbeginningon1January2019forthoseaccountingstandards,amendmentsandinterpretationthatareeffectiveforannualperiodsbeginningonorafter1January2019.

• fromtheannualperiodbeginningon1January2020forthoseamendmentsthatareeffectiveforannualperiodsbeginningonorafter1January2020.

TheGroupandtheCompanydoesnotplantoapplyMFRS17,InsuranceContractsthatiseffectiveforannualperiodsbeginningon1January2021asitisnotapplicabletotheGroupandtheCompany.

The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and the Company except as mentioned below:


[94

1. BASIS OF PREPARATION (CONT’D)

(a) Statement of compliance (Cont’d)

(i) MFRS 16, Leases

MFRS16replacestheguidanceinMFRS117,Leases, IC Interpretation 4, Determining whether an Arrangement contains a Lease, IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127,Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

MFRS16introducesasingle,on-balancesheetleaseaccountingmodelforlessees.Alesseerecognisesa right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard which continues to be classified as finance or operating lease.

Basedontheassessment,theGroupdoesnotexpecttheapplicationofMFRS16tohaveasignificantimpact on its financial statements.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Group and the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

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

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

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements.


[95


2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated.

ArisingfromtheadoptionofMFRS15,RevenuefromContractswithCustomersandMFRS9,FinancialInstruments,there are changes to the accounting policies of:

(i) financial instruments;

(ii) revenue recognition; and

(iii) impairment losses of financial instruments

as compared to those adopted in previous financial statements. The impacts arising from the changes are disclosed inNote25.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.


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2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of consolidation (Cont’d)

(ii) Business combinations

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

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

• thefairvalueoftheconsiderationtransferred;plus• therecognisedamountofanynon-controllinginterestsintheacquiree;plus• ifthebusinesscombinationisachievedinstages,thefairvalueoftheexistingequityinterestin

the acquiree; less• thenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilities

assumed.

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

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

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

(iii) Loss of control

Uponthelossofcontrolofasubsidiary,theGroupderecognisestheassetsandliabilitiesoftheformersubsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated 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 in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.


[97



(a) Basis of consolidation (Cont’d)

(iv) Joint arrangements

Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.

Joint arrangements are classified and accounted for as follows:

• Ajointarrangementisclassifiedas“jointoperation”whentheGrouphasrightstotheassetsandobligations for the liabilities relating to an arrangement. The Group account for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint operation.

• Ajointarrangementisclassifiedas“jointventure”whentheGrouphasrightsonlytothenetassets of the arrangements. The Group accounts for its interest in the joint venture using the equity method. Investments in joint venture are measured in the Group’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

(v) Transactions eliminated on consolidation

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

(b) Financial instruments

Unlessspecificallydisclosedbelow,theGroupandtheCompanygenerallyappliedthefollowingaccountingpoliciesretrospectively.Nevertheless,aspermittedbyMFRS9,Financial Instruments, the Group and the Company have elected not to restate the comparatives.

(i) Recognition and initial measurement

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

Current financial year

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


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(b) Financial instruments (Cont’d)

(i) Recognition and initial measurement (Cont’d)

Previous financial year

A financial instrument was recognised initially, at its fair value plus or minus, in the 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 the financial instrument.

(ii) Financial instrument categories and subsequent measurement

Financial assets


Categories of financial assets are determined on initial recognition and are not reclassified subsequent to their initial recognition unless the Group and the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change of the business model.

Amortised cost

Amortised cost category comprises financial assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method. Interest income and foreign exchange gains and losses are recognised in profit or loss.

The financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition, these financial assets 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 profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Interest income is recognised by applying effective interest rate to the gross carrying amount except for credit impaired financial assets where the effective interest rate is applied to the amortised cost.


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(ii) Financial instrument categories and subsequent measurement (Cont’d)

Financial assets (Cont’d)


In the previous financial year, financial assets of the Group and the Company were classified and measuredunderMFRS139,FinancialInstruments:RecognitionandMeasurementasfollows:

Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

Allfinancialassetsaresubjectedtoreviewforimpairment(seeNote2(h)(i)).

Financial liabilities


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

Amortised cost

Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method.

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


In the previous financial year, financial liabilities of the Group and the Company were subsequently measured at amortised cost.


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(iii) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date or settlement date accounting in the current year.

Trade date accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and

(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

Settlement date accounting refers to:

(a) the recognition of an asset on the day it is received by the Group and the Company, and

(b) derecognition of an asset and recognition of any gain or loss on disposal on the day that is delivered by the Group and the Company.

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

Generally, the Group and the Company applies settlement date accounting unless otherwise stated for the specific class of asset.

(iv) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or transferred, or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount of the financial asset and the sum of consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.


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(iv) Derecognition (Cont’d)

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. A financial liability is also derecognised when its terms are modified and the cash flows of the modified liability are substantially different, in which case, a new financial liability based on modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(c) Plant and equipment

(i) Recognition and measurement

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

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour.

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

When significant parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment.

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

(ii) Subsequent costs

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


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(c) Plant and equipment (Cont’d)

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then the component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group and the Company will obtain ownership by the end of the lease term.

The estimated useful lives for the current and comparative periods are as follows:

• Computerequipment 3-5years• Officeandtestequipment 5-10years• Furniture&fittings 10years• Motorvehicles 5years• Renovation 5-7years• Plantandmachinery 10years• Digitalmediainfrastructure 5years

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

(d) Leased assets

(i) Finance lease

Leases in terms of which the Group and the Company assumes substantially all the risks and rewards ofownershipareclassifiedasfinanceleases.Uponinitialrecognition,theleasedassetismeasuredatan amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.


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(d) Leased assets (Cont’d)

(ii) Operating leases

Leases, where the Group and the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, the leased assets are not recognised on the statement of financial position.

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

(e) Intangible assets

(i) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in profit or loss as incurred.

Expenditure on development activities, whereby the application of research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.

The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly attributable to preparing the asset for its intended use. Development expenditure is recognised in profit or loss as incurred.

Capitalised development expenditure is measured at cost less any accumulated amortisation and any accumulated impairment losses.

(ii) Amortisation

Intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired.

Other intangible assets are amortised from the date that they are available for use. Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets.


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(e) Intangible assets (Cont’d)

(ii) Amortisation (Cont’d)

The estimated useful lives for the current and comparative periods are as follows:

• capitaliseddevelopmentcosts-3years

Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(f) Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is calculated using the weighted average method and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition.

In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(g) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(h) Impairment

(i) Financial assets

Unless specifically disclosedbelow, theGroup and theCompanygenerally applied the followingaccountingpoliciesretrospectively.Nevertheless,aspermittedbyMFRS9,Financial Instruments, the Group and the Company elected not to restate the comparatives.


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(h) Impairment (Cont’d)

(i) Financial assets (Cont’d)


The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at amortised cost. Expected credit losses are a probability-weighted estimate of credit losses.

The Group and the Company measure loss allowances at an amount equal to lifetime expected credit loss, except for cash and bank balance for which credit risk has not increased significantly since initial recognition,whicharemeasuredat12-monthexpectedcreditloss.Lossallowancesforreceivablesare always measured at an amount equal to lifetime expected credit loss.

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

Lifetime expected credit losses are the expected credit losses that result from all possible default events overtheexpectedlifeoftheasset,while12-monthexpectedcreditlossesaretheportionofexpectedcreditlossesthatresultfromdefaulteventsthatarepossiblewithinthe12monthsafterthereportingdate.

The Group estimate the expected credit losses on receivables using a provision matrix with reference to historical credit loss experience.

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


All financial assets were assessed at each reporting date whether there was any objective evidence of impairment as a result of one or more 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 not recognised.

An impairment loss in respect of loans and receivables was recognised in profit or loss and was measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset was reduced through the use of an allowance account.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.


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(h) Impairment (Cont’d)

(i) Financial assets (Cont’d)

Previous financial year (Cont’d)

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

(ii) Other assets

The carrying amounts of other assets (except for inventories and deferred tax asset) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, the recoverable amount is estimated each period at the same time.

The carrying amounts of other assets (except for inventories and deferred tax asset) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating unit.

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

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

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amounts of other assets in the cash-generating unit (or a group of cash-generating units) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.


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(i) Employee benefits

(i) Short term employee benefits

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

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

(ii) Defined contribution plan

The Group’s and the Company’s contributions to the defined contribution plan (‘Employees Provident Fund’) are charged to the statement of comprehensive income in the period in which they relate. Once the contributions have been paid, the Group and the Company has no further payment obligations.

(j) Revenue and other income

(i) Revenue

Revenue is measured based on the consideration specified in a contract with a customer and exclude amounts collected on behalf of third parties. The Group and the Company recognises revenue when or as it transfers control over a product or service to customer. An asset is transferred when (or as) the customer obtains control of the asset.

