Digi - Annual Report 2016
Digi - Annual Report 2016
Digi - Annual Report 2016
Digital Life
Annual Report 2016
Every year, we connect more and more
people, and now serve 12.3 million mobile
customers who are increasingly digital
savvy.
1 + 2 3 4 5 6
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Store or Google Play compatibility before scanner AR scanner to enjoy content
Store with your smart installing) the interactive AR
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WHAT’S
Welcome to our
2016 Annual Report
INSIDE
Business 002 At A Glance
Review 004 Chairman’s Statement
006 Making Digital Beneficial for Everyone
008 CEO’s Statement
012 Management Discussion and Analysis:
Strategy and Performance Review
022 5-Year Financial Summary
024 Share Development and Shareholdings
028 Event Highlights
034 Accolades
20th
095 Statements of Cash Flows
097 Notes to the Financial Statements
12.3 million
Customers
8.1 million
RM6.23 billion Internet customers
Service Revenue
45% 3 - 4GB
EBITDA Margin
average monthly data usage
by customers
RM1.67
billion
Normalised
Profit After Tax
Smart
RM1.63 billion 12.00 p.m. Meeting Rooms
Dividend Payout power down electricity for an hour powered by sensor to conserve
at lunch time to conserve energy energy when empty
DIGITISING
SAFETY
Digi’s Permit
To Work is
Malaysia’s first
location-based
More than
app to strengthen
6 million HSE governance
customer interactions at sites
on our social media
channels daily
Inspiring Your Digital Life Annual Report 2016 003
100% digital
and paperless
experience in new More than
retail stores
1.6 million
visits to Digi Stores
86%
dealerships powered
by Mobile Sales App
nationwide
eQMS virtual queue
system gives customers
more freedom more than
15,000
retail touchpoints
42 self-service nationwide
Registering
kiosks enabling SIM new lines as fast as
replacements
20 seconds
180 founded
participated
in employee 2 startups
innovation to build new digital
programmes ventures
40% 43%
76% Employee More than 2,000
women
leaders
women at
Board
Engagement happy employees
Scores nationwide
004 Annual Report 2016 Digi.Com Berhad
Chairman’s Statement
Dear Shareholders,
Across the globe, telecommunications
companies are reinventing themselves to
adapt to the fast growing digital world. And as
responsible, forward-looking leaders in these
disruptive times, we too, consistently ask
ourselves the all-important question: whether
we are the company we need to be to succeed
in the future.
Our balance sheet remains robust with solid financial capability and
flexibility to fund our investments and operational commitments.
And as a result of our strong financial framework, I am pleased
to share that Digi’s shareholders were rewarded a net dividend
Morten Karlsen Sorby of 20.9 sen per share equivalent to RM1.63 billion for the year.
The 100% dividend payout ratio exceeds the company’s dividend
policy of distributing a minimum 80% of our net profits. These
Chairman
results show that we remain consistent in delivering our long-term
shareholder value commitment, a policy that will continue to have
the highest attention of the Board.
Inspiring Your Digital Life Annual Report 2016 005
Chairman’s Statement
BUSINESS REVIEW
Our ability to perform and hold to our remuneration policies have of trust is even more essential in our digital world. And we have
not gone unnoticed, having received recognition from the broader sharpened our strategy to further emphasise the need to maintain
corporate community. In particular, from The Edge Billion Ringgit a culture that safeguards the responsible and sustainable business
Club Awards 2016 for having the highest return on equity over practices we are known for, built on a solid foundation of strong
three years among companies with an overall market capitalisation moral values and a deep sense of integrity.
of RM10 billion and also being recognised in our Trading and
Services sector. Our steadfast commitment to good corporate This underscores our determination to be a trusted company,
governance has also received acknowledgements in Asia’s Best delivering services to our customers that guarantee their safety
Managed Companies 2016 awards by FinanceAsia, and the and privacy, creating an inclusive, dynamic workplace for our
MALAYSIA-ASEAN Corporate Governance Transparency Index, people, building trust with our stakeholders across our entire
Findings and Recognition 2016 by the Minority Shareholder value chain, digitally empower communities and respectfully
Watchdog Group. This is an excellent testament to the practices, manage our impact on the environment to create a better future
policies and strategy we have in place to succeed in this new and for all Malaysians. The details of our responsible leadership efforts
rapidly changing time. and commitment to set the standard for excellence in our industry
are summarised in the Sustainability section of this Annual Report.
Taking a bolder position in our digital reality A full disclosure of these initiatives is also laid out in Digi’s 2016
Sustainability Report online at www.digi.com.my/sustainability.
We live in a world of unprecedented constant technological
disruption, where the scope and reach of digitisation is altering Delivering future growth together
every aspect of our lives. Asia as a region is expected to add around
1.6 billion smartphone connections by 2020, over half of total Considering all we have accomplished in 2016, it is safe to say that
connections globally; a trend that indicates the sheer amount of we are at an excellent point from which to continue our journey
data traffic and information that will be shared over our networks. forward. The motivations that set us on this path remain the
And this is only the beginning. We will see mainstreaming of more same, that we adapt our business to meet our customers’ evolving
objects connecting to the internet, spelling out exponential growth needs. We intend to deliver on this, and the goals we have set for
for the Internet of Things, new technologies such as augmented ourselves to contribute meaningfully to our growth in the coming
reality, virtual reality, and robotics emerge, to name a few, as years. I am confident that our success will be achieved through
well as the advent of 5G in the next decade, that will dramatically the concerted effort and collective energy from everyone who is
transform our customers’ digital experiences, and change existing a part of this inspiring organisation.
business models.
On behalf of the Board, I would like to thank our management team
For all these reasons, we are excited about our future as and Digizens for their commitment to and courage throughout our
connectivity will be the enabler and the centre of all this disruption. digital transformation, undoubtedly a very exciting period of our
And we have a clear strategy built around Telenor’s ambition to history.
be our customers’ favourite digital life partner, to take a bold,
leadership position in the industry to facilitate and capture the Our appreciation also extends to the government of Malaysia,
opportunities offered by this digital revolution. Being a part of the Ministry of Communications and Multimedia (KKMM), Malaysia
Telenor Group, one of the world’s major mobile operators shaping Communications and Multimedia Commission (SKMM), various
digital globally, is a significant advantage for Digi. Leveraging the other agencies and our partner ecosystem who share in our
shared experience, scale, and transfer of innovation within the 13 steadfastness to realise Malaysia’s digital future, and expand the
markets in the Telenor network means our customers assuredly widespread benefits of digitisation for every part of society, every
stand to benefit from the innovations we quickly bring to Malaysia, industry and everyone.
in addition to those we innovate ourselves.
Before concluding, I would like to thank you, our shareholders,
Maintaining a responsible, transparent and trustworthy personally and on behalf of the Board of Directors for all the
business support and trust you have placed in Digi to succeed. I look
forward to sharing more of our strategy with you at our Annual
While we have set ambitious goals to succeed, we recognise that General Meeting in May.
our success lies not only in our ability to provide services that are
valuable to our customers but also with the high ethical standards Morten Karlsen Sorby
we uphold for the way we conduct our business. This relationship Chairman
006 Annual Report 2016 Digi.Com Berhad
digital services
Delivering the most consistent Widest LTE-A We serve Across music, video, games,
4G+ network network 580,000 more cloud and sharing.
We have invested
Solid
RM780mil #1
Malaysian #1 Most
Committed
Top 100 Companies
49
shareholder
returns Telenor and Recognition
ASA % 2016
+57.3% 2016
Inspiring Your Digital Life Annual Report 2016 007
BUSINESS REVIEW
Building a strong
Invested close to
entrepreneurship to standardise •A
verage 1.25% growth
health & safety Impact on per KWh per customer
practices
Environment
2013-2016
008 Annual Report 2016 Digi.Com Berhad
CEO’s Statement
Dear
Shareholders,
Over the past year, we have been laying the
foundation to capture growth potential of the
digital ecosystem, reshaping our business and
taking the necessary digital leaps to innovate and
evolve around what our customers increasingly
want.
Albern Murty
Chief Executive Officer
Inspiring Your Digital Life Annual Report 2016 009
CEO’s Statement
Accelerating innovation to inspire our customers’ digital These innovations are delivered with an enriched connectivity
lives experience on our consistent 4G+ nationwide network. Here,
we have remained steadfast in investing to reinforce the quality,
BUSINESS REVIEW
In light of the explosion in data usage and emergence of multiple performance and future capacity of our network. In 2016, we
technologies all converging on the smartphone, we have stepped accelerated the expansion of Malaysia’s widest LTE-A network
up to the challenge of positioning Digi as an innovator, not merely now covering 41% of the population, added to a solid 85% 4G LTE
to keep up with trends but as a competitive advantage to stay footprint, supported by 7,600km of fibre network. Our consistent,
ahead of this new wave of digital disruption. stable network today connects 8.1 million mobile internet
customers of which 4.2 million are LTE subscribers.
Our strategy for continued growth and profitability is clear:
deliver great internet services over our advanced data network, Our leadership in network technologies has enabled us to
drive opportunities in digital services and applications, and introduce new innovations such as Voice over LTE (VoLTE),
develop new business models in platforms such as music, video enabling HD quality audio experience, faster call connections
and the Internet of Things (IoT). We delivered on these in 2016 and simultaneous use of data for our customers. This year, we
by focusing on what is essential to our customers to bring them intend to further enhance our seamless connectivity experience
an incomparable, high-quality experience with us. with Voice over WiFi (VoWiFi) services. More importantly, when
we deploy services on our recently acquired 900Mhz spectrum,
We listened carefully and delivered flexible data plans, and a key addition to our spectrum portfolio, it will provide stronger
innovative internet features to woo customers with highly data- indoor service, wider coverage and better network capacity for
centric lifestyles, who want more music and video streaming, the benefit our customers.
gaming, cloud and sharing services on-the-go. Our customers’
growing confidence in our digital offerings is seeing their usage Our people have been essential to the innovation process. We have
patterns averaging 3GB a month on our network. built an inclusive, fast, adaptive mobile-first culture to support
them through our digital transformation, and to fully understand
We are also enabling our enterprise customers’ digitisation why creating engaging digital experiences for our customers
journey, becoming a trusted partner in providing them more than is critical to our success and makes perfect sense in building a
just connectivity services. long-term future for ourselves. This is reflected in all areas of our
Digizens’ every day experience in Digi, from the time they tap
We reinvented the customer relationship journey, bringing an into work, use mobile money to pay for meals, learn on-the-go,
experience that is continually improved at every interaction engage HR services on their mobiles, to ideating and innovating
point with us, whether digital or physical. Our all-new self-care on processes, products and services like never before. Here’s an
MyDigi app today empowers 1.5 million customers with full empowered digital workforce having the freedom to innovate
control of their accounts anytime, anywhere, and this feature- every day, and I am truly proud of this.
rich platform will be a key point of interaction with customers
moving forward. Social media is also a popular point of customer A more comprehensive assessment of these activities is available
interaction with us, and where we continue to build our customer in the following Strategy and Performance Review section of this
care capabilities and experience. Annual Report.
Our in-store experiences have also improved tremendously, Delivering digital for the benefit of all
digitising frontline engagements with our Mobile Sales App (MSA),
which completes new line registrations as fast as 20 seconds. And We have also come together around a simple, powerful purpose:
we are ready to roll out a new digital retail store, a completely to deliver the promise of a digital world for all. While we deliver
paperless digital playground for customers this year. on this promise every day to our millions of customers, we are
equally and deeply committed to empower more segments of
We have also begun pursuing promising new areas such as IoT, society to benefit from digitisation. The aim is to create a more
connected cars and mobile financial services to enable a steady sustainable future for everyone, centered on connectivity. In
stream of innovative services for our customers, now and in the 2016, we committed our resources to extend our impact in this
future. I believe these ventures will also contribute to new and area through our six Empower Societies community programmes.
more equitable business models for us in the long-term.
010 Annual Report 2016 Digi.Com Berhad
CEO’s Statement
In particular, we introduced our Wanita Era Digital programme Cash flows from operating activities in 2016 totaled RM2.18
earlier in the year in efforts to bridge the digital gender gap by billion, registering a 4.6% growth. EBITDA margins increased 1.7
equipping women with basic internet and e-commerce skills. percentage points to 45 percent over the year, bearing testimony
There is an opportunity here to impact 6 million unconnected to our diligent attention to improve the efficiency of our operating
women to benefit from the freedom to connect not only as model and our emphasis on freeing up resources to move our
an internet consumer but an active participant in the digital business forward. Our performance is evidence of our overall
economy. And contributing to Malaysia’s digital growth, we have digitisation efforts, focus on excellent execution and our financial
also actively worked to develop the next generation of innovators strength.
and local content creation through our flagship incubator and
accelerator efforts, Digi Incub8 and Digi Accelerate, as well as Well positioned to win in a digital world
our social enterprise innovation programme, Digi Challenge for
Change. We expect to see digital technologies continue to disrupt the
market and business models in 2017. We are ready, and we
As important is our continued work to safeguard the digital have the agility, reach and infrastructure to respond to these
lives of our children, innovating new ways to build greater changes quickly. Entering into the next phase of our ongoing
digital resilience and responsible use of the internet with our digital transformation, we are shifting our focus from building
Digi CyberSAFE programme. Our approach in 2016 focused the solid foundation of digital capabilities needed for the future,
on building a strong peer-to-peer cybersafe network, with to delivering on the opportunities that are provided by that
the understanding that children are more likely to heed their foundation. And I am confident we will succeed, because we have
friends’ advice instead of adults. This was aided by relevant been brave to willingly disrupt our business and the industry,
projects that generated interest among our youths, in the form rather than wait to be disrupted.
of video challenges, youth camps, and more, supported further
by practical content on the topic made available online. More on I am grateful to our leadership team and our Board for their
this and details of our Empower Societies initiatives are available tenacity and guidance through this new and exciting time. And to
in the Sustainability section of this report, and in our online 2016 our employees who embody our Let’s Inspire credo, I thank each
Sustainability Report at www.digi.com.my/sustainability. of them for their dedication to our customers, and willingness
to embrace and lead change as we reshape our company for the
Staying resilient in the face of change future. Together, we have done well in maintaining a strong core
business, bringing new products and technologies to market,
In delivering our customer, innovation and empower societies remained financially sound, and stayed true to our DNA to deliver
agenda, we have kept close attention to the fundamentals of a steady 2016.
our business. This has been a strong year of execution for Digi,
where our entire organisation has been unrelenting with their To our customers and our shareholders, we are committed to
operational discipline and in efficiently delivering high-quality continue delivering value for you as we move forward in our
network and customer experiences across the board. I am journey to become your trusted, inspiring digital life partner.
pleased to report that the result is a year of steady performance
with service revenues totaling RM6.23 billion, over a solid 12.3
customer base. This cements Digi’s position as the second largest Albern Murty
operator in terms of revenue market share, and our subscriber Chief Executive Officer
market leadership.
Inspiring Your Digital Life Annual Report 2016 011
012 Annual Report 2016 Digi.Com Berhad
Digi is a part of Telenor Group, a leading telecommunications assessment of Digi’s future prospects and business viability (see
provider shaping digital globally. Our innovative mobile pages 36 to 44).
connectivity and digital services benefit over 12.3 million
BUSINESS REVIEW
Malaysians in 2016; making us the largest operator in terms of We see increasing demand for our products and services because
subscriber market share in Malaysia and the second largest in they play an integral role in our customers’ digital life. We leverage
terms of service revenue. Among our total subscriber base, 64.7% analytics and in-depth customer insights to make sure we stay
are smartphone users and 65.8% are active internet users. in tune with market developments and customer expectations.
And we use governance committees, such as the Investment
We aspire to transform into an increasingly digital company with Committee, Commercial Forum and various digital innovation
a broader set of engaging products and services to inspire more platforms to make sure we are making the right investments and
Malaysians towards a digital future, yet being deeply rooted in go-to-market products and services to deliver value over the
highly efficient mobile telecommunication operations. We take short, medium and long-term.
our role as a digital enabler seriously, impacting millions in the way
they live, work, play and everything in between. Our Strategy
Our approach to delivering the best customer experience, efficient Becoming our customers’ favourite partner in their digital lives
cost management and investing for growth is central to what we is important for our future value creation and growth. Mobile
do. We have a strong combination of people, technology, networks is expected to be the primary channel of accessibility for almost
and other physical assets that set us apart from our competitors. everything in our customers’ lives, and we are deeply committed
Our innovation culture is crucial to us – and to the wider society. to creating value in our business by developing and providing
We have pioneered innovations in Malaysia’s telecommunication engaging products and services that satisfy our customers’ digital
arena, advancing our technologies, and establishing new ways needs. We will deploy scalable and commercial models for digital
of working to benefit our customers. Importantly, we have services opportunities while leveraging digital tools, technologies
the financial strength to invest in these areas to stay ahead of and ways of work to operate in the most cost efficient manner.
competition.
We are relentless in our drive to deliver the most stable and
The Malaysian mobile telecommunications market is extremely expansive 4G+ network (4G LTE and LTE-A) in Malaysia to ensure
dynamic and very competitive. There are risks and also exciting our growing customer base enjoys quality, consistent high-speed
growth opportunities within this industry. Our Enterprise Risk internet on Digi’s network anywhere across the country. This has
Management framework (see page 70) helps us identify and resulted in the robust growth in data consumption across our
mitigate the challenges and risks we face. Every year, we undertake postpaid and prepaid customers, contributing to Digi’s resilient
a materiality review to understand the societal and environmental financial performance, stronger EBITDA margin and healthy
issues that are important to our stakeholders. We have a flexible shareholders’ returns. Consequently, this provides Digi the necessary
and sustainable business model, enabling us to anticipate and flexibility and capability to invest for future data and digital growth
respond to changes in our markets. This model underpins our opportunities to continue creating value for our stakeholders.
Being responsible,
Responsible Creating a winning team
accountable and transparent Winning
Business Team with a customer-driven,
because it makes good Conduct
collaborative culture
business sense
014 Annual Report 2016 Digi.Com Berhad
Customers’ Favourite Partner During the year, the Malaysian Communications and Multimedia
Commission (SKMM) assigned 2 x 5Mhz of 900Mhz and 2 x
Internet-loving Malaysians spend a considerable amount of time 20Mhz of 1800Mhz spectrum bands to Digi for a tenure of 15
on digital products and services daily to stay connected on their years, for an upfront fee of RM598.5 million and annual fee of
social networks, and frequently enjoying real-time music and RM51.5 million with full implementation starting 1 July 2017. The
video entertainment online. This change in consumer behaviour spectrum allocation process and pricing on 900Mhz and 1800Mhz
is an opportunity for growth, but is also a challenge as increased spectrum bands have been fair and reasonable to enable operators
connectivity changes the social and safety landscape of digital to optimise network planning, deployment and quality coverage
living. Recognising this new wave of rapid digital adoption and for our customers.
usage among Malaysians, we have geared our business priorities,
investments and innovations to become our customers’ favourite In addition to the 4G+ network deployment, we commenced
partner at every stage of their digital journey. work on network readiness for the new spectrum assignment.
Our strategic access to the new 900MHz spectrum portfolio
Industry-Leading 4G+ Network will allow Digi to provide improved indoor coverage and quality
service experience for our customers, and bridge the spectrum
In 2016, we accelerated the nationwide expansion of our portfolio gap between industry players for a more level playing
industry-leading 4G+ network to serve more of Malaysia’s 32 field to deliver affordable and quality internet services to more
million population. Our LTE-A network footprint, now the widest Malaysians.
in Malaysia, grew from 29% to 41% of the population, covering a
total of 61 towns nationwide while our 4G LTE network extended Engaging Digital Products and Services
significantly from 65% to 85% population coverage, serving 275
towns. This is supported by our widespread fiber network that With a solid 4G+ network nationwide, we continued to strengthen
registered a solid 1,200km build out within the year, bringing our our internet positioning in prepaid with our Digi Prepaid LiVE and
fiber network to 7,600km. Digi Prepaid Best plans. Our prepaid products draw strong appeal
among young, entertainment-oriented customers who choose
Digi to enjoy worry-free digital services and the best video and
92% 85% 41% As part of a tactical campaign to drive internet adoption among
prepaid subscribers, we offered competitive data quotas on our
monthly internet passes, and innovative digital services passes
Our strategic investment in our 4G+ network has been such as the unlimited SD video streaming for RM1 per day. Positive
instrumental in fuelling adoption of our LTE services. We saw a uptake of these new prepaid plans, in particular Digi Prepaid LiVE
sharp 81% growth of LTE subscribers to 4.2 million in the year, and and internet passes, spurred stronger growth in prepaid internet
an additional 586,000 new internet subscribers bringing our base adoption and data usage on our network. However, the adverse
of active internet customers to 8.1 million. impact from aggressive IDD pricing, intense competition and
weaker consumer sentiment counterbalanced this favourable
Two out of every three new internet subscribers are from our development. Nonetheless, we have taken bold steps to stabilise
postpaid base. This growing confidence in our network has seen our prepaid base with more sustainable earnings prospects, and
a significant growth in our customers’ data usage, with monthly focused on the opportunities arising from prepaid to postpaid
average usage surging by 0.9 times for prepaid and 1.4 times for conversions.
postpaid compared to last year.
On the postpaid front, we intensified our focus on driving growth
As part of our commitment to 4G innovation, we introduced voice with our new, simplified postpaid plans. Our customers have shown
over LTE (VoLTE) services in the year for our customers to enjoy genuine interest in the innovative features we have delivered in
better call experiences through high-definition quality audio, our postpaid products, including our unique weekend internet
faster call connections and simultaneous use of data. propositions to border roaming flexibility. This has fueled solid
acquisition momentum in this segment and a record high postpaid
revenue growth for the year.
Inspiring Your Digital Life Annual Report 2016 015
Over and above our core product offerings, we augmented our Digi-X And Digital Innovations
home broadband plans with enticing non-stop entertainment
proposition to maximise the capabilities of our 4G+ network. Advancing our efforts to capture growth in the digital ecosystem,
BUSINESS REVIEW
This strategically positioned Digi as the choice provider for we formed a new digital venture-building division named Digi-X,
entertainment, empowering customers with the flexibility of led by our newly appointed Chief Digital Officer. The new
enjoying consistent high-speed internet at home and on-the-go. organisation is mandated to spearhead the development of
digitally adjacent businesses and competencies, and unlock new
Digitisation of Core Business business models and partnerships to generate alternative revenue
streams for Digi. Digi-X is given full autonomy to pace itself like
In the year, we focused on building a solid foundation of digital a start-up, challenge conventions, explore and innovate quickly
capabilities needed for our future, innovating around what our within a sandbox environment.
digital-first customers’ want to consume and how they want to
engage with us. One of our key enablers in this respect is our Being a part of Telenor is a significant advantage for us. We
MyDigi app, an intuitive and efficient self-serve digital channel are leveraging the global operator’s scale, experience and
that puts customers in full control of their accounts. It enables investments in areas such as the acquisition of global platforms
basic and frequently used functions such as account balance and capabilities, strategic partnerships with global digital players
status reports, bill payments, reloads, add-on subscriptions and and development of adjacent digital business prospects, for
rewards - all at our customers’ fingertips. We have received example, financial services and IoT. We will also tap on the analytics
positive response from our customers on the app, of which more capabilities across Telenor to enable personalisation of digital
than 1.5 million now actively use, a number that is growing by the services, recommendation engines for product development,
day. MyDigi will serve as a key point of interaction with customers digital distribution as well as smart planning and investment as
moving forward, and will see a rich feature upgrade in 2017 to part of our digital transformation journey.
better serve our growing user base.