The Group and the Company transfer control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

(a) the customer simultaneously receives and consumes the benefit provided by the entity’s performance as the entity performs;

(b) the entity’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced; or

(c) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.

If a performance obligation is not satisfied over time in accordance with the above criteria, an entity satisfies the performance obligation and recognises revenue at a point in time.


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(k) Income tax

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

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

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

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

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

Unutilisedreinvestmentallowanceandinvestmenttaxallowance,beingtaxincentivesthatisnotataxbaseof an asset, is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

(l) Borrowings costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective profit method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.


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(l) Borrowings costs (Cont’d)

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(m) Contingent liabilities

The Group and the Company does not recognise contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group and the Company of a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.

(n) Fair value measurements

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

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

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

Level 1: quoted prices (unadjusted) in active markets for identical asset or liabilities that the Group can access at the measurement date.

Level2: inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

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


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3. PLANT AND EqUIPMENT

Digital Office media Computer and test Furniture Motor Plant and infra- equipment equipment and fittings vehicles Renovation machinery structure Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group Cost At1January2017 26,225 1,650 21 629 2,208 2,512 6,614 39,859Additions 1,176 29 24 – 232 432 – 1,893Reclassification 371 5 – – – (75) – 301Writtenoff (3) (4) (6) – (68) – – (81)

At31December2017/ 1January2018 27,769 1,680 39 629 2,372 2,869 6,614 41,972Additions 890 184 12 – 28 40 – 1,154Reclassification 66 – – – – – (66) –Disposal (6) – – – – – – (6)

At31December2018 28,719 1,864 51 629 2,400 2,909 6,548 43,120

Accumulated depreciationAt1January2017 14,665 846 10 583 771 1,828 6,614 25,317Depreciationfortheyear 7,218 186 4 46 443 183 – 8,080Reclassification 293 38 (2) – – (28) – 301Writtenoff (2) (2) (4) – (67) – – (75)

At31December2017/ 1January2018 22,174 1,068 8 629 1,147 1,983 6,614 33,623Depreciationfortheyear 4,422 168 5 – 461 255 – 5,311Reclassification 66 – – – – – (66) –Disposal (2) – – – – – – (2)

At31December2018 26,660 1,236 13 629 1,608 2,238 6,548 38,932


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3. PLANT AND EqUIPMENT (CONT’D)

Digital Office media Computer and test Furniture Motor Plant and infra- equipment equipment and fittings vehicles Renovation machinery structure Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GroupCarrying amountsAt1January2017 11,560 804 11 46 1,437 684 – 14,542

At31December2017/ 1January2018 5,595 612 31 – 1,225 886 – 8,349

At31December2018 2,059 628 38 – 792 671 – 4,188 At31December2018,thenetcarryingamountofleasedcomputerequipmentwasRM569,000(2017:RM3,482,000).


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3. PLANT AND EqUIPMENT (CONT’D)

Computer Office Furniture equipment equipment and fittings Renovation Total RM’000 RM’000 RM’000 RM’000 RM’000

CompanyCost At1January2017 373 130 1 465 969Additions 78 5 6 148 237

At31December2017/ 1January2018 451 135 7 613 1,206Additions 35 31 11 2 79

At31December2018 486 166 18 615 1,285

Accumulated depreciationAt1January2017 348 63 – 21 432Depreciationfortheyear 9 12 – 93 114

At31December2017/ 1January2018 357 75 – 114 546Depreciationfortheyear 15 17 1 124 157

At31December2018 372 92 1 238 703

Carrying amounts At1January2017 25 67 1 444 537

At31December2017/ 1January2018 94 60 7 499 660

At31December2018 114 74 17 377 582


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4. INVESTMENTS IN SUBSIDIARIES

Company 2018 2017 RM’000 RM’000

At cost Unquotedshares 98,909 98,909 Less:Impairmentloss (27,283) (32,005)

71,626 66,904

Details of subsidiaries are as follows:

Name of companyPrincipalplace of business

Principal activitiesEffective ownership

interest andvoting interest

2018%

2017%

Advanced Business Solutions (M) Sdn. Bhd.

Malaysia Dealers, software writers, compilers and testers, system developers, trainers and consultants in computers and all services related to information technology industry

100 100

Impianas Sdn. Bhd. Malaysia Public mobile data network operator 100 100

Theta Technologies Sdn. Bhd. Malaysia Sales and maintenance of computers and telecommunication equipment, peripherals and related services

100 100

Lityan Applications Sdn. Bhd. Malaysia Marketing of computer products, provision of application development services and all other computer related activities

100 100

Theta Telecoms Sdn. Bhd. Malaysia Supply of telecommunication equipment and services and provision of customised total systems integration services and solutions

100 100

Theta Greentech Sdn. Bhd. Malaysia Information technology solutions 100 100


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4. INVESTMENTS IN SUBSIDIARIES (CONT’D)

Name of companyPrincipalplace of business

Principal activitiesEffective ownership

interest andvoting interest

2018%

2017%

Theta Multimedia Sdn. Bhd. Malaysia Distributions of computers and computers related equipment

100 100

TH2.0Sdn.Bhd. Malaysia Investment holding company 100 100

Theta Mobile Sdn. Bhd. Malaysia Carrying on business associated with or in promotion of IT industry

100 100

5. INVESTMENT IN JOINT VENTURE

Group 2018 2017 RM’000 RM’000

At cost Unquotedshares – 3,000 Shareofpost-acquisitionlosses – (2,985)

– 15

The details of the joint venture, incorporated in Malaysia, is as follows:

Name of company Principal activities

Effectiveownership

interest2018

%2017

%

Taha Alam Sdn. Bhd. * To carry on the business of providing product and services relating to Hajj and umrah related operations globally

– 50

* not audited by KPMG Desa Megat PLT


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5. INVESTMENT IN JOINT VENTURE (CONT’D)

TheCompany’swholly-ownedsubsidiary,TH2.0SdnBhd(“TH2.0”)hadon2April2018enteredintoaShareSaleand Purchase Agreement (“SSPA”) with Ijara Management Company (“IMC”), a management service company, established by the Islamic Corporation for the Development of the Private Sector (“ICD”) under the laws of the KingdomofSaudiArabia,forthedisposalofTH2.0’sentire3,000,000OrdinaryShares,representinga50%oftheequity holding in Taha Alam Sdn Bhd (“Taha Alam”) to IMC for a total consideration of RM1.00 only (“Disposal”).

Following the disposal, Taha Alam is no longer a joint venture of the Group.

6. INTANGIBLE ASSETS

Development costGroup RM’000Cost At1January2017/31December2017/1January2018/31December2018 3,814

Accumulated amortisationAt1January2017 2,309Amortisationfortheyear 289

At31December2017/1January2018 2,598Writtenofffortheyear 1,216

At31December2018 3,814

Carrying amountsAt1January2017 1,505

At31December2017/1January2018 1,216

At31December2018 –

Development costs

The development costs represent cost incurred to further develop and enhance the existing accounting software and development of the KJ-iFinancials and Enterprise Hajj Registration and Management System (“EHRAMS”), both which had been registered with the Intellectual Property Corporation of Malaysia. The cost for EHRAMS had fully written off due to the uncertainties of the commercialisation of the application.


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7. DEFERRED TAx ASSETS

Recognised deferred tax assets

Deferred tax assets are attributable to the following:

Group Company Assets/Net Assets/Net 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Taxlosscarry-forwards 3,902 3,902 – –

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items (stated at gross):


Taxlosscarry-forwards 95,433 90,106 15,188 15,195Otherdeductibletemporarydifferences 36,715 43,238 55,140 41,079

132,148 133,344 70,328 56,274

Deferred tax assets have not been recognised in respect of these items due to history of recent losses and because it is not probable that future taxable profit will be available against which the Group can utilise the benefits.

PursuanttotheannouncementofFinanceBill2018inconjunctionwiththeBudgetAnnouncement2019,unutilisedtaxlosscarry-forwardsfromayearofassessmentcanonlybecarriedforwardupto7consecutiveyearofassessment.Included in the other temporary differences is unutilised capital allowances which do not expire under the current tax legislation.

8. INVENTORIES

Group 2018 2017 RM’000 RM’000

Equipmentandsupplies,atcost 528 421Work-in-progress 3,893 12,311

4,421 12,732

Recognised in profit or loss:Equipmentandsuppliesrecognisedascostofsales 262 199


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9. TRADE AND OTHER RECEIVABLES

Group Company 2018 2017 2018 2017 Note RM’000 RM’000 RM’000 RM’000

TradeTradereceivables 8,183 14,127 213 595Less:Impairmentloss (363) (1,131) (79) (311)

7,820 12,996 134 284

Amount due from ultimate holdingcorporation 9.1 2,340 5,428 153 97Less:Impairmentloss (6) (16) – –

2,334 5,412 153 97

Amount due from related companies 9.2 6,082 17,741 5,966 10,902Less:Impairmentloss – (3,678) – –

6,082 14,063 5,966 10,902

Amount due from customerincontract 2,675 259 – –

18,911 32,730 6,253 11,283

Non-tradeAmount due from subsidiaries 9.3 – – 104,942 81,084Less:Impairmentloss – – (66,372) (47,302)

– – 38,570 33,782GSTclaimable 164 84 28 –Otherreceivables 113 21 29 –Deposits 1,099 2,192 81 191Prepayments 349 169 59 –Less:Impairmentloss (20) (20) – –

1,705 2,446 197 191

1,705 2,446 38,767 33,973

20,616 35,176 45,020 45,256


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9. TRADE AND OTHER RECEIVABLES (CONT’D)

9.1 Amount due from ultimate holding corporation

The amounts due from ultimate holding corporation is in relation to trade transactions in the ordinary course of business, and subject to normal credit terms.

9.2 Amount due from related companies

The amounts due from related companies are in relation to trade transactions in the ordinary course of business, and subject to normal credit terms.

9.3 Amount due from subsidiaries

The amounts due from subsidiaries are interest free, unsecured and have no fixed terms of repayment.

10. CASH AND CASH EqUIVALENTS


Deposits placed with licensedbanks 10.1 37,029 24,342 3,087 3,484Cashandbankbalances 9,303 5,128 458 145

46,332 29,470 3,545 3,629

10.1 Deposits placed with licensed banks

Included indepositsplacedwith licensedbanksof theGroupand theCompany isRM1,892,000 (2017:RM3,582,000)andRM1,788,000(2017:RM3,482,000),respectively,pledgedforbankguarantees.

11. SHARE CAPITAL

Number Number Amount of shares Amount of shares 2018 2018 2017 2017Group and Company RM’000 (‘000) RM’000 (‘000)

Issued and fully paid ordinary sharesAt31December 107,243 107,243 107,243 107,243


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12. ACCUMULATED LOSSES


Accumulatedlosses (39,356) (37,748) (41,449) (27,230)

13. LOANS AND BORROWINGS

Group 2018 2017 Note RM’000 RM’000

Non-current Financeleaseliabilities 13.1 – 754

Current Financeleaseliabilities 13.1 754 3,170

754 3,924

13.1 Finance lease liabilities

Finance lease liabilities are payable as follows:

Present Present Future value of Future value of minimum minimum minimum minimum lease Borrowing lease lease Borrowing lease payments cost payments payments cost payments 2018 2018 2018 2017 2017 2017 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Lessthanoneyear 828 74 754 3,477 307 3,170Between one and fiveyears – – – 828 74 754

828 74 754 4,305 381 3,924


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14. TRADE AND OTHER PAYABLES


TradeTradepayables 5,311 12,515 – –Amountduetosubsidiary 14.1 – – 21,590 22,132

5,311 12,515 21,590 22,132

Non-tradeAmountduetosubsidiaries 14.1 – – 31,770 12,414Billingsinadvance 14.2 2,096 1,421 – –Otherpayablesandaccruals 2,938 2,783 1,420 1,395Depositsreceived 182 182 176 176GSTpayable – 528 – 311SalesTaxPayable 313 – 17 –

5,529 4,914 33,383 14,296

10,840 17,429 54,973 36,428

14.1 Amount due to subsidiaries

The trade amount due to subsidiary is in relation to trade transactions in the ordinary course of business, and subject to normal credit terms.

The non-trade amount due to subsidiaries are interest free, unsecured and have no fixed terms of repayment.

14.2 Billings in advance

Billings in advance represent the contract liabilities primarily relate to the advances consideration received from customers, which revenue is recognised overtime during the period of the projects.


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15. REVENUE


Revenue from contracts withcustomers 70,469 90,453 10,152 19,885Otherrevenue – – 5,034 5,721

70,469 90,453 15,186 25,606

Disaggregation of revenue from contracts with customers

In the following table, revenue is disaggregated by major products/services lines.


Major products/services lines-Telecommunicationservices 13,256 15,196 706 367- Equipment and application managedservices 26,782 24,433 536 536-Systemintegrationprojects 24,070 49,264 8,910 18,732-Trading 5,376 1,560 – 250-Greentechservices 985 – – –

70,469 90,453 10,152 19,885


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15. REVENUE (CONT’D)

Nature of goods and services

The following information reflects the typical transactions of the Group:

Nature of goods or servicesTiming of recognition or methodused to recognise revenue Significant payment terms

Telecommunication services Revenue is recognised over timewhen the goods/services are delivered& accepted by the customers at theirsites.

Based on agreed milestones, certified & accepted by customers’ authorisedsignatories.

Equipment and application managed services

Revenue is recognised over time over the agreement period.

Credit period of 30 days from invoicedate.

System integration projects Revenue is recognised over time when the goods/services are delivered & accepted by the customer at their sites.

Based on agreed milestones, certified& accepted by customers’ authorised signatories.

Trading Revenue is recognised at a point in timewhen the goods/services are delivered& accepted by the customer.

Credit period of 30 days from invoicedate.

Greentech services Revenue is recognised over time whenthe goods/services are delivered &accepted by the customer at theirsites.

Based on agreed milestones, certified& accepted by customers’ authorisedsignatories.

There are no variable elements in consideration, obligation for returns or refund in all of the contracts for the provision

of goods and services by the Group.


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15. REVENUE (CONT’D)

Transaction price allocated to performance obligations

The following table shows revenue from performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date. The disclosure is only providing information for contracts that have a duration for more than one year.

Group

2019 2020 2021 2022 2023 Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Telecommunicationservices 7,031 4,518 – – – 11,549Equipment and application managedservices 13,039 9,371 1,596 420 62 24,488Systemintegrationprojects 23,765 7,008 2,197 – – 32,970

43,835 20,897 3,793 420 62 69,007

The Group applies the following practical expedients:

- exemption not to adjust the promised amount of consideration for the effects of a significant financing component when the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service is one year or less.


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16. (LOSS)/PROFIT BEFORE TAx


(Loss)/Profit before tax arrived at after charging:

Auditors’ remuneration: Audit fees -currentyear 132 132 45 45 - underprovision in prior year 3 5 – 5 Otherservices 3 32 – 30

138 169 45 80

Other expenses: -Amortisationofdevelopmentcost – 289 – – -Developmentcostwrittenoff 1,216 – – – -Plantandequipmentwrittenoff – 6 – – -Tradereceivablewrittenoff – 37 – – -Inventorywrittenoff 6 – – – -Impairmentlossonreceivables 311 269 19,068 – -Impairmentlossoninventories 74 – – – - Impairment loss for diminution in investmentinsubsidiaries – – – 1,796 -Lossonforeignexchange 192 – – – - Loss on disposal of investment in joint venture 15 – – – -Depreciationofplantandequipment 1,395 1,686 157 114Depreciationofleasingequipment 3,916 6,394 – –Finance costs - Trusts receipts, revolving credit, bank guarantee, letter of credit & overdraft 35 135 – – -financeleaseliabilities 307 587 – –Personnel expenses (including key management personnel): -Salaries,bonusandallowances 20,506 22,569 3,164 3,474 - Contribution to Employees ProvidentFund 2,184 2,386 252 252 -Others 247 241 24 22Office/warehouserental 1,104 900 316 188


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16. (LOSS)/PROFIT BEFORE TAx (CONT’D)


and after crediting:Baddebtsrecovered 35 689 12 12Income from deposits with licensed banks 1,034 684 170 103Management fees from subsidiary companies – – 5,034 5,721Reversal on Impairment loss on amountduefromsubsidiaries – – 220 206Reversal of diminution in investment insubsidiaries – – 4,722 –Reversalofprovisionforlitigation – 2,595 – 2,595

17. INCOME TAx ExPENSE


Current tax expense -Currentyear 64 49 17 20 -(Over)/Underprovisioninprioryear (27) (1) 8 29

37 48 25 49

Reconciliation of income tax expense(Loss)/Profitbeforetax (1,571) 1,439 (14,194) 1,107

Income tax calculated using Malaysiantaxrateof24% (377) 345 (3,407) 266 Non-deductibleexpenses 693 1,471 51 90

Effectofdeferredtaxnotrecognised (287) (1,767) 3,373 (336)

29 49 17 20Under/(Over)provisioninprioryear 8 (1) 8 29

37 48 25 49


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18. (LOSS)/EARNINGS PER ORDINARY SHARE

Basic (loss)/earnings per ordinary share

Basic(loss)/earningsperordinaryshareasat31December2018wascalculatedbydividingtheprofitafterincometax by weighted average number of ordinary shares in issue during the financial year, calculated as follows:

Group 2018 2017 RM’000 RM’000

(Loss)/ProfitfortheyearattributabletoownersoftheCompany (1,608) 1,391

Weightedaveragenumberofordinarysharesasat31December 107,243 107,243

Basic (loss)/earnings per ordinary share (sen) (1.50) 1.30

19. OPERATING SEGMENTS

The Group’s reportable segments comprise of Information Technology and Telecommunication services. Both reportable segment offers different products and services and require different marketing strategies. The following summary describes the operations in each of the Group’s reportable segment:

• Informationtechnology - Consistofsystemintegrationwork,tradingofhardwareandsoftware.• Telecommunication - Consist of provisionof telecommunication engineering andcommunication

services.