Most Efficient Operator
Another key milestone in revolutionising and digitising our core
mobile operations was the deployment of our Mobile Sales App We remain committed to being operationally disciplined, and work
(MSA). A mobile solution that now empowers our Digi Store to drive aggressive cost transformation through solid governance
consultants and dealers to efficiently manage frontline customer and processes. We prioritise building network and IT ecosystems
interactions, in particular for new line registrations. The app that are open, agile and intelligent, and drive new technology
enables account activation with accurate identity and credit operating models that focus on common or shared platforms
verification all at the convenience of a smartphone or tablet. At end across Telenor Group and other business units.
2016, more than 86% of our dealers adopted our MSA platform.
We have the financial strength to make bold decisions to invest
We have also reinvented our in-store experience, and are ready in the things that set us apart. Our goal is to deliver sustainable
to roll out a new digital retail store concept for customers. The profitable revenue growth. With our focus on transforming our
new store format enriches the retail experience, using digital cost structures, we aim to grow our EBITDA and cash flow over
capabilities to serve our customers better and faster, from the long-term.
paperless transactions to efficient payment and self-serve
channels, focusing on minimising wait times and delivering more We have a prudent financial policy and strong governance over
value creating engagements with customers. Our new virtual our decisions to make investments, manage our debt, grow our
queue management system (eQMS), for example, gives customers business, and reward our employees and investors. To build our
greater convenience when visiting our store. It has notification business, we continue to make daring, informed decisions and
capabilities that allow customers to queue virtually, returning to undertake strategic investments to support growth in our core
the store only when notified that they are next in line to be served. mobile business and new digital revenue streams. We intend to
manage our net debt to EBITDA in a responsible way, below 2.0x
We will continue to digitise our customer journey, sharpening in the next three years while delivering healthy annual dividends
capabilities from these new digital services, supported by an agile to our shareholders.
core mobile operation to bring improved experiences at every
interaction point for more Malaysians nationwide.
016 Annual Report 2016 Digi.Com Berhad
This approach gives us the financial flexibility to make long-term Record High Postpaid Revenue Growth of 10.2%
investments in the best interests of Digi, our stakeholders and
for the communities where we operate. Our financial strength Postpaid revenue grew 10.2% to RM1.96 billion, the highest
underpins the investments we make and enable us to continue to recorded growth in the last five years, alongside a stronger
innovate and stay at the forefront of a rapidly-changing industry. postpaid subscriber base that maintained a steady ARPU at RM81.
Financial Performance for The Year Our postpaid subscribers expanded to 2.1 million, an increase
of 259,000 subscribers from a year ago. 86.8% of postpaid
2016 has been an exciting and interesting year for us, where we
subscribers or 1.8 million are active internet users and have been
achieved a number of new milestones: our record high growth on
instrumental in fuelling postpaid internet revenue growth by
postpaid, 4G+ network leadership on the back of highly efficient
26.5% to RM966 million.
capex spending and emerging as Malaysia’s largest mobile
operator with 12.3 million subscribers.
Our strong postpaid revenue growth in 2016 stems from the solid
Resilient Service Revenue at RM6.23 billion execution of innovative internet offerings, meeting the needs of
our customers’ increasing digital lifestyle on the back of Digi’s
We had our best performing postpaid revenue growth of 10.2% robust 4G+ network nationwide.
with a solid acquisition trajectory to seal 2016 with service
revenue at RM6.23 billion, a low single digit decline at 1.9%, in line
with guidance. 10.2% postpaid revenue growth while postpaid
subscribers surged to 2.1 million
Our internet revenue strengthened 11.4% to RM2.31 billion or 1.96
Service
37.2% of service revenue, alongside the increase in smartphone revenue 1.78
(RM billion) 1.71 1.73 1.72
adoption to 64.7% and active internet subscribers to 65.8%,
representing 8.1 million subscribers. The solid growth in internet ARPU
(RM) 84
revenue significantly cushioned adverse service revenue impact 82 82 81 81
from challenging market conditions and evolving customer usage Subscribers
(’000)
behaviour.
In line with the higher demand for sim-only subscriptions during 2012 2013 2014 2015 2016
the year, full year sales of devices and other revenue moderated
34.5% from RM566 million to RM371 million.
Defensive Prepaid Development in a Challenging Year
Resilient service revenue with the support of
12.3 million subscribers We experienced encouraging take-up of our new prepaid plans
Service especially Digi Prepaid LiVE and internet passes during the year.
revenue
6.33 6.35 6.23
Our move to rationalise the IDD pricing and step up on our
(RM billion) 5.89 6.13
internet value propositions favourably increased internet usage
ARPU
(RM) 48 48 47
among our prepaid base and helped stabilise prepaid ARPU and
45 margins.
42
Subscribers
(’000)
Intense competition in the prepaid market continued to put
pressure on data monetisation opportunities while the industry
faced relatively weaker consumer sentiment, and declining
demand on traditional voice and messaging services which still
10.5 11.0 11.4 12.1 12.3 forms a large proportion of prepaid revenue. Acknowledging these
challenges, we took a targeted segment approach to compete
2012 2013 2014 2015 2016 sustainably and reinforce our resilience in the prepaid market.
Inspiring Your Digital Life Annual Report 2016 017
BUSINESS REVIEW
conversions, and driving sustainable prepaid revenue and margins
during the year. EBITDA
(RM billion)
3.04 3.16
2.93 2.98 2.96
At year end, prepaid revenue stood at RM4.27 billion, a 6.6%
EBITDA
decline from a year ago as prepaid ARPU weakened to RM35 amid Margin 46% 45% 45% 45%
various headwinds while our prepaid subscriber base remained 43%
relatively stable. Total Cost
(RM billion) 3.92
3.71 3.87 3.65
3.45
Opex
Leveled prepaid revenue amid challenging market 1.62 1.67 1.77 1.89 2.01
conditions and intense competition
Service COGS
revenue 4.61 4.57
(RM billion) 4.40 4.27 1.83 2.04 2.10 2.03 1.64
4.18
ARPU
(RM) 41 41 41 2012 2013 2014 2015 2016
38
35
Subscribers
(’000)
We delivered a stronger EBITDA margin at 45%, up 1.7pp
from a year ago as a flow through from stronger gross profit,
higher internet revenue contribution alongside efficient cost
8.8 9.3 9.7 10.3 10.2 management. Meanwhile, absolute EBITDA tracked marginally
lower at RM2.96 billion.
2012 2013 2014 2015 2016
During the year, we invested RM780 million capex - net of RM73
million savings from the fixed asset register review undertaken
Highly Efficient Cost Management with Stronger as part of good governance - to improve the quality, capacity
EBITDA Margin and coverage of our 4G+ network to support our core business
digitisation roadmap. Our efficient capex management uplifted
Cost of goods sold (COGS) improved by 19.3% to RM1.64 billion ops cash flow by 4.6% to RM2.18 billion or 33% margin.
from lower device costs and traffic costs during the year. Our
relentless cost focus led to higher gross profit at RM4.96 billion,
Robust ops cash flow alongside efficient capex to
an increase of 1.6% amid weaker service revenue.
deliver industry 4G+ network
Opex for the year included the recognition of shared site rental Ops
costs of RM54 million that had a corresponding rental income in Cash flow 2.30 2.26
(RM billion) 2.23 2.18
other revenue resulting in zero net impact on EBITDA. Excluding 2.08
the shared site rental impact, our annual opex increment marked Ops
Cash flow 35%
34% 33%
a solid improvement with 3.9% annual increment versus 6.6%, a Margin 32%
30%
year ago. Capex
(RM billion)
The solid cost and operational discipline provided us the firepower
to fuel robust subscriber acquisitions, progressive 4G+ network
expansion as well as deliver affordable products and service
innovations to our customers. 0.70 0.74 0.90 0.90 0.78
Normalised profit after tax (PAT)1 moderated 3.1% to RM1.67 The balance sheet remains robust with solid financial capability
billion as a flow through from weaker EBITDA and progressively and flexibility to fund future investments and operational
higher depreciation from our 4G+ network expansion. commitments. Total assets strengthened 17.9% to RM5.50 billion
after the upfront spectrum payment fees of RM598.5 million in
November 2016 and investments for 4G+ network expansions.
Steady PAT margin with progressively higher
depreciation from 4G+ expansion Our net debt to EBITDA ratio stayed healthy at 0.6x level, post
upfront spectrum fees payment for 900Mhz and 1800Mhz.
Depreciation 0.88
and 1.33 0.63 0.65
0.49
amortisation All in all, we delivered 2016 financial performance within the
(RM billion)
guidance and at a higher EBITDA margin of 45% while delivering
PAT 29%
Margin 25% innovative data and digital services to more internet-loving
25% 25%
19% Malaysians.
PAT
(RM billion)
2016 Updated 2016
Guidance Actual
Service revenue Low single digit -1.9%
1.21 1.71 2.03 1.72 1.67 growth decline
EBITDA margin Slightly below 45% 45%
2012 2013 2014 2015 20161
Capex Around 13% of 12.5%
service revenue
Healthy Shareholders’ Return with New Capabilities to
tap on Growth Opportunities
Winning Team
Healthy shareholders’ return with dividend yield
above 4% Cultivating a Culture of Innovation 360
DPS
(sen) 26.0 As we reshape our business to become a digital company, we
26.3
21.3 22.0 20.9 recognise the importance to inculcate a culture of everyday
Payout innovation across every aspect of our way of work within the
Ratio 170% 97% 100% 99% 100% organisation. During the year, we established several platforms to
encourage employees to innovate like never before. This included
EPS
(sen) Disrupt@Digi, a 30-hour idea hackathon that challenged Digizens
to explore new ideas for products and services. The programme
required employees to experience and understand the process
of ideation, customer validation, service design, prototyping and
15.5 21.9 26.1 22.2 21.0 pitching their digital innovation ideas. Beta Labs was another such
platform, an ongoing innovation programme that encouraged
Digizens to pitch and test the feasibility of going to market with
2012 2013 2014 2015 2016
their ideas.
Normalised earnings per share (EPS)1 for the year remained We also organised a series of Digital Days, engaging the entire
healthy at 21.4 sen but trimmed lower to 21.0 sen after accounting organisation to explore existing and new technologies disrupting
for RM35 million prior year tax provision. the market and transforming our customers’ lives in order for
employees to understand the need to create great digital products,
The Board of Directors declared an interim dividend of 20.9 sen and drive change in the way we work.
per share equivalent to RM1,625 million or almost 100% payout
for 2016.
1
Exclude prior year tax provision of RM35 million
Inspiring Your Digital Life Annual Report 2016 019
A big part of our innovation agenda included contributing to Responsible Business Conduct
Malaysia’s digital growth by actively developing the next generation
of innovators via our newly established incubator and accelerator
BUSINESS REVIEW
We are deeply committed to doing business responsibly and
programmes, Digi Incub8 and Digi Accelerate. These programmes transparently. At the core of bringing mobile and internet
support budding entrepreneurs to build business fundamentals connectivity that is easily accessible, affordable and meaningful
through guided mentorship, ideation and marketing platforms, to different customer groups, we believe it is our responsibility
seed funding as well as opportunities for commercialisation. to operate our business and value chain, in an accountable and
sustainable manner.
This similar support is extended to budding social enterprises
through our Digi Challenge For Change (DigiCFC) programme, 2016 Customer First Day Celebration to Nurture
in collaboration with Agensi Innovasi Malaysia, MDec, MaGIC, Awareness for Safer Internet
Unicef, Google, Microsoft and Facebook. Here, we continue to
enable the development of mobile solutions to address social Together with 12 other business units in Telenor Group, we
issues concerning children, youth and women in Malaysia. celebrated Customer First Day (CFD) on 29 September 2016,
mobilising more than 1,400 Digizens across six major cities to
People Development Towards a Digital Future learn, share and interact with customers.
Digitising our employees’ every day experience was an important During the event, we took the opportunity to do a few important
aspect of reshaping our business. We invested to make available things: empowered customers to have full-control over their
three new digital learning platforms – Lynda.com, Udacity and accounts with our digital self-serve MyDigi app, engaged with
Coursera – to enable Digizens to do bite-sized learning on-the- customers for their valuable feedback on our services, and raised
go, very similar to how our customers consume media today. This awareness to combat cyberbullying and promote a safer internet
new way of learning gives employees access to a diverse range of experience for Malaysians. This stems from our commitment to
topics, for any type of learning pattern to develop relevant skills safeguard the digital lives of our children while empowering more
and knowledge to be a part of our digital journey. segments of society to benefit from being connected.
In this respect, we focused our efforts in the year to empower The key priorities in 2017 will focus on relentlessly growing
employees to report compliance incidents. We rolled out postpaid and Malaysian prepaid opportunities while defending
mandatory online modules on anti-corruption and privacy to raise core service revenue streams. Digi will also continue to drive:
awareness among Digizens on this issue. We launched a face-to-
face scenario training which was cascaded down by management • Stronger 4G+ adoption and usage with better monetisation,
to our employees to allow for active conversations on how to • New digital revenue opportunities beyond the immediate
handle incidents. We also launched an independent integrity future,
hotline, which has resulted in an increase in the number and • Digitisation of core business, and
complexity of cases reported. • Operational efficiency.
We believe in working with stakeholders to raise the level of We aspire to turn in stronger performance than industry with
responsible business conduct in our sphere of influence. Our solid development in operational efficiencies, service revenue and
Supplier Conduct Principles and Agreement on Responsible EBITDA margin at around 2016 level alongside maintaining capex
Business Conduct require business partners and vendors to meet to service revenue ratio at 11% - 13%.
international labour standards, provide a safe workplace, and
protect the environment. We conducted 984 supplier inspections, The 2017 financial guidance is as follows:
and took strict action on contractors who failed to meet our safety
standards. We are also a pioneering member of the Business 2017 2016
Integrity Alliance, a private sector initiative focused on engaging Guidance Actual
relevant government agencies and stakeholders to combat Service revenue 6.23 billion
corruption affecting the business environment. (RM) Around 2016
level
More detailed information on our responsible business practices EBITDA margin 45%
can be found on pages 36 to 44. Capex to service 11% - 13% 12.5%
revenue ratio
2017 Outlook and Priorities
These are internal management targets which will be reviewed periodically by
The strong foundations we have laid in 2016 with our innovative the Board of Directors. Hence, these internal targets have not been reviewed
by our external auditors.
internet and digital services offerings, and robust infrastructure
capability has given us a good head start in 2017 to deliver on the
opportunities provided by this same foundation. Our persistent focus on products and service innovations, retail
experience reforms, and digitisation of core business for future
The year ahead holds new opportunities and similar challenges growth gives us the agility and foundation to capitalise on new
as 2016, and we are committed to continue driving resilient opportunities in 2017.
performance and sustainable returns in 2017.
Inspiring Your Digital Life Annual Report 2016 021
022 Annual Report 2016 Digi.Com Berhad
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
18.3
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Ordinary Special
Inspiring Your Digital Life Annual Report 2016 023
BUSINESS REVIEW
Financial results (RM million)
Revenue 6,597 6,914 7,019 6,733 6,361
- Telecommunication revenue
- Service revenue 6,226 6,348 6,333 6,131 5,891
- Others 100 64 67 64 65
- Sales of device 271 502 619 538 405
Financial ratios
EBITDA margin 45% 43% 45% 45% 46%
Return on equity 314.6% 332.0% 296.1% 258.1% 462.1%
Return on total assets 29.7% 37.0% 47.2% 45.5% 30.0%
Earnings per share (sen) 21.0 22.2 26.1 21.9 15.5
Dividend per share (sen) 20.9 22.0 26.0 21.3 26.3
Dividend yield 1
4.3% 4.1% 4.2% 4.3% 3.5%
Net assets per share (sen) 6.7 6.7 8.8 8.5 3.4
Net debt/EBITDA (x) 0.6 0.4 0.2 0.1 0.1
Interest cover (x) 29.5 42.0 68.5 50.3 30.8
1
Yield calculated based on share price at year end
024 Annual Report 2016 Digi.Com Berhad
Share Development
In 2016, Digi’s share price performed weaker than FBM KLCI but relatively resilient compared to industry peers, who registered
an average of 16.3% decline as the Malaysian mobile telecom stocks underwent a series of bearish sentiment on concerns over the
uncertainties surrounding the spectrum fee obligation and increasingly challenging market conditions that may pose downside risks on
industry earnings.
Digi’s share continued to garner robust shareholdings support with 41.1% Malaysian shareholdings (2015: 40.9%) and steady foreign
shareholdings at 9.9% (2015: 10.1%) to deliver market capitalisation of RM37.6 billion at end 2016.
6.00 1,800
-3.0%
1,700
5.50
1,600
5.00
1,500
4.50 -10.6% 1,400
1,300
4.00
1,200
3.50
1,100
3.00 1,000
Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16
FBM KLCI Digi.Com
Digi’s total shareholders’ return continued to outperform the benchmark indices, supported by solid financial performance and higher
dividend payout.
150
+57.3%
100
50 +25.8%
0
2012 2013 2014 2015 2016
FBM KLCI Digi.Com
Total Shareholders’ Return (TSR) measures total return arising from capital gains (share price increase) and dividends.
Inspiring Your Digital Life Annual Report 2016 025
Statistics on Shareholdings
as at 3 March 2017
BUSINESS REVIEW
Issued and Paid up Share Capital : RM77,750,000 comprising 7,775,000,000 ordinary shares
Class of Shares : Ordinary shares
Voting Rights : One vote per share
No. of No. of
Size of Holdings Holders % Shares %
1 - 99 890 3.05 10,770 0.00
100 - 1,000 12,838 43.99 7,516,135 0.10
1,001 - 10,000 12,344 42.29 49,245,468 0.63
10,001 - 100,000 2,346 8.04 65,741,762 0.85
100,001 - 388,749,999 (*) 766 2.62 2,422,165,813 31.15
388,750,000 and above (**) 3 0.01 5,230,320,052 67.27
Total 29,187 100.00 7,775,000,000 100.00
Number of Shares
Direct Deemed
Name Interest % Interest %
1. Telenor Asia Pte Ltd 3,809,750,300 49.00 - -
2. Telenor Mobile Communications AS - - 3,809,750,300 (a)
49.00
3. Telenor Mobile Holding AS - - 3,809,750,300 (b)
49.00
4. Telenor ASA - - 3,809,750,300 (c)
49.00
5. Employees Provident Fund Board 863,129,052 11.10 - -
6. AmanahRaya Trustees Berhad 557,440,700 7.17 - -
- Amanah Saham Bumiputera
7. Kumpulan Wang Persaraan (Diperbadankan) 359,466,200 4.62 40,507,200 0.52
Notes:
(a) Deemed interested by virtue of its 100% interest in Telenor Asia Pte Ltd.
(b) Deemed interested by virtue of its 100% interest in Telenor Mobile Communications AS.
(c) Deemed interested by virtue of its 100% interest in Telenor Mobile Holding AS.
026 Annual Report 2016 Digi.Com Berhad
BUSINESS REVIEW
18 Maybank Nominees (Tempatan) Sdn Bhd 39,500,000 0.51
Maybank Trustees Berhad for Public Ittikal Fund (N14011970240)
Event Highlights
Quarter 1
18 February 8 March
January Rolled out promised 4G LTE sites in the Celebrated International Women’s
North: Lunas, Batu Gajah, Jejawi and Day with inspiring speakers, from
Arau as voted by Malaysians with the topic experts to industry leaders in the
#DigiWeWant4G You Tweet, We Build Advancing Women in Digital panel,
11 January
Twitter campaign. and pledged our support for the global
Announced Dialogue in the Dark
#HeForShe movement.
as season six winner of our flagship
community innovation programme, Digi
Challenge for Change (DigiCFC6).
10 March
First in Malaysia to rollout GSMA’s
Mobile Connect authentication solution
22 January
for select Digi customers, a universal
Launched a new community programme,
digital identity using mobile numbers as
Digi Wanita Era Digital (DigiWED),
ID links.
to bridge the digital gender gap by
equipping women with basic internet
and e-commerce skills nationwide.
25 February
Only Malaysian telco and pioneering 23 March
GSMA member operators to support Launched Digi Accelerate, our flagship
the GSMA Connected Women accelerator programme to fast track
Commitment initiative to extend mobile development of local startups, building
internet and mobile money services to strong fundamentals to position them
more women. for global success.
March
26 January
Partnered iflix to bring more video
1 March
content streaming to Digi Postpaid
Introduced the all-new Digi Postpaid
customers. packed with new features from extra
internet quota, internet rollover, new
internet roaming rates and a wider
range of digital services. 25 March
February Delivering on our promise to customers
by installing the latest nominated 4G
LTE sites in Papar and Tenom, Sabah as
2 March
4 February Launched our flagship Digi CXO
part of the #DigiWeWant4G You Tweet,
Conducted a workshop with Childline We Build Twitter campaign.
Apprentice challenge; a twist from
Malaysia to develop advocacy of the conventional management trainee
safe internet use among children in programme in search of young talents to
conjunction with Safer Internet Day benefit from a year of direct mentorship
2016. with Digi’s CXOs.
Inspiring Your Digital Life Annual Report 2016 029
Event Highlights
May
31 March 6 April
BUSINESS REVIEW
Introduced our latest slew of LTE-A Announced our industry-leading
capable mobile broadband device 6-months fully-paid maternity leave 1 May
bundles that give customers access to policy for employees, affirming our Introduced the new Internet Sharing
high-speed internet on-the-go with a commitment to build an inclusive, feature for all postpaid plans, helping
MoBiFi device. family-friendly workplace in Digi. customers share their quota with up to
six supplementary lines by simply adding
RM10 to their bill.
31 March 14 April
Expanded our network of retail Introduced Digi Video Freedom, a range
touchpoints by opening a Digi Store of bite-sized internet video streaming 13 May
Express in Taipan, Inanam, Sabah. passes that help customers stream their Five Malaysians join peers from
favourite video content without using Bangladesh, Myanmar, India, Pakistan
up their internet quota. and Thailand for the Telenor Youth
Forum Asia 2016 to solve some of the
Quarter 2 most pressing issues facing Asia’s youth,
from unemployment, mental health to
equal access to education.
April
1 April 18 May
Loh Keh Jiat appointed as Chief The Digi 4G LTE Carnival opened across
Marketing Officer to manage an our 150 Digi Stores and Digi Stores
expanded Sales and Marketing function Express nationwide, giving customers
with the overall mandate to drive end- the opportunity to enjoy internet offers
to-end customer focus and delivery. 30 April designed for all types of usage needs.
Enabled connectivity for residents in
the remote village of Long Urun, Bintulu
with a SmallCell tower system piloted
3 April with the Malaysian Communications 30 May
Opened Digi’s third Kampung IFA and Multimedia Commission (MCMC). Praveen Rajan appointed as Chief
(Internet For All) in Kg Sampadi, Lundu, Digital Officer to head Digi-X, the
Sarawak, an internet centre to empower company’s new venture-building
rural communities with connectivity and division mandated to create new digital
basic internet skills. 30 April businesses for Digi.
Opened a new Digi Store Express in
Lahad Datu, bringing our total retail
touchpoints in Sabah to over 1,800
6 April as part of making our services more 31 May
Rolled out new 4G LTE towers for accessible to more Sabahans. Launched our first incubator
customers in Bau and Limbang, Sarawak programme, Digi Incub8, adding
to enjoy quality, high-speed internet as to our spectrum of startup
part of the #DigiWeWant4G You Tweet, programmes focused on building basic
We Build Twitter campaign entrepreneurship skills in East Malaysia.
030 Annual Report 2016 Digi.Com Berhad
Event Highlights
June August
12 August
Announced three winning ideas for
16 June 1 August Digi Challenge for Change (DigiCFC7),
Initiated the search for mobile app ideas Introduced our all-new prepaid internet and simultaneously kicked-off the app
to benefit underserved communities plans customised to suit different development phase that invites local
with the seventh edition of our internet needs, with Digi Prepaid Best developers to turn these ideas into full-
community innovation programme, Digi being the ideal internet starter pack, fledged mobile apps.
Challenge for Change (DigiCFC7). and Digi Prepaid Live, the ultimate
streaming pack that offers free video
and music streaming quotas every
month. 31 August
In conjunction with Merdeka Day,
Quarter 3 kicked-off our #BukaLaHati campaign
with a video themed ‘Connect to be
July Free’, a heartwarming story to inspire
and remind Malaysians of the hope and
camaraderie we share.
4 July
Partnered popular mobile game
developer Supercell, to introduce
limited edition co-branded collectible
reload cards where prepaid customers
September
enjoy 10% discounts and postpaid
customers enjoy RM10 off when 1 August
purchasing any in-app Supercell content Opened a Digi Store in Tawau, Sabah 8 September
adding to our wide network of retail Opened a Digi Store Express at The Hub
on Google Play via Direct Carrier Billing.
touchpoints in the state. in Kuching, to make it more accessible
for Sarawakians to enjoy our services.
27 July
Underscored our commitment to 3 August
safeguard our customers’ digital Our first batch of eight CXO 9 September
Apprentices started their mentorship Expanded the retail distribution
life with the launch of a new Digi
programme with us. They were network for our Digi Prepaid Live
Family Safety app, and an online
selected from over 800 peers for this packs through a partnership with Bison
safety workbook #SafeWeb4Kids in
opportunity. Stores, a chain that operates retail
partnership with PS the Children.
press and convenience stores in high
traffic areas under trade names such as
myNEWS.com, newsplus, MAGBIT and
9 August The Front Page.
Launched the ‘Be Smart, Use Heart’
Video contest, a CyberSAFE in Schools
initiative in search of youth influencers
to advocate the need to be smart online
and to exercise cyber rights among their
peers.
Inspiring Your Digital Life Annual Report 2016 031
Event Highlights
Quarter 4
13 September 26 October
BUSINESS REVIEW
Pioneered an industry collaboration Introduced VoLTE, the next-generation
to standardise Health, Safety and
October voice call technology that enables
Environment (HSE) requirements for customers to enjoy high definition call
all contractors undertaking network quality on Digi’s 4G+ network. It also
infrastructure works in efforts to
1 October allows customers to simultaneously surf
Hosted 3,000 youths and families at
establish a safer working culture across the web, download or stream content
the ‘Us vs. Cyberbullying’ mega-event
the industry. from the internet at 4G LTE speeds
to advocate widespread internet
while engaged on a voice call.
safety practices for children to combat
Cyberbullying in Malaysia.
21 September
Launched Kreative Crew, a new creative 28 October
content crowdsourcing community Concluded Malaysia’s first on-ground
platform to facilitate the development
12 October Clash Royale tournament where
Introduced Digi RoamBorder, an
of local content producers. students from 18 universities compete
international roaming service for
to win prizes up to RM10,000,
postpaid customers to use voice and
delivering our promise to enable
internet services worry-free when
relevant internet content for our
traveling in Singapore.
29 September customers.
Annual Customer First Day event,
mobilising over 1,400 Digizens across
six major cities nationwide to appreciate
customers and raise awareness against
13 October
Cyberbullying.
Announced two winners to represent November
Malaysia at the 2016 Telenor Youth
Forum in Norway themed ‘Digitalisation
for Peace’, which calls for inspiring 2 November
youths to tackle social challenges using Hosted our first Digital Day to mark our
digital solutions. move to become a digital company; a
full-day tech showcase for employees
to explore new technologies. Also
announced tie-ups with GreenTech
18 October Malaysia for M2M connectivity in Tesla
Made annual phone upgrades possible cars, and Telenor’s acquisition of Prabhu
for customers with Digi Easy Up, a new as a move into the IOT and financial
service feature that gives customers the services space.
option to swap to a new smartphone
annually, for life.
032 Annual Report 2016 Digi.Com Berhad
Event Highlights
4 November 28 November
Named the Best Malaysian Organisation Sponsored the local qualifier leg of the
at TalentCorp Malaysia’s LIFE@WORK ESL One championship, hailed as the
awards, for pioneering best practices in World Cup of e-sports as part of our
2016 creating an inclusive, diverse and commitment to participate in and enable
family-friendly workplace for women. internet content that our customers
love.
15 November
Launched our all-new Digi Broadband
plans, offering customers internet quota December
for streaming movies, TV shows and
music from the comfort of their living
rooms. 1 December
Joined the Malaysian Business Integrity
Alliance as a pioneering partner,
reflecting our deep commitment
to uphold high standards of ethical
behavior in our business conduct.
14 December
Announced support for three social
entrepreneurs as DigiCFC7 winners,
namely grand prize winner EDDY, and
21 November consolation prize winners Good People
Announced partnership with CSE Today and Food Ninja Innovation, in
Group to deliver automotive and the form of a RM150,000 seed grant to
insurance telematics solutions for develop their mobile solutions for social
Malaysian enterprises as part of making good.
Internet of Things (IoT) services more
accessible to all customers.
26 November
Hosted the Digi CyberSAFE Digital
Citizen Camp to spread positive use
of internet among youths, and build a
strong network of peer influencers.
Inspiring Your Digital Life Annual Report 2016 033
034 Annual Report 2016 Digi.Com Berhad
Accolades
1 2
Companies 2016
3 4 5
Malaysia Brands 2016 Corporate Governance Corporate Performance
Transparency Index, Awards 2016
Findings and Recognition
• Ranked No. 11, Malaysia’s Top • Silver, Malaysia Company of the
100 Brands
2016 Year 2016
by Brand Finance • Malaysia Diversified
• Ranked No. 18, List of Top 100
Telecommunication Services
Companies for Overall Corporate
Company of the Year 2016
Governance and Performance
by Charlton East Coles
• Ranked No. 31, List of Top 100
Companies with Good Disclosures
by Minority Shareholder Watchdog
Group
6 7
• Best IR Website, Large-Cap • Best Malaysian Organisation,
Companies Category (pioneering increasingly diverse,
by Malaysian Investor Relations inclusive and family-friendly best
Association practices)
by TalentCorp Malaysia
Inspiring Your Digital Life Annual Report 2016 035
Accolades
ACCA Malaysia
8
BUSINESS REVIEW
Sustainability Reporting
Awards (MaSRA) 2016
• Commendation Award, Enterprise
of the Future Category
by ACCA Malaysia
9 10
Index 2016 Markets Index 2016
11 12
Sustainability Ranking Sustainability Awards 2016
2016
• Top 100 Companies in Asia • Winner, Commercial Project
by Channel NewsAsia Leadership Category for the Digi
Technology Operations Centre
by the International Union of
Architects (IUA), Malaysian Green
Building Confederation (MGBC),
Persatuan Akitek Malaysia (PAM)
and Solar Research Malaysia UKM
036 Annual Report 2016 Digi.Com Berhad
Sustainability
Our commitment to sustainability leadership is deeply embedded in our business strategy. We believe
our position, governance and management of material issues have an impact on the long term success of
our business, and are also what’s important to our stakeholders. This approach gives us the competitive
advantage to attract the best talent, remain agile in delivering our services, build trust with stakeholders
in future proofing our operations, while engaging communities to create a better future together.
Our sustainability framework underscores our commitment to In 2016, we mapped our sustainability framework to the
operate an accountable, transparent business. It steers our focus Sustainable Development Goals (SDG), a landmark global
to uphold ethical and responsible conduct across our operations, commitment to collectively end poverty, protect the planet, and
build a highly motivated, skilled and collaborative workforce, ensure prosperity for all by 2030. Launched in September 2016,
and reduce our environmental impact. It also guides our broader the SDG accelerates expectations for the private sector to join
purpose of empowering communities to address social, economic the international community in taking meaningful action. As
and environment inequalities by working with like-minded part of Telenor Group, we have prioritised Goal 10 in Reducing
partners to scale and accelerate the rollout of relevant digital Inequalities, leveraging on our digital competencies and strength.
solutions for the betterment of local communities.
Sustainable
Development Goals
Empower Societies
• Safe Internet
• Digital Enablement
Responsible
Business
• Ethics and Compliance
• Winning Team
• Climate Change and
Environment
We believe in conducting business in a responsible manner by All Digizens are guided by the Code of Conduct that set
establishing a business environment with partners who share the standard for proper business conduct with customers,
our commitment to high standards of ethics and integrity. This stakeholders and partners. It defines the culture and the main
is maintained by ensuring the right principles of anti-corruption, principles by which we create value. All employees must read,
customer privacy, consumer responsibility, supply chain acknowledge and sign the Code of Conduct annually.
sustainability, and safe use of equipment are upheld across our
business.
Inspiring Your Digital Life Annual Report 2016 037
Sustainability
Building awareness: Following the Integrity and Ethics Survey secure, and be transparent in how we collect and use their data.
2015, we conducted focus group sessions and roadshows with Our security systems are ISO 27000 Information Security
Division leaders and employees to discuss findings and solutions. Management Systems certified to ensure robustness of our
Key focus areas include managing exposure to corruption, conflict processes.
of interest, gifts and business courtesies, and improving trust
in the whistle blowing policy. These engagements allowed us to Raising awareness: Over 60 privacy ambassadors from various
better understand ethical dilemmas faced by our employees, and functions help drive the privacy agenda within their divisions. We
for them to have more confidence to report compliance incidents rolled out a mandatory e-learning information handling training to
and understand management’s expectations of behaving with ensure all Digizens understand the importance of privacy, and to
integrity. live the values of safeguarding customers’ data at all times.
Training and support: We developed and launched the ‘Say No Improving compliance: Privacy by design ensures that protocols
to Corruption Training’, consisting of an e-learning module and regulating the collection, use and disposal of personal data are
SUSTAINABILITY
a face-to-face scenario workshop based on ethical dilemmas. built into all our systems and processes before it is rolled out.
The integrity scenario training began with the Digi Management We tightened privacy governance and compliance in the year,
team, and all people managers had the responsibility to engage and incorporated privacy by design protocol into all operational
and train their respective teams once they were trained by their activities, and business and vendor selection processes.
immediate managers. As at 31 December 2016, 86% of Digizens
had completed the scenario workshop. Increasing transparency: We are committed to analysing
customers’ data to provide them with better value and relevant
Enabling reporting: The launch of an independent integrity services with their consent. The launch of a new privacy notice
hotline contributed to the reporting of compliance issues that ensures we are data network analysis compliant, and that we help
were more complex, substantive, and led to a 37% year-on-year customers understand their rights to the use of their data.
increase of issues reported. Almost half of the reports were
related to business integrity. Consumer Responsibility
Broadening due diligence: Business managers are now required We want to deliver experiences that delight our customers. Every
to conduct an Integrity Due Diligence (IDD) assessment for customer interaction across key channels are rated, and detractors
all business partners. The IDD serves to measure the level of are engaged to improve services. Our extensive customer
integrity held by potential business partners. The IDD findings engagement at stores, quarterly network drive tests, and annual
are reviewed by the Ethics and Compliance, and the Sourcing and Customer First Day engagement ensure we have a constant pulse
Logistics teams before contracts are awarded. on creating experiences that delight customers.
Protecting Privacy
Sustainability
Engaging network detractors: Our network and technical requirements of workers at our base stations and technical sites.
backend teams take responsibility of customers’ experience For the first time, the app allows our inspection team to have a
by engaging and understanding the challenges faced by our real-time overview of when, and where our contractors and sub-
customers. Members of the teams volunteer to call detractors to contractors are working. This enables efficient deployment of
deep dive on issues and attempt to provide resolutions. Information inspectors to sites.
collated from this Network Net Promoter Score (NPS) exercise is
then cross-referenced against our network performance KPIs by We conducted 984 inspections, of which 99% were unannounced.
the network quality team. Though major non-compliance was reported in less than one
per cent of inspections, we had two more cases of major non-
Resolving disputes: Bill disputes were one of the top three issues compliance compared to the year before. In 2016, we terminated
raised by customers across the industry. We were the first in the eight sub-contractors and suspended three sub-contractors for
industry to introduce a customer guarantee to resolve a customer’s failing to meet our safety standards. We saw a 40% year-on-year
bill dispute within 24 hours, or they will receive a full waiver on the reduction in minor non-compliance cases.
disputed amount. We have seen a reduction in escalation of cases,
a significant drop in repeated calls on billing, and improvement in Internalising safety: We apply the same high level of safety
NPS on billing adjustment. standards to our employees. Our health and safety management
systems are OHSAS 18001:2007 certified, and regional health
Innovating services: The MyDigi app was designed as an and safety committees roll out safety inspections and health
intuitive self-management of relevant Digi services such as bill programmes. Having achieved three years of zero lost time injury
payment, services subscription, and account status. Over 75% frequency (LTIF), we recorded our first significant employee
of the 1.5 million active users log on at least once a month, and injury in 2016. Our LTIF was 0.23 per million hours of work.
is rated consistently as one of the Top 5 apps on Google Play
Store Malaysia. The digital Mobile Sales App (MSA) has reduced Promoting collaboration: We partnered with industry peers to
customers’ average waiting and handling time at stores by 35% conduct a baseline calibration of health and safety requirements.
and 16% respectively. Average registration time is now only 20 This baseline led to the development of a common industry
seconds for prepaid and 3 minutes for postpaid. safety standard, which was endorsed by five industry CEOs.
This common standard will transform the industry’s safety
Supply Chain Sustainability culture, allow for cost savings, and increase efficiencies for all
stakeholders.
We expect business partners to adopt our high standards
of business conduct, working conditions and environmental
management. Through our Supplier Conduct Principles, we
help business partners build capacity and reduce inequalities by
ensuring that their workers’ rights and safety are protected.
Sustainability
Winning Team
Age (%)
Our employer promise of ‘Freedom to inspire the next’ is a belief
in creating a workplace where everyone’s voice is heard, and
Below 30
aspirations fulfilled, regardless of their position in Digi. It is this 22%
freedom that attracts and retains top talent, and innovates the
next generation of products and services in our drive to be our
customers’ favourite partner in digital life. 31 - 50
73%
SUSTAINABILITY
belonging, everyone is respected, differences embraced, and
there are equal opportunities for all.
Ethnicity (%)
Bumi
3%
Malay
33%
Chinese
46%
Indian
15%
Others
3%
040 Annual Report 2016 Digi.Com Berhad
Sustainability
Supporting work life balance: In January 2016, we launched a 800 young adults with the unique opportunity to spend a year
six months fully paid maternity policy for all full time employees. shadowing and being mentored by a CXO. Following a rigorous
Sixty five Digizens have gone on maternity under this new policy, online recruitment, a workshop to observe and shortlist potential
and 37 have returned to their positions while the remaining are candidates, eight individuals were selected to apprentice with the
still on maternity leave. respective CXOs.
Attracting future-ready talent: We created unique opportunities Employee Engagement Index (EEI): EEI measures percentage of
to accelerate learning of young talent as part of building our future employees committed to the organisation and willingness to apply
talent pipeline. The CXO Apprentice Challenge attracted over discretionary effort in their work. Our EEI averaged 76% over the
last three years, which is above the benchmark of high performing,
and Malaysian companies. The results point towards a strong
culture of customer centricity and higher employee net promoter
score.
Innovation Everyday
Innovation Platforms
Disrupt@Digi
Over 80 Digizens formed 15 teams to create the next innovative product or service over a non-stop
30 hour event. Connect Kindie, an app to enable better communications between kindergarten
teachers and parents, was selected to be commercialised.
Beta Labs
An intrapreneurial platform designed to harness collective validated learning through small,
autonomous teams. Supported by an Innovation Catalyst, teams win approval from the monthly Beta
Council to prototype and test their ideas. Thirty five ideas were submitted, and five are being beta
tested with customers. One idea has garnered interest from the Marketing team, and may be turned
into a Digi product.
Inspiring Your Digital Life Annual Report 2016 041
Sustainability
SUSTAINABILITY
we launched the ‘Strategic Execution Programme’ for all head of data traffic. Our energy intensity per RM revenue rose 19% to
sections and senior experts. The six-week online course exposes 0.046 KWh due to lower revenues, and our KWh per customer is
leaders to the external disruptive forces and trends shaping our marginally above the Telenor Group average of 18.6 KWh.
industry, inspires new ways of work and thinking, and instills
skills to lead their teams to make the digital shift. Leaders need Our total carbon emission is 142,835 tonnes, a 5.6% year-on-
to demonstrate and reflect execution of the new knowledge by year increase, and our carbon intensity per RM value added
completing a project over three months. increased 4.5% to 0.044 tonnes, while our carbon emission per
customer is above the Telenor Group average of 6.3 kg CO2e.
Future-ready: ‘What’s your Next’ is a half day workshop that engages
all Digizens to understand and embrace our new digital ambition.
The workshop explains why and how the business is changing, Total Energy Use By Type (GWh)
enabling Digizens to chart their next step within Digi, freely challenge
conventions, experiment with new opportunies, and urgently commit
to learning a future related skill to remain future-ready. 160
101
Freedom to learn: We launched our new Digital D’Academy 2016
15
allowing every Digizen to freely access three world class online
8
learning platforms anytime and anywhere. Ninety eight Digizens
have enrolled for a six months nanodegree on Udacity. Five have
graduated having undergone on average of 72.4 online learning 155
hours per nanodegree. Digizens on average completed 14.2 hours 86
of training. 2015
14
8
Freedom to Learn
152
Sustainability
Sustainability
Empower Societies
A connected society is an empowered society. Building on our core values and leveraging on our digital ambition, we believe digital
services and platforms can bring many benefits to the lives of individuals and communities. Digi’s CyberSAFETM, Challenge for Change,
and Wanita Era Digital are core programmes to empower societies. We also support other digital empowerment initiatives such as the
Telenor Youth Forum, Digital Winners Asia, and Kampung Internet For All.
Safe Internet
Over the six years of Digi’s CyberSAFETM programme, more In 2016, our focus was on creating mass awareness by deepening
than 100,000 students and 7,000 teachers nationwide have our strategic partnerships with the Ministry of Education,
been trained and engaged. We have curated the nation’s largest CyberSecurity Malaysia, UNICEF, the Royal Malaysia Police and
repository of information on schoolchildren’s online behaviour The Star R.AGE.
SUSTAINABILITY
through biennial national quantitative and qualitative surveys.
With our partners, we launched a public Partnering with UNICEF, The Star R.AGE and Women:girls,
campaign, ‘Us vs Cyberbullying’, that we kicked off the ‘ReplyForAll’ public townhall to trigger a
reached over 3,000 people with the conversation on online child sexual exploitation and the call
Mayor of Petaling Jaya. to action for anti-grooming laws in Malaysia.
Digi’s CyberSAFETM Champion, Philip Ling, was awarded the Cybersafe Professional
2016 by Cybersecurity Malaysia, an agency under the Ministry of Science, Technology
and Innovation. The award recognises an individual’s contribution and commitment to
Malaysia’s cyber and information security.
044 Annual Report 2016 Digi.Com Berhad
Sustainability
Digital Enablement
We continue to work with partners who have the vision of how digital
services can bring meaningful impact to their communities. With
our partners, we developed scalable solutions which underscore
our vision to leverage digital connectivity and services for good.
Accessing safer child care: Working alongside Childline Malaysia Enhancing learning of sign language: Eddy, an edutainment app
and The Association of Registered Childcare Providers Malaysia, which intends to gamify the learning of sign language emerged
we developed asuhan.my to help families identify and review as the winner of Digi Challenge for Change 7. Eddy utilises 3D
over 3,000 child care centres registered under the Child Care animation, localised content and games to make learning sign
Centre Act 1984. It also identifies care centres that are not language easier and more fun for everyone. The Eddy team won a
registered with local authorities, provides an avenue to report RM50,000 cash prize, and an additional RM70,000 from Digi and
suspected abuse, and to locate the nearest support systems. Agensi Innovasi Malaysia as they meet development milestones
www.asuhan.my. over the next six months.
Board of Directors
Decisive.
Our Board has set clear directions for our business moving forward;
a well-defined digital strategy focused on securing Digi’s long-term
growth and continued attractive returns to shareholders.
Tore Johnsen
Yasmin Binti Non-Independent Lars-Ake
Aladad Khan Non-Executive Director, Valdemar Norling
Independent Non- Member of the Audit Non-Independent
Executive Director, & Risk Committee and Non-Executive Director, Vimala A/P
Chairman of the Remuneration Committee Member of the V.R. Menon
Nomination Committee Nomination Committee Independent Non-
and Remuneration Executive Director,
Committee Member of the
Audit & Risk Committee
GOVERNANCE
048 Annual Report 2016 Digi.Com Berhad
Directors’ Profile
Directors’ Profile
GOVERNANCE
in January 2000, he served as the Mobile Product Director at for DHL Express overseeing 14 countries with more than 14,000
Telenor Asia Pte Ltd in Singapore. Mr Johnsen was also CEO of employees and 160,000 customers until December 2015. Prior
Telenor Pakistan Ltd from August 2004 to August 2008, CEO of to this, she was DHL Singapore’s Country Manager in 2003 and
Total Access Communications Public Company Limited, Thailand Country Manager in Malaysia in 2001.
from August 2008 to March 2011, and CEO of Grameenphone
Ltd, Bangladesh from March 2011 to January 2013. Other Commitments
Puan Yasmin is a Director of DHL’s subsidiaries in Asia Pacific and
Other Commitments she also holds the role as Executive Vice President, Asia Pacific
Mr Johnsen is currently a Senior Advisor for Telenor ASA, and (excluding China) and Managing Director, Emerging Markets.