For each reportable segment, the Group chief decision maker, which is the Group Managing Director/Chief Executive Officer of the Company, reviews segment business progress on a weekly basis and internal management reports at least on a quarterly basis.

Performance is measured based on segment revenue and gross profit as included in the internal management reports that are reviewed by the Group’s Board of Directors on quarterly basis. Segment revenue and gross profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.


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19. OPERATING SEGMENTS (CONT’D)

Information technology Telecommunication TotalBusiness Segments amount amount amount RM’000 RM’000 RM’000

Group2018 Revenue 57,213 13,256 70,469Costofsales (44,805) (13,755) (58,560)

Grossprofit/(loss) 12,408 (499) 11,909

2017 Revenue 75,257 15,196 90,453Costofsales (59,739) (16,907) (76,646)

Grossprofit/(loss) 15,518 (1,711) 13,807

Geographical information

There is no disclosure on geographical segment information as the Group does not have operation outside of Malaysia.

Major customers

The following are major customers with revenue equal or more than 10 percent of Group revenue:

2018 2017 Segment RM’000 RM’000

CustomerA 26,104 26,935 InformationtechnologyCustomerB 9,885 17,662 Informationtechnology


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20. FINANCIAL INSTRUMENTS

20.1 Categories of financial instruments

Thetablebelowprovidesananalysisoffinancialinstrumentsasat31December2018categorisedasfollows:

(a) Amortised cost (“AC”)

Carrying amount AC RM’000 RM’000

2018Financial assetGroup Tradeandotherreceivables 20,123 20,123Cashandcashequivalent 46,332 46,332

66,455 66,455

Company Tradeandotherreceivables 44,933 44,933Cash and cash equivalent 3,545 3,545

48,478 48,478

2018 Financial liabilitiesGroup Tradeandotherpayables 8,431 8,431Loansandborrowings 754 754

9,185 9,185

Company Tradeandotherpayables 54,956 54,956


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20. FINANCIAL INSTRUMENTS (CONT’D)

20.1 Categories of financial instruments (Cont’d)

(a) Amortised cost (“AC”) (Cont’d)

Thetablebelowprovidesananalysisoffinancialinstrumentsasat31December2017categorisedasfollows:

(a) Loans and receivables (“L&R”); and(b) Financial liabilities measured at amortised cost (“FL”)

Carrying L&R/ amount FL RM’000 RM’000

2017Financial assetGroupTradeandotherreceivables 34,943 34,943Cashandcashequivalent 29,470 29,470

64,413 64,413

Company Tradeandotherreceivables 45,256 45,256Cashandcashequivalent 3,629 3,629

48,885 48,885

2017Financial liabilitiesGroup Tradeandotherpayables 15,480 15,480Loansandborrowings 3,924 3,924

19,404 19,404

Company Tradeandotherpayables 36,117 36,117


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20.2 Net gains and losses arising from financial instruments


Net gain arising from: Financial assets at amortisedcost 1,380 – 182 – Financial liabilities at amortisedcost (342) (722) – – Loansandreceivables – 1,119 – 115

1,038 397 182 115

20.3 Financial risk management

The Group and the Company has exposure to the following risks from its use of financial instruments:

• Creditrisk• Liquidityrisk• Marketrisk

20.4 Credit risk

Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposure to credit risk arises principally from its receivables from customers.

Trade receivables and contract assets

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally credit evaluations are performed on customers requiring credit over a certain amount.


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20.4 Credit risk (Cont’d)

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group and the Company. The Group and the Company uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due, which are deemed to have higher credit risk, are monitored individually.

Recognition and measurement of impairment losses

The following table provides information about the exposure to credit risk and ECLs for trade receivables and contractassetsasat31December2018whicharegroupedtogetherastheyareexpectedtohavesimilarrisk nature.

Group 2018 Gross carrying Loss Net amount allowances balance RM’000 RM’000 RM’000

Current(notpastdue) 5,770 – 5,7700–30dayspastdue 2,795 – 2,79531–60dayspastdue 567 – 56761–90dayspastdue 662 – 662

9,794 – 9,794

Credit impaired Morethan90dayspastdue 9,486 (369) 9,117

19,280 (369) 18,911

Tradereceivables 16,605 (369) 16,236Contractassets 2,675 – 2,675

19,280 (369) 18,911


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Trade receivables and contract assets (Cont’d)

Recognition and measurement of impairment losses (Cont’d)

Company 2018 Gross carrying Loss Net amount allowances balance RM’000 RM’000 RM’000

Current (not past due) 154 – 1540–30dayspastdue 306 – 306

460 – 460

Credit impaired Morethan90dayspastdue 5,872 (79) 5,793

6,332 (79) 6,253

Tradereceivables 6,332 (79) 6,253


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Comparative information under MFRS 139, Financial Instruments: Recognition and Measurement

Theagingoftradereceivablesasat31December2017wasasfollows:

Group 2017 Gross carrying Loss Net amount allowances balance RM’000 RM’000 RM’000

Current(notpastdue) 15,152 – 15,1520–30dayspastdue 8,755 – 8,75531–60dayspastdue 2,318 – 2,31861–90dayspastdue 1,451 – 1,451

27,676 – 27,676

Credit impairedMorethan90dayspastdue 9,879 (4,825) 5,054

37,555 (4,825) 32,730

Tradereceivables 37,296 (4,825) 32,471Contractassets 259 – 259

37,555 (4,825) 32,730


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Comparative information under MFRS 139, Financial Instruments: Recognition and Measurement (Cont’d)

Company 2017 Gross carrying Loss Net amount allowances balance RM’000 RM’000 RM’000 Current(notpastdue) 4,710 – 4,7100–30dayspastdue 6,573 – 6,573

11,283 – 11,283

Credit impaired Morethan90dayspastdue 311 (311) –

11,594 (311) 11,283

Tradereceivables 11,594 (311) 11,283

The movement in the allowance for impairment losses of trade receivables and contract assets during the financial year were:


At1January 4,825 5,286 311 323Baddebtrecovered (35) (689) (12) (12)Baddebtwrittenoff (4,421) (19) (220) –Impairmentlossrecognised – 247 – –

At31December 369 4,825 79 311

No other impairment was provided during the year as the Group and the Company are satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.


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Related companies advances

Risk management objectives, policies and processes for managing the risk

The Group and the Company provides unsecured advances to related companies. The Company monitors on an ongoing basis the results of the related companies and repayments made by the related companies.

Exposure to credit risk, credit quality and collateral

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

Advances provided are not secured by any collateral or supported by any credit enhancements.

Recognition and measurement of impairment losses

Generally, the Company considers advances to subsidiaries have low credit risk. The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. As the Company is able to determine the timing of payments of the subsidiaries’ advances when they are payable, the Company considers the advances to be in default when the subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s advances to be credit impaired when:

• ThesubsidiaryisunlikelytorepayitsadvancestotheCompanyinfull;• Thesubsidiary’sadvancesisoverdueformorethan365days;or• Thesubsidiaryiscontinuouslymakinglossmakingandishavingadeficitshareholders’fund

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

The following table provides informations about the exposure to credit risk and ECL’s for subsidiaries’ advances asat31December2018.