Director of Total Access Communications Public Company
Limited, Thailand, Grameenphone Ltd, Bangladesh and Digi Skills & Experience
Telecommunications Sdn Bhd. Puan Yasmin holds a Master in Business Administration from
Aston University, and is currently a member of the Advisory Board
Skills & Experience of Singapore Management University.
Mr Johnsen holds a Master of Science from University of
Trondheim (1972) in addition to Studies in International Business
Management at the Norwegian School of Economics and Business
Management (1995).
050 Annual Report 2016 Digi.Com Berhad
Directors’ Profile
Directors’ Profile
GOVERNANCE
Cycle & Carriage Limited and PT Astra International Tbk. She left
EON Berhad in 2007 and was subsequently appointed Director
of Finance and Corporate Affairs at Proton Holdings Berhad from
2008 to 2009.
Other Commitments
Ms Menon is currently the Senior Independent Director
and Chairman of the Board Audit Committee for Petronas
Chemical Group Berhad and Cycle & Carriage Bintang Berhad,
and Independent Director and Chairman of the Board Audit
Committee for Petronas Dagangan Berhad. She is also a Board
member of Prince Court Medical Centre Sdn Bhd.
Management
Inspiring Your Digital Life Annual Report 2016 053
Active.
Our leaders are committed to executing our strategy and achieving
our ambitious goals to capture growth opportunities in digital; deeply
driven by a customer-first, and innovation-led approach to everything.
left to right
1. Kesavan Sivabalan Chief Network Officer
2. Loh Keh Jiat Chief Marketing Officer
3. Haroon Bhatti Chief Human Resource Officer
4. Eugene Teh Chief Corporate Affairs Officer
5. Albern Murty Chief Executive Officer
6. Praveen Rajan Chief Digital Officer
7. Orsolya Sekerka Chief IT Officer
8. Karl Erik Broten Chief Financial Officer
GOVERNANCE
054 Annual Report 2016 Digi.Com Berhad
Management Profiles
Management Profiles
GOVERNANCE
Master of Science in Enterprise Project Political Science.
Management from Stevens Institute of
Technology, New York, USA.
Praveen Rajan
Chief Digital Officer
Male, 38, Malaysian
Career History:
Praveen was appointed Chief Digital
Officer on 1 June 2016. He joined Digi
Telecommunications Sdn Bhd in 2007, and
brings more than 15 years of experience in
the internet and mobile industries. He has
held multiple leadership positions in his ten The CEO has:
year stint with Digi Telecommunications 4,600 interest in shares of Digi.Com
Sdn Bhd, and these include Head of Berhad.
Advanced Data Services, Head of Products
– Internet & Services, and Head of Postpaid The Management Team do not have any
& Digital Services. Prior to joining Digi, of the following:
Praveen co-founded a social networking 1. Directorship of public companies;
startup called LifeLogger in 2003, where he 2. Family relationship with any Director
served as the Chief Technology Officer. and/or major shareholders of the
Company;
Skills & Experience: 3. Conflict of interest with the Company;
Praveen holds a Bachelor of Engineering and
(BEng), Electronics and Computing from 4. Conviction for offences within the past
Nottingham Trent University, Nottingham, 5 years other than traffic offences.
England.
056 Annual Report 2016 Digi.Com Berhad
The Board of Directors (the Board) of Digi.Com Berhad and its Group of Companies (Digi or the Group) integrates business integrity
into the strategies and operations of the Group because the Board believes that maintaining good corporate ethics is key to delivering
shareholders’ value.
Digi is guided by the principles of the Malaysian Code on Corporate Governance 2012 (MCCG 2012) and the Corporate Governance
Guide issued by Bursa Malaysia Securities Berhad (Bursa Securities) in its corporate governance practices, and continues to strive
towards achieving a high standard of corporate governance.
This statement describes how Digi has applied the principles and in general complied with the recommendations of the MCCG 2012
during the financial year under review.
I. Board Structure
In leading a telecommunications company, the Board seeks to continually evolve its membership by seeking Non-Executive Directors
equipped with diverse and complementary skills and perspectives, as well as extensive experience in international operations.
The Board currently has seven (7) Directors, comprising four (4) Non-Independent Directors and three (3) Independent Directors.
They are all Non-Executive Directors.
The Chairman, Mr Morten Karlsen Sorby is a Non-Independent Non-Executive Director. Notwithstanding that the Board does
not comprise majority Independent Directors where the Chairman is not an Independent Director as recommended in the MCCG
2012, the Independent Directors are able to exercise strong independent judgment and provide balance to the Board with their
unbiased and independent views and advice to all Board deliberations. The Nomination Committee (NC) has assessed and held the
view that Mr Sorby has and continues to play an effective role as Chairman and Director of Digi. He has consistently demonstrated
strong commitment and judgment in overseeing the management function, taking care of the best interests of the shareholders and
facilitating Board meetings to ensure that contributions by all Directors are forthcoming on matters being deliberated and that no
particular Board member dominated in any of the discussions. This ensures the balance of power and authority within the Board
whilst taking cognizance of the interests of minority shareholders and other stakeholders.
Inspiring Your Digital Life Annual Report 2016 057
The Board assesses annually the effectiveness of the Board as a whole, Board Committees and Directors individually through
the NC. Further details are shared in the NC report from pages 78 to 79. In January 2017, the NC conducted an assessment of
the Board’s effectiveness and recommended the re-election of Puan Yasmin Binti Aladad Khan and Tan Sri Saw Choo Boon, the
Directors who are retiring by rotation in accordance with Article 98(A) of the Company’s Articles of Association at the forthcoming
AGM to be held in May 2017. The Board (save for the interested Directors who have abstained from deliberations) is satisfied that
they have continued to contribute to the Board’s effectiveness and have discharged their responsibilities as Directors. Therefore,
their re-election to the Board is recommended for shareholders’ approval.
The Board is satisfied that the current composition of Directors provides the appropriate mix of relevant skills and knowledge,
experience, balance and size necessary to promote shareholders’ interests and govern Digi effectively. It also fairly represents
the ownership structure of Digi, with appropriate representation of minority interests through the Independent Non-Executive
Directors. The Non-Executive Directors contribute international and operational experience, and understanding of the financial and
capital markets.
Most of the Directors have experience in the telecommunications industry. A brief description of the background of each Director is
presented in pages 48 to 51 of the Annual Report.
Tan Sri Saw Choo Boon, Puan Yasmin Binti Aladad Khan and Ms Vimala A/P V.R. Menon are Independent Directors. Based on the
independence assessment in 2017, the Board is satisfied with the level of independence demonstrated through their engagement in
meetings, providing objective challenges to Management and bringing independent judgment to decisions taken by the Board. The
GOVERNANCE
Independent Directors fulfill the criteria of “Independence” as prescribed under Chapter 1 of the Main Market Listing Requirements
of Bursa Securities (MMLR). Digi fulfills the requirement to have at least one-third of the Board comprising Independent Non-
Executive Directors.
The Independent Directors are assessed annually based on the criteria established by the Board. In assessing independence, the
Board has considered the recommendations of the MCCG 2012 regarding the tenure of Independent Directors to be limited to
nine (9) years, and hence, do not encourage a Director whose term of appointment has exceeded a cumulative period of 9 years
to be retained as an Independent Director. At this juncture, there is no such Director who has served on the Board for more than
9 years. However, if and when such an occasion arises, the experience and knowledge of long-service Directors would be taken
into consideration and the Board has authorised the NC to conduct an assessment of the Independence of such Directors prior to
seeking shareholders’ approval to retain such Independent non-Executive Directors on the Board.
Board Diversity
The Board recognises that other aspects of diversity within the Board are also important, and this includes a mix of skills, experience,
perspective, gender and age. The evolution of this mix is a long-term process that is deliberated each time a vacancy arises to ensure
a balanced and diverse Board composition is maintained. The Diversity Policy aims to set the approach to achieve diversity on Digi’s
Board and its workforce.
Currently, there are three (3) women serving as members of the Board, reflecting a 43% female representation among Non-
Executive Directors on the Board which exceeds the Malaysian government’s target of 30% women participation on boards of public
listed companies.
Further information on diversity within the organisation is included in Digi’s 2016 Sustainability Report, available at
www.digi.com.my/sustainability.
45 - 50
66 - 70 years
years 29%
28% Female
43%
Male
57%
61 - 65
years
14% 55 - 60
years
29%
Length of Service
1-2 Y 3
3Y 0
4Y 3
5Y 0
6Y 1
No. of Directors
Board Committees
The Board has established three (3) Board Committees, namely the Audit & Risk Committee (ARC), Remuneration Committee (RC)
and NC which are entrusted with specific responsibilities to oversee Digi’s affairs, with authority to act on behalf of the Board in
accordance with their respective Terms of Reference (TOR). The Board Committees review matters within their TORs and make
recommendations to the Board for approval. The Board is kept appraised of the activities of the Board Committees through
circulation of minutes of the Board Committees meetings and update by the respective Chairman of the Board Committees.
Although the Board has granted discretionary authority to these Committees to deliberate and decide on certain operational
matters as set out in their respective charter, the ultimate responsibility for final decision on all matters lies with the Board.
Inspiring Your Digital Life Annual Report 2016 059
Tan Sri Saw Choo Boon Yasmin Binti Aladad Khan Morten Karlsen Sorby
Chairman, Independent Non-Executive Chairman, Independent Non-Executive Chairman, Non-Independent Non-
Director Director Executive Director
Vimala A/P V.R. Menon Lars-Ake Valdemar Norling Lars-Ake Valdemar Norling
Member, Independent Non-Executive Member, Non-Independent Non-Executive Member, Non-Independent Non-Executive
Director Director Director
The TOR for each of the Committees is accessible on Digi’s website at digi.listedcompany.com/misc/factsheet.
• All Board Committees consist of members who are Non-Executive Directors, a majority of whom are independent except for the
RC where all its members are non-independent.
• All Board Committees meet as and when necessary. Decisions can also be made via circular resolutions.
• In carrying out its duties and responsibilities, the Board Committees have:
(i) full access to any information, records, properties and personnel of Digi, and
(ii) power to obtain independent professional advice and expertise necessary in order to enable them to discharge their duties
GOVERNANCE
effectively.
• All members of the Board Committees have access to the advice and services of the Company Secretaries.
Details of the attendance at Board Committees meetings are set out on page 62.
The summary of activities of the ARC can be found in the ARC Report from pages 75 to 77 of this Annual Report.
The NC oversees matters related to Board structure in ensuring the existence of the right mix of experience, skills, knowledge,
expertise, professionalism, integrity, competence, time commitment and other factors with regard to the leadership needs of the
Company. A summary of the activities of the NC is set out in the NC Report from page 78 to 79.
During the year, the RC met once and all members of the Committee attended the meeting.
The RC evaluated Mr Albern Murty as CEO against his set performance criteria and reviewed his compensation package thereof.
The Chairman of the RC was authorised by the Board to determine the compensation package for the CEO.
The Board established formal and transparent remuneration policies and procedures for the Board and its Committees, to attract,
retain and motivate the Directors. Non-Executive Directors’ remuneration is structured to link with their contributions to the overall
performance of the Company and commensurate with their experience, expertise and level of responsibilities.
060 Annual Report 2016 Digi.Com Berhad
The Board collectively determined the remuneration for the Independent Directors based on the recommendation of the RC. Each
of the Independent Directors abstained from deliberating and voting on their own remuneration. The Non-Independent Non-
Executive Directors receive their remuneration from their employing companies within Telenor Group and do not receive any form
of remuneration from Digi. The Board is of the view that the current remuneration level suffices to attract, retain and motivate
qualified Directors to serve on the Board.
The details of the remuneration of Directors (both the Company and the Group) comprising fixed monthly fees and ARC meeting
allowances for the financial year 2016 are as follows:
Tan Sri Saw Choo Boon 240,000 3,334 31,992 Nil 275,326
Non-Executive Directors
Not applicable 4
RM200,000 – RM250,000 2
RM250,001 – RM300,000 1
Total 7
The Board is cognizant of the need to promote and protect the interests of shareholders and stakeholders of Digi. The Board also
shoulders the ultimate responsibility of determining the direction of the Group, assisting in the fine-tuning of corporate strategies
and ensuring effective execution of these strategies.
The Board shall be involved in any matters that may have a significant impact on Digi’s business, including, and not limited to, issues
within objectives and strategies, operations, finances and employees.
Inspiring Your Digital Life Annual Report 2016 061
During the financial year 2016, the Board carried out the following activities:
GOVERNANCE
• approved the Circular to Shareholders in relation to recurrent related party transactions;
• reviewed and approved Group expenditure which exceeds the authority limits of the CEO and Management as defined in the
Delegation Authority Matrix;
• approved the revision of the Group’s policies;
• received updates on tax that impacts the Groups’ businesses; and
• reviewed the evaluation results of the Board, Board Committees, Directors Self/Peer and Independent Directors for the
financial year ended 2016.
There is a clear division of responsibility between the Chairman and the CEO to ensure that there is a balance of power and authority,
where no individual has complete autonomy over decision making. The Chairman leads the Board with a keen focus on governance
and compliance, ensuring its effectiveness. He principally ensures that the Board fulfills its obligations under the Board Charter and
as required under the relevant legislations. He engages directly with the CEO to monitor business performance and oversees the
implementation of strategies.
The CEO ensures effective implementation of the Board’s policies, achieves strategic and performance targets, exercises high levels
of business judgment and manages the relationship with stakeholders and the public. The Board has delegated the authority to
achieve the Company’s corporate objectives to the CEO in accordance with the Rules of Procedure for the CEO and he remains
accountable to the Board. The CEO is not a Board member of Digi.Com Berhad to ensure there is a clear distinction between the
roles of the CEO and the Board, and to prevent conflict of interest. He is supported by seven other members of the Management
team.
062 Annual Report 2016 Digi.Com Berhad
Board Charter
The Board is guided by the principles contained in the MCCG 2012, the Board Charter and the Delegation Authority Matrix, which
set out the practices and processes in the discharge of its responsibilities, the matters that are reserved for consideration and
decision making, the authority that has been delegated to the CEO including the authority limits which the CEO can execute, and
provides guidance on the division of responsibilities between the Board and the CEO.
The Board Charter and the Delegation Authority Matrix are reviewed and revised, as and when required, to ensure an optimal
structure for efficient and effective decision making in the organisation.
Time Commitment
The Directors are aware of the time commitment expected from them to attend to matters of the Group in general, including
attending meetings of the Board, Board Committees and AGM. As such, meetings are scheduled one year in advance and due notice
is given for additional meetings.
Technology is effectively used in Board Meetings and in communication with the Board, where Directors may participate in meetings
by audio or video conferencing.
The Board is satisfied with the level of time commitment given by the Directors in the discharge of their roles and responsibilities.
The breakdown of the Directors’ attendance at the Board, various Board Committee meetings and the AGM during the year are set
out below:
Name of Directors Board ARC NC RC AGM
meetings Meetings Meetings Meetings
7 5 1 1 1
Morten Karlsen Sorby 7/7 N/A N/A 1/1 1/1
Chairman/Non-Independent Non-Executive Director (100%) (100%) (100%)
Tan Sri Saw Choo Boon 7/7 5/5 1/1 N/A 1/1
Independent Non-Executive Director (100%) (100%) (100%) (100%)
At Board meetings, the Chairman encourages constructive and healthy debates, and Directors are free to express their views.
Any Director who has a direct or deemed interest in the subject matter abstains from deliberation and voting on the respective
resolution. Decisions of the Board are made unanimously or by consensus. Where appropriate, decisions may be taken by way of
Directors’ Circular Resolutions between scheduled and special meetings. In 2016, six resolutions, ranging from administrative to
operational in nature, were approved by Directors via Circular Resolutions.
The agenda for the meeting of the Board is set by the Company Secretaries in consultation with the Chairman and the CEO. The
agenda, the relevant reports and Board papers are furnished to Directors in advance to allow the Directors sufficient time to peruse
the materials, thereby facilitating effective discussion and decision making during the meeting. The Board has a regular schedule of
matters which are typically on the agenda and is reviewed during the course of the year.
The proceedings of and resolutions passed at each Board and Committee meetings are minuted by the Company Secretaries and
kept in the Minutes Book at the registered office.
The Board emphasises the importance of continuing education for its Directors to ensure that they are equipped with the necessary
skills and knowledge to meet the challenges of the Board. All existing Directors have completed the Mandatory Accreditation
Programme (MAP). The NC continues to evaluate and determine the training needs of its members to assist them in the discharge
of their duties as Directors. The Company Secretaries arranges for the Directors’ attendance at the training programmes, which are
conducted either in-house or by external service providers. All Directors attended training programmes during the year.
Orientation and familiarisation programmes including market visits to Digi’s business operations and meetings with the Management
GOVERNANCE
were organised for the newly appointed Directors during the year to facilitate the new Director’s understanding of Digi’s operations
and businesses. Regular briefings and workshops were scheduled on various topics for the Board and these sessions were held
together with the Management team to encourage open discussion on these topics.
Set out below are the training programmes attended by the Directors, individually or collectively, during the financial year 2016:
Date Courses
13 Jan 2016 The New Auditor’s Report – Sharing the UK Experience
22-25 Feb 2016 Mobile World Congress
26 Feb 2016 Corporate Governance Breakfast Series – Improving Board Risk Oversight Effectiveness
3 Mar 2016 Crisis Management Seminar
15 Mar 2016 EMC workshop
22 Mar 2016 DTAC & Ericsson workshop
31 Mar 2016 Sustainability Engagement Series for Directors
28 April 2016 National Start-up Expo
4-5 May 2016 Mandatory Accreditation Programme
5 May 2016 Digi Orientation Programme
27 May 2016 Ethical Leadership Programme
30 May 2016 Shell Global Scenarios
31 May 2016 SERC Global Economic Conference – The New Normal
30 Jun 2016 World Bank Malaysia Economic Monitor – Leveraging Trade Agreements
11 July 2016 Ensuring Organisation’s Sustainability through Integrated Strategic Risk Management Program - IERP
23 July 2016 Site Visit to RAPID Project Site, Pengerang
064 Annual Report 2016 Digi.Com Berhad
Date Courses
25 July 2016 • Introduction to MFRS9 – Ernst & Young
• General and Detailed Sustainability Statements in Annual Report 2017
3 Aug 2016 Best Practices for Board Excellence
16 Aug 2016 • International Blue Ocean Conference
• 5th PETRONAS BAC Forum
• Quality Awareness Certification
4-6 Sep 2016 Telenor Strategy Execution Programme
14 Sep 2016 Identify Right Board Talent
15 Sep 2016 Shariah Islamic Banking Awareness Program
27 Oct 2016 Security Awareness Recertification
31 Oct 2016 Anti-Money Laundering/Counter Terrorism Training
8 Nov 2016 • Director Training – New Company Act, Security & Terrorism in Malaysia, The Power of Social Media
• Dangerous Good Awareness Training
15-17 Nov 2016 Certified International Manager – Coaching for Success Program
15 Dec 2016 4-Year Strategy Workshop
19 Dec 2016 World Bank Malaysia Economic Monitor – Quest for Productivity Growth
Compliance Framework
The Board has adopted and implemented a Code of Conduct (Code) that reflects Digi’s vision and core values of integrity, respect,
trust and openness. It provides a clear direction on conducting business, interacting with the community, government and business
partners, and general workplace behaviour. It also includes guidance on disclosure of conflict of interests, maintaining confidentiality
and disclosure of information, good practices, internal controls and the duty to report where there is a breach of the Code.
All employees including the Board members are required to read and acknowledge the Code. Digi’s Ethics and Compliance Officer
reports regularly to the ARC on the compliance of the Code by Digi and its employees. Ongoing training is provided to employees
on the Code, in particular on how to deal with situations involving ethical dilemmas to ensure that they continuously uphold high
standards of conduct while performing their duties. In January 2016, a new Ethics & Compliance Hotline service was made available
to all employees and the public to allow the opportunity to speak up on misconduct and/or wrong doing by Digi employees.
The Ethics and Compliance Officer also handles whistle-blowing cases according to a well-defined process, outlined in the Whistle-
blowing Manual. Digi employees, suppliers, business partners and customers are encouraged to raise their concerns about any
malpractices involving Digi without any fear of repercussions. In case of illegal or unethical conduct in the workplace, employees
can choose to report it through the Ethics & Compliance Hotline, their respective leaders or directly to the Ethics and Compliance
Officer.
Company Secretaries
The Board is satisfied with the performance and support rendered by the Company Secretaries in discharging their functions. The
Company Secretaries play an advisory role to the Board and are qualified, experienced, and competent in performing their duty. The
Company Secretaries carry out, among others, the following tasks:
• statutory duties as specified under the new Companies Act, 2016, MMLR and other relevant laws and regulations;
• updating and advising the Board on relevant guidelines on statutory and regulatory requirements periodically and the resultant
implications to Digi and the Directors in relation to their duties and responsibilities;
• attending and ensuring that all Board and Shareholders’ meetings are properly convened, pertinent issues discussed and
decided upon, and conclusions are properly recorded;
• following-up on the action points and implementation of the Board’s decisions to Management;
• facilitating the provision of information to the Board and Board Committees, and between Directors and Management from
time to time; and
• supporting the Board in ensuring adherence to Board policies and procedures.
The removal of Company Secretaries, if any, is a matter for the Board to decide collectively.
Sustainability
The Board is mindful of the importance of sustainability. It therefore takes necessary steps to ensure high standards of governance
across Digi’s operations, managing its environmental, social and governance impact as well as future risks and opportunities
in continuing to build a responsible, sustainable business. A summary of Digi’s sustainability agenda for the year under review is
GOVERNANCE
disclosed from pages 36 to 44 of this Annual Report.
The Board is responsible for ensuring that the financial statements are prepared in accordance with the Companies Act, 1965 and
are applicable to the Financial Reporting Standards in Malaysia so as to give a true and fair view of Digi’s financial state of affairs.
The Board is assisted by the ARC in overseeing and governing Digi’s financial reporting processes and the quality of its financial
reporting. The ARC meets on a quarterly basis to review the quarterly reports and annual financial statements focusing particularly
on compliance with applicable financial reporting standards and other legal requirements, changes in major accounting policies and
practices, significant adjustments arising from audit and significant and unusual events. A summary of the ARC’s activities during the
year are set out on pages 75 to 77 of this Annual Report.