Company Gross carrying Loss Net amount allowances balance2018 RM’000 RM’000 RM’000

Lowcreditrisk 38,570 – 38,570Creditimpaired 66,372 (66,372) –

104,942 (66,372) 38,570


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Related companies advances (Cont’d)

The movement in the allowance for impairment in respect of subsidiaries’ advances during the year is as follows:

Company 2018 Lifetime ECL RM’000

Balance at 1 January per MFRS 139/MFRS 9 47,302Netremeasurementoflossallowance 19,070

Balance at 31 December 66,372

ComparativeinformationunderMFRS139,FinancialInstruments:RecognitionandMeasurement

The movements in the allowance for impairment losses of inter-company advances during the financial year were:

Company 2017 RM’000

At1January 47,508Impairmentreversed (206)

At31December 47,302

20.5 Liquidity risk

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

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

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


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20.5 Liquidity risk (Cont’d)

Maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments:

Carrying Contractual Contractual Less than 1 - 2 amount profit rate cash flows 1 year yearsGroup RM’000 % RM’000 RM’000 RM’000

2018 Non-derivative financial liabilities Financeleaseliabilities 754 3.30-3.46 828 828 –Tradeandotherpayables 8,431 – 8,431 8,431 –

9,185 9,259 9,259 –

2017 Non-derivative financial liabilities Financeleaseliabilities 3,924 2.50-3.60 4,305 3,477 828Tradeandotherpayables 15,480 – 15,480 15,480 –

19,404 19,785 18,957 828

Company 2018 Non-derivative financial liabilities Tradeandotherpayables 54,956 – 54,956 54,956 –

2017 Non-derivative financial liabilities Tradeandotherpayables 36,117 – 36,117 36,117 –


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20.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and profit rates that will affect the Group’s and the Company’s financial position or cash flows.

20.6.1 Effective profit rate risks

The Group’s and the Company’s non-trade receivables, cash and cash equivalents, non-trade payables and fixed rate borrowings are exposed to a risk of change in their fair value due to changes in profit rates.

Exposure to effective profit rates risk

The profit rate profile of the Group’s and the Company’s significant profit-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:


Fixed rate instrumentsFinancialassets 36,810 24,123 2,868 3,265Financialliabilities (754) (3,924) – –

36,056 20,199 2,868 3,265

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in profit rates at the end of the reporting period would not affect profit or loss.


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20.7 Fair values of financial instruments

The carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables and short term borrowings reasonably approximate fair values due to the relatively short term nature of these financial instruments.

The table below analyses financial instruments not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position.

Fair value of financial instruments Fair value of financial instruments Total carried at fair value not carried at fair value fair Carrying Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total value amount RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2018 Financial liabilities Finance lease liabilities – – – – – – 828 828 828 754

2017Financial liabilities Finance lease liabilities – – – – – – 4,305 4,305 4,305 3,924

Level 3 fair value

The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the key unobservable inputs used in the valuation models.

Financial instruments not carried at fair value

Type Description of valuation technique and inputs used

Finance lease liabilities. Pre-determined cash flows using a rate based on the current market rate of borrowing of the respective Group entities at the time of borrowing.

21. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain creditor and market confidence and to sustain future development of the business. The Directors monitor the adequacy of working capital on an ongoing basis.

There was no change in the Group’s approach to capital management during the financial year.


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22. OPERATING LEASES

Leases as lesseeNon-cancellable operating lease rentals are payable as follows:


Lessthanoneyear 578 762 208 207Betweenoneandtwoyears 326 873 146 354

904 1,635 354 561

The Group and the Company leases a number of offices, warehouses and computer equipment under operating leases. The leases typically run for a period of 1 to 3 years, with an option to renew the lease after that date.

23. CONTINGENT LIABILITIES


Bank guarantees issued to tradecustomers 5,047 7,272 4,588 6,708Corporate guarantee issued forbankingfacilitiesforsubsidiary – – 55,206 55,206

A subsidiary of theCompany has received a claim froma relatedparty on 6September 2018 amounting toRM435,550.11. The claim is in relation to alleged unauthorized transactions by an employee of the subsidiary. Police reports have been lodged by the relevant parties. The Company denies any obligation and liability in respect of this matter, notwithstanding the Company is currently engaging with the relevant party to resolve the matter amicably.

24. RELATED PARTY TRANSACTIONS

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly and entity that provides key management personnel services to the Group. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group.


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24. RELATED PARTY TRANSACTIONS (CONT’D)

Identity of related parties (Cont’d)

The Group has related party relationship with its ultimate holding corporation, significant investors, subsidiaries, joint ventures and key management personnel.

Related party transactions have been entered into in the normal course of business under normal trade terms. The significant related party transactions of the Group and of the Company are shown below. The balances related to thebelowtransactionsareshowninNotes9and14.


A. Ultimate holding corporation Saleofgoods 26,104 26,935 776 687 Purchase of services – 11 – 11

B. Related companies Saleofgoods 11,414 19,375 8,619 18,663 Purchaseofservices 15 60 – 11

C. Subsidiaries Managementfeeincome – – 5,034 5,721 Purchaseofservices – – 9,395 19,350

D. Key management personnel Directors -Fees 285 428 230 368 -Salariesandotheremoluments 1,046 1,090 1,046 1,090

1,331 1,518 1,276 1,458 Other key management personnel Salariesandotheremoluments 1,087 1,085 673 671

2,418 2,603 1,949 2,129

Other key management personnel comprise persons other than the Directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.


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25. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES

During the year, the Group and the Company adopted MFRS 15, Revenue from Contracts with Customers and MFRS9,Financial Instruments on their financial statements.

There is no significant impact arising from the adoption of MFRS 15 on the Company’s financial statements.

EffectofadoptionofMFRS9issetoutbelow:

Classification and measurement of financial assets and financial liabilities

ThefollowingtablesandtheaccompanyingnotesbelowshowtheinitialmeasurementunderMFRS139andthenewmeasurementcategoriesunderMFRS9foreachclassoftheGroup’sandoftheCompany’sfinancialassetsandfinancialliabilitiesasat1January2018.

Thereisnoimpactonthecarryingamountsoffinancialassetsasat1January2018asshownbelow:

1 January 2018 Reclassification to new MFRS 9 category 31 December Remeasure- Amortised 2017 ment Cost RM ‘000 RM ‘000 RM ‘000

Category under MFRS 139 Financial assets Group Tradeandotherreceivables* 34,943 – 34,943 Cashandcashequivalent 29,470 – 29,470

64,413 – 64,413

Company Tradeandotherreceivables* 45,256 – 45,526 Cashandcashequivalent 3,629 – 3,629

48,885 – 48,885

Financial liabilities Group Tradeandotherpayables* (15,480) – (15,480) Loansandborrowings (3,924) – (3,924)

Company Tradeandotherpayables* (36,117) – (36,117)

* Thesebalances excludebalanceswhich are notwithin the scopeofMFRS139, Financial Instruments: Recognition and Measurement.

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STATEMENT BY DIRECTORSpursuanttoSection251(2)oftheCompaniesAct2016

IntheopinionoftheDirectors,thefinancialstatementssetoutonpages86to142aredrawnupinaccordancewithMalaysianFinancial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016inMalaysiasoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2018andoftheirfinancialperformanceandcashflowsforthefinancialyearthenended.

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

Dato’ Iskandar Mizal bin MahmoodDirector

A. Shukor bin S.A KarimDirector

Kuala Lumpur,

Date:14March2019

I, Karen Yap Pik Li, the officer primarily responsible for the financial management of Theta Edge Berhad, do solemnly andsincerelydeclarethatthefinancialstatementssetoutonpages86to142are,tothebestofmyknowledgeandbelief, correct and I make this solemn declaration conscientiously believing the declaration to be true, and by virtue of theStatutoryDeclarationsAct,1960.

SubscribedandsolemnlydeclaredbytheabovenamedKarenYapPikLi,I/CNo721017-14-5434,MIACA18921atKualaLumpurintheStateofFederalterritoryon14March2019.

Karen Yap Pik Li

Before me:

STATUTORY DECLARATIONpursuanttoSection251(1)(b)oftheCompaniesAct2016

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INDEPENDENT AUDITORS’ REPORTto the members of Theta Edge Berhad

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Theta Edge Berhad and its subsidiaries, which comprise the statements of financialpositionasat31December2018oftheGroupandoftheCompany,andthestatementsofprofitorlossandother comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies,assetoutonpages86to142.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group andoftheCompanyasat31December2018,andoftheirfinancialperformanceandtheircashflowsfortheyearthenended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirementsoftheCompaniesAct2016inMalaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

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Key Audit Matters

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

Recoverability of trade receivables and amount due from related companies

RefertoNote2(h)(i)-Significantaccountingpolicy:ImpairmentandNote9–Tradeandotherreceivables

The key audit matter How the matter was addressed in our audit

There were significant level of trade receivables and amount due from related companies as at 31 December 2018.The collectability and the valuation of the allowance for impairment of the Groups’s trade receivables and amount due from related companies is a key audit matter due to the judgement involved.

We performed the following audit procedures, among others:

• WehaveassessedthedesignandimplementationoftheGroup’sprocess over collection of trade receivables and amount due from related companies.

• Weassessedtheadequacyoftheallowanceforimpairmentoftradereceivables and amount due from related companies by assessing the assumptions made by the group with reference to the profile of aged debts at the reporting date and post year-end payment records.

• Weevaluatedthereliabilityontradereceivablesageingreport.

• Weevaluatedtheageingofoutstandingdebtstoascertainadequacyof impairment losses on trade receivables and amount due from related companies.

• We evaluated theGroup’s and theCompany’s justification andsupport it with repayment trend of debtors and the ability of the customer to repay debts based on their financial ability by reviewing the latest available financial information of the customer.

Independent Auditors’ Report (Cont’d)

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Information Other than the Financial Statements and Auditors’ Report Thereon

The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the annual report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the annual report and, in doing so, consider whether the annual report is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the annual report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting StandardsandtherequirementsoftheCompaniesAct2016inMalaysia.TheDirectorsarealsoresponsibleforsuchinternalcontrol as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

• IdentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsoftheGroupandoftheCompany,whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.


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Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Group and of the Company.

• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelated disclosures made by the Directors.

• ConcludeontheappropriatenessoftheDirectors’useofthegoingconcernbasisofaccountingand,basedonthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany,including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view.

• Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithin the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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


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OTHER MATTERS

ThisreportismadesolelytothememberoftheCompany,asabody,inaccordancewithSection266oftheCompaniesAct2016inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthis report.

KPMG Desa Megat PLT Abdullah Abu Samah(LLP0010082-LCA&AF0759) ApprovalNumber:02013/06/2020JChartered Accountants Chartered Accountant

Petaling Jaya

Date:14March2019


[149


ANALYSIS OF SHAREHOLDINGS

Class of Shares : Ordinary sharesVoting rights : One vote per ordinary shareIssuedshares : 107,243,269ordinaryshares

DISTRIBUTION OF SHAREHOLDINGS AS AT 16 APRIL 2019

Shareholders Shareholdings Size of Shareholdings Number % Number %

Lessthan99 392 5.70 13,723 0.01100-1,000 5,047 73.34 1,393,913 1.301,001-10,000 1,008 14.65 3,968,202 3.7010,001-100,000 389 5.65 12,661,670 11.81100,001-5,362,162(*) 45 0.65 15,526,111 14.485,362,163andabove(**) 1 0.01 73,679,650 68.70

TOTAL 6,882 100.00 107,243,269 100.00

Notes:* less than 5% of issued shares** 5% and above of issued shares

LIST OF THIRTY LARGEST SHAREHOLDERS AS AT 16 APRIL 2019

NO. INVESTORS NAME NO. OF SHARES %

1 LembagaTabungHaji 73,679,650 68.70

2 RHBNominees(Tempatan)SdnBhd 2,000,000 1.86 Pledged Securities Account for Mohamed Faroz Bin Mohamed Jakel

3 BIMSECNominees(Tempatan)SdnBhd 1,745,200 1.63 Pledged Securities Account for Noor Rizai Binti Husain (MGNM05004)

4 MAYBANKSecuritiesNominees(Tempatan)SdnBhd 1,000,000 0.93 Pledged Securities Account for Mohamed Faroz Bin Mohamed Jakel (STF)

5 CIMSECNominees(Tempatan)SdnBhd 910,000 0.85 CIMB Bank for Richard George Azlan Bin Abas (MY1182)

6 LimPowToon 796,100 0.74

7 LimChaiKee@LimGaikKee 720,800 0.67

8 RameshA/LKanapathy 542,499 0.51

9 RHBNominees(Tempatan)SdnBhd 433,500 0.40 Pledged Securities Account for Koh Kin Lip

10 AFFINHWANGNominees(Tempatan)SdnBhd 400,000 0.37 Pledged Securities Account for Hu Siew Huay (HUS0015C)

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Analysis of Shareholdings (Cont’d)

LIST OF THIRTY LARGEST SHAREHOLDERS AS AT 16 APRIL 2019 (CONT’D)

NO. INVESTORS NAME NO. OF SHARES %

11 KENANGANominees(Tempatan)SdnBhd 400,000 0.37 Exempt an for Phillip Securities Pte Ltd (Client Account)

12 AMSECNominees(Tempatan)SdnBhd 387,500 0.36 Pledged Securities Account for Chew Siow Geok

13 JFAPEXNominees(Tempatan)SdnBhd 377,400 0.35 Pledged Securities Account for Asiah Binti Othman (STA 1)

14 KENANGANominees(Tempatan)SdnBhd 371,000 0.35 Pledged Securities Account for Chew Ba Bah @ Chew Yew Khoon (002)

15 ZainalAbidinBinMaidin 330,075 0.31

16 PangTeckSeng 305,000 0.28

17 ToeHongGiok 290,150 0.27

18 BIMSECNominees(Tempatan)SdnBhd 240,000 0.22 Pledged Securities Account for Roszali Bin Othman (MGNM80504)

19 ChongKayLin 237,200 0.22

20 PeeYuChi 230,075 0.22

21 Abd.KadirBinSahlan 224,700 0.21

22 MohyenBinMosman 220,000 0.21

23 WongChanYuan 210,000 0.20

24 AMSECNominees(Tempatan)SdnBhd 203,400 0.19 Pledged Securities Account for Beh Poh Choon

25 MAYBANKSecuritiesNominees(Tempatan)SdnBhd 195,400 0.19 Pledged Securities Account for Hasmizi Bin Ahmad

26 PUBLICNominees(Tempatan)SdnBhd 183,000 0.17 Pledged Securities Account for Cheah Eng Guan (E-SPI/PLI)

27 KerYenNin 165,000 0.15

28 TeeBeeLeng 150,000 0.14

29 SongMaeChoy 146,600 0.14

30 RHBNominees(Tempatan)SdnBhd 146,000 0.14 Pledged Securities Account for Lai Yoke Yong

TOTAL 87,240,249 81.35

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Analysis of Shareholdings (Cont’d)

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS(AccordingtotheRegisterofSubstantialShareholdersasat16April2019)

Direct Indirect No. of No. of Shares % Shares %

LembagaTabungHaji 73,679,650 68.70 – –

DIRECTORS’ DIRECT AND INDIRECT INTEREST IN THETA EDGE BERHAD (“COMPANY”) AND ITS RELATED CORPORATIONS(AccordingtotheRegisterofDirectors’Shareholdingsasat16April2019)

Direct Interest Indirect Interest No. of No. of Shares % Shares %

Dato’ Noordin bin Sulaiman – – – –Mohamed Ridza bin Mohamed Abdulla – – – –Dato’RichardGeorgeAzlanbinAbas 910,000 0.85 – –Abdul Halim bin Jantan – – – –Dato’ Iskandar Mizal bin Mahmood – – – –Datuk Adi Azuan bin Abdul Ghani – – – –Anis Zuhani binti Ahmad – – – –A. Shukor bin S.A. Karim – – – –

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PERSONAL DATA NOTICE

ThePersonalDataProtectionAct2010(“Act”)whichregulatestheProcessingofpersonaldataincommercialtransactions,applies to Tricor Investor & Issuing House Services Sdn Bhd, the Share Registrar of Theta Edge Berhad.

The personal data processed by Tricor Investor & Issuing House Services Sdn Bhd may include your name, contact details, mailing address and any other personal data derived from any documentation.

Tricor Investor & Issuing House Services Sdn Bhd may use or disclose your personal data to any person engaged for the purposes of issuing the above notice of meeting and convening the meeting.

Subject to the requirement under the Act, if you would like to make any enquiries on your personal data, please contact us at:

Address : Tricor Investor & Issuing House Services Sdn Bhd Unit32-01,Level32,TowerA Vertical Business Suite, Avenue 3 BangsarSouth,No.8,JalanKerinchi 59200KualaLumpur,MalaysiaTelNo : 60327839299FaxNo : 60327839222

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Twenty-Sixth Annual General Meeting of THETA EDGE BERHAD (“Company”) willbeheldatTropicanaGolf&CountryResort,BallroomI,JalanKelabTropicana,47410PetalingJaya,SelangorDarulEhsanonFriday,28June2019at3.00p.m.forthefollowingpurposes:-

AS ORDINARY BUSINESSES

1. To receive the audited financial statements together with the reports of the Directors andAuditorsfortheyearended31December2018.

(Please refer toExplanatory Note 1)

2. To re-elect the following Directors who retire by rotation as Directors of the Company inaccordancewithClause96oftheCompany’sConstitution:-

(i) Encik Mohamed Ridza bin Mohamed Abdulla; and(ii) Encik A. Shukor bin S.A. Karim.

PuanAnisZuhanibintiAhmadwhoalsoretiresbyrotationinaccordancewithClause96of the Company’s Constitution, has indicated her intention not to seek for re-election. Hence, she will retain office until the close of the Twenty-Sixth Annual General Meeting.