Details of these transactions are set out under Notes 28 to the Financial Statements and also the list of Related Party Transactions
from pages 132 to 134 and 145 of this Annual Report.
066 Annual Report 2016 Digi.Com Berhad
All Quarterly Results and Financial Statements were reviewed by external auditors prior to the tabling to the ARC for review.
The External Auditors also participated in the discussions relating to financial results at all ARC meetings. The ARC discussed key
concerns with and obtained feedback from the external auditors on matters relating to the company’s affairs without the presence
of the Management.
The ARC conducted an annual assessment of the external auditors. Areas of assessment include technical competencies, adequacy
of specialist support and senior audit partners’ accessibility and time commitment, independence and objectivity, audit scope
and planning, audit and non-audit fees and audit communications to the ARC. The external auditors confirmed to the Board their
independence in providing both audit and non-audit services up to the date of this statement. Following the review of the assessment,
the ARC was satisfied with Messrs Ernst and Young’s technical competency and audit independence and recommended the re-
appointment of Messrs Ernst & Young (EY) for shareholder approval at the coming AGM.
To reinforce the independence and objectivity of the external auditors, the ARC assessed all non-audit services that were above
50% of the statutory audit fees for the financial year 2016 that the auditors may be called upon to perform. This was so in those
circumstances where the auditors were best qualified and suitable to provide the required services given their comprehensive
knowledge of Digi’s business operations, systems and processes. During the financial year, the amount incurred by Digi and by the
Group in respect of audit fees and non-audit related fees for services rendered by EY are as follows:-
The Statement on Risk Management and Internal Control is set out from pages 69 to 74 of this Annual Report.
Digi’s Investor Relations function continued to strengthen the quality of corporate disclosures during the year to address the
increasing demand for more detailed and relevant information from the investment community. The solid teamwork between the
Investor Relations team and various functional leaders within Digi enabled timely, accurate, transparent, effective and relevant
communication of Digi’s business strategies, financial performance and current business initiatives to be made available for
Digi’s investors and stakeholders and where necessary, filed with regulators in accordance with applicable legal and regulatory
requirements.
Inspiring Your Digital Life Annual Report 2016 067
In 2016, Digi’s Investor Relations team continued its strategy of diversifying its shareholder base by targeting more emerging
market funds, long-term funds as well as prospective investors with exposure in industry peers. With that objective in mind, Digi
participated in 4 ASEAN or telecommunications themed conferences and 6 non-deal roadshows. In addition, Digi also augmented
its Investor Relations engagement efforts with analysts and investors by organising two Analyst Days to engage with local, regional
as well as Telenor Group’s analysts and fund managers on a regular basis.
Analyst Briefings
Digi’s Investor Relations team organised quarterly analyst briefings via conference calls on the same day it released its quarterly
earnings announcement. Prior to the quarterly analyst briefing, an earnings call briefing pack is emailed to relevant parties within
the investment community and is made available on Digi’s website immediately after the announcement is made to Bursa Malaysia
to ensure that investors and analysts are provided with comprehensive and equal access to the results announcements. The briefing
pack includes the financial statements to the exchange, management discussion and analysis report, earnings call presentation and
press release, which together provide information on Digi’s quarterly financial performance and financial position as well as non-
financial KPIs and other information deemed useful to the investment community.
Digi’s 19th AGM was held on 13 May 2016 in Kuala Lumpur, Malaysia. During the AGM, the Management presented a comprehensive
review of Digi’s financial performance for the year and outlined Digi’s prospects for the subsequent financial year. Sufficient time
was also set aside for shareholders’ and Minority Shareholder Watchdog Group (MSWG) to raise questions and provide feedback
to the Board and Management.
Moving forward, in line with the revised Paragraph 8.29A of the MMLR, all resolutions put to general meetings will be voted by
GOVERNANCE
poll. Arising thereon, Digi would conduct its AGM by poll/e-voting instead of voting by show of hands as practiced previously. An
independent scrutineer will be appointed to validate the votes cast at the AGM.
The outcomes of voting on the proposed resolutions will be disclosed to the market and posted on Digi’s website after the AGM.
Website
Digi’s website (www.digi.com.my) is a key communication channel for the Company to connect with its shareholders, the investment
community and the general public. Digi’s Investor Relations team regularly updates the Investor Relations section of the website to
ensure investor-related corporate disclosures, such as current information on Digi’s activities, quarterly financial results, corporate
presentations, annual reports, announcements to Bursa Malaysia as well as information on Digi’s business principles and Corporate
Governance framework, are up-to-date.
Digi has a diversified shareholder base with 29,074 shareholders across the globe as at 31 December 2016, out of which 41.1%
(2015: 40.9%) are from Malaysia while foreign shareholding remained relatively steady at 9.9% (2015: 10.1%). A total of 98.0% of
Digi’s shares are held by institutional or corporate investors and the remaining 2.0% by private investors or individuals.
The Investor Relations team periodically analyses and monitors Digi’s shareholding structure including the breakdown of
shareholders by type, investment styles and geographical location, including shareholders’ buying and selling activities during the
year to facilitate investor targeting and planning of investor programmes.
068 Annual Report 2016 Digi.Com Berhad
In addition to the above, shareholders and investors can make inquiries about Investor Relations matters with Digi throughout the
year via Investor_Relations@digi.com.my.
Regular dialogues between Digi and the investment community has been instrumental to facilitate a clear, fair and holistic
appreciation on Digi’s performance, business strategies and prospects among research analysts, fund managers, investors and other
stakeholders.
The Investor Relations team provides regular updates to Management on feedback received from Investor Relations activities,
recommendations by analysts, commentary on share price information and changes to the holdings of substantial shareholders of
Digi.
The Board has deliberated, reviewed and approved the Statement on Corporate Governance on 13 March 2017.
Inspiring Your Digital Life Annual Report 2016 069
The Board acknowledges its responsibility for establishing and overseeing Digi’s risk management framework and internal control
systems. The risk management framework is designed to identify, assess and manage risks that may impede the achievement of business
objectives and strategies. The Board also acknowledges that the internal control systems are designed to manage and minimise, rather
than eliminate occurrences of material misstatement, financial loss or fraud.
The Board, through the Audit & Risk Committee (ARC), ensures that the risk management and internal control practices are adequately
implemented within Digi, and observes that measures are taken in areas identified for improvement, as part of Management’s continued
efforts to strengthen Digi’s risk management and internal control system.
Management is responsible for implementing Board-approved policies and procedures on risk management and internal controls
by identifying and evaluating risks faced and monitoring the achievement of business goals and objectives within the risk appetite
parameters.
Risk Management
GOVERNANCE
Digi has a Risk Management framework in place to identify, evaluate and manage significant risks that may affect the achievement of
Digi’s business objectives. An established structured process has been set-up for this purpose where significant risks are reviewed
and reported at the Risk Management Forum and ARC meetings on a regular basis. Continuous effort is being taken to enhance the
effectiveness of the risk management process.
The overall scope of risk management process encompasses, inter alia, strategic, financial, operational, network, information systems,
health, safety, security and environment (HSSE), employees and regulatory matters.
070 Annual Report 2016 Digi.Com Berhad
Risk management responsibilities are defined in the framework where the Board takes an oversight role while the Digi Management
Team (DMT) drives risk response and evaluates the organisation’s risk profile on a regular basis. The Risk Management team provides
support to facilitate risk identification, assessment, monitoring and reporting. Details of risk management responsibilities are depicted
in the diagram below:
• Approves Risk Management Framework and Policy • Assesses risk management processes
• Reviews Digi’s risk profile, ensures clear
accountabilities
• Determine Digi’s risk appetite and tolerance
• Monitors how Digi’s key risks are mitigated
Set/State
Identify Risks Analyse Risks Evaluate Risks Decide Actions
Objectives
The following sets out the control environment and its key elements within Digi, which have been in place throughout the financial year,
and up to the date of the Directors’ Report:
GOVERNANCE
• Legal and Compliance
1. Control Activities
Digi has documented policies and procedures designed to assist and guide operations to implement various requirements as
prescribed by law and/or considered best practices. This also ensures consistency in practice whilst providing guidance and
direction for proper management and governance of operations and business activities. These policies and procedures are
communicated company-wide and made available on the intranet for employees.
• Profitability Assurance
The Profitability Assurance function carried out by the Business Planning department firstly ensures that revenue leakage
is minimised by implementing adequate controls and processes through optimal revenue management framework. It covers
the cycle of identification, assessment, mitigation and monitoring. Digi has in place automated controls to ensure that usage
and profile integrity between the network, mediation, rating and billing is assured and adequately controlled. Key issues and
mitigation actions are reported to the DMT on a monthly basis. Processes and controls within the revenue cycle are reviewed
regularly to ensure its effectiveness and efficiency. In addition to assuring minimal revenue leakage, the Profitability Assurance
team also monitors site and store profitability, providing key feedback to optimise the management of Digi’s key assets.
• Security
The Security department is in charge of compliance investigations, fraud management, authority requests, information security
and physical security.
072 Annual Report 2016 Digi.Com Berhad
The Fraud Management function manages and mitigates the risk of relevant fraud and fraud losses. Some of the key activities
involve developing and designing internal fraud controls and these controls are regularly reviewed to ensure relevance and
effectiveness. Measures and continuous actions are taken to ensure telecommunication fraud is minimised and the requirement
for preventive controls are embedded into the business processes.
The Information Security and Physical Security functions are responsible for achieving and maintaining confidentiality, integrity
and availability of information, and information processing facilities, including telecommunication systems and infrastructure,
and to protect against cyber-crime, fraudulent activities, information loss and other security risks and threats.
The Controls over Financial Reporting (CFR) function in the Accounting and Financial Reporting department plays an important
role in evaluating and improving effectiveness of key controls surrounding Digi’s financial reporting process. Its primary objective
is to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements. Review
on internal control over financial reporting is performed in accordance to Digi’s Internal Control over Financial Reporting
Framework, which requires assessment on significant accounts and processes based on materiality level, testing and evaluation
of the design and operational effectiveness of internal controls included in the scope. The function has a robust and continuous
monitoring routine to follow up on unaddressed risks and non-operating controls, including periodic reporting to DMT and the
ARC on status of controls on financial reporting processes.
2. Authority
• Organisation Structure
There is a defined organisational structure with clear lines of reporting and responsibility to ensure proper segregation of duties,
assignment of authority and accountability within Digi.
As part of Digi’s aim to drive end-to-end customer focus and delivery, and enable deeper collaboration and faster execution, the
Sales and Marketing divisions were consolidated in April 2016 and led by the Chief Marketing Officer.
Additionally, a new division, Digi-X, was formed in May 2016 which is responsible for building digitally adjacent businesses and
core competencies in the digital arena. This division is led by the Chief Digital Officer.
Board Committees have been set up to assist the Board to perform its oversight function, namely the ARC, Nomination
Committee, and Remuneration Committee. These Board Committees have been delegated specific responsibilities all of which
are governed by clearly defined terms of reference. The roles and responsibilities of the ARC are detailed in the Audit & Risk
Committee Report, whilst those of the other two committees are detailed in the Statement on Corporate Governance and the
NC Report.
Various Management Committees comprising key DMT members have been established to oversee the areas of business
operations assigned to them under their respective documented mandates. The Committees are:
• The Vendor and Investment Committee governs the approval process regarding material capital investments and operating
expenditure for Digi including the review and approval of the vendor evaluation criteria and vendor selection. The
Commercial Forum governs the decision-making process for commercial issues, and is managed by Marketing.
• The Regulatory Steering Committee provides direction and makes decisions on regulatory matters and/or related topics
that have a significant impact on Digi. The Risk Management Forum reviews and deliberates on the significant risks reported
across Digi and makes decisions on the coordinated action plans necessary to mitigate risks. The monthly Forum is chaired
by the CFO with DMT as members of the Forum.
Inspiring Your Digital Life Annual Report 2016 073
• Assignment of Authority
Digi has an established Delegation Authority Matrix (DAM) to provide a framework of authority and accountability. The DAM
outlines approval authority for strategic, capital and operational expenditure. The DAM is reviewed and approved by the Board
in line with changes in business needs.
• Code of Conduct
The Code of Conduct is a vital and integral part of Digi’s governance regime that defines the core principles and ethical standards
in conducting business and engagements with all key stakeholders, and compliance with the law and regulations. The Code of
Conduct applies to the members of the Board, employees and those acting on behalf of Digi. All employees are required to sign
and confirm that they have read, understood and will adhere to the Code of Conduct. Communication channels are established
through which concerns on non-adherence to the Code of Conduct can be safely reported.
The Legal department is mandated to manage and address Digi’s legal affairs and mitigate legal risks in the performance of its
daily business. It plays a key role in identifying, evaluating and formulating strategies on legal risks.
The Ethics & Compliance Officer supports the CEO and the Board in ensuring that:
GOVERNANCE
• The Code of Conduct reflects good business practices and relevant laws, regulations and widely recognised treaties.
• The Code of Conduct is implemented consistently and effectively through sharing of knowledge and measures for quality
assurance.
• Compliance incidents are consistently and effectively managed.
Reports on material breaches of the Code of Conduct are made to the ARC on a quarterly basis.
4. Monitoring
• DMT meetings are held on a weekly basis to identify, discuss, approve and resolve strategic, operational, financial and
key management issues pertaining to Digi’s day-to-day business. Significant changes in the business and the external
environment are reported by the DMT to the Board on an ongoing basis and/or during Board meetings.
• Digi’s performance management model provides a comprehensive review of business performance, which includes a review
of actual performance against targets.
• Quarterly financial results and other information are provided to the ARC to monitor and evaluate business performance.
• The ARC monitors significant internal and external audit issues to ensure they are promptly addressed and resolved.
The Internal Audit department assists both the Board and the ARC by conducting appropriate reviews of key business processes
to assess the adequacy and effectiveness of internal control and risk management, and compliance with regulations and Digi’s
policies and procedures. To ensure independence from Management, the Internal Audit department reports directly to the
ARC. The purpose, authority and responsibility of the Internal Audit department are reflected in the Internal Audit Charter,
which is reviewed and approved by the ARC annually.
074 Annual Report 2016 Digi.Com Berhad
Audit reviews are carried out on areas that are identified through a risk-based approach, in line with Digi’s objectives and
policies. Adjustments are made to the audit coverage as required, with any amendments to the Audit Plan being presented to
the ARC for approval.
The audit reports, including significant findings and recommendations for improvements, and management’s responses to the
recommendations, are highlighted to DMT and on a quarterly basis reported to the ARC. Status of actions taken by management
to address improvement areas highlighted are also monitored and followed up until closure. The Internal Audit’s activities and
practices conform with The Institute of Internal Auditor’s International Standards for the Professional Practice of Internal
Auditing.
Further information on the Internal Audit department’s activities is detailed in the Audit & Risk Committee Report on page 77
of this Annual Report.
The external auditors have performed limited assurance procedures on this Statement on Risk Management and Internal Control
pursuant to the scope set out in Recommended Practice Guide (RPG) 5 (Revised), 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) for inclusion in the Annual Report of the Group for the year ended 31 December 2016, and reported to the Board that nothing
has come to their attention that cause them to believe the statement intended to be included in the Annual Report is not prepared, in all
material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Guidelines, nor is the Statement factually
inaccurate.
RPG 5 does not require 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 Directors and management thereon. The report from the external auditor
was made solely for, and directed solely to the Board of Directors in connection with their compliance with the listing requirements of
Bursa Malaysia Securities Berhad and for no other purposes or parties. The external auditors do not assume responsibility to any person
other than the Board of Directors in respect of any aspect of this report.
Conclusion
The Board is of the view that the risk management and internal control practices and processes in place for the year under review and up
to the date of this report are sound and sufficient to safeguard the shareholders’ investment, the interests of customers, regulators and
employees, and Digi’s assets, and have received the same assurance from both the CEO and CFO.
Inspiring Your Digital Life Annual Report 2016 075
The Audit & Risk Committee (ARC) has three members, all of whom are non-executive directors and a majority of whom are independent,
including the Chairman of the ARC. No alternate directors shall be a member of the ARC.
Ms Vimala A/P V.R. Menon is a Fellow of the Institute of Chartered Accountants in England and Wales, United Kingdom and a member
of the Malaysian Institute of Accountants. The ARC, therefore, meets the requirement of Paragraph 15.09(1)(c)(i) of the Main Market
Listing Requirements of Bursa Securities (MMLR), which stipulates that at least (1) member of the ARC must be a qualified accountant.
The Board of Directors (the Board) via the Nomination Committee (NC), reviews the terms of office and performance of the ARC and
each of its members annually through an annual Board Committee effectiveness evaluation exercise to determine whether the ARC and
its members have discharged their functions, duties and responsibilities in accordance to the Terms of Reference of the ARC.
The ARC held five (5) meetings during the financial year ended 31 December 2016. Details of the ARC members and the attendance of
each member at ARC meetings are as follows:
Tan Sri Saw Choo Boon Chairman, Independent Non-Executive Director 5/5
GOVERNANCE
The CEO, CFO and Head of Internal Audit attended all meetings of the ARC to make known their views on any matter under consideration
by the ARC, or which, in their opinion, should be brought to the attention of the ARC. Relevant Management team members were invited
to attend the meetings to provide further information or details on matters that were discussed.
Deliberations during the ARC meetings, including the issues tabled and rationale adopted for decisions were properly recorded. Minutes
of the ARC meetings were tabled for confirmation at the following ARC meeting and subsequently presented to the Board for notation.
The ARC Chairman reported to the Board the significant matters discussed at each ARC meeting.
In early 2017, the Board through the NC assessed the effectiveness of the ARC performance for the financial year ended 31 December
2016 and was satisfied that it was operating in an effective manner.
Financial results
(a) Reviewed the unaudited quarterly financial results and audited annual financial statements of Digi before recommending them for
approval by the Board, including:
(i) Deliberation on significant audit and accounting matters highlighted, comprising management’s judgments, estimates or
assessments made and sufficiency of disclosures in the financial statements; and
(ii) Discussion of significant financial matters at length to ensure compliance with accounting standards and policies.
076 Annual Report 2016 Digi.Com Berhad
(a) Reviewed related party transactions and mandate for recurrent related party transactions to ensure compliance with MMLR and
Digi’s policies and procedures.
(a) Reviewed Digi’s quarterly risk profile and discussed key risks highlighted including mitigating actions.
(b) Evaluated the overall adequacy and effectiveness of the system of internal controls through review of the work performed by both
internal and external auditors and in discussions with the Management.
External Audit
(a) Reviewed the scope of work of the external auditors confirming their independence and objectivity.
(b) Reviewed external auditor’s Management Letter together with Management’s responses, in ensuring that appropriate actions have
been taken.
(c) Reviewed all non-audit services that were above 50% of the statutory audit fees for the financial year 2016 in which the external
auditors may be called upon to perform. The amount incurred by Digi and on group basis in respect of audit fees and non-audit
related fees for services rendered by the external auditors are disclosed in the Statement on Corporate Governance on page 66.
(d) Had private meetings with the external auditors on two (2) occasions to ensure there were no restrictions on the scope of their audit
and to discuss significant matters that arose during the course of audit.
(e) Evaluated the effectiveness of the external auditors and made recommendations to the Board on their re-appointment, subject to
the approval of Digi’s shareholders at the general meeting.
Internal Audit
(a) Reviewed and approved the proposed revisions to the Internal Audit Charter.
(b) Reviewed and approved the annual Audit Plan to ensure adequate scope and comprehensive coverage of Digi’s activities.
(c) Reviewed and deliberated on internal audit reports tabled during the year, the audit recommendations made and Management’s
response to these recommendations. Significant issues were discussed at length with the presence of relevant Management team
members to ensure satisfactory response to address identified risks.
(d) Monitored the implementation of mitigating actions by Management on outstanding issues on a quarterly basis to ensure that all key
risks and control weaknesses were properly and timely addressed.
(e) Had private meetings with the Head of Internal Audit for discussions on audit related matters and activities of the Internal Audit
Department without the presence of Management.
(f) Reviewed the Key Performance Indicators, performance, competency and resources of the Internal Audit functions to ensure that it
has the required expertise and professionalism to discharge its duties.
Compliance
(a) Reviewed and monitored the results and status of actions of internal misconduct cases in accordance to Digi’s Code of Conduct.
(b) Reviewed the results of the Anti-Corruption risk assessment exercise performed in 2016.
Other Matters
(a) Reviewed and recommended to the Board the ARC Report, Statement on Corporate Governance and Statement on Risk Management
and Internal Control for inclusion in the Annual Report.
(b) Reviewed and recommended the declaration of interim dividend to the Board.
Inspiring Your Digital Life Annual Report 2016 077
Internal Audit activities are carried out by the Internal Audit department led by the Head of Internal Audit who reports directly to the
ARC. The ARC determines the adequacy of the scope, functions, competency and resources of the Internal Audit department, which
comprises 7 members as at 31 December 2016 and ensures that it has the necessary authority to carry out its work. In 2016, the internal
auditors attended various internal and external training programmes, aimed at maintaining and enhancing the desired competency levels.
The Internal audit department provides independent and reasonable assurance, as well as advisory services designed to add value and
improve the operations of Digi. Its scope encompasses the examination and evaluation of the adequacy, integrity and effectiveness of
Digi’s overall system of internal control, risk management and governance. In order to maintain its independence and objectivity, the
Internal Audit department has no operational responsibility and authority over the activities it audits.
The Internal Audit department practices risk-based auditing, which provides the flexibility needed to address current risks as well as
potential future risks. This allows its resources and skills to be focused on ensuring alignment with business strategy and goals, thus
maintaining relevance and ability to drive continuous improvements within Digi. Reviews are carried out based on the approved Audit
Plan for 2016, which was developed using a risk-based approach and in line with Digi’s strategic ambitions. The Audit Plan was assessed
on a quarterly basis in alignment with the business and risk environment. Any deviations to the plan were reviewed and approved by the
ARC on a quarterly basis.
In 2016, the Internal Audit department executed a total of 18 audits, including ad-hoc requests. The audits conducted covered a wide
range of areas, which included amongst others, Procurement, Accounting and Financial activities, Asset Management, Network Delivery
and Marketing, aimed at providing assurance over the adequacy and effectiveness of controls within the processes reviewed.
GOVERNANCE
All audit findings were highlighted to relevant Management team members responsible for ensuring that corrective actions on
reported weaknesses are taken within the required timeframe. Audit reports were issued to the ARC, quarterly incorporating findings
and Management’s remediation actions. An established system has been put in place to ensure all actions agreed by Management are
followed up on and the status of implementation is reported to the ARC on quarterly basis.
The Internal Audit department complies with the Institute of Internal Auditors International Standards for the Professional Practice
of Internal Auditing and continues to maintain a quality assurance and improvement programme covering its internal audit processes,
which is subject to an annual internal assessment and an external assessment by a certified body once in 5 years.
The total costs incurred for the Internal Audit department for the financial year 2016 was RM1,494,905 (2015: RM1,250,680).
The ARC Report is made in accordance with the resolution of the Board dated 13 March 2017.
The ARC Terms of Reference clearly set out the purpose, authority, composition and responsibilities of the ARC. The Terms of Reference
seek to ensure that ARC members are aware of their roles and duties and also serve as a clear source of reference to all stakeholders. In
order to ensure the continuous relevance of the Terms of Reference, the ARC conducts periodic review of the Terms of Reference when
necessary. The full Terms of Reference are available to the public on the Company website at digi.listedcompany.com/misc/factsheet.
078 Annual Report 2016 Digi.Com Berhad
The Nomination Committee (NC) was established on 27 February 2002 and comprises three (3) members who are exclusively Non-
Executive Directors, with the majority of them being Independent Directors.
The Board of Directors (the Board) takes note that the MCCG 2012 recommends that the Chairman of the NC should be a senior
independent director identified by the Board. The Board has decided that it is not necessary for Digi to appoint a senior independent
director as all the Independent Directors are well qualified and experienced. The Board will, from time to time, review the
recommendation and make the necessary appointment as and when it deems fit.
Yasmin Binti Aladad Khan 1 July 2015 Chairman, Independent Non-Executive Director
Tan Sri Saw Choo Boon 1 July 2015 Member, Independent Non-Executive Director
During the year, the NC met once and all members of the Committee attended the meeting.
The NC is responsible to ensure that the procedures for appointing new Directors are transparent and rigorous. The Board composition
is reviewed to identify and close any gaps in the Board’s functional knowledge and competencies by bringing in new directors with the
required experience, knowledge and expertise to meet the current and future needs of the Company.
When a vacancy on the Board arises, the NC will meet to discuss the profile of the position to be filled. The NC will go through the
search process, including soliciting recommendations from existing Directors, major shareholder and/or engaging in external search
for candidates. The NC will then shortlist candidates and conduct interviews together with the other Directors. An invitation will be
extended to the selected candidate to join the Board and upon acceptance, the Board will approve the appointment and make the
necessary announcement to Bursa Malaysia Securities Berhad.
Any new Director appointed by the Board during the year is required to stand for re-election at the next AGM. Other than those
Directors appointed during the year, one-third of the remaining Directors are required to retire by rotation and all Directors must
submit themselves for re-election at AGM at least once in every three (3) years. The NC is responsible for assessing and recommending
to the Board the eligibility of retiring Directors for re-election.
Upon the Board endorsement, the retiring Director is then proposed for re-election at the AGM. The re-election of each Director is
voted as a separate resolution during Digi’s AGM.
The NC assesses the effectiveness of the Board, its Committees and the contribution of each Director with the aim of improving
individual contribution by identifying gaps, maximising strengths and addressing weaknesses of the Board. The evaluation includes
a review of the administration of the Board and its Committees covering their operations agendas, reports, information produced for
consideration and relationship with Management.
The Board Committees are assessed based on their roles and scope, frequency and length of meetings, supply of sufficient and timely
information to the Board and overall effectiveness and efficiency in discharging their function.
Inspiring Your Digital Life Annual Report 2016 079
Each Director undertakes a self-assessment of their individual performance during the financial year based on the criteria of integrity
and ethics, experience, knowledge, judgment and decision making, teamwork and character, leadership and competence, understanding
of role, and time commitment in discharging their respective roles as Directors of Digi.
The evaluation process is led by the NC Chairman and assisted by the Company Secretaries. The evaluation process is conducted via
questionnaires.
In the financial year 2016, the NC carried out the following activities:
During the meeting held on 7 March 2017, the NC reviewed and assessed the mix of skills, knowledge, expertise and experience,
professionalism, integrity, competencies, time commitment, composition, size and experience of the Board, including the core
competencies of the Directors, the contribution of each individual Director, the independence of the Independent Directors, Board
diversity in terms of gender and age, the effectiveness of the Board and the Board Committees, as well as the retirement of Directors
eligible for re-election. The NC had also assessed the training needs by Directors and recommended the appropriate training list for
GOVERNANCE
Directors to the Board.
The NC had evaluated the performance of the CEO and CFO for the year under review and concluded that they possess the desired
character, experience and competency and have demonstrated their time commitment and integrity in discharging their duties and
responsibilities.
The Board has deliberated, reviewed and approved the Nomination Committee Report on 13 March 2017.
080 Annual Report 2016 Digi.Com Berhad
Other Disclosures
The following information is provided in accordance with Paragraph 9.25 of Main Market Listing Requirements of Bursa Securities as
set out in Appendix 9C thereto.
1. Non-Audit Fees
During the financial year, the amount incurred by Digi and the Group with respect to audit fees and non-audit related fees paid
to external auditors for the financial year ended 31 December 2016 are disclosed in the Statement on Corporate Governance on
page 66.
There were no material contract by Digi and/or its subsidiaries involving Directors’ and major shareholders’ interests either
subsisting as at 31 December 2016 or entered into since the end of the previous financial year.
At the Annual General Meeting held on 13 May 2016, Digi obtained a shareholders’ mandate to allow the Group to enter into
recurrent related party transactions of a revenue or trading nature.
The disclosure of the recurrent related party transactions conducted during the financial year ended 31 December 2016 are set out
on page 145 of the Annual Report.
Inspiring Your Digital Life Annual Report 2016 081
082 Annual Report 2016 Digi.Com Berhad
Directors’ Report
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company
for the financial year ended 31 December 2016.
Principal activities
The principal activity of the Company is investment holding.
The principal activities and other information relating to subsidiaries are disclosed in Note 13 to the financial statements.
Results
Group Company
RM’000 RM’000
Profit for the year, attributable to owners of the parent 1,632,658 1,632,797
There were no material transfers to or from reserves or provisions during the financial year, other than as disclosed in the financial
statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not
substantially affected by any item, transaction or event of a material and unusual nature.
Dividends
The dividends paid by the Company since the end of the previous financial year were as follows:
RM’000
Directors’ Report
Directors
The names of the directors of the Company in office since the beginning of the financial year to the date of this report are:
Tan Sri Saw Choo Boon
Morten Karlsen Sorby
Tore Johnsen
Yasmin Binti Aladad Khan
Vimala A/P V.R. Menon
Lars-Ake Valdemar Norling
Kristin Muri Moller
The names of the directors of the subsidiaries of the Company since the beginning of the financial year to the date of this report, not
including those directors listed above are:
Karl Erik Broten
Albern A/L Murty
Eugene Teh Yee (Appointed on 31 May 2016)
Praveen Rajan A/L Nadarajan (Appointed on 31 May 2016)
Directors’ benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a
party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body
corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included
in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 7 to the financial statements)
by reason of a contract made by the Company or a related corporation with any 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.
Directors’ interest
According to the register of directors’ shareholdings, the interest of directors in office at the end of the financial year in the shares of the
Company or its related corporations during the financial year were as follows:
Number of ordinary shares of NOK6 each
financialS
1 January 2016/
date of 31 December
appointment Acquired Sold 2016
None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations
during the financial year.
084 Annual Report 2016 Digi.Com Berhad
Directors’ Report
Tan Sri Saw Choo Boon Morten Karlsen Sorby
Director Director
Inspiring Your Digital Life Annual Report 2016 085
Statement by Directors
Pursuant to Section 251(2) of the Companies Act 2016
We, Tan Sri Saw Choo Boon and Morten Karlsen Sorby, being two of the directors of Digi.Com Berhad, do hereby state that, in the opinion
of the directors, the accompanying financial statements set out on pages 91 to 140 are drawn up in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as
to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2016 and of their financial
performance and cash flows for the financial year then ended.
The information set out in Note 34 on page 141 to the financial statements have been prepared in accordance with the Guidance on
Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 13 March 2017.
Tan Sri Saw Choo Boon Morten Karlsen Sorby
Director Director
Statutory Declaration
Pursuant to Section 251(1)(b) of the Companies Act 2016
I, Karl Erik Broten, being the officer primarily responsible for the financial management of Digi.Com Berhad, do solemnly and sincerely
declare that the accompanying financial statements set out on pages 91 to 141 are in my opinion correct, and I make this solemn
declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
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Subscribed and solemnly declared by
the above-named Karl Erik Broten at
Kuala Lumpur in Wilayah Persekutuan
on 13 March 2017 Karl Erik Broten
Before me,
Opinion
We have audited the financial statements of Digi.Com Berhad, which comprise the statements of financial position as at 31 December
2016 of the Group and of the Company, and statements of 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, as set out on pages 91 to 140.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company
as at 31 December 2016 and of their financial performance and their cash flows for the year then ended in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in
Malaysia.
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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our
report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to
our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.
Inspiring Your Digital Life Annual Report 2016 087
The Group relies on complex information technology system Our audit sought to place a high level of reliance on the Group’s
(including the rating module within the billing system) in information technology systems and key controls which the
accounting for its telecommunication revenue. Such information management rely in recording telecommunication revenue,
system processes large volumes of data with a combination where we:
of different products, which consist of individually low value
transactions. (a) involved our information technology specialists to test the
operating effectiveness of automated controls over the
In addition, significant estimates and judgements are involved billing system, including the rating module. We also tested
in: the accuracy of the data interface between the billing
system and the general ledger; and
(a) accounting for unbilled revenue at the reporting date; and
(b) tested the non-automated controls in place to ensure
(b) allocating the transaction price between the multiple accuracy of revenue recognised, including timely updating
products sold in bundled transactions. of approved rate changes in the billing system.
The above factors gave rise to higher risk of material Our substantive procedures, included amongst others, the
misstatement in the timing and amount of telecommunication following:
revenue recognised. Accordingly, we identified revenue
recognition to be an area of focus. (a) testing the reconciliation between the billing system and
the general ledger, including validating material manual
journals processed; and
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In respect of the allocation of transaction price between
multiple products sold in bundled transactions, we performed
the following:
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 in the annual
report but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group
and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give
a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors
determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic
alternative but to do so.
We also (cont’d):
(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the directors.
(d) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or
the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going
concern.
(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including
the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and
events in a manner that achieves fair presentation.
(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
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 report because the adverse consequences of doing so would reasonably be
financialS
expected to outweigh the public interest benefits of such communication.
090 Annual Report 2016 Digi.Com Berhad
Other matters
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Ernst & Young Chong Tse Heng
AF: 0039 No. 3179/05/17(J)
Chartered Accountants Chartered Accountant
Kuala Lumpur, Malaysia
13 March 2017
Inspiring Your Digital Life Annual Report 2016 091
Group Company
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
financialS
Taxation 8 (605,526) (586,195) (61) (59)
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
092 Annual Report 2016 Digi.Com Berhad
Group Company
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Non-current assets
Property, plant and equipment 11 2,832,265 2,643,214 - -
Intangible assets 12 453,777 516,684 - -
Investments in subsidiaries 13 - - 772,751 772,751
Other investment 14 100 - - -
Other receivable 16 62,572 82,005 - -
3,348,714 3,241,903 772,751 772,751
Current assets
Inventories 15 47,822 116,794 - -
Trade and other receivables 16 1,707,679 921,924 5 9
Derivative financial instruments 17 4,034 - - -
Tax recoverable 13,121 148,140 - -
Cash and short-term deposits 18 376,588 233,557 940 925
2,149,244 1,420,415 945 934
Total assets 5,497,958 4,662,318 773,696 773,685
Non-current liabilities
Loans and borrowings 19 1,798,837 25,376 - -
Deferred tax liabilities 20 311,285 325,030 - -
Other liabilities 21 40,034 35,283 - -
2,150,156 385,689 - -
Current liabilities
Trade and other payables 22 1,947,851 2,056,176 945 981
Derivative financial instruments 17 - 118 - -
Other liabilities 21 397,621 432,418 - -
Loans and borrowings 19 483,036 1,268,531 - -
Tax payable 24 24 24 24
2,828,532 3,757,267 969 1,005
Total liabilities 4,978,688 4,142,956 969 1,005
Equity
Share capital 23 77,750 77,750 77,750 77,750
Reserves 441,520 441,612 694,977 694,930
Total equity 519,270 519,362 772,727 772,680
Total equity and liabilities 5,497,958 4,662,318 773,696 773,685
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
Inspiring Your Digital Life Annual Report 2016 093
Group
At 1 January 2015 77,750 691,905 (83,518) 686,137
Total comprehensive income - - 1,722,550 1,722,550
Transaction with owners:
Dividends on ordinary shares 10 - - (1,889,325) (1,889,325)
At 31 December 2015/
1 January 2016 77,750 691,905 (250,293) 1 519,362
Total comprehensive income - - 1,632,658 1,632,658
Transaction with owners:
Dividends on ordinary shares 10 - - (1,632,750) (1,632,750)
At 31 December 2016 77,750 691,905 (250,385) 1 519,270
Note: 1 In the prior years, as part of the Group’s capital management initiatives, the Company received dividends in specie from its
subsidiary, Digi Telecommunications Sdn Bhd (DTSB), in the form of bonus issue of redeemable preference shares and capital
repayment by DTSB amounting to RM509.0 million and RM495.0 million respectively. The Company has declared part of these
as special dividend to its shareholders. The deficit arose from the elimination of these intra-group dividends at Group level.
financialS
094 Annual Report 2016 Digi.Com Berhad
Company
At 1 January 2015 77,750 691,905 3,542 773,197
Total comprehensive income - - 1,888,808 1,888,808
Transaction with owners:
Dividends on ordinary shares 10 - - (1,889,325) (1,889,325)
At 31 December 2015/
1 January 2016 77,750 691,905 3,025 772,680
Total comprehensive income - - 1,632,797 1,632,797
Transaction with owners:
Dividends on ordinary shares 10 - - (1,632,750) (1,632,750)
At 31 December 2016
77,750 691,905 3,072 772,727
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
Inspiring Your Digital Life Annual Report 2016 095
Group Company
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Cash flows from operating activities
Profit before tax 2,238,184 2,308,745 1,632,858 1,888,867
Adjustments for:
Amortisation of intangible assets 12 130,970 129,517 - -
Allowance for impairment on trade receivables 16(a) 50,704 42,407 - -
Provision for inventories written down - 2,289 - -
Dividend income - - (1,632,500) (1,888,750)
Depreciation of property, plant and equipment 11 520,211 512,226 - -
Impairment reversal on property, plant and equipment 11 - (13,869) - -
Finance costs 6 78,078 56,232 - -
Gain on disposal of property, plant and equipment (345) (311) - -
Loss on disposal of intangible asset - computer software 1,052 - - -
Reversal of provision for site decommissioning
and restoration costs 21(a) (340) - - -
Property, plant and equipment written off - 62 - -
Interest income (12,536) (10,509) (265) (284)
Provision for employee leave entitlements 21(a) 1,352 1,536 - -
Employee benefits
- share-based payment 398 1,628 - -
- defined benefit plan 24 80 80 - -
Fair value (gain)/loss on derivative
financial instruments (4,152) 384 - -
Unrealised foreign exchange loss/(gain) 2,526 (12,526) - -
Operating cash flows before working capital changes 3,006,182 3,017,891 93 (167)
Decrease/(increase) in inventories 68,972 (54,541) - -
(Increase)/decrease in trade and other receivables (917,910) (306,954) 4 1
financialS
(Decrease)/increase in trade and other payables (119,254) 218,652 (36) 229
(Decrease)/increase in deferred revenue (36,149) 14,601 - -
Cash generated from operations 2,001,841 2,889,649 61 63
Advance payment for bandwidth - (83,125) - -
Interest paid (85,602) (56,392) - -
Proceeds from government grants 100,576 75,859 - -
Payments for provisions (244) (177) - -
Taxes paid (484,252) (600,752) (61) (63)
Net cash generated from operating activities 1,532,319 2,225,062 - -
096 Annual Report 2016 Digi.Com Berhad
Group Company
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
Inspiring Your Digital Life Annual Report 2016 097
1. Corporate information
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa
Malaysia Securities Berhad (Bursa Securities). The principal place of business is located at Lot 10, Jalan Delima 1/1, Subang Hi-Tech
Industrial Park, 40000 Subang Jaya, Selangor Darul Ehsan. The registered office of the Company is located at Lot 6.05, Level 6,
KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan.
The immediate and ultimate holding companies are Telenor Asia Pte Ltd and Telenor ASA, incorporated in Singapore and Norway
respectively. The ultimate holding company is listed on the Oslo Stock Exchange, Norway.
The principal activity of the Company is investment holding, whilst the principal activities of the subsidiaries are stated in Note 13.
Related companies refer to companies within the Telenor Asia Pte Ltd and Telenor ASA group of companies.
There has been no significant change in the nature of the principal activities during the financial year.
2. Significant accounting policies
(a) Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial
Reporting Standards (MFRS), International Financial Reporting Standards (IFRS) and the requirements of the Companies
Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and amended
MFRSs which are mandatory for annual financial periods beginning on or after 1 January 2016 as described fully in Note 3(a).
The financial statements of the Group and of the Company have been prepared on the historical cost convention unless
otherwise indicated in the accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000)
except when otherwise indicated.
(b) Basis of consolidation
financialS
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the
reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements
are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and
events in similar circumstances.
The Company controls an investee if, and only if, the Company has all the following:
(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses
control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-
group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.
098 Annual Report 2016 Digi.Com Berhad
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising from the difference between the net disposal proceeds, if any, and the net
carrying amount is recognised in profit and loss in the year the asset is derecognised.
(e) Intangible assets
Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are
measured at cost less accumulated amortisation and accumulated impairment losses, if any. The useful lives of intangible
assets are assessed to be either finite or indefinite.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are
reviewed at least during each financial year end. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as
appropriate, and are treated prospectively as changes in accounting estimates. The amortisation expense on intangible
assets with finite lives is recognised in profit and loss.
Intangible assets not yet available for use are tested for impairment annually, or more frequently if events and circumstances
indicate that the carrying value may be impaired either individually or at the cash generating unit (CGU) level. Such intangible
assets are not amortised.
Any gain or loss arising from derecognition of an intangible asset is measured as the difference between the net disposal
proceeds and the carrying amount of the asset, and is recognised in profit and loss when the asset is derecognised.
(i) 3G spectrum
Expenditure for the acquisition of the 3G spectrum are capitalised under intangible assets. The amount is amortised
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using the straight-line method over the shorter of the asset’s estimated useful life or remaining spectrum period up to
1 April 2018.
(ii) Computer software
Costs incurred to acquire computer software, that are not an integral part of the related hardware, are capitalised as
intangible assets and amortised on a straight-line basis over the estimated useful life of five years.
(iii) License fee
License fees are capitalised and amortised over the period of the licenses. The license fees had been fully-amortised in
the financial year ended 31 December 2009.
100 Annual Report 2016 Digi.Com Berhad
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Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified as
financial assets at fair value through profit or loss or loans and receivables.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes
in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses,
foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method
are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is
reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest
income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale
equity instrument are recognised in profit or loss when the Group’s and the Company’s rights to receive payment is
established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment
loss, if any.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12
months after the reporting date.
102 Annual Report 2016 Digi.Com Berhad
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition
of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and
any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
All normal purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date that the
Group and the Company commit to purchase or sell the asset. Normal purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or convention in the market place
concerned.
(i) Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is
impaired.
(i) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the
Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the
debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables,
assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis
based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables include the Group’s
past experience of collecting debts, and reduced collection rates for specific ageing buckets.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows discounted at the financial asset’s original effective
interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When
a trade receivable becomes uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the
extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of
reversal is recognised in profit or loss.
(ii) Available-for-sale financial assets (unquoted equity securities carried at cost)
If there is objective evidence (such as significant adverse changes in the business environment where the issuer
operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial
assets carried at cost has been incurred, the amount of the loss is measured as the difference between the 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. Such impairment losses are not reversed in subsequent periods.
Inspiring Your Digital Life Annual Report 2016 103
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provision due to the passage of time is recognised as a finance cost.
(iii) Defined benefit plan
Provision for defined benefit plan for eligible employees is as disclosed in Note 2(o)(iii).
(l) Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss, or other financial liabilities, as
appropriate in the statements of financial position, according to the substance of the contractual arrangements entered into
and the definitions of a financial liability. Management determines the classification of financial liabilities of the Group and of
the Company upon initial recognition.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognised in profit or loss.
104 Annual Report 2016 Digi.Com Berhad
Financial assets and financial liabilities are offset and the net amount reported in the statements of financial position if, and
only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, or to realise the assets and settle the liabilities simultaneously.
(i) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading purposes and financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading purposes if they are acquired for the purpose of selling in the near
term. This category includes derivative financial instruments entered into by the Group that do not meet the hedge
accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with
any resultant gains or losses recognised in profit or loss.
(ii) Other financial liabilities
The Group’s other financial liabilities include trade and other payables, and loans and borrowings.
Trade and other payables are initially measured at fair value plus directly attributable transaction costs, and are
subsequently measured at amortised cost, using the effective interest rate method.
Loans and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the
effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or
redemption of borrowings is recognised in profit and loss over the period of the borrowings using the effective interest
rate method.
Borrowing costs are recognised in profit and loss as an expense in the period in which they are incurred.
Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and
through the amortisation process.
(m) Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after
deducting all of its liabilities. Ordinary shares are equity instruments.
The attributable incremental transaction costs of an equity transaction are accounted for as a deduction from equity, net of
tax. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they
are declared.
Inspiring Your Digital Life Annual Report 2016 105
financialS
(ii) Defined contribution plan
As required by law, companies in Malaysia make contributions to the state-defined contribution pension scheme known
as the Employee Provident Fund, and will have no legal or constructive obligation to make further contributions in the
future, over-and-above what is existingly legally required. The contributions are recognised as an expense in profit and
loss in the period which the related services are rendered by employees.
(iii) Defined benefit plan
The Group operates an unfunded defined benefit plan for its eligible employees. The benefits are calculated based on
the length of service and the agreed percentages of eligible employees’ salaries over the period of their employment
and are payable upon resignation after completion of the minimum employment period of ten years or upon retirement
age of fifty five years. The Group’s obligations under the retirement benefit scheme, calculated using the Projected Unit
Credit Method, is determined based on actuarial computations by independent actuaries, through which the amount of
benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit
is discounted in order to determine its present value.
106 Annual Report 2016 Digi.Com Berhad
financialS
Revenue relating to provision of telecommunications and related services are recognised net of rebates and discounts
upon the transfer of risks and rewards when goods are delivered and services are performed. Revenue from services that
have been sold to customers but where services have not been rendered at the reporting date is deferred.
(ii) Sales of device
Revenue from sale of device is recognised when significant risks and rewards of ownership of the device have been
passed to the customer, usually on delivery and acceptance of the device.
(iii) Interest income
Interest income is recognised on a time-proportion basis that reflects the effective yield on the asset.