(Resolution 1)(Resolution 2)

3. To re-elect the following Director who retires by rotation as Director of the Company pursuanttoClause102oftheCompany’sConstitution:-

(i) Dato’ Noordin bin Sulaiman (Resolution 3)

4. ToapprovethepaymentofDirectors’feesforanamountuptoRM290,000forthefinancialyearending31December2019.

(Resolution 4)

5. ToapprovethepaymentofDirectors’benefitsforanamountuptoRM238,000from29June2019untilthenextAGMoftheCompany.

(Resolution 5)

6. To re-appoint Messrs KPMG Desa Megat PLT as Auditors of the Company and to authorise the Directors to fix their remuneration.

(Resolution 6)

AS SPECIAL BUSINESSES

7. To consider and if thought fit, pass the following resolutions with or without modifications:-

ORDINARY RESOLUTION 1AUTHORITY TO ISSUE SHARES “THATpursuanttoSection75andSection76oftheCompaniesAct,2016andsubjectto the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum of the number of issued shares of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the CompanyinaccordancewithSection76oftheCompaniesAct,2016.”

(Resolution 7)

[154

ORDINARY RESOLUTION 2 PROPOSED RENEWAL OF THE ExISTING SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING IN NATURE AND RENEWAL OF THE ExISTING GENERAL MANDATE FOR CONTRACTS WHICH ARE REVENUE IN NATURE

“THATsubjecttotheCompaniesAct,2016(“Act”),theprovisionoftheCompany’sConstitution and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the Renewal of the Existing Shareholders’ Mandate and Existing General Mandate for the Company to enter into and give effect to the category of the recurrent arrangements or transactions of a revenue or trading naturefromtimetotimewiththeRelatedParty(ies)asspecifiedinSection2.1.2ofPartAoftheCirculartoShareholdersdated29April2019,providedthatsuchtransactionsare :-

(i) recurrent transactions of a revenue or trading in nature;(ii) necessary for the Company’s day-to-day operations;(iii) carried out in the ordinary course of business on normal commercial terms which

are not more favourable to the Related Party(ies) than those generally available to the public; and

(iv) not to the detriment of minority shareholders;

(the “Mandate”);

THAT the Mandate given by the shareholders of the Company shall only continue to be in force until:-

(i) the conclusion of the next AGM of the Company following the forthcoming AGM at which the Proposal is passed, at which time such Mandate will lapse, unless by a resolution passed at the meeting, the authority for the Proposal is renewed;

(ii) the expiration of the period, within which the next AGM of the Company is requiredtobeheldpursuanttoSection340(2)oftheAct(butshallnotextendto such extension as may be allowed pursuant to Section 340(4) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders in general meeting,

whichever is the earlier.

AND THAT the Directors of the Company be authorized to complete and do all such acts and things (including executing all such documents as may be required), as they may consider expedient or necessary to give effect to the Mandate”.

(Resolution 8)

Notice of Annual General Meeting (Cont’d)

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ORDINARY RESOLUTION 3 TO RETAIN ENCIK MOHAMED RIDZA BIN MOHAMED ABDULLA AS AN INDEPENDENT NON-ExECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to Encik Mohamed Ridza Bin Mohamed Abdulla to continue to act as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance.”

(Resolution 9)

SPECIAL RESOLUTIONPROPOSED ADOPTION OF A NEW CONSTITUTION OF THE COMPANY

“THAT approval be and is hereby given to the Company to revoke the existing Constitution in its entirety with immediate effect and in place thereof, the new ConstitutionassetoutinAppendixIIoftheCirculartotheShareholdersdated29April2019beandisherebyadoptedastheConstitutionoftheCompany(“ProposedAdoption”).

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 and/or expedient in order to give full effect to the Proposed Adoption.”

(Resolution 10)

8. To transact any other ordinary business for which due notice shall have been given.

By Order of the Board,

CYNTHIAGLORIALOUIS(MAICSA7008306)CHEWMEILING(MAICSA7019175)Company Secretaries

29April2019Petaling Jaya


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Notes:-

Appointment of Proxy

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint more than one proxy and vote in his stead. There shall be no restriction as to the qualification of the proxy. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

2. Whereamember isanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act,1991,itmayappointatleastoneproxyinrespectofeachsecuritiesaccountitholdswithordinarysharesoftheCompany standing to the credit of the said securities account.

3. 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.

4. The Proxy Form shall be under the hand of the appointor or of his attorney duly authorised in writing. In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the hand of its officer or its duly authorised attorney.

5. The instrument appointing a proxy must be deposited at the Share Registrar, Tricor Investor & Issuing House Services Sdn.Bhd.atUnit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,WilayahPersekutuan,oralternatively,TricorCustomerServiceCentre,UnitG-3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpurWilayahPersekutuannotlessthanforty-eight(48)hoursbeforethetimesetforholdingthemeetingoradjournedmeeting.

Members Entitled to Attend

6. ForpurposesofdeterminingamemberwhoshallbeentitledtoattendtheAnnualGeneralMeeting,theCompanyshallberequestingBursaDepository,inaccordancewithClause67(A)oftheCompany’sConstitutionandSection34(1)oftheSICDA,toissueaGeneralMeetingRecordofDepositorsasat24June2019.OnlyadepositorwhosenameappearsontheGeneralMeetingRecordofDepositorsasat24June2019shallbeentitledtoattend,speakand vote at the said meeting or appoint a proxy(ies) on his/her behalf.


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Explanatory Notes:-

1. Directors’ Report, Audited Financial Statement and the Auditors’ Report for the financial year ended 31 December 2018

ThisAgendaItemismeantfordiscussiononlyastheprovisionofSection340(1)oftheCompaniesAct,2016doesnot require a formal approval of the shareholders and hence is not put forward for voting.

2. Re-election of Directors in accordance with Clause 96 of the Company’s Constitution (Resolutions 1 and 2)

InaccordancewithClause96oftheCompany’sConstitution,atleastone-third(1/3)oftheDirectorsforthetimebeing or if their number is not three (3) or multiples of three (3), then the number nearest to one-third (1/3) shall retire from office and shall be eligible for re-election at each Annual General Meeting (“AGM”). Consequently, each Director shall retire from office at least once in every three years but shall be eligible for re-election. A Director retiring at AGM shall retain office until the close of the AGM whether adjourn or not.

Encik Mohamed Ridza bin Mohamed Abdulla and Encik A. Shukor bin S.A. Karim who retire by rotation in accordance withClause96oftheCompany’sConstitutionandbeingeligible,offerthemselvesforre-election.

PuanAnis Zuhani binti Ahmadwho also retires by rotation in accordancewithClause 96 of theCompany’sConstitution, has indicated her intention not to seek for re-election after having served on the Board of the Company foralmostfour(4)yearssinceherappointmenton19November2015.Hence,shewillretainofficeuntilthecloseoftheTwenty-Sixth(26th)AGM.

3. Re-election of Director in accordance with Clause 102 of the Company’s Constitution (Resolution 3)

InaccordancewithClause102oftheCompany’sConstitution,theDirectorsshallhavepoweratanytimeandfromtime to time to appoint any person to be a Director either to fill a casual vacancy or as an additional Director, but so that the total number of Directors shall not at any time exceed the maximum number fixed by or in accordance with the Constitution. Any Director so appointed shall hold office only until the next AGM and shall then be eligible for re-election, but shall not be taken into account in determining the number of Directors who are to retire by rotation at such meeting.

Dato’NoordinbinSulaimanwhowasappointedastheChairman,Non-IndependentNon-ExecutiveDirectoron16April2019retiresinaccordancewithClause102oftheCompany’sConstitutionandbeingeligible,offershimselffor re-election.


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Explanatory Notes:- (Cont’d)

4. Directors’ Benefit (Resolution 5)

The benefits comprises meeting allowance payable to Non-Executive Directors, details of which are as follows:-

Board ofDirectors

(Per Meeting)RM

Audit & Risk Management

Committee(Per Meeting)

RM

NominationCommittee

(Per Meeting)RM

RemunerationCommittee

(Per Meeting)RM

Chairman 3,000 3,000 2,000 2,000Non-Executive Member 1,500 2,500 1,500 1,500Group Managing Director & CEO – – – –

The Group Managing Director & CEO is not entitled to any meeting allowance.

TheestimatedamountofRM238,000isderivedfromestimatednumberofmeetingstobeheldbytheBoardandBoardCommitteesfrom29June2019untilthenextAGM.

5. Authority to issue shares under Section 75 and Section 76 of the Companies Act, 2016 (Resolution 7)

The Directors did not issue any new shares pursuant to the existing mandate.