(iv) Dividend income
Dividend income is recognised when the Group’s and the Company’s right to receive payment is established.
108 Annual Report 2016 Digi.Com Berhad
A grant relating to the asset is recognised as income over the life of the depreciable asset by way of a reduced depreciation
charge. Grant relating to income is recognised in profit and loss by crediting directly against the related expense.
(t) Foreign currency transactions
(i) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary economic
environment in which the entity operates (the functional currency). The consolidated financial statements of the Group
are presented in RM, which is also the functional currency of all entities in the Group.
(ii) Foreign currency transactions
Transactions in foreign currencies are initially converted into RM at exchange rates prevailing at the date of transaction.
At each reporting date, foreign currency monetary items are translated into RM at exchange rates prevailing at that
date. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated
using the historical rate as of the date of acquisition.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date
are recognised in profit or loss. Exchange differences arising on the translation of non-monetary items carried at fair
value are included in profit or loss for the period except for the differences arising on the translation of non-monetary
items in respect of which gains and losses are recognised directly in other comprehensive income. Exchange differences
arising from such non-monetary items are also recognised directly in other comprehensive income.
(u) Fair value measurement
The Group measures financial instruments, such as, derivatives at fair value at each reporting date. Also, fair values of financial
instruments measured at amortised cost are disclosed in Note 29(f).
Fair value is 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 fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability; or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset 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.
Inspiring Your Digital Life Annual Report 2016 109
financialS
- Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current. A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period.
The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets
and liabilities.
110 Annual Report 2016 Digi.Com Berhad
The Group provides mobile communication services and related products to customers across the country and its services
and products essentially have similar risk profile. Business activities of the Group are not organised by product or geographical
components and its operating result is reviewed as a whole by its management. Accordingly, there is no separate segment, as
disclosed in Note 31.
financialS
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the
goods or services underlying the particular performance obligation is transferred to the customer.
Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with
early adoption permitted. The directors anticipate that the application of MFRS 15 will have an impact on the amounts
reported and disclosures made in the Group’s financial statements. The Group is currently assessing the impact of MFRS 15
and plans to adopt the new standard on the required effective date.
MFRS 9 Financial instruments
In November 2014, MASB issued the final version of MFRS 9: Financial Instruments which reflects all phases of the financial
instruments project and replaces MFRS 139: Financial Instruments: Recognition and Measurement and all previous versions
of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting.
MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted.
Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have
an effect on the classification and measurement of the Group’s financial assets, but no impact on the classification and
measurement of the Group’s financial liabilities.
112 Annual Report 2016 Digi.Com Berhad
MFRS 16 Leases
MFRS 16 will replace MFRS 117: Leases, IC Interpretation 4: Determining whether an Arrangement contains a Lease, IC
Interpretation 115: Operating Lease-Incentives and IC Interpretation 127: Evaluating the Substance of Transactions Involving
the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure
of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for
finance leases under MFRS 117.
At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the
right to use the underlying asset during the lease term. Lessees will be required to recognise interest expense on the lease
liability and the depreciation expense on the right-of-use asset.
Lessor accounting under MFRS 16 is substantially the same as the accounting under MFRS 117. Lessors will continue to
classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating
and finance leases.
MFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted but not before an
entity applies MFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective
approach. The Group is assessing the potential effect of MFRS 16 and plans to adopt the new standard on the required
effective date.
4. Significant accounting estimates and judgements and key sources of estimation uncertainty
There were no significant judgements made in applying the accounting policies of the Group which may have significant effects on
the amounts recognised in the financial statements.
Management makes key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year.
The following represents a summary of the critical accounting estimates and the associated key sources of estimation uncertainty.
(a) Useful lives of property, plant and equipment and intangible assets
Depreciation and amortisation are based on management’s estimates of the future estimated useful lives and residual
values of property, plant and equipment and intangible assets. Estimates may change due to technological developments,
modernisation initiatives, expected level of usage, competition, market conditions and other factors, which could potentially
impact the average useful lives and the residual values of these assets. This may result in future changes in the estimated
useful lives and in the depreciation or amortisation expenses. A 5.0% difference in the expected useful lives of these assets
from management’s estimates would result in approximately 1.8% (2015: 1.6%) variance in the Group’s profit for the year.
The carrying amounts of property, plant and equipment and intangible assets at the reporting date are disclosed in Note 11
and Note 12 respectively.
Inspiring Your Digital Life Annual Report 2016 113
4. Significant accounting estimates and judgements and key sources of estimation uncertainty (cont’d)
(b) Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To
determine whether there is objective evidence of impairment, the Group considers factors such as the probability of
insolvency or significant financial difficulties of the debtor and default or significant reduction in collection rates.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on
historical loss experience for assets with similar credit risk characteristics. The carrying amounts of the Group’s trade and
other receivables at the reporting date are disclosed in Note 16. If the present value of estimated future cash flows varies by
5.0% from management’s estimates, the Group’s allowance for impairment will cause either a 0.1% (2015: 0.1%) increase or
0.2% (2015: 0.2%) decrease respectively in the Group’s profit for the year.
(c) Deferred tax
Deferred tax implications arising from the changes in corporate income tax rates are measured with reference to the
estimated realisation and settlement of temporary differences in the future periods in which the tax rates are expected to
apply, based on the tax rates enacted or substantively enacted at the reporting date. While management’s estimates on the
realisation and settlement of temporary differences are based on the available information at the reporting date; changes in
business strategy, future operating performance and other factors could potentially impact on the actual timing and amount
of temporary differences realised and settled. Any difference between the actual amount and the estimated amount would
be recognised in profit and loss in the period in which actual realisation and settlement occurs. The carrying amount of
deferred tax liabilities is disclosed in Note 20.
(d) Income taxes
Significant estimation is involved in determining the Group’s provision for income taxes as there are certain transactions and
computations for which the final tax determination is uncertain at the reporting date.
Where the final tax outcome of these matters are different from the amounts that were initially recognised, such differences
will impact the income tax and deferred tax provisions in the period in which such determination is made.
(e) Provisions for liabilities
financialS
Provision for site decommissioning and restoration costs are provided based on the present value of the estimated future
expenditure to be incurred for dismantling the inactive sites. Significant management assumption and estimation are required
in determining the discount rate, the estimated life cycle and the expenditure to be incurred for dismantling each network
infrastructure sites. Where expectations differ from the original estimates, the differences will impact the carrying amount
of provision for site decommissioning and restoration costs. The carrying amount of provision for site decommissioning and
restoration costs at the reporting date is disclosed in Note 21.
114 Annual Report 2016 Digi.Com Berhad
5. Revenue
Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
financialS
Non-executive directors:
- Nil 4 5
- Below RM100,000 - 1
- RM100,001 - RM200,000 - 1
- RM200,001 - RM300,000 3 2
116 Annual Report 2016 Digi.Com Berhad
8. Taxation
Major components of income tax expense
The major components of income tax expense for the financial years ended 31 December 2016 and 2015 are:
Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Group
Profit before tax 2,238,184 2,308,745
Taxation at Malaysian statutory tax rate 24.0 537,164 25.0 577,186
Effect of changes in statutory tax rate - - (0.6) (13,542)
Effect of expenses not deductible for tax purposes 1.0 17,251 1.0 22,918
Under accrual of income tax expense in prior years 2.5 56,459 0.2 5,032
Over accrual of deferred tax expense in prior years (0.2) (5,348) (0.2) (5,399)
Effective tax rate/income tax expense recognised in profit or loss 27.3 605,526 25.4 586,195
Company
Profit before tax 1,632,858 1,888,867
Taxation at Malaysian statutory tax rate 24.0 391,886 25.0 472,217
Income not subject to tax (24.0) (391,822) (25.0) (472,144)
Over accrual of income tax expense in prior year (0.0) (3) (0.0) (14)
Effective tax rate/income tax expense recognised in profit or loss 0.0 61 0.0 59
Inspiring Your Digital Life Annual Report 2016 117
8. Taxation (cont’d)
Domestic current income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated taxable profit
for the year.
With effect from 1 January 2016, the tax rate of the Group and the Company has been reduced from 25% to 24% due to the
change in the Malaysian statutory tax rate that was announced in the 2014 Budget.
9. Earnings per ordinary share
Earnings per ordinary share is calculated by dividing profit for the year, net of tax, attributable to owners of the parent by the
weighted average number of ordinary shares in issue during the financial year.
Group
2016 2015
10. Dividends
Group/Company
2016 2015
RM’000 RM’000
financialS
- Fourth interim tax exempt (single-tier) dividend (2015: 4.9 sen; 2014: 7.2 sen) 380,975 559,800
- First interim tax exempt (single-tier) dividend (2016: 5.1 sen; 2015: 6.1 sen) 396,525 474,275
- Second interim tax exempt (single-tier) dividend (2016: 5.4 sen; 2015: 5.9 sen) 419,850 458,725
- Third interim tax exempt (single-tier) dividend (2016: 5.6 sen; 2015: 5.1 sen) 435,400 396,525
1,632,750 1,889,325
Interim dividend declared subsequent to the reporting date
(not recognised as a liability as at 31 December):
Dividends on ordinary shares:
- Fourth interim tax exempt (single-tier) dividend (2016: 4.8 sen; 2015: 4.9 sen) 373,200 380,975
The Board of Directors had on 23 January 2017, declared a fourth interim tax exempt (single-tier) dividend of 4.8 sen per ordinary
share in respect of the financial year ended 31 December 2016 amounting to RM373,200,000. The financial statements for the
current financial year do not reflect this fourth interim dividend. Such dividend, will be accounted for in equity as an appropriation
of retained earnings in the financial year ending 31 December 2017.
118 Annual Report 2016 Digi.Com Berhad
Cost
At 1 January
2016 29,638 7,312 7,565 128,015 7,365 6,866 26,529 428,017 167,788 4,336,251 255,948 5,401,294
Additions - - - - - - 2,835 - 1,913 26,617 677,957 709,322
Disposals - - - - - - (3,097) (1,737) (164) (3) - (5,001)
Write offs - - - - - - - (149,781) (8,743) (14,093) - (172,617)
Transfers - - - 15,280 - - - 16,231 33,928 580,428 (645,867) -
At 31
December
2016 29,638 7,312 7,565 143,295 7,365 6,866 26,267 292,730 194,722 4,929,200 288,038 5,932,998
Accumulated
depreciation
At 1 January
2016: - 1,378 2,827 18,919 678 2,942 16,615 344,007 133,534 2,237,180 - 2,758,080
Depreciation
expenses
for the
year - 61 128 2,471 67 108 3,037 29,825 20,393 464,121 - 520,211
Disposals - - - - - - (3,039) (1,735) (164) (3) - (4,941)
Write offs - - - - - - - (149,781) (8,743) (14,093) - (172,617)
At 31
December
2016 - 1,439 2,955 21,390 745 3,050 16,613 222,316 145,020 2,687,205 - 3,100,733
Carrying
Amount
At 31
December
2016 29,638 5,873 4,610 121,905 6,620 3,816 9,654 70,414 49,702 2,241,995 288,038 2,832,265
Inspiring Your Digital Life Annual Report 2016 119
Cost
At 1 January
2015 29,638 7,502 7,578 138,740 7,365 6,866 21,302 409,613 174,037 3,669,753 328,586 4,800,980
Additions - - - - - - 7,456 - 1,856 65,735 684,478 759,525
Disposals - - - - - - (2,229) (1,583) (203) - - (4,015)
Write offs - (190) (13) (10,725) - - - (7,988) (25,697) (110,521) (62) (155,196)
Transfers - - - - - - - 27,975 17,795 711,284 (757,054) -
At 31 December
2015 29,638 7,312 7,565 128,015 7,365 6,866 26,529 428,017 167,788 4,336,251 255,948 5,401,294
Accumulated
depreciation
and
impairment
losses
At 1 January
2015:
Accumulated
depreciation - 1,340 2,703 18,196 611 2,834 16,078 319,693 138,959 1,904,585 - 2,404,999
Accumulated
impairment losses - - - - - - - - 398 13,471 - 13,869
- 1,340 2,703 18,196 611 2,834 16,078 319,693 139,357 1,918,056 - 2,418,868
Depreciation
expenses
for the year - 228 137 11,448 67 108 2,766 33,882 20,474 443,116 - 512,226
Reversal of
impairment
loss - - - - - - - - (398) (13,471) - (13,869)
Disposals - - - - - - (2,229) (1,580) (202) - - (4,011)
Write offs - (190) (13) (10,725) - - - (7,988) (25,697) (110,521) - (155,134)
financialS
At 31 December
2015 - 1,378 2,827 18,919 678 2,942 16,615 344,007 133,534 2,237,180 - 2,758,080
Analysed as:
Accumulated
depreciation - 1,378 2,827 18,919 678 2,942 16,615 344,007 133,534 2,237,180 - 2,758,080
- 1,378 2,827 18,919 678 2,942 16,615 344,007 133,534 2,237,180 - 2,758,080
Carrying Amount
At 31 December
2015 29,638 5,934 4,738 109,096 6,687 3,924 9,914 84,010 34,254 2,099,071 255,948 2,643,214
(a) The Group acquired property, plant and equipment with an aggregate cost of RM709.3 million (2015: RM759.5 million)
of which RM4.2 million (2015: RM7.1 million) relates to the provision for site decommissioning and restoration costs, as
disclosed in Note 21.
(b) Government grants of RM119.2 million (2015: RM93.8 million) relating to additions to property, plant and equipment, were
deducted before arriving at the cost of qualifying property, plant and equipment during the financial year ended 31 December
2016.
120 Annual Report 2016 Digi.Com Berhad
Group
Cost
At 1 January 2016 695,066 854,351 1,300 1,550,717
Additions - 70,596 - 70,596
Disposals - (2,533) - (2,533)
Write offs - (340,543) - (340,543)
At 31 December 2016 695,066 581,871 1,300 1,278,237
Accumulated amortisation
At 1 January 2016 524,458 508,275 1,300 1,034,033
Amortisation expenses for the year 75,825 55,145 - 130,970
Write offs - (340,543) - (340,543)
At 31 December 2016 600,283 222,877 1,300 824,460
Carrying amount
At 31 December 2016 94,783 358,994 - 453,777
Cost
Carrying amount
At 31 December 2015 170,608 346,076 - 516,684
Included in the cost of computer software is capital work-in-progress of RM116.3 million (2015: RM83.0 million).
Inspiring Your Digital Life Annual Report 2016 121
financialS
Group
2016 2015
RM’000 RM’000
Non-current
Available-for-sale financial asset:
- Unquoted shares at cost 100 -
During the financial year, the Group’s wholly owned subsidiary, Y3llownation Sdn Bhd (YN) (formerly known as Pay By Mobile Sdn
Bhd), had subscribed to equity interest of approximate 8% in Localusher Sdn Bhd (LocalUsher), an entity incorporated in Malaysia.
LocalUsher is engaged in operating an online booking platform for leisure trips and activities.
The investment was made in relation to a programme initiated by the Group for equity funding new digital start-ups in
Malaysia.
122 Annual Report 2016 Digi.Com Berhad
15. Inventories
Group
2016 2015
RM’000 RM’000
Merchandise:
- At cost 45,174 111,456
- At net realisable value 2,648 5,338
47,822 116,794
During the financial year, the amount of inventories recognised as an expense in cost of materials of the Group was RM379.1 million
(2015: RM639.1 million).
16. Trade and other receivables
Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Non-current
Prepayments 62,572 82,005 - -
Current
Trade receivables 371,156 349,386 - -
Other receivables 436,797 221,139 5 4
Deposits 171,423 150,096 - -
Prepayments 741,680 212,421 - 5
1,721,056 933,042 5 9
Allowance for impairment on trade receivables (13,377) (11,118) - -
1,707,679 921,924 5 9
Total trade and other receivables 1,770,251 1,003,929 5 9
The Group’s trade receivables are non-interest bearing, and are subject to normal trade credit terms ranging from 30 to 45 days
(2015: 30 to 45 days). They are recognised at their original invoice amounts which represent their fair value on initial recognition.
Included in non-current and current prepayments are advances to a network facility provider (NFP) of RM83.4 million (2015:
RM98.0 million) to provide connectivity services for a period of 10 years.
Included in current prepayment is an upfront payment made to Malaysian Communications and Multimedia Commission (MCMC)
amounting to RM598.5 million for Spectrum Assignment allocated to the Group. The Spectrum Assignment will be effective on 1
July 2017 for a tenure of 15 years.
Inspiring Your Digital Life Annual Report 2016 123
Trade receivables:
- Neither past due nor impaired 287,835 262,198
- 1 to 30 days past due not impaired 35,107 39,102
- 31 to 60 days past due not impaired 17,235 9,075
- 61 to 90 days past due not impaired 3,210 4,891
- 91 to 180 days past due not impaired 6,485 9,959
- More than 181 days past due not impaired 7,907 13,043
357,779 338,268
Trade receivables that are neither past due nor impaired, representing 80% (2015: 78%) of the Group’s total net trade
receivables, are creditworthy debtors with good payment records with the Group. None of the Group’s trade receivables
that are neither past due nor impaired have been renegotiated during the financial year.
At the reporting date, 20% (2015: 22%) of the Group’s trade receivables were past due but not impaired. These relate mostly
to corporate customers with slower repayment patterns, for whom there is no history of default.
The movements of the Group’s allowance for impairment on trade receivables are as follows:
Individually Collectively
Note impaired impaired Total
RM’000 RM’000 RM’000
financialS
At 1 January 2015 - 11,855 11,855
Charge for the year 7 42,407 - 42,407
Write offs (42,407) (737) (43,144)
At 31 December 2015/ 1 January 2016 - 11,118 11,118
Charge for the year 7 48,445 2,259 50,704
Write offs (48,445) - (48,445)
At 31 December 2016 - 13,377 13,377
The Group’s trade receivables that are individually determined to be impaired at the reporting date relate to debtors that have
defaulted on payments in excess of two months. These receivables are not secured by any collateral or credit enhancements.
As at 31 December 2016, Group’s trade receivables with an initial carrying value of RM19,012,000 (2015: RM20,143,000)
were impaired and provided for allowance for impairment amounting to RM13,377,000 (2015: RM11,118,000).
124 Annual Report 2016 Digi.Com Berhad
Non-hedging derivatives
Current
Foreign currency forward contracts:
- 2016 24,400 105,643 109,677 4,034
- 2015 23,000 99,054 98,936 (118)
The above foreign currency forward contracts were entered into by the Group to minimise its exposure to foreign currency risks
as a result of transactions denominated in currency other than its functional currency, arising from the normal business activities.
These contracts are not designated as cash flow or fair value hedges, and are entered into for periods consistent with currency
transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting. Foreign currency
forward contracts are used to hedge certain payables denominated in USD for which firm commitments existed at the reporting
date, extending to periods between January and March 2017.
During the financial year, the Group recognised a gain of RM4,034,000 (2015: a loss of RM118,000) arising from fair value changes
of derivative financial instruments. The fair value changes are attributable to changes between foreign exchange spot and forward
rates. The method and assumptions applied in determining the fair values of derivatives are disclosed in Note 29(f)(iv).
18. Cash and short-term deposits
Group Company
2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Non-current (unsecured)
Floating-rate term loans 1,783,728 -
Finance lease obligation 26(c) 15,109 25,376
1,798,837 25,376
Current (unsecured)
Floating-rate term loans - 210,000
financialS
Revolving credits 473,046 1,050,000
Finance lease obligation 26(c) 9,990 8,531
483,036 1,268,531
Total loans and borrowings 2,281,873 1,293,907
The weighted average effective and implicit interest rates at the reporting date for loans and borrowings are as follows:
Group
2016 2015
% %
Deferred
revenue Others Total
RM’000 RM’000 RM’000
21. Other liabilities
Group
2016 2015
RM’000 RM’000
Non-current
Provisions (Note a) 40,034 35,283
Current
Provisions (Note a) 7,547 6,195
financialS
Deferred revenue (Note b) 390,074 426,223
397,621 432,418
Total other liabilities 437,655 467,701
128 Annual Report 2016 Digi.Com Berhad
(a) Provisions
Site
decommissioning Defined
and restoration benefit
costs plan Total
RM’000 RM’000 RM’000
Note (Note 24)
Group
Non-current
At 1 January 2016 34,245 1,038 35,283
Capitalised as property, plant and equipment 11(a) 4,236 - 4,236
Recognised in profit and loss 1,019 80 1,099
Paid during the year - (244) (244)
Reversal of provision 7 (340) - (340)
At 31 December 2016 39,160 874 40,034
At 1 January 2015 25,814 1,135 26,949
Capitalised as property, plant and equipment 11(a) 7,107 - 7,107
Recognised in profit and loss 1,324 80 1,404
Paid during the year - (177) (177)
At 31 December 2015 34,245 1,038 35,283
Employee
leave
entitlements
Note RM’000
Group
Current
At 1 January 2016 6,195
Recognised in profit and loss 7 1,352
At 31 December 2016 7,547
At 1 January 2015 4,659
Recognised in profit and loss 7 1,536
At 31 December 2015 6,195
Further details on the provisions are disclosed in Note 2(k).
(b) Deferred revenue
Deferred revenue comprises unutilised balance of airtime and data subscriptions in respect of services sold to customers.
Inspiring Your Digital Life Annual Report 2016 129
Authorised
At 1 January/31 December 100,000,000 100,000,000 1,000,000 1,000,000
Issued and fully paid
At 1 January/31 December 7,775,000 7,775,000 77,750 77,750
financialS
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry
one vote per share without restrictions and rank equally with regard to the Company’s residual assets.
24. Defined benefit plan
The Group operates an unfunded defined benefit plan for its eligible employees. The estimated obligations under the retirement
benefit scheme are determined based on actuarial valuation by a qualified independent actuary on 18 March 2014.
The amount recognised in the consolidated statement of financial position is determined as follows:
Group
2016 2015
Note RM’000 RM’000
The amount recognised in profit and loss, included under staff expenses, is as follows:
Group
2016 2015
Note RM’000 RM’000
Capital expenditure in respect of property, plant and equipment and intangible assets:
- Approved and contracted for 1,077,000 286,000
- Approved but not contracted for 1,043,000 944,000
Inspiring Your Digital Life Annual Report 2016 131
financialS
Less: Amounts representing finance charges (3,079) (5,681)
Present value of minimum lease payments 25,099 33,907
Present value of payments:
- Less than one year 9,990 8,531
- Between one and two years 6,998 9,990
- Between two and five years 8,111 15,386
Present value of minimum lease payments 25,099 33,907
Less: Amount due within 12 months (Note 19) (9,990) (8,531)
Amount due after 12 months (Note 19) 15,109 25,376
132 Annual Report 2016 Digi.Com Berhad
Unsecured
Guarantees given to third parties for public infrastructure works 13,484 14,985
Guarantee given to MCMC on the allocation of the 2600 MHz spectrum band 10,000 10,000
Guarantee given to MCMC for USP project of constructing and operating the radio
access network infrastructure 24,562 -
48,046 24,985
28. Significant related party disclosures
(a) Sales and purchases of services
Related party relationships are as follows:
(i) The immediate and ultimate holding company are as disclosed in Note 1; and
(ii) The Company’s subsidiaries are as disclosed in Note 13.
Significant transactions and balances with related parties of the Group during the financial year are as follows:
Balance due
Transactions (to)/from at
2016 2015 2016 2015
Group RM’000 RM’000 RM’000 RM’000
financialS
basic operation for data centre 9,171 5,015
Purchases of operation application 347 289
Services rendered on IT Infrastructure Shared
Services Centre - 500
Purchases of customer centre offshoring services 2,378 1,133
- Telenor IT Asia Sdn Bhd (10,239) (3,099)
Rental income and services rendered for
Asian Infrastructure Shared Services Centre 893 688
Services rendered on Asian Infrastructure
Shared Services Centre 7,291 5,853
- Valyou Sdn Bhd (formerly known as Prabhu Money
Transfer Sdn Bhd) 10 -
Sales of telecommunication and related services 1,683 -
134 Annual Report 2016 Digi.Com Berhad
Amounts due (to)/from related companies are trade in nature, unsecured, non-interest bearing and are subject to the normal
credit terms for trade receivables and trade payables respectively.
The directors are of the opinion that the above transactions are entered into, in the normal course of business and at standard
commercial terms mutually agreed between both parties.
(b) Compensation of key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly and indirectly, including directors of that entity.
The remuneration of key management personnel during the financial year was as follows:
Group
2016 2015
RM’000 RM’000
financialS
(d) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The
Group monitors and maintains a level of cash and cash equivalents deemed adequate by management, for working capital
purposes and to mitigate the effects of fluctuations in cash flows. The Group invests only in highly liquid cash management
funds, if any.
The Group’s trade and other payables and non-hedging derivative liabilities at the reporting date, are short-term in nature,
and are payable either on-demand or within one year. Details of respective maturities for the Group’s loans and borrowings
are as disclosed in Note 19.
136 Annual Report 2016 Digi.Com Berhad
Group
2016
Financial liabilities
Trade and other payables 1,947,851 - - - 1,947,851
Loans and borrowings 486,726 7,946 1,083,506 725,000 2,303,178
Total undiscounted financial liabilities 2,434,577 7,946 1,083,506 725,000 4,251,029
2015
Financial liabilities
Trade and other payables 2,056,176 - - - 2,056,176
Loans and borrowings 1,271,410 11,726 16,452 - 1,299,588
Total undiscounted financial liabilities 3,327,586 11,726 16,452 - 3,355,764
(e) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because
of changes in market interest rates. The Group’s income and operating cash flows are substantially independent of changes in
market interest rates. The Group is exposed to interest rate risk primarily from the deposit placements and interest-bearing
financial liabilities. The Group manages its interest rate risk for the interest-earning deposit placements by placing such
balances on varying maturities and interest rate terms.
The Group’s policy in dealing with interest-bearing financial liabilities is to minimise the interest expense by obtaining the
most favourable interest rates available. A difference of 20 (2015: 20) basis points in interest rates applicable for the Group’s
entire loans and borrowings (excluding finance lease obligation) would result in approximately 0.16% (2015: 0.11%) variance
in the Group’s profit for the year.
Inspiring Your Digital Life Annual Report 2016 137
financialS
(i) Other investment
Fair value information has not been disclosed for the Group’s investment in unquoted equity interest that is carried
at cost of RM100,000 because its fair value cannot be measured reliably. The equity instrument represents ordinary
shares not quoted on any market and does not have any comparable industry peers that is listed.
(ii) Financial liabilities
Group
Carrying amount Fair value
Note 2016 2015 2016 2015
RM’000 RM’000 RM’000 RM’000
Quantitative disclosures fair value measurement hierarchy for financial assets/(liabilities) as at 31 December 2015:
financialS
Note valuation Total (Level 1) (Level 2) (Level 3)
The tenure of the proposed IMTN and ICP Programme is fifteen (15) and seven (7) years, respectively from the date of the
first issuance. RAM Ratings Services Berhad has assigned AAA rating for the proposed IMTN Programme and P1 rating
for the proposed ICP Programme. The proceeds from the Sukuk Programme shall be used to finance capital expenditure,
working capital requirements, other general funding requirements and/or general corporate purposes of DTSB and/or its
subsidiaries, which shall be Shariah-compliant.
financialS
142 Annual Report 2016 Digi.Com Berhad
List of Properties
as at 31 December 2016
No. Location Tenure Description/ Date of Area Age of Net Book Net Book
Existing Use Acquisition Building Value as at Value as at
31.12.2015 31.12.2016
Years RM’000 RM’000
1 H.S. (D) No 92086 & 92087 Freehold Land with a building/ 29.12.1997 22,529 sq ft 19 595 577
P.T. No 9 & No.10, Telecommunications
Pekan Seremban Jaya, Centre
Daerah Seremban,
Negeri Sembilan
7 32 , PLO 151 Leasehold Land with a building/ 12.05.1995 1.58 acres 22 739 727
Jln Angkasa Mas Utama, 30 years Telecommunications
Kawasan Perindustrian Tebrau II, (expiring in Centre
81100 Johor Bahru, 2023)
Johor
8 HS (D) 77, No. P.T. Leasehold Land with a building/ 23.03.1995 1 acre 42 1,502 1,450
PTBM/A/081, Mukim 1, 60 years Telecommunications
Kawasan Perusahaan Perai, (expiring Centre
District Seberang Perai Tengah, in 2033)
Pulau Pinang
9 Lot 36, Leasehold Land with a building/ 12.06.1995 0.938 acre 36 1,681 1,625
Sedco Light Industrial Estate, 60 years Telecommunications
Jalan Kelombong, (expiring Centre
Kota Kinabalu, in 2034)
Sabah
Inspiring Your Digital Life Annual Report 2016 143
List of Properties
as at 31 December 2016
No. Location Tenure Description/ Date of Area Age of Net Book Net Book
Existing Use Acquisition Building Value as at Value as at
31.12.2015 31.12.2016
Years RM’000 RM’000
10 Lot 1220, Section 66, Leasehold Land with a building/ 15.08.1995 4,124 sq ft 21 1,448 1,399
Kuching Town Land District, 60 years Telecommunications
Sarawak (expiring Centre
in 2036)
12 Unit 16-12-1, 12th Floor, Leasehold Apartment/Housing 08.02.1995 1,400 sq ft 28 162 160
Cloud View Tower, 99 years base transceiver
Taman Supreme, (expiring equipment
Cheras, in 2076)
Kuala Lumpur
14 H.S.(D) 12776, P.T. No. 15866, Leasehold Land with a building/ 07.08.1996 7.5 acres 23 5,231 5,164
Mukim Bentong, 99 years Earth Station Complex
District of Bentong, (expiring
Pahang in 2091)
15 Plot D-38, Leasehold Land with fixed line 14.11.1997 25,521 sq ft 19 353 349
Taman Industri Prima Kota Fasa 1, 99 years switch and base
Sector 3, Bandar Indera Mahkota, (expiring in transceiver station
Kuantan, 2097)
Pahang
16 Ptd 1490, Leasehold Land with trunk 17.08.1999 40,000 sq ft 17 103 102
Mukim of Jemaluang, 99 years station
District of Mersing, (expiring
Johor in 2098)
17 PN 89926, Lot 191363, Leasehold Land with a building/ 15.07.1999 5,942 sq ft 17 190 188
Mukim Hulu Kinta, 90 years Telecommunications
Daerah Kinta, Perak (expiring Centre
in 2081)
18 Lot No 54, Jalan 6/2, Leasehold Land with a building/ 23.05.2000 18,050 sq ft 27 1,670 1,650
Kawasan Perindustrian 99 years Telecommunications
Seri Kembangan, (expiring Centre
ADDITIONAL INFORMATION
19 Lot 2728 Miri Leasehold Land with cabin 29.09.2000 4,937 sq m N/A 838 814
Concession Land District, 60 years container/
Lopeng , Miri, (expiring Telecommunications
Sarawak in 2027) Centre
144 Annual Report 2016 Digi.Com Berhad
List of Properties
as at 31 December 2016
No. Location Tenure Description/ Date of Area Age of Net Book Net Book
Existing Use Acquisition Building Value as at Value as at
31.12.2015 31.12.2016
Years RM’000 RM’000
20 Lot 10, Jalan Delima 1/1, Freehold Land with a building 19.07.2001 284,485 sq ft 11 57,482 71,715
Subang Hi-Tech Industrial Park,
40000 Subang Jaya,
Selangor
21 No. 24, Jalan KIP 7, Freehold Land with a building/ 21.08.2002 17,847 sq ft 20 2,779 2,779
Taman Perindustrian KIP, Telecommunications
52200 Kuala Lumpur Centre
22 Lot 42, Jalan Delima 1/1, Freehold Parking Lot 28.04.2008 91,676 sq ft N/A 8,234 8,234
Subang Hi-Tech Industrial Park, (Title transferred
date)
40000 Subang Jaya,
Selangor
23 Lot 43, Jalan Delima 1/1, Freehold Land with a building/ 06.04.2008 92,142 sq ft 7 68,678 67,303
Subang Hi-Tech Industrial Park, Telecommunications (Title transferred
date)
40000 Subang Jaya, Centre
Selangor
25 H.S.(M) 26928 PT 180, Leasehold Land with a building/ 03.03.2009 1803 sq m 21 4,042 3,994
Pekan Serdang, 90 years Telecommunications
Tempat Seri Kembangan, (expiring Centre
Daerah Petaling, in 2099)
Selangor
26 Title No. PN 89925, Leasehold Land with a building/ 21.09.2009 358 sq m 16 677 669
Lot 191362, 90 years Telecommunications
No.4, Hala Perusahaan (expiring Centre
Kledang U5, in 2099)
Kawasan Perusahaan
Menglembu,
Daerah Kinta, Perak
Notes:
The Group does not adopt a revaluation policy on landed properties.
N/A denotes “Not Applicable”
Inspiring Your Digital Life Annual Report 2016 145
At the Annual General Meeting held on 13 May 2016, the Company obtained a shareholders’ mandate to allow the Group to enter into
recurrent related party transactions of revenue or trading nature.
In accordance with Practice Note 12 of Main Market Listing Requirements of Bursa Securities, the details of recurrent related party
transactions conducted during the financial year ended 31 December 2016 pursuant to the shareholders’ mandate are disclosed as
follows:-
Notes:
1. Telenor Group refers to Telenor ASA and its subsidiary and related companies (including the associated companies). Telenor ASA is the ultimate holding
company of Digi.Com Berhad (Digi).
2. Digi Telecommunications Sdn Bhd (DTSB) is a wholly-owned subsidiary of Digi.
146 Annual Report 2016 Digi.Com Berhad
The Company
Digi.Com Berhad Direct Interest % Deemed Interest %
- - - - -
Tore Johnsen - - - -
NOTICE IS HEREBY GIVEN THAT the Twentieth Annual General Meeting (20th AGM) of Digi.Com Berhad (the Company) will be
held at Nexus Ballroom 2 & 3, Connexion @ Nexus, No. 7 Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur, Malaysia on
Tuesday, 9 May 2017 at 10.00 a.m. for the following purposes:
Agenda
As Ordinary Business
1. To receive the Audited Financial Statements for the financial year ended 31 December 2016 and the (Please refer to
Reports of the Directors and Auditors thereon. Note 1 of the
Explanatory Notes)
2. To re-elect the following Directors of the Company retiring pursuant to the Article 98(A) of the
Company’s Articles of Association:-
3. To approve the payment of Directors’ fees of up to RM1,100,000 for the Independent Non-Executive Ordinary Resolution 3
Directors and benefits payable to the Directors up to an aggregate amount of RM40,000 from
1 January 2017 until the next AGM of the Company.
4. To appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix Ordinary Resolution 4
their remuneration.
As Special Business
To consider and, if deemed fit, to pass the following resolutions:-
5. Proposed Renewal of Existing Shareholders’ Mandate and Proposed New Shareholders’ Mandate Ordinary Resolution 5
For Recurrent Related Party Transactions of a Revenue or Trading Nature, to be entered with
Telenor ASA (Telenor) and Persons Connected with Telenor (Proposed Shareholders’ Mandate)
“That, subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad, approval be and is hereby given for the Proposed Shareholders’ Mandate for the Company
and its subsidiaries, to enter into recurrent related party transactions of a revenue or trading nature
with Telenor and persons connected with Telenor as specified in Section 2.3 of the Circular to
Shareholders dated 10 April 2017, which are necessary for the day-to-day operations and/or in the
ordinary course of business of the Company and its subsidiaries on terms not more favourable to the
related parties than those generally available to the public and are not detrimental to the minority
shareholders of the Company and that such approval shall continue to be in force until:
ADDITIONAL INFORMATION
(i) the conclusion of the next annual general meeting of the Company following the general meeting
at which this Ordinary Resolution shall be passed, at which time it will lapse, unless by a resolution
passed at a general meeting, the authority conferred by this resolution is renewed;
(ii) the expiration of the period within which the next annual general meeting after the date it is
required to be held pursuant to Section 340(2) of the Companies Act, 2016 (but shall not extend
to such extension as may be allowed pursuant to Section 340(4) of the Companies Act, 2016); or
148 Annual Report 2016 Digi.Com Berhad
whichever is earlier.
And that in making the disclosure of the aggregate value of the recurrent related party transactions
conducted pursuant to the proposed shareholders’ approval in the Company’s annual reports, the
Company shall provide a breakdown of the aggregate value of recurrent related party transactions
made during the financial year, amongst others, based on:
(i) the type of the recurrent related party transactions made; and
(ii) the names of the related parties involved in each type of the recurrent related party transactions
made and their relationship with the Company.
And further that authority be and is hereby given to the Directors of the Company and its subsidiaries
to complete and do all such acts and things (including executing such documents as may be required)
to give effect to the Proposed Shareholders’ Mandate.”
“That the deletions, alterations, modifications, variations and additions to the Articles of Association of
the Company as set out in Appendix II of the Circular to Shareholders dated 10 April 2017 be and are
hereby approved.”
As Other Business
7. To transact any other business of which due notice has been given.
FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend this 20th AGM,
the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Article 54(1)(b) of the Company’s Articles
of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a General Meeting Record of
Depositors as at 28 April 2017. Only a depositor whose name appears on Record of Depositors shall be entitled to attend, speak and
vote at the said meeting or appoint proxies to attend, speak and/or vote on his/her behalf.
NOTES:-
(ii) Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple
beneficial owners in one securities account (omnibus account) as defined under the Securities Industry (Central Depositories)
Act 1991, there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each
omnibus account it holds.
(iii) The instrument appointing a proxy, shall be in writing under the hand of the appointer or his attorney duly authorised in writing,
and in the case of a corporation, either under its seal or under the hand of an officer or attorney duly authorised.
(iv) The instrument appointing a proxy together with the power of attorney (if any) or a certified copy thereof must be deposited at
the Company’s Share Registrar Office at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8,
Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia at least twenty-four (24) hours before the time appointed for the holding of the
meeting.
1. The Audited Financial Statements are laid in accordance with Section 340(1)(a) the Companies Act, 2016 for discussion only
under Agenda 1. They do not require shareholders’ approval and hence, will not be put for voting.
2. Ordinary Resolution 5 proposed under Agenda 5 on the shareholders’ mandate, if passed, will allow the Company and its
subsidiaries (Group) to enter into recurrent related party transactions in accordance with paragraph 10.09 of the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad and the necessity to convene separate general meetings
from time to time to seek shareholders’ approval as and when such recurrent related party transactions occur would not
arise. This would reduce substantial administrative time and expenses associated with the convening of such meetings
without compromising the corporate objectives of the Group or affecting the business opportunities available to the Group.
The shareholders’ mandate is subject to renewal on an annual basis.
3. The proposed Special Resolution, if passed, will align the Articles of Association with the new Companies Act, 2016 which came
into force on 31 January 2017, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and prevailing
statutory and regulatory requirements as well as to render clarity and consistency throughout. Details of which as set out in the
Circular to Shareholders dated 10 April 2017.
thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its
agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for
the AGM (including any adjournment thereof), and the preparation and compilation of the attendance lists, minutes and other documents
relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws,
listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the
member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies)
and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or
representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims,
demands, losses and damages as a result of the member’s breach of warranty.
This page has been left blank intentionally
FORM OF PROXY DIGI.COM BERHAD
(Company No.: 425190-X)
(Incorporated in Malaysia)
NRIC No. or Company No. (New and Old NRIC No.) __________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________________________________________
or failing him/her (Name in full) ____________________________________________ NRIC No. (New and Old NRIC No.)__________________________________________
of (Address) _________________________________________________________________________________________________________________________________________
or the *Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Twentieth Annual General Meeting of the
Company to be held at Nexus Ballroom 2 & 3, Connexion @ Nexus, No. 7, Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur, Malaysia
on Tuesday, 9 May 2017 at 10.00 a.m. or any adjournment thereof.
This proxy is to vote on the resolutions set out in the Notice of the Meeting, as indicated with an 'X' in the appropriate spaces below. If no
specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.
*Please delete the words “Chairman of the Meeting” if you wish to appoint some other person to be your proxy.
Notes:
1. A member entitled to attend and vote at a general meeting of the Company 3. The instrument appointing a proxy, shall be in writing under the hand of
is entitled to appoint a proxy to attend, speak and vote in his stead. Where the appointer or his attorney duly authorised in writing, and in the case of a
more than one proxy is appointed, the appointment shall not be valid unless corporation, either under its seal or under the hand of an officer or attorney
he specifies the shareholdings to be represented by each proxy. A proxy need duly authorised.
not be a member of the Company. 4. The instrument appointing a proxy together with the power of attorney (if
2. Where a member of the Company is an Exempt Authorised Nominee which any) or a certified copy thereof must be deposited at the Company’s Share
holds ordinary shares in the Company for multiple beneficial owners in Registrar Office at Unit 32-01, Level 32, Tower A, Vertical Business Suite,
one securities account (omnibus account) as defined under the Securities Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur,
Industry (Central Depositories) Act 1991, there shall be no limit to the Malaysia at least twenty-four (24) hours before the time appointed for the
number of proxies which the Exempt Authorised Nominee may appoint in holding of the meeting.
respect of each omnibus account it holds.
Personal Data Privacy:
By submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy terms set out in the Notice of Annual
General Meeting dated 10 April 2017.
Please fold here to seal.
Affix
Stamp
Here
Share Registrars
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
Malaysia
Digi.Com Berhad’s wholly owned subsidiary, Digi Telecommunications Sdn Bhd, has engaged Deloitte PLT (LLP0010145-LCA) (we
or us) to perform limited assurance procedures on selected subject matter (the Subject Matter) for the year ended December 31,
2016 presented in the Sustainability section of the Annual Report 2016 (the Sustainability Report) in accordance with the reporting
criteria (the Criteria).
Subject Matter
• Energy consumption within the organization GRI G4-EN3 Climate Change and Environment (Page 41)
b. Winning Team
• Lost time injury frequency (LTIF) GRI G4-LA6 Internalising Safety (Page 38)
Criteria
The selected Subject Matter above included in the Sustainability section of the annual report 2016 has been assessed according to the
reporting principle prepared by Digi which is in accordance with the Global Reporting Initiative’s (GRI) G4 “in accordance” option (Core).
ADDITIONAL INFORMATION
154 Annual Report 2016 Digi.Com Berhad
We carried out limited assurance in accordance with International Standard for Assurance Engagements 3000 (revised) Assurance
Engagements Other Than Audits or Reviews of Historical Financial Information (ISAE 3000). A limited assurance engagement consists
of making enquiries and applying analytical, controls testing, and other evidence gathering procedures that are sufficient for us to
obtain a meaningful level of assurance. The procedures performed depend on the assurance practitioner’s judgement including the
risk of material misstatement of the specific activity data, whether due to fraud or error. While we considered the effectiveness of
Management’s internal controls when determining the nature and extent of our procedures, our review was not designed to provide a
basis for our conclusion.
The procedures performed in a limited assurance engagement vary in nature, and are less in extent than for a reasonable assurance
engagement. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that
would have been obtained had we performed a reasonable assurance engagement.
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued
by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity,
professional standards and due care, confidentiality and professional behaviour.
The firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control
including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable
legal and regulatory requirements.
Considering the risk of material error, we planned and performed the work to obtain all the information and explanations considered
necessary to provide sufficient evidence to support our assurance conclusion.
Inherent limitation
Inherent limitation exists in all assurance engagements due to the selective testing of the information being examined. Therefore, fraud,
errors and non-compliance may occur and not be detected. Additionally, non-financial data may be subject to more inherent limitations
than financial data, given both its nature and the methods used for determining, calculating and estimating such data.
Management’s responsibilities
The management of Digi (Management) is responsible for the collection, preparation and presentation of the Subject Matter in the
Report in accordance with the above Criteria, and for maintaining adequate records and internal controls that are designed to support
the sustainability reporting process.
Our responsibilities
Our responsibility is to express a limited assurance conclusion as to whether the subject matter is presented in accordance with the
criteria. Our assurance engagement has been planned and performed in accordance with the ISAE 3000.
Limitation of use
Our review was limited to the information on the select subject matter set out within the Digi Sustainability Report 2016. We do not
therefore accept or assume any responsibility for any other purpose of to any other person or organisation. Any reliance that any such
third party may place on the Report is entirely at its own risk. No statement is made as to whether the criteria are appropriate for any
third party purpose.
Based on the work described above, nothing has come to our attention that causes us to believe that the selected Subject matter for the
year ended December 31, 2016 included in the Sustainability section of the annual report 2016 has not been prepared, in all material
respects, in accordance with the Criteria.
Corporate Information
Lars-Ake Valdemar Norling Tricor Investor & Issuing House Services Sdn Bhd
Non-Independent Non-Executive Director Unit 32-01, Level 32, Tower A
(Appointed on 4 January 2016) Vertical Business Suite, Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur
Malaysia
Tel : 03-2783 9299
Fax : 03-2783 9222
E-mail : is.enquiry@my.tricorglobal.com
Web : www.tricorglobal.com
Inspiring Your Digital Life Annual Report 2016 157
Corporate Information
Corporate Structure
100%
Y3llownation
Sdn Bhd
(formerly known as Pay By
Mobile Sdn Bhd)
(Company No. 846253-D)
Digi.Com 100%
Y3llowlabs
Berhad Sdn Bhd
(Company No. 425190-X) (formerly known as DJuice.
Digi
Telecommunications
Sdn Bhd
(Company No. 201283-M) 100%
Digi Services
Sdn Bhd
(Company No. 243889-T)
158 Annual Report 2016 Digi.Com Berhad
Corporate Directory