The proposed Ordinary Resolution 1, if passed, will give a renewed mandate to the Directors of the Company, from the date of the forthcoming AGM, to issue and allot ordinary shares up to an aggregate amount of not exceeding 10%ofthetotalissuedsharesoftheCompanyforthetimebeing,pursuanttoSections75and76oftheCompaniesAct,2016.Thisauthority,unlessrevokedorvariedatageneralmeeting,willexpireatthenextAGM.

The renewed mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to placement of shares, funding for future investment project(s) and/or acquisitions of assets and/or working capital.

6. Proposed Renewal of the existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading in Nature and Renewal of the existing General Mandate for Contracts which are Revenue in Nature (Resolution 8)

TheproposedOrdinaryResolution2,ifapproved,willallowThetaEdgeGrouptoenterintoRecurrentRelatedPartyTransactionspursuanttoParagraph10.09oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad. Further information on the Proposed Renewal of the existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading in Nature and Renewal of the existing General Mandate for Contracts whichareRevenueinNatureissetoutinPartAoftheCirculartoShareholdersoftheCompanydated29April2019whichisdispatchedtogetherwiththeCompany’s2018AnnualReport.


[159


Explanatory Notes:- (Cont’d)

7. Proposal to Retain Encik Mohamed Ridza Bin Mohamed Abdulla as an Independent Non-Executive Director of the Company (Resolution 9)

Encik Mohamed Ridza Bin Mohamed Abdulla is currently the Senior Independent Non-Executive Director of the CompanywhohasservedtheBoardsince7November2007.HehasservedasanIndependentNon-ExecutiveDirectoroftheCompanyforcumulativetermofmorethannine(9)years.

In applying the recommendation under the Malaysian Code of Corporate Governance, the Board has assessed and with the recommendation of the Nomination Committee would strongly recommend to the members of the Company to vote in favour of the resolution for Encik Mohamed Ridza Bin Mohamed Abdulla to continue to act as an Independent Non-Executive Director. This is because he has demonstrated throughout the term of his office to be independent not only by the mere fulfillment of the criteria under the definition of Independent Director in the Main Market Listing Requirements of Bursa Securities but subjectively too by providing objectivity, independent judgement and balance to Board deliberations. He provides wise and thoughtful counsel to the Board on a broad range of issues and has an active role in Board Committees to ensure good governance and risk management. His length of service on the Board does not in any way interfere with his exercise of objective judgement or his ability to act in the best interests of the Company and Group. He also has the necessary knowledge of the Group’s business operations to make informed decisions.

8. Proposed Adoption of a new Constitution (Resolution 10)

The Special Resolution, if passed, will streamline the Company’s Constitution with the new provisions of the CompaniesAct2016,amendmentsmadetoMainMarketListingRequirementsandenhanceadministrativeefficiency.

The Board proposed that the existing Constitution be revoked in its entirety and the proposed new Constitution of theCompanyassetoutinAppendixIIoftheCirculartotheShareholderdated29April2019beadoptedasthenew Constitution of the Company. The Proposed Adoption shall take effect once it has been passed by a majority ofnotlessthan75%ofsuchmemberswhoareentitledtovoteanddovoteinpersonorbyproxyattheTwenty-Sixth(26th)AGM.


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STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Followingisthestatementmadepursuanttoparagraph8.27(2)oftheListingRequirementsofBursaMalaysiaSecuritiesBerhad:-

(1) Directorswhoarestandingforre-electionattheTwenty-Sixth(26th)AnnualGeneralMeetingoftheCompany,areas follows:-

(i) Encik Mohamed Ridza bin Mohamed Abdulla; (Resolution 1)(ii) EncikA.ShukorbinS.A.Karim;and (Resolution2)(iii) Dato’ Noordin bin Sulaiman. (Resolution 3)

(2) FurtherdetailsofDirectorswhoarestandingforre-electionaresetoutintheProfileofDirectorsappearingonpage8to15oftheAnnualReport.


✄

I/We ....................................................................................................................................................................................................................... (name as per NRIC, in capital letters)

NRIC No./Company No. .......................................................................................................................................................................................................................................... (new)(old)

of ..................................................................................................................................................................................................................................................................(full address)

being a member(s) of THETA EDGE BERHAD, hereby appoint ................................................................................................................................ (name of proxy as per NRIC,

in capital letters) NRIC/Passport No. .....................................................................................................(new) .......................................................................................................... (old)

of ...................................................................................................................................................................................................................................................................................... (full 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 Twenty-Sixth Annual General Meeting of the Company tobeheldatTropicanaGolf&CountryResort,BallroomI,JalanKelabTropicana,47410PetalingJaya,SelangorDarulEhsanonFriday,28June2019at3.00p.m.andatanyadjournment thereof, in the manner indicated below:-

RESOLUTIONS FOR AGAINST

Resolution 1 Tore-electEncikMohamedRidzabinMohamedAbdullawhoretiresbyrotationinaccordancewithClause96ofthe Company’s Constitution.

Resolution2 Tore-electEncikA.ShukorbinS.A.KarimwhoretiresbyrotationinaccordancewithClause96oftheCompany’sConstitution.

Resolution 3 Tore-electDato’NoordinbinSulaimanwhoretiresbyrotationinaccordancewithClause102oftheCompany’sConstitution.

Resolution 4 ToapprovethepaymentofDirectors’feesanamountuptoRM290,000forthefinancialyearending31December2019.

Resolution 5 ToapprovethepaymentofDirectors’benefitsforanamountuptoRM238,000from29June2019untilthenextAGM of the Company.

Resolution6 To re-appoint Messrs KPMG Desa Megat PLT as Auditors of the Company and to authorise the Directors to fix their remuneration.

Resolution7 AuthoritytoallotsharespursuanttoSection75andSection76oftheCompaniesAct,2016.

Resolution8 Proposed renewal of the existing shareholders’ mandate for recurrent related party transactions of a revenue or trading in nature and renewal of the existing general mandate for contracts which are revenue in nature.

Resolution9 Retention of Encik Mohamed Ridza bin Mohamed Abdulla as an Independent Non-Executive Director of the Company.

Resolution 10 Proposed Adoption of a new Constitution of the Company. (Please indicate with an “X” in the spaces provided how you wish your votes to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.)

.................................................................................... Signature/Common Seal Number of shares held: ..............................................

Date: ...........................................................................

Notes:1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint more than one proxy and vote in his stead. There shall be no restriction as to the qualification of

the proxy. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.2. WhereamemberisanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act,1991,itmayappointatleastoneproxyinrespectofeachsecuritiesaccount

it holds with ordinary shares of the Company standing to the credit of the said securities account.3. 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.4. The Proxy Form shall be under the hand of the appointor or of his attorney duly authorised in writing. In the case of a corporate member, the instrument appointing a proxy must be either

under its common seal or under the hand of its officer or its duly authorised attorney.5. TheinstrumentappointingaproxymustbedepositedattheShareRegistrar,TricorInvestor&IssuingHouseServicesSdn.Bhd.atUnit32-01,Level32,TowerA,VerticalBusinessSuite,

Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,WilayahPersekutuan,oralternatively,TricorCustomerServiceCentre,UnitG-3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpurWilayahPersekutuannotlessthanforty-eight(48)hoursbeforethetimesetforholdingthemeetingoradjournedmeeting.

Members Entitled to Attend6. ForpurposesofdeterminingamemberwhoshallbeentitledtoattendtheAnnualGeneralMeeting,theCompanyshallberequestingBursaDepository,inaccordancewithClause67(A)of

theCompany’sConstitutionandSection34(1)oftheSICDA,toissueaGeneralMeetingRecordofDepositorsasat24June2019.OnlyadepositorwhosenameappearsontheGeneralMeetingRecordofDepositorsasat24June2019shallbeentitledtoattend,speakandvoteatthesaidmeetingorappointaproxy(ies)onhis/herbehalf.

PERSONAL DATA NOTICEBysubmittinganinstrumentappointingaproxy(ies)and/orrepresentative(s),thememberacceptsandagreestothepersonaldatanoticesetoutinthenoticeoftheAGMdated29April2019.

PROxY FORM

CDS account no.

PostageStamp

Please fold here

Please fold here

The Share Registrar

TRICOR INVESTOR & ISSUING HOUSE SERVICES SDN. BHD.(11324-H)Unit32-01,Level32,TowerAVertical Business Suite, Avenue 3BangsarSouth,No.8,JalanKerinchi59200KualaLumpur,Malaysia

Theta Edge Berhad (260002-W)

A-3A-3A, Block A, Oasis Square OfficeJalan PJU 1A/7A, Ara Damansara

47301 Petaling Jaya, Selangor Darul EhsanTel: 603-7622 1188Fax: 603-7666 6968

www.theta-edge.com

THETA

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Annual Report2018

a-3a-3a, block a, oasis square office 47301 petaling jaya ......theta edge berhad (260002-w)...

